Rogers Wireless has withdrawn a proposal placed before Canadian regulators to force its competitors to pay up ex-customers’ unpaid cell phone bills.

In mid-January, Rogers filed a request with the Canadian Radio-television and Telecommunications Commission (CRTC) requesting the agency force other cell phone companies to make good on any past due balances left when customers switched providers.

When other providers didn’t get on board, the company withdrew the proposal.

Rogers’ proposal would have left a customer’s new cell phone provider on the hook for any past due charges left on that customer’s final bill.  With early termination fees running well over $100, that’s a big tab to drop on Canadian cell phone companies, particularly for new entrants in the marketplace.

Providers would have had to require verification of a “clean break” from a previous provider before taking on new customers, creating bureaucratic red tape, and a built-in incentive to hold customers in place.  But the company first advocated the proposal as a solution to the problem of past due balances.

“Customers porting out mid-contract with unpaid balances are costing Rogers, and most probably other wireless carriers as well, millions of dollars each year,” the company said. “The task of collecting these unpaid balances is made much more difficult once a customer ports their number to a new carrier as the relationship has been terminated.”

Rogers claims the problem of unpaid balances on canceled service became a problem after the advent of number portability in 2007.  Customers switching providers can keep their existing cell phone number.  With even greater competition in the Canadian wireless marketplace, customers are more willing than ever to take their business elsewhere, occasionally not paying their last bill.

Critics accused Rogers of trying to throw roadblocks up to make switching a hassle.

Michael Janigan, executive director at the Public Interest Advocacy Centre, a consumer watchdog, told CBC News Rogers’ move is an attempt to slow down the loss of Rogers’ market share.  Rogers’ new competitors, including Wind Mobile, and better prices from Telus and Bell are prompting customers to switch.

“This is the clear downside of long-term contracts for a supplier and now they want regulation to solve a problem brought about by market forces,” he said.

The provision would have benefited Rogers in at least two ways:

1. It would give Rogers advance warning a customer was prepared to switch, as soon as a new provider inquired as to that customer’s final balance.  That would allow Rogers to reach out to the customer with special incentives like retention deals, which could persuade a customer to stay;
2. Competitors would have had to build in a delay before they agreed to finalize a provider change, so they didn’t expose themselves to past due penalties from the former provider.  That inconveniences customers who would have to wait for their old provider to send a balance verification.

When asked why Rogers simply didn’t turn over past due balances to collection agencies, the company claims that method is not particularly effective.

“Collections and risk management systems are in place to mitigate the impact, but … the effectiveness of these measures is limited, especially in cases where the unpaid balance is significant,” the company said.

Some other Canadian providers weren’t impressed with Rogers’ proposal.

“Telus couldn’t disagree more with Rogers on their proposal,” said spokesman Jim Johannsson. “It’s not consumer focused, it’s not transparent, doesn’t promote consumer choice and runs counter to everything we are striving for as an industry.”

The blowback from customers was far worse.  A sampling:

“Canada has diversified its wireless market from Robbers and Bhell to allow for companies like Wind to offer much better prices/services & “CUSTOMER SERVICE”. What exactly is Robbers going to do? Send Jack Bauer? Their sub-par overpriced service deserves this. As Canadians we need to start a revolution against these monopoly giants who just leech off vulnerable middle-class Canadians. Even after we wash our hands of them, they still reach for our wallets.”

“Burn your bridges Rogers, keep tickin’ off your customers, and have the gall to expect their competitors to help them. It’s a tough world when you are not a monopoly, eh?”

“Rogers, they’re leaving you high and dry after you sucked the life out of your customers.  You expect respect when none is given. How the tides have turned.”

A few days after comments like that, Rogers flip-flopped and caved:

“We decided to withdraw it as it just didn’t seem appropriate,” said Jan Innes, a Rogers spokesperson.

Phillip Dampier

While reviewing coverage on Comcast’s new usage meter, I ran across a disappointing quote from an article in The Hill newspaper from Gigi Sohn, president of public interest group Public Knowledge:

But as more consumers are downloading movies and streaming TV shows on their computers, bandwidth use is inching up. Imposing caps on consumers can become a form of discrimination, said Gigi Sohn, president of Public Knowledge, this morning at a panel I moderated about copyright and net neutrality.

“Public Knowledge doesn’t oppose usage-based pricing,” she said. “But if you set the cap low enough you discriminate against high-bandwidth applications. “If consumers have a finite amount of bandwidth each month, they could be forced to stay away from bit-hogging sites, like video high-quality video streaming services.

Sohn seems to grasp the very real risk of rationed broadband, but drops the ball completely in not opposing the scandal that “usage-based pricing” represents for broadband users.  It was a real disappointment to see a group fail to understand the implications of these kinds of Internet Overcharging schemes.  As the industry seeks to further monetize broadband usage, these pricing changes guarantee fatter profits and reduced costs for providers, and a higher bill for rationed broadband for consumers.

Comcast’s two year old 250GB usage cap seems generous by today’s standards, but note it has remained the same, despite growing overall broadband usage.  What was generous two years ago is slightly less so today, and could be downright stingy a few years from now.

For customers stuck with providers with a different definition of “generous,” it is even more worrisome.  Rochester, New York faced the prospect of a 5GB usage allowance from the local phone company’s DSL service, or a 40GB allowance from the local cable operator.  The latter called their experiment fair, consumption-based pricing, but in reality it would have tripled the cost of broadband service for residents seeking to maintain the same level of service they enjoyed previously.  There should be plenty to oppose in a $150 monthly broadband bill.

Usage-based billing makes providers very happy counting your money

Internet Overcharging schemes involve all the ways a profitable broadband industry, enjoying record revenue and declining costs, could force consumers to pay more for the exact same service they receive today:

• The arbitrary usage cap, which ranges incredibly from 5GB-250GB per month, depending on the provider.
• The false “consumption/usage-based pricing” model which doesn’t actually charge consumers for what they use, but rather confines them into ranges of data allowance plans that carry stiff penalties for consumers who exceed their limit.  Think cell phone plan for broadband, only markup the penalty fee by several thousand percent above cost.
• The overlimit penalty or fee, which seeks to punish and monetize usage at the same time.  Customers, most of whom don’t have a clue about what a “gigabyte” is, will pay a stiff price for not intuitively knowing how much they’ll use month to month, and pay an overlimit penalty of $1-5 per gigabyte for excess usage.  That’s far above the pennies per gigabyte large providers pay, but it’s a great way to make consumers think twice about daring to use high bandwidth services like online video.
• The overlimit insurance policy, which Bell Canada introduced to protect consumers from their own rapacious pricing.  They pocket the proceeds from the “insurance” as well, picking customer pockets at every opportunity.
• The usage meter, not subject to independent scrutiny or verification.  What they say you used, you used, even if you didn’t.  Customers have learned these meters aren’t as accurate as providers suggest they are.

The fact is, customers pay for access based on speed, which has its own natural built-in usage limits.  You can’t exceed certain consumption thresholds if your service doesn’t deliver the speed required to do so.  Heavier users naturally gravitate towards faster speed, often premium-priced tiers.  Lighter users often choose “lite” plans (when the provider makes them aware they exist) which deliver lower speed service perfectly adequate for web page browsing and e-mail.  Current pricing models remain highly profitable for providers, even more so than some of the other components of their “triple play” packages.  It’s the service consumers cancel last.

With a duopoly for wired broadband service in most American communities, tolerating “usage-based pricing” that isn’t (or will be overpriced even when offered) repeats the terrible mistake Canada made which today lives with the results — pricey, slow-speed broadband and a decline in broadband rankings.  Canadians are livid about handing over considerably more of their money for throttled, usage-limited Internet access.

Public Knowledge advocates for Net Neutrality.  In terms they might better understand, advocating for Net Neutrality while also not being opposed to the industry’s definition of “network management,” defined to create an exploitable loophole, makes Net Neutrality protection meaningless.

Without a ban on such pricing schemes, providers will keep their best possible tool to stop the threat of broadband video competing with their pay television offerings, and can favor certain content partners over others with exemptions from the dreaded cap ‘n tier system.

Matthew Henry, Internet Policy Counsel for Data Foundry, a database company, said on the panel that usage-based pricing presents serious “conflicts of interest” for cable companies that provide both cable TV and Internet services.

As people watch more cable content online, as both Comcast and Time Warner are pushing with their TV Everywhere services, more demands are placed on their broadband networks.

“Companies have a real incentive to force consumers to turn off the computer and pick up the remote,” he said.

Public Knowledge should carefully consider what happens in a Net Neutral world with onerous data caps and consumption pricing that exists for some, but not all online services.  It’s an end run around the kind of open Internet we all support.

A survey conducted by International Data Corporation on behalf of Zeugma Systems, a company that makes an edge router for broadband networks, shows that consumers simply hate bandwidth caps and will likely switch to another carrier if they have the option

Over the last year, over 600 articles here have documented the abuse of consumers’ wallets from such schemes.  We’ve also shown the real world consequences this pricing has in retarding development of new multimedia applications and higher bandwidth features.  Innovative high bandwidth services seeking funding in a usage-capped world are deemed untenable if usage limits or overpriced broadband make customers think twice about using them.  In the south Pacific, online video services have been literally shuttered simply because of data caps.  Australian broadband, littered with caps and consumption billing, has become so bad the government is proposing its own National Broadband Plan to provide relief to those down under.  Public Knowledge’s position would bring that broadband backwater to America if it became commonplace here.

Make no mistake — consumers are overwhelmingly opposed to such pricing, already pay higher-than-average costs for broadband, and are threatened with even higher bills if such schemes are imposed.

Public Knowledge needs to carefully reconsider its position and get on the side of consumers who recognize highly profitable broadband providers don’t need another major payday at their expense.  Free Press understands the implications.  We respect and appreciate Public Knowledge’s hard work for consumers on other issues.  We invite them to join the consumer movement to retain fair broadband pricing.

Just like the credit card companies, once a broadband provider wedges its foot in the door with Internet Overcharging schemes like consumption billing and usage allowances, they can push it open further and further, allowing your money to fly out the door into their pocket.

Rogers Communications, the dominant cable broadband provider in eastern Canada has quietly planned to double the maximum overlimit penalty customers pay for exceeding their usage allowance.  Effective this March, Rogers will confiscate up to $50 from you for daring to cross their arbitrary allowances, which range from a piddly 2GB on their “Ultra-Lite” plan to 175GB on their $100 “Ultimate” plan.  That’s double the old maximum penalty of $25 a month.

It appears many Canadian broadband customers simply took it for granted that unlimited broadband, regardless of the tier they selected, would cost an additional $25 a month.  Many begrudgingly paid it, knowing in many areas all of the alternatives had Internet Overcharging schemes of their own.

Broadband Providers Limbo Dance: Lowering Your Value With Internet Overcharging Schemes

As Stop the Cap! has warned repeatedly, once broadband providers establish such schemes, they can begin a limbo dance with their customers, reducing the value of the service they receive by either increasing the penalties for exceeding usage limits, or simply reducing usage allowances to expose more customers to profit-padding fees and surcharges.

Rogers is taking a page from companies like Time Warner Cable that wanted to implement their own Internet Overcharging scheme in April 2009 with a maximum overlimit penalty of $100.  For broadband providers in Canada like Rogers who double such fees, there is plenty of room to grow them further.

Rogers charges customers trying to keep to a broadband budget some stunning overlimit fees as it is.  Their Ultra-Lite plan exposes customers to a future bill up to $76.00 a month, all for 500kbps service, and that’s before taxes and surcharges.  That’s because Rogers charges customers exceeding 2GB per month a whopping $5 for each additional gigabyte of usage.

Most Rogers customers end up on plans like “Express” which charges $46.99 a month for 10Mbps/512kbps service, with a 60GB usage allowance.  But with Rogers’ new overlimit penalty fee, customers opening their bills could find that service costing them $97 a month instead.  That’s a bill only a credit card company could love.

All this, when Rogers’ costs to provide broadband service continue to decline.  Rationing broadband is profitable and and shareholders love it.  Considering the  regulatory agency that is supposed to watch out for Canadians, the Canadian Radio-television Telecommunications Commission (CRTC), more closely resembles a cable and telephone industry lobbying group, there is nothing to stand in the way of even greater fee increases in the future.

Oh, and they get to throttle your broadband speed down… way down, for any online application they feel consumes too many resources on their network, so customers can’t even use the service they pay good money to receive.

Nadir Mohamed, president and chief operating officer of Rogers Communications Inc., admits it’s all about the money.  In June 2008, he told the Canadian Telecom Summit, “Usage-based billing is a reality for wired and wireless network,” he said. “The capacity is exploding, and we need to be able to monetize some of that.”

A person representing themselves as a Rogers social networking rep, “RogersMary” told customers Rogers had increased the value of their broadband service:

We always want to offer our customers great quality of service for the best value. In the last year, we have made network and technology investments that include improvements in download speeds, expanding our network in other parts of Canada and launching Rogers On Demand Online free to all customers that subscribe to any Rogers product. In terms of pricing, we have reduced higher tier services such as Extreme Plus ($69.99 from $99.95) and Ultimate ($99.99 from $149.99). Based on our research, the vast majority (90%) of Rogers Internet customers do not go over their usage limits each month and will not be impacted by changes to overage charges. If you do, I would suggest calling Care to discuss which plan best suits your Internet use.

If you call, ask Rogers which plan doesn’t include an Internet Overcharging scheme.

Wind Mobile uses "home zones" as their version of "in network" calling. Placing calls outside of your home zone is akin to "roaming" and can incur additional costs. Here is their service area in the metro GTA (Toronto-Hamilton).

The Canadian Radio-television and Telecommunications Commission has been overruled in an upset decision by the Harper government to admit new competition into Canada’s mobile phone marketplace.  Earlier this fall, the CRTC denied a license to Globalive to begin mobile service under its Wind Mobile brand, agreeing with objections from incumbent providers Bell, Rogers, and Telus that the company was not sufficiently “Canadian enough” in its ownership to operate legally in the country.  The CRTC decision upset many consumers who saw the regulatory body overprotecting the interests of the country’s three large mobile providers, effectively keeping competition out of Canada.

Canada’s version of the FCC ruled that because the Toronto-based company received most of its funding from Naguib Sawiris, an Egyptian billionaire that runs Egypt’s telecommunications provider Orascom, it disqualified Globalive from doing business in Canada.  Cell phone providers in Canada must be majority owned by Canadian citizens.

Apparently the decision was so egregiously wrong, the Harper government overturned it on December 11th.  Industry Minister Tony Clement said a government review of Globalive found the company did meet Canadian ownership requirements and reversed the CRTC decision effective immediately.

The Harper government’s direct intervention in the Globalive matter rocked Canada’s existing mobile providers.

“If Wind is Canadian, then so was King Tut,” Michael Hennessy, head of regulatory affairs for Telus, wrote on his Twitter page. “When you have no effective opposition party, you can make the rules you want.”

Rogers has repeatedly insisted there is no room for a fourth player in Canadian mobile, claiming there isn’t enough business to go around.  Stockholders apparently agreed and shares of all three incumbents dropped when the news broke that Wind Mobile was on the way in Toronto and Calgary in as little as a week.  Indeed, some analysts predict Globalive’s entry could force two of the existing carriers to merge — most likely Bell and Telus.

Rogers CEO Nadir Mohamed: “There’s no question in my mind that Canada cannot support more than three national facilities-based players,” he said in an interview with Bloomberg News the day before the government decision. “It’s inconceivable to me.”

“We think Globalive clearly does not meet the requirements for Canadian control,” Bell officials said in a statement. “We’ll be taking a close look at the reasoning behind this decision.”

Canadian consumers are excited about the arrival of competition in a marketplace with three providers charging essentially identical high pricing for mobile service.

Wind Mobile could dramatically change the the entire business model of Canada’s cell phone marketplace because most of its plans offer flat rate service for Canadian customers with no overage fees.  It also does away with the nickle-and-dime fees consumers hate, with no charges for “system access,” “911,” and other non-government-imposed fees and surcharges.  Wind doesn’t even charge for incoming text messages or received long distance phone calls.  That means text spam doesn’t cost you anything beyond irritation.

In return for not subsidizing the cost of your phone, the company doesn’t compel subscribers to remain on lengthy service contracts.  That Blackberry Bold 9700 that costs $199 on AT&T or T-Mobile’s network in the United States costs $450CDN from Wind Mobile, but no two year contract is required.

The only downside?  Wind Mobile’s network is very limited at present to Toronto and Calgary, and while service is available throughout Canada, using it will incur roaming charges around 25 cents per minute.  Most early Wind Mobile customers will likely be those who don’t roam too far from home because of these limitations.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC Coverage Wind Mobile 12-11-09.flv[/flv]

CBC Television ran extensive coverage of the government decision to admit Globalive into the Canadian mobile marketplace.  We’ve combined several reports into a single clip that explores consumer reaction, the government’s logic in permitting Wind Mobile to start service, as well as the discontent from existing providers who feel the decision is unfair.  (12/11/09 – 21 minutes)

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/CTV Coverage Wind Mobile 12-11-09.flv[/flv]

CTV News also covered the story, and included a more extensive review of what consumers can expect from the deal.  (12/11/09 – 5 minutes)

[flv]http://www.phillipdampier.com/video/Global CRTC Decision Lets Wind Mobile In 12-11-09.flv[/flv]

Global Television led its newscast with the story on December 11th, and included a pouting Telus representative.  (2 minutes)

More video coverage can be found below.

Wind Mobile Pricing & Features (provided by Wind Mobile, all prices in Canadian dollars)

Handsets / Devices:

BlackBerry Bold 9700 …… $450
HTC Maple ………………….. $300
Samsung Gravity 2 ……….. $150
Huawei U7519 ……………… $130
Huawei E181 data stick…….$150

Here’s what we don’t have:

• No system access fees
• No 911 fees
• No activation fee
• Never a charge for incoming texts
• No charge for incoming long distance calls
• No difference between plans for postpaid and prepaid
• No contracts. Our Customers stay with us because they want to, not because they have to.

What we do have:

• Nation-wide coverage with a domestic roaming partner
• Unlimited calling (incoming and outgoing) in the GTA and Calgary to start, followed by Edmonton, Vancouver and Ottawa in early 2010
• Unlimited WIND to WIND calling across Canada included on all plans
• Unlimited province-wide calling on the $35 plan
• Unlimited Canada-wide calling on the $45 plan
• Call control included on all plans (missed call alerts, caller ID, call forward, call waiting)

Wind Mobile's Voice & Text Plans

Wind Mobile's data plan has a 5GB per month "fair access policy" limit, similar to that offered by Cricket Wireless. Exceed it, and the company reserves the right to throttle your speeds until the month is up.

Watch more video coverage below.

… Continue Reading

One of the side issues of the fight against Internet Overcharging is the copyright enforcement issue.  Some members of the recording industry believe unlimited broadband promotes piracy and encourages providers to monitor customer activity to enforce copyright law.  Now the recording industry wants a global Anti-Counterfeiting Trade Agreement, part of which could include a three-strikes provision that would force your broadband provider to shut off your service for a year if you’re caught downloading copyrighted material.  The language for the agreement is being worked out, in secret, and you’re not invited to participate.

The recording industry that has hassled broadband users for more than a decade about copyright matters itself now faces a charge of rank hypocrisy as it defends itself against a $6 billion dollar copyright infringement lawsuit. Warner Music Canada, Sony BMG Music Canada, EMI Music Canada, and Universal Music Canada, the four principle members of the Canadian Recording Industry Association, are all named in the suit originally filed in October 2008.

Recording artists charge that for years Canadian record companies have used their works without permission in so-called “compilation” CD’s, containing music from many different popular artists and marketed with titles like “Top Country Music of 2009” or “Your Holiday Favorites 2008.”

Record companies use what the lawsuit describes as “exploit now, pay later if at all” business practices.  It allegedly works like this: a record company needs 12-17 songs to build a new compilation CD.  As the CD is produced, the record company adds the name of the artist and the song to a “pending list” that suggests they’ll sell first, and get the required permission and payment negotiation later.

Unfortunately for artists, that “pending list” is usually a black hole.  That list still contains lists of songs used in the 1980s, and has since grown to more than 300,000 titles.  The creation of the “pending list” loophole has provided a convenient stall tactic for the industry not to pay its artists for using their music.

Details from the court case continue to leak out, including an affidavit from David Basskin, the president and CEO of the Canadian Musical Reproduction Rights Agency Ltd.  Basskin provides a potential explanation for why the “pending list” has gone unattended for decades: “the record labels have devoted insufficient resources for identifying and paying the owners of musical works on the pending lists.”

The existence of the lists could prove to be very expensive to the Canadian recording industry because it openly admits liability to those unpaid artists.  The impacted artists seek damages up to $20,000 per song, which could result in a judgment against the industry for more than $60 billion dollars.

Those are big numbers, but some suggest they are not any bigger than the demands by the music industry for consumers to pay millions in damages for “copyright infringement.”

“After years of claiming Canadian consumers disrespect copyright, the irony of having the recording industry face a massive lawsuit will not be lost on anyone, least of all the artists still waiting to be paid,” said Michael Geist, who holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa. “Indeed, they are also seeking punitive damages, arguing ‘the conduct of the defendant record companies is aggravated by their strict and unremitting approach to the enforcement of their copyright interests against consumers.'”