Canada is a victim of Internet Overcharging, with virtually every major provider limiting access to broadband, throttling speeds, and charging overlimit penalties for exceeding arbitrary limits. Now Cogeco, which itself engages in these schemes for its residential broadband service, has made a breakthrough of sorts.

Cogeco One Zone, available only to users of Apple’s iPhone and iPod Touch, provides 802.11g WiFi across the One Zone WiFi network for only $5CAD a month. One Zone, acquired last August from Toronto Hydro Telecom, operates within a six kilometre region in the downtown core of Toronto. Users discovering the service report it can achieve speeds of up to 7Mbps, and there are no data consumption limits or contracts.

Any iPhone/iPod Touch user who accesses the network within range will automatically be taken to a special sign-up page to begin service. Cogeco One Zone’s offer represents a major discount off the pricing being charged to other One Zone WiFi users:

1 Hour
60 minutes of continuous access
$4.99 + GST and PST

1 Day
24 hours of continuous access
$9.99 + GST and PST

1 Month
Continuous access to same date in following month
$29.00 + GST and PST

(All prices are in Canadian Dollars)

So why has Cogeco decided to practically give away the service?

“Our expectation is that users won’t be using it for downloading video and huge files … It’s just the nature of the device. It’s not likely they’ll be downloading gigabytes of information standing on the street,” Cogeco Data Services president Ian Collins told itWorldCanada.

One potential use Collins may not realize has been among Toronto residents who live and work within range of the network. For some of them, Cogeco One Zone is being used from work and home, and although it is unlikely to replace residential broadband accounts that connect with home computers, some users will give the network a real workout. Should customers figure out how to tether their iPhone WiFi connection to their home computer, effectively accessing the network from a home PC or laptop, that could become an entirely new challenge.

For Canadian iPhone owners, who already face higher prices for iPhone data plans (no “unlimited” plan exists in Canada as it does in the United States), the biggest savings may come from customers downgrading data plans for “phone-based” data, because they rely on the WiFi network instead. Most iPhone owners currently pay $30 per month for 1GB or $25 for 500MB. With unlimited access through WiFi, there are no worries about exceeding data allowances.

Knowledgeable iPod Touch owners could also turn their players into Voice Over IP telephone lines using Skype or Truphone, and effectively pay just a few dollars per month for unlimited long distance calling.

For those who tried to watch the live stream from this past Monday’s Internet Town Hall from Toronto, it was a process that demonstrated the limitations of broadband service in Canada.  Evidently the hotel broadband connection was inadequate for the task, and the stream suffered ongoing video and audio problems for the duration.

An audio podcast version has now become available and is included below.  Because the event runs nearly two hours, you may wish to download the audio and listen on the go.  If you want to listen here, remember that the audio player will only work as long as you remain on this page.

Internet Town Hall On Canadian Broadband/Net Neutrality Issues – Toronto, June 8, 2009 (1 Hour 50 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Gazing into our future, unless Internet Overcharging stops before it gets started (Photo: Sean McGrath)

Americans have a lot to learn.  Our neighbors to the north have been living our broadband future, and it’s time to start paying attention.

Broadband providers that want to implement their Internet Overcharging schemes often claim that this isn’t unprecedented.  People in Canada, Australia, New Zealand, and a few other countries already face a broadband service hobbled by arbitrary limits, and ‘you don’t hear them complaining.’

Except you do.

The Canadian broadband market is remarkably similar to our own.  A very comfortable duopoly of providers – one cable operator and one telephone company provide the vast majority of Canadians with their Internet service.  Several smaller independent providers, typically reselling access to Bell Canada’s network they’ve contracted to obtain at wholesale pricing, make up most of the rest.

Five years ago, those two providers clawed each other fighting for market share, and independent providers were popping up to provide more flexible broadband accounts for those looking for lower pricing or different speeds.  Canada rose to second place in broadband among the 30 nations that belong to the Organization for Economic Cooperation and Development (OECD).

Evidently, the price and service war ended with a truce in the last 24 months.  Then came the classic signs of Internet Overcharging: new restrictions and limits on usage, overlimit and penalty fees for exceeding those limits, a slowdown in competition to build better infrastructure offering higher speeds, and even “traffic shaping,” which in reality means artificially restricting selected services moving across a broadband network.

Rogers Internet Overcharging limbo dance reduces usage allowances on new customers. (click to enlarge)

Even more irritating for customers, rate increases accompanied all of these new restrictions.  Rogers Cable, which helped get the ball rolling on Internet Overcharging schemes, raised broadband rates March 1st and then announced a “free speed upgrade” this past month, bringing their broadband speed in Toronto to 10Mbps for $45.26US per month, before taxes, with a 60GB limit and “traffic shaping.”

Customers looking for cheaper broadband from Rogers have been subjected to a reduction in the usage allowance since the Internet Overcharging schemes began.  Now, customers looking for the least expensive plan pay $26.23US per month for 500kbps “broadband” with a usage limit of 2GB per month.  Exceed that, and your overlimit penalty fee is an enormous $5.00CAD per gigabyte.  When the first Internet Overcharging scheme was introduced, “lite” customers could use up to 60GB per month.  It’s just more evidence that when broadband companies are allowed to implement Internet Overcharging schemes like this, the broadband limbo dance begins, with customers facing smaller and smaller “allowances” at the whim of the provider.

Rogers competition, primarily from Bell Canada, did what can be expected in a lightly competitive marketplace — they announced Internet Overcharging schemes of their own, trapping many Canadians into restrictive broadband service from every provider around.

Canadians hate the schemes, despite broadband industry propaganda that suggests customers didn’t mind paying more for less.

“Broadband in this country has completely stalled,” Stop the Cap! reader Brent, living near Ottawa wrote to us.

For several years, everything was heading in the right direction in Canada.  Broadband service was extending from cities into smaller towns and communities, even in the Prairies, BC and Alberta, which have much more empty space between developed communities.  Here in Ontario, Rogers and Bell are the dominant companies.  It was bad enough when Rogers starting using traffic shaping to slow down things like peer to peer services, so you often find your speeds slowing down by half or more.  Internet video is not as common in Canada because services like Hulu see the usage allowances and don’t bother to come here, because people can’t afford to watch them.  But some independent producers do have online video, that they freely distribute using peer to peer.  It’s throttled by Rogers, though, so it takes forever to load.

Then their cap came.  We get 60GB per month on our service.  I have a wife and two teenage daughters.  Everyone is online here.  Between all of us, 60GB is never enough, and we have to constantly watch them because they like to have friends over to do things on the computer together.  We have to keep track of everything they do, and there are fights all of the time about who used what.  You can never relax when you are online anymore, because you have to always be worried about what something might cost you.

Even worse, Rogers interferes with your service when you reach 75% of your allowance by injecting a warning banner on your web browser to tell you that you are approaching your limit for the month.  That process forces their announcement onto web page after web page, and you’ll know it because half the time those pages with a warning banner take much longer to load, if they load properly at all.  It doesn’t matter what page you are looking at, or who runs it.  Rogers feels they can put their banner on it.

I spent two weeks in the States at a friend’s home who had Verizon FiOS and I couldn’t believe the difference.  Using Canadian broadband and comparing it to Verizon FiOS is like the difference between dial-up service and the broadband service we used to have in this country.

Bell is now going to force limits on wholesale accounts as well. All of the independent companies that don’t currently have caps and allowances will now have to impose them, cutting off the last competitive choices we had.  It’s a nice racket.

Reading the American papers, it’s all familiar to me.  It’s the same things we were told.

• There are “Internet hogs” using “too much service” so we have to charge them more.
• We have to use the extra money to build better networks.
• We need to traffic shape to make sure everyone can use our service.
• It’s about fairness for everyone.

No. It’s about getting more money from you and pocketing it.  The people they stereotype as “Internet hogs” turn out be ordinary families.  Just because we may not know about some of the Internet cutting edge services becoming available, our kids do.

Canada’s providers aren’t using the all the extra money to build better networks, they are just treating them as profits.  Our speeds are still slower than Americans get. They reduced the usage allowances on many people even further. They still traffic shape even on the networks they claim they were “improving.”  Everyone’s Internet bill went up.  Nobody is saving anything.  There is nothing fair about duopoly pricing.

Dr. Michael Geist

Brent’s point about Bell Canada imposing Internet Overcharging schemes on their wholesale business accounts rings familiar.  Earthlink wanted to sell its broadband Internet service that travels across Time Warner Cable’s lines at the current unlimited pricing they charge today.  Whether they would be allowed to do so under TWC’s original Internet Overcharging proposal was highly doubtful.

Independent providers in Canada are upset about Bell Canada’s attempt to impose new limitations on their wholesale accounts, because it threatens their existence.

Two weeks ago, Dr. Michael Geist appeared before the Standing Committee on Transport and Communications to discuss the state of telecommunications in Canada.

Geist, a law professor at the University of Ottawa and noted expert on the state of Canadian broadband, called the developing situation in Canada “a crisis.”

Limiting competition and throwing your duopoly weight around has been a hallmark of insufficient oversight and regulatory control in under-competitive markets and Geist brought examples of providers engaged in mischief:

• Telus blocked access to a union supporting website during a labour dispute, blocking more than 600 other sites in the process
• Shaw advertised a $10 premium surcharge for customers using Internet telephony services opening the door to creating a competitive advantage over third party services
• Rogers currently degrades the performance of certain applications such as BitTorrent, widely used by software developers and independent film makers to distribute their work
• Bell openly throttles BitTorrent traffic, a practice that has been challenged before the CRTC

Bill St. Arnaud

Competition can provide some answers, but not all.  It’s obvious new laws are required to put a stop to Internet Overcharging while real competition can develop.

As Stop the Cap! has documented, when fed-up municipalities reject their status as a “broadband backwater” and seek to deploy the advanced fiber networks that they need to spur economic growth and development, incumbent providers engage in lawsuits and delay tactics.  But in many communities, in the end, the threat of municipal competition finally forces those networks to commit to the upgrades they refused to provide earlier.

Bill St. Arnaud, Chief Research Officer for CANARIE, ponders Canada’s future as the country slips further and further behind in OECD rankings because of the broadband duopoly in the country.  Speaking with CBC Radio’s Nora Young, who hosts Spark, a twice-weekly radio program about technology and culture, he contemplates a solution to this problem that builds on the Obama Administration’s broadband stimulus program in the United States — by publicly funding an advanced “fiber to the home network” and then open it up to all providers to compete for customers.

Audio Clip: Bill St. Arnaud Appears on CBC Radio’s Spark – June 3, 2009 (11 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Live Coverage of SaveOurNet.ca‘s National Open Internet Town Hall, netcasting from Toronto has now concluded.  Unfortunately, connectivity issues at the hotel plagued the live streaming event, and a good deal of it was not available on the live stream.  A recording of the presentation should be forthcoming shortly, and will be embedded in this space, when available.

Fact vs. Fiction: Five Myths About Net Neutrality (click to read document)

A coalition of consumer groups, educators, and online activists have called on Canadian public utilities and municipalities to explore the construction and implementation of fiber optic networks to combat Canada’s deteriorating position in broadband service.

Steve Anderson, writing for The Tyee, opined in a Mediawatch column that “big telecom’s monopolistic control over the net is threatening to leave Canada with a last generation Internet.”

In the 2009 Federal budget, the Conservative government pledged to commit $225 million over the next three years for broadband to unserved communities.  By contrast, Australia, which has a similar geographic breakdown to Canada, is reportedly committing AU$4.7 billion to a similar initiative. Not only is the Conservative’s commitment relatively weak, it also does little to get Canadians hooked up to next generation networks.

Anderson complains the current competitive lock on broadband is unlikely to be broken by commercial providers, unwilling to compete for access.  Instead, Anderson suggests municipalities, community-non profits, and public utilities should fill the gap and provoke competition.

University of Toronto professor of Information Studies Andrew Clement points out that municipalities “have many critical assets, including significant financial resources, control over rights of way, as well as experience in developing and operating other complex, capital-intensive infrastructures, such as roads, waterworks, and transportation systems.” In fact, many municipalities own high-speed fiber networks that they can utilize relatively easily for Internet service provision.

There are successful public, municipal owned broadband networks now providing service in some cities in Canada.  Fredericton, New Brunswick’s award winning fiber and wi-fi network is a partnership co-op with the city government.  Wi-fi service is provided free of charge to all citizens, one of the reasons the city was congratulated for being one of the “communities or regions with a documented strategy for creating a local prosperity and inclusion using broadband and information technology to attract leading-edge businesses, stimulate job creation, build skills, generate economic growth, and improve the delivery of government services.”

Anderson criticizes Canadian broadband for being usage capped and throttled, a victim of lack of Net Neutrality protections.

A public interest organization SaveOurNet.ca is sponsoring a series of Open Internet Town Halls in Toronto, Ottawa, and Vancouver to engage citizens in discussions about the future of the Internet. Through live video streaming, the town halls will be available to a national audience on theREALnews.com, rabble.ca, TheTyee, Beyond Robson, SaveOurNet.ca, and other participating websites.

People from across Canada are encouraged to watch and engage with the first Open Internet Town Hall meeting at 7:30pm on Monday June 8th. The Canadian equivalent of the FCC, the CRTC, will be holding hearings on Net Neutrality issues on July 6th.

StoptheCap! will provide additional coverage of the SaveOurNet event Monday.  Americans can and should pay attention.  Canada’s abusive provider practices may very well be forthcoming in the States soon enough.