Canadian Netflix subscribers will pay up to $3 more a month in the coming weeks for streaming video as the company raises prices to produce more original Canadian content.

The latest rate increase is the largest ever for the service in Canada.

New Rates for Netflix Canada

• Netflix Basic increases $1 to $9.99 a month. No 4K video and one-stream only
• Netflix Standard increases $3 to $13.99 a month. No 4K video and up to two streams at a time viewing
• Netflix Premium increases $3 to $16.99 a month. Includes 4K ultra HD video and up to four streams at a time viewing

The new rates take effect today for new customers. Existing customers will be notified by e-mail about the rate increase and when exactly it will be applied to their account.

Netflix Canada has taken over distribution of the long running mockumentary filmed in Nova Scotia.

The last rate increase in 2016 raised the price of Netflix by $1.

Netflix Canada spent $3.3 billion on original content in 2017. That is more than any of Canada’s English language commercial networks or broadcasters spent on scripted productions. Netflix also films many of its original productions in Canada, which is less expensive than many American filming locations.

Netflix Canada appears to have found a formula that works for the streaming service: participating in co-productions with entities like the CBC (at least for English productions) and asking subscribers to pay more to cover the company’s costs. This has spared Netflix from having its service subject to the federal GST, which would come out of subscribers’ pockets.

The company has had a much more difficult time dealing with the provincial government in Quebec, which protested loudly that Netflix Canada failed to make specific French language content commitments. As a result, Quebec has slapped its 9.975% sales tax on Netflix and all other streaming services.

Canada is gradually catching up to the United States in cord-cutting options. Netflix Canada’s offering is just a few hundred titles behind Netflix’s catalogs in the United States and Japan.

Other services have entered Canada in the last year or so, including CBS’ All Access, Acorn TV, and BritBox.

In response, Canadian broadcasters and telecom companies are beefing up their own services, which include CTV Movies/CTV Vault and Citytv Now/FX Now (which are only for authenticated cable/satellite subscribers) and Bell’s Crave TV (which just launched CraveTV+, offering more movies and original HBO shows).

Rationing Your Internet Experience: Stick to e-mail and web pages.

This week’s news that the alleged owner of a Wireless ISP serving parts of New England may have fled the country to avoid an investigation by the Securities and Exchange Commission on an unrelated digital currency matter has left about 1,000 Vermont customers of GAW Wireless with no certain future for their Internet Service Provider.

As the “Geniuses At Work” came under pressure from public accusations the company was running a scam on digital currency investors, so went the performance of GAW Wireless. In February, a two-week service outage left many customers without telephone and Internet service. This month, e-mail accounts stopped working for some and nobody appears to be answering the firm’s customer service line. Even Vermont’s Attorney General cannot find the owner.

While Wireless ISPs (WISPs) can be a good option for North America’s unserved rural communities, they are not always the best choice, especially as customers continue to gravitate towards high bandwidth applications like Netflix.

Some rural WISPs have kept up with customer demand and continue to offer good service. Others have educated customers about being a good steward of a limited resource by showing courtesy to other customers by self-limiting heavy traffic applications to off-peak hours.

But other providers have chosen usage-discouraging data caps or usage-based billing to cover up for their inadequate infrastructure investment. In Nova Scotia, Eastlink’s new 15GB monthly usage cap on rural customers is nothing short of Internet rationing, completely ignorant of the fact most customers have moved beyond the Internet applications Eastlink envisioned them using when it built its network in 2006. Nearly a decade later, it is ridiculous to suggest customers should be happy continuing to pay almost $50 a month for a 1.5Mbps connection designed for e-mail, basic web browsing, and occasional dabbling into downloads, music, and video.

Come for the view but don’t stay for the wireless broadband.

Some angry customers suspect Eastlink is simply being greedy. We believe it is more likely Eastlink’s existing wireless network is no longer adequate for the needs of Nova Scotians (or practically anybody else in 2015). The evidence that congestion is the real problem was supplied by customers who have noticed the network’s performance has slowed over the last few years. That is a sign the network is either oversold — too many customers trying to share the same bandwidth limited resource — or has become congested because of the growth of Internet traffic generally. It might even be both.

Implementing draconian usage caps only alienates customers and suggests Eastlink wants to collect as much revenue as it can from a resource that should either be vastly upgraded or retired in favor of superior technology. We have not seen anything from Eastlink that suggests major upgrades are on the way. In fact, the only conclusion we can make from Eastlink’s public comments is they think equal access to an inadequate resource is fairer than actually upgrading it.

Eastlink claims nobody could have envisioned Internet traffic growth from the likes of Netflix. In fact, equipment manufacturers like 3Com and Cisco were issuing scare stories about Internet brownouts and future traffic exafloods since December, 1995 — the year before Eastlink planned its Nova Scotia wireless network. Smart network planners have kept up with demand, which has been made easier by technology improvements accompanying the increased traffic. A good ISP recognizes upgrades are continual and essential to keep up with customer needs. A bad ISP introduces a rationing usage cap and claims it is only trying to be fair to every customer.

Phillip “Fiber is Good for You” Dampier

Usage caps and usage-based billing have never been about “fairness.” We’ve seen all sorts of usage enforcement schemes imposed on customers since 2008 when Stop the Cap! was founded. In each instance, usage caps were only about the money. Eastlink customers will not see any rate decrease as a result of its rationing plan, giving users less value for their broadband dollar. If an Eastlink customer confines use of their high traffic applications to the overnight hours, when they would cause little or no congestion, they will still eat into their monthly usage allowance.

All the benefits of usage caps accrue to Eastlink, either by reducing traffic on its network and allowing the company to delay necessary upgrades, or by pocketing the inevitable overlimit fees, which may or may not go towards upgrades. In our experience, the case for spending capital on network upgrades has never depended on overlimit fees collected from subscribers squirreled away in a separate bank account.

This is why communities in Vermont, Nova Scotia and beyond should strongly consider investing in fiber optics for broadband delivery and consider wireless only for the least populated areas. A broadband project in rural western Massachusetts can offer a guide to resolving the ongoing problem of unserved or underserved communities ignored by commercial providers. Deprived of upgrades from Verizon and shunned by Comcast and Time Warner Cable, the residents of these towns continue to vote overwhelmingly in favor of fiber optics.

The WiredWest approach is a solid solution. The initiative secures bond authorizations from each participating town in a public vote backed by deposits of $49 per household, held in escrow to be later used to cover the first month of broadband service when the service launches. Each town must have at least a 40% buy-in from residents, providing strong evidence the project has a solid customer base, is financially viable, and can recover construction costs and pay off the bonds estimated at $100-120 million within a reasonable amount of time. The state legislature contributed an additional $40 million dedicated to last mile infrastructure — the cost to wire each home or business. (In contrast, Nova Scotia and the federal government spent $34 million subsidizing the Eastlink wireless network in 2007 that has not aged well. Fiber optics is infinitely upgradable.) By choosing fiber optics, instead of getting rationed, slow speed, or no Internet service, WiredWest towns will be able to subscribe to 25Mbps for $49 a month, 100Mbps service for $79, or 1,000Mbps for $109 a month
.

In comparison, Eastlink charges $46.95 a month for “up to” 1.5Mbps with a 15GB cap and GAW Wireless (when working) charges $39.95/mo for “up to 7Mbps.”

A plan to place a 15GB monthly usage cap on Eastlink broadband service in rural Nova Scotia has led to calls to ban data caps, with a NDP Member of the Legislative Assembly of Nova Scotia leading the charge.

NDP MLA Sterling Belliveau is calling on the Liberal government to prohibit Eastlink from placing Internet data caps on rural broadband.

“This newly announced cap really sends us back to the 1990s when it comes to technology,” Belliveau said in a news release Tuesday. “The province paid $20 million to bring this service to rural communities, and as such, the Minister of Business needs to tell Eastlink this can’t stand.”

Belliveau’s office is being flooded with complaints from residents and business owners upset about Eastlink’s data cap, which includes a $2/GB overlimit fee, up to a maximum of $20.

“Only rural customers get penalized for using the Internet,” complained Angel Flanagan on Twitter. “We can’t have Netflix or YouTube. Eastlink, stop this cap and upgrade your services and give us better Internet. We don’t need to use it less.”

“I am so angry about the Internet capping,” said Emma Davis. “Eastlink you are out of your goddamn minds. Rural Nova Scotia is entering the Dark Ages.”

Eastlink’s Rural Connect package is a wireless service, delivering speeds up to 1.5Mbps at a cost of $46.95 a month. The service is provided where wired providers are generally not available, including Annapolis, Hants, Digby, Yarmouth, Queens, Lunenburg, Shelburne and Kings counties. Eastlink says its new usage cap was designed to accommodate “intended usage like surfing the web, reading/sending emails, social media, e-commerce, accessing government services, etc. — and NOT video streaming, for which the service was not intended.”

Belliveau

Eastlink’s continued dependence on a low capacity wireless network platform has conflicted with the changing needs of Internet users, who increasingly use high bandwidth applications like streaming video that can quickly clog wireless ISP traffic.

When the service was designed, the popular video streaming service “Netflix was shipping DVDs by mail,” says Eastlink spokesperson Jill Laing.

The cap was implemented to “address Internet traffic, which we believe will help provide equal access to the service and deliver a better overall rural Internet experience for customers,” Laing wrote.

Eastlink says the average customer uses about 12GB of traffic, excluding video streaming. Setting a usage cap at 15GB should not be a problem for customers who stay off Netflix, argues the ISP.

“Those who are using the service as it was intended to be used should not be impacted by monthly usage,” she wrote.

The fact Eastlink labeled some traffic legitimate while video streaming was discouraged did not go over well with customers.

“Who made them Internet Gods when our provincial tax dollars helped finance their Internet project,” asks Al Fournier. “The very fact they would suggest a 15GB cap with a straight face in 2015 should be ringing alarm bells in Ottawa about the rural broadband crisis in Canada.”

Fournier suspects Eastlink has not invested enough to keep up with a growing Internet because the service originally advertised itself as a way to listen to online music and watch video. But he also wonders if the data cap is an attempt to force the government to fund additional upgrades to get Eastlink to back down.

“This is why wireless ISPs suck for 21st century Internet,” Fournier argues. “They are incapable of keeping up with growing traffic and bandwidth needs and need to be retired in favor of fiber.”

But at least one wireless provider in Nova Scotia does not understand why Eastlink is making a fuss over data caps.

Cape Breton’s Seaside Wireless Communications offers Internet access in Antigonish, Cape Breton, Colchester, Cumberland, Guysborough, Inverness, Pictou, Richmond and Victoria counties, along with rural parts of Halifax County, and has no data caps.

“It is not even on our radar,” said Loran Tweedie, CEO of Seaside Wireless. “This is a differential we are proud of.”

Some Nova Scotians are also questioning why their Internet service is being capped while rural Eastlink customers in Newfoundland, Labrador and Ontario can continue to use the Internet cap-free, at least for now. Others are suspicious about the future of Eastlink’s maximum cap on overlimit fees, currently $20. Canadian providers have a history of raising the maximum cap, subjecting customers to greater fees.

“It’s hard to speak to what will happen over time. We’ll certainly evaluate where we’re at later in the fall,” said Laing.

Liberal provincial Business Minister Mark Furey said he was aware of Eastlink’s rural broadband data cap but only promised to monitor the situation for now.

Starting next month, Eastlink’s rural Internet packages will be capped at 15 gigabytes of usage per month. CBC Radio Nova Scotia’s “Information Morning” program speaks with Eastlink and Port Royal resident Gary Ewer about the impact the usage cap will have. (10:15)

You must remain on this page to hear the clip, or you can download the clip and listen later.

Bell Aliant’s FibreOp fiber to the home service may suffer as Bell/BCE redirects upgrade investments into shareholder dividend payouts.

Bell Aliant customers in Atlantic Canada won’t benefit from Bell Canada’s (BCE) efforts to take subsidiary Bell Aliant, Inc. private unless they happen to be shareholders.

In July, Bell Canada Enterprises announced its intention to privatize Bell Aliant, which serves customers in Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland and Labrador, expecting at least $100 million a year in savings from reduced operating costs and capital investments.

Bell Aliant has operated largely independent of Bell Canada from its headquarters in Halifax, N.S. Bell Aliant customers have received FibreOp fiber to the home upgrades in several Atlantic provinces in recent years, providing more advanced services than Bell’s fiber to the neighborhood platform Fibe in Ontario and Quebec. Bell Aliant customers have also avoided usage caps and usage-based billing, getting access to unlimited use broadband at speeds up to 400/350Mbps.

Politicians in Nova Scotia immediately raised the alarm about the possibility of job cuts. Both Tory and NDP opposition leaders complain the Liberal premier has not done enough to protect jobs.

Bell Canada Enterprises

NDP MLA Dave Wilson said all three parties agreed to work on economic issues for the province. Wilson said he fears if the government isn’t vocal about its support for the jobs, Bell might look to move them elsewhere.

The news is better for those holding stock in the company. Existing public minority shareholders are being offered cash or shares of BCE stock (or a combination of both) in return for selling their Bell Aliant stock.

Bell wants to take Bell Aliant private to get access to its consistent $1 billion in cash revenue earned annually, mostly to satisfy BCE shareholders with a more reliable and consistent dividend payout.

Although Bell promises it will continue to invest in Atlantic Canada, its own financial disclosures show customers in the region will see spending on upgrades and other service improvements cut as a result of Bell’s actions.

Bell has committed to spending an average of $420 million a year across Atlantic Canada, but as an independent, Bell Aliant was investing $578 million annually, primarily on fiber upgrades. Over the next few years $160 million of the investment budget will be diverted to maintain a healthy divided payout for BCE stockholders. As of May 2014, BCE was paying a dividend of $0.6175 per quarter with common shares outstanding of 777.3 million, for a quarterly dividend payout of about $480 million per quarter, or $1.92 billion per year. As Bell Aliant shareholders cash out their holdings or convert them to BCE shares, the growing number of BCE shareholders will require Bell to spend more to satisfy dividend payouts. In fact, BCE may transfer enough money out of Bell Aliant’s operations to raise its dividend for all BCE shareholders to attract new investors.

Reduced spending will mean reduced upgrades for Bell Aliant customers. Bell is not promising significant cost savings from merger-related synergy, so capital spending will likely suffer the most as a result. So will customers.

Canadian investment analysts are recommending that Canada’s telecom giant Bell (BCE) should explore buying out Bell Aliant, Inc. the largest telephone company in the Maritimes, to further consolidate Canada’s telecommunications marketplace.

Bell already effectively controls the phone company serving provinces east of Quebec through its 44 percent stake in the venture. Picking up the rest through a takeover would make financial sense, said Maher Taghi, a telecom analyst at Canada’s Desjardins Securities.

The Globe and Mail reports Yaghi explained in a note to investors a buyout would boost overall free cash flow for Bell (BCE), primarily from the increased revenue paid by customers for phone, television, and Internet service.

Bell Aliant has been one of Canada’s most conservative telecom companies serving the country’s smallest provinces in Atlantic Canada, as well as parts of rural Ontario under the NorthernTel brand and Télébec, which serves rural Quebec.

Unlike Bell (BCE), Bell Aliant has aggressively deployed fiber to the home service in New Brunswick, Prince Edward Island, and Nova Scotia to stem landline losses. Bell Aliant’s FiberOP customers avoid stingy usage caps that are pervasive across the rest of Canada. Its fiber network delivers strong competition to cable operators.

Bell (BCE) is already a major player in Canadian telecommunications, both with its landline operation and Fibe — mostly a fiber-to-the-neighborhood service — wireless phone and broadband, owner of more than two dozen specialty cable networks, a satellite TV service, owner of the CTV television network, new owner of Astral Media, and a few dozen radio stations across Canada. With this level of media concentration, Bell (BCE) would have a tough time trying to buy any additional media assets, but with its current de facto control, Bell would likely have little regulatory scrutiny merging Bell Aliant into its existing operations.

[flv]http://www.phillipdampier.com/video/Bell Aliant FiberOP Intro Video 1-2014.flv[/flv]

Bell Aliant’s FiberOP introductory video explains the network and its features for Atlantic Canada. (2:20)