Prime Minister Harper's government is facing an open revolt by Canadian consumers over Internet Overcharging.

A full-scale revolt among consumers across Canada has brought the issue of Internet Overcharging to the highest levels of government.

A spokesman for Prime Minister Stephen Harper said the government is very concerned about a decision from the Canadian Radio-television and Telecommunications Commission that has effectively forced the end of unlimited use broadband plans across the country.

Both the Liberal and NDP parties have made a point of protesting the CRTC decision, which happened under the Conservative Party’s watch.  Harper’s Industry Minister Tony Clement stepped up his remarks this morning which hint the government is prepared to quash last week’s decision by the CRTC, which has already forced price increases for broadband service across the country.

“The decision on its face has some pretty severe impacts,” Clement told reporters in Ottawa after NDP and Liberal critics in the House of Commons repeatedly pounded the government on the issue of so-called “usage-based billing.”

“I indicated the impacts on consumers, on small business operators, on creators, on innovators. So that’s why I have to work through a process, cross my T’s, doc my I’s. When you’re dealing with a legal process, that’s what you have to do. But I will be doing that very, very quickly, and getting back to the prime minister and my colleagues very, very quickly,” said Clement.

As of this morning, more than 286,000 Canadians have signed a petition protesting the Internet Overcharging schemes.

The protest movement has now been joined by small and medium-sized business groups who fear the impact new Internet pricing will have on their businesses.

Richard Truscott, with the Canadian Federation of Independent Business, normally a group that prefers less government action, said his members are demanding a stop to the pricing schemes before they get started.

“The vast majority of small businesses rely on reasonably-priced Internet service to conduct their operations,” he said. “Generally this is the sort of thing that hits the most innovative sector with higher costs.”

Most cable and phone companies are lobbying Ottawa politicians to keep the new usage-based billing schemes, and several are pretending the protest movement doesn’t exist.

AgenceQMI, a cable-company owned wire service, is also coming under fire for misrepresenting Clement’s positions on the pricing schemes in a news report issued yesterday.  The wire service claimed Clement supported the CRTC’s position, something Clement adamantly denied this morning.

The National Post, a self-described conservative newspaper, this morning published an editorial supporting usage-based pricing, claiming a handful of users were creating a problem that light users should not pay to solve.  But many readers leaving comments on the article strongly disagreed, claiming the newspaper is out of touch.

Although the regime of usage caps, speed throttles, and overlimit fees have been in place with most major providers for at least two years, the culmination of several events in the last six months have brought the issue to the boiling point:

1. The arrival of Netflix video streaming, which provides unlimited access for a flat monthly fee;
2. The ongoing limbo dance among several providers who are reducing usage allowances when competitive threats arrive;
3. The increase in providers now enforcing usage limits by billing consumers overlimit fees that spike broadband bills;
4. Recent examples of bill shock, which have left some consumers with thousands of dollars in Internet charges.

Bill Shock

Kevin Brennan, a graphic designer who works from home and downloads large files from clients, was first hit with extra charges in November, which cost him $34 above his usual Shaw bill.

“I’d never been contacted about going over before,” he told the Calgary Herald, adding he was also over in December. “Thirty-four dollars doesn’t seem like much, but over the course of a year it adds up.

“What concerns me, outside my own business, is the lack of innovation people will be able to do. And it makes Shaw a monopoly. . . . if you watch TV or the Internet, you pay more to them.”

Shaw reduced its usage allowance for customers like Brennan late last year from 75 to 60GB on its most popular broadband plan.  It also now enforces a $2/GB overlimit fee.

John Lawford, counsel for the Public Interest Advocacy Centre, told the Herald the concern isn’t just that smaller companies can no longer offer unlimited plans, which reduces competition.

“The phone and Internet and cable companies of the world are playing it both ways. They’re saying, ‘Well, there’s these big data hogs that are using too much, we’ve got to punish them to keep the price down.’ On the other hand they’re buying media companies so they have stuff to shove down the wires, which doesn’t count toward your cap,” Lawford said. “That’s anti-competitive.”

Most Canadian media companies are now tightly integrated with large telecommunications companies.  CTV, Canada’s largest commercial network, is now owned by Bell, the country’s biggest phone company.  Rogers, Shaw, and Videotron — the largest cable companies in Canada own cable and broadcast stations, newspapers, and magazines.  They also control cellphone companies, Wi-Fi networks, and have interests in satellite providers as well.

When a competitor like Netflix arrives to challenge the companies’ pay television interests, turning down consumers’ broadband usage allowances discourages cord-cutting.

The CRTC’s decision to allow Bell to charge usage-based pricing for wholesale accounts was the final death blow to unlimited Internet according to several independent service providers, because virtually all of them rely on Bell — a company that received taxpayer subsidies to build its broadband network — for access to the Internet.

Canadian Parliament

TekSavvy, a company that used to offer unlimited use plans, can do so no more.  In a statement to customers, TekSavvy laid blame on regulators for being forced to increase prices.

“From March 1 on, users of the up to 5Mbps packages in Ontario can expect a usage cap of 25Gb (60Gb in Quebec), substantially down from the 200Gb or unlimited deals TekSavvy was able to offer before the CRTC’s decision to impose usage based billing,” read a statement sent to customers.

TekSavvy spokeswoman Katie do Forno said the CRTC decision is a disaster for Canadian broadband in the new digital economy.

“This will result in unjustifiably high prices and a reduction in innovation,” said do Forno. “I think it’s going to change behavior about how people use the Internet.”

The company underlines the point by including “before and after” pricing schedules on its website, an unprecedented move.  Shaw, western Canada’s largest cable company, was heavily criticized for trying to hide their reduction in usage allowances.

Ottawa residents are planning direct action to protest the decision this Saturday.  Shawn Pepin is organizing the protest rally.

“What they’re doing right now looks like a cash-grab scheme, and people aren’t going to take it,” he said.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC News Pay As You Go Tony Clement 2-1-11.flv[/flv]

Minister of Industry Tony Clement was pressed by CBC Television about the Harper Government’s stand on Internet Overcharging.  The CBC asks why Canadians are paying some of the world’s highest prices for broadband and why Clement is finally getting involved.  Watch as he mysteriously avoids stating the obvious: Canadians are in open revolt and politicians from competing parties are taking their side.  (9 minutes)

Haggling for a better deal from your telecommunications provider is beginning to resemble buying a car.

Less than a day after writing up our experiences with the Customer Retention Department of Time Warner Cable, there have been new developments.

Because our account was configured for a disconnect, a Time Warner retention specialist called us, this time from Albany, N.Y.  His role — to win us back as a Time Warner customer.  His office formerly called customers who turned in their equipment and canceled service, but now that the company is losing more cable-TV customers than it adds, they are now trying to stop disconnects at all costs.

Incredibly, this high-level office was authorized to provide deals even Time Warner’s regional office could not touch.

The best deal we could negotiate with the Buffalo office included the company’s triple play package, Road Runner Turbo, one DVR box and one digital set top box for $132 a month.

That was until we received a call this morning with an offer that blew that out of the water — $79.95 a month for the company’s triple-play package including a year of free DVR service. Putting the two packages together to compare pricing, Albany’s Time Warner office was willing offer that same package for $106.90, plus tax.

That’s a difference of $25 a month.

That’s quite a difference.

But then, on cue, Time Warner proved our earlier point about confusing and conflicting information being thrown at customers.

Minutes after agreeing to that offer, which would have cut some additional red tape from the earlier deal, we were called back and told the deal fell apart, at least temporarily.

It seems customers who agree to an earlier offer end up locking themselves out from something even better.  Because we worked with another retention specialist who partially entered an order into the system, and despite the fact the company called us with something better, they reneged on the better offer.

“I can’t even begin the order,” we were told.  “As long as a pending order is in place, there is nothing we can do.”

We found it odd the company would call us with an offer we couldn’t get.  We were then told that office is authorized to make offers to customers who:

• downgrade to one service;
• have a pending disconnect order;
• actually disconnect service.

We asked if we pulled out of our earlier retention deal, would we then be qualified to proceed with his?  He repeated the three conditions and said he’d love to offer us something but until one of those conditions were in place, he could not.

Hint. Hint.

It’s remarkable Time Warner would offer customers one deal they insist was the best available price, only to have another employee cut $25 off the top without breaking a sweat.  It’s quickly reminding me of my last car buying experience — always a major headache.  So many tricks, traps, and games.

We’ll be bringing this whole matter up with the company shortly.

In the meantime, we’re going to modify our advice to customers searching for a better deal.  Call and schedule a disconnect or downgrade of your service two weeks out, tell the agent you are not prepared to discuss a retention deal, and then wait for them to call you a few days later.  Ours originated from the Time Warner Sales Center at 1-877-726-0712, for those who check caller ID.

Ask about the triple play $79 offer that includes a year of free DVR service.

Oh, and about the free “DVR service.”  We learned Time Warner no longer considers the “service” the same as the “box.”  This word salad means customers pay about $8 and change for the DVR hardware, but get the “service” that let’s you record shows on the equipment for free — a $3 value.

We told you it was confusing.

[Updated: 1:02pm ET — We just spoke with Time Warner Cable, who apologized for the confusion over pricing and the follow-up retention call we received.  Time Warner Cable will honor any offers made by any of their agents, so with the assistance of a supervisor, we were able to take advantage of this offer after all.  They even threw in free Turbo service for a year, free Showtime, and gave us a “whole house DVR” at a special rate, bringing the total out of the door price to around $116 a month, including all equipment.  When Road Runner Extreme (30/5Mbps) service arrives, that will run an additional $10 per month.  The entire ordeal netted us almost $60 a month in savings, more if we didn’t upgrade to the “whole house DVR.”]

Phillip Dampier: The Blizzard of BS from Canadian ISPs is getting salted and plowed by Canadian media and outraged citizens.

A major ongoing Internet Overcharging campaign by Canadian Internet Service Providers to extract more revenue from consumers has sailed under the radar for more than two years now in most of the Canadian press.  Although some newspapers have occasionally covered various telecommunications atrocities related to cell phone pricing, lagging broadband speeds, and an overall lack of competition in the country, specifics about efforts to curtail broadband usage (or monetize its claimed “overuse”) has been a topic mostly discussed on online forums.

No more.

As Stop the Cap! turns more attention to Canadian Internet Overcharging schemes, let this be an object lesson to our American readers about how the game is being played.  What starts in Canada could finish American flat rate broadband as well.

CRTC Ruling Lights the Flame

This week, the Canadian Radio-television and Telecommunications Commission (CRTC) finalized rules that will effectively end unlimited broadband service in the country.  Remarkably, the Commission’s ruling completely ignores the one group such “usage-based billing (UBB)” impacts the most: individual customers.

The game-changing rules, found in the obliquely-named “Telecom Decision CRTC 2011-44,” effectively establish false usage-based pricing on both the wholesale and retail levels.  No provider will actually sell broadband packages that charge only for what a consumer actually uses.  Instead, each provider will set arbitrary usage allowances — usage limits — on their broadband accounts.  Any remaining unused allowance is forfeit at the end of the month, but “overuse,” at the discretion of the provider, will be penalized with overlimit penalty fees running several dollars per gigabyte.

The CRTC acknowledges, and big providers admit, these Internet Overcharging schemes are all about getting consumers to change their online activities.

[Providers] submitted that UBB rates shape end-user behaviour and that different UBB rates would lead to different behaviours by carriers’ and competitors’ end-customers.

Perish the thought.  Without such pricing, Canadian broadband could ultimately offer an alternative to overpriced cable-TV and telephone packages sold by the very providers that advocate limited use plans.  Providers insist on predictable, uniform usage.  The Commission apparently agrees.

The Commission even acknowledges today’s unlimited use plans in Canada almost always recover the actual costs incurred to provide them, and then some:

The Commission also notes that the flat-rate component of the carriers’ retail Internet service rates recovers most, if not all, of the associated retail UBB costs. In the Commission’s view, this situation provides carriers with the flexibility to adjust or waive retail UBB rates on a promotional basis.

With this in mind, why the CRTC felt radical changes were warranted is only a mystery until you realize most of the commissioners were former employees of the various telecommunications companies themselves.

Birds of a feather….

The only audience the CRTC listens to.

All of the falderal about the merits of UBB aside, in the end the CRTC threw a small bone to independent service providers not affiliated with super-sized players like Bell, Rogers, Shaw, and Videotron — the Commission ordered they be given a “whopping” 15 percent price break off wholesale rates.

Major carriers were outraged even by this token amount, arguing that providers forced to charge correspondingly higher prices (higher than major carriers charge) could still eke out a place in the market by offering other services or better support.  They didn’t need, or deserve a discount.

But independent competitors warned without discounts approaching 50 percent, many will be gone within five years.  Many providers argued the major companies, some who received taxpayer subsidies to construct national telecommunications networks, would be able to set wholesale prices artificially high to drive them out of business.

Canada’s Media Reacts

The effective end of flat rate service across Canada finally sparked significant national media coverage of the imminent death of Canada’s broadband revolution, soon to be relegated to a nickle-and-dime metered pricing scheme that will give providers the monetary power to control usage, limit innovation, and have their hands into picking marketplace winners and losers.  Don’t like Netflix?  Slash usage allowances.  Want to protect your cable-TV revenue?  Exempt your own online content from the meter as long as you keep your subscription.  Want to drive down Canada’s broadband standing in the world?  Turn the marketplace over to a handful of companies dreaming of revenue opportunities afforded by monetizing broadband usage.

The Globe and Mail — A metered Internet is a regulatory failure: The CRTC has decided to allow Bell and other big telecom companies to change the way Canadians are billed for Internet access. Metering, or usage-based billing (UBB), will mean that service providers can charge per byte in addition to their basic access charges. The move is sure to stifle digital creativity in Canada while the rest of the world looks on and snickers.  […] So there you have it. Just as the world is ready to feast on what Canadians might cook up in the way of multimedia 3.0, Canada decides to meter the Internet, tilting the table sharply towards old-school TV networks and big corporations that can absorb the higher cost of doing business.

Canadian newspapers have covered the story in the greatest detail, but now — finally — Canada’s television news has discovered the story, which for many media critics mean the story is actually “real.”

“If you don’t see it on television, it didn’t really happen,” writes Jim from Halifax, Nova Scotia.  “A lot of Canadians don’t read newspapers, and the magazines certainly are not covering this story, so it has been an online-only event  until CBC, CTV, and Global put it on their newscasts.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CBC News Extra Billing for Internet 1-18-11.flv[/flv]

CBC Television reports on the Internet Overcharging controversy.  (2 minutes)

Some critics say much of Canada’s commercial media is already in the hands of a tightly controlled, vertically integrated empire.  Most of the cable and phone companies have ownership in many major commercial broadcasters, cable networks, and even newspapers and magazines.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Vertical Integration.mp4[/flv]

30 Rock’s Liz Lemon and Jack Donaghy explore the concept of “vertical integration.”  Then see how it relates to Canada’s media.  (3 minutes)

But even a controlled media environment cannot stop outrage over UBB going viral, as ordinary Canadians realize they are about to pay much higher prices for a service they depend on more and more.

Outrage Commences

Charlie Angus (NDP) -- "This pricing is a ripoff."

While these pricing schemes have been around awhile, now that they are getting well-publicized exposure, consumers have realized the implications of counting how many YouTube videos they watch.

Tens of thousands have signed Openmedia.ca’s online petition, others are complaining to the media and writing their members of Parliament, demanding action.

That will only get louder when consumers start receiving bills for double, triple, or even higher for the exact same quality of service they used to pay less to receive.

“There will be a huge wake-up call for many customers,” said Jared Miller, president of Youmano, a provider based in the Town of Mount Royal.

Charlie Angus, the NDP member of Parliament who speaks about digital issues, said he he thinks the entire pricing scheme is a ripoff that will lead to huge increases in customers’ bills.

“What we need to have is clear and transparent rules so it’s being used in a measured capacity, and it’s not just instituting the principle that every time you turn on the Internet, they can ding you for fees like they do with cell-phones,” Angus said. “We’ve seen this before; when we were told that deregulating cable rates would give customers a big benefit. We were paying 60-to 100-per-cent more in no time.”

“Canada is already falling behind other countries in terms of choice, accessibility and pricing for the Internet,” Angus added.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CTV British Columbia – Canadians rank among most enthusiastic web users 12-28-10.flv[/flv]

CTV British Columbia explores Canada’s love affair with technology and how its integration has dramatically changed the social lives of many families.  That’s no surprise, considering Canadians are North America’s most enthusiastic net users.  (2 minutes)

The Vancouver Sun‘s Gillian Shaw reports consumers in British Columbia, Alberta, and beyond are about to pay more for their Internet service, and consumers across Canada are not pleased.

Shaw, who isn’t affiliated with Shaw-the-cable-company, notes changes by a federal regulator could mean the end of unlimited broadband service across the country.

Steve Anderson, founder and national coordinator of the Vancouver-based OpenMedia.ca., which also fights for Net Neutrality protections in the country, thinks “usage-based billing,” a core component of Internet Overcharging, has struck a nerve.

“Bell, Rogers, and Shaw have been given the green light to determine how we pay for Internet,” Anderson tells Shaw.  “If this decision goes unchecked, broadband is about to cost much more for Canadians.”

Anderson tells the newspaper more than 40,000 consumers have signed the group’s petition opposing the pricing schemes, and many Canadians are taking the matter to their member of Parliament.

“It is a really interesting grassroots community that has sprung up around this. Basically they said enough is enough. They are drawing a line in the sand and saying ‘we are not going to take this anymore, this is where it stops.’”

Shaw also talked to Stop the Cap! about the pricing schemes:

“We have consumers who pay good money to receive broadband service, now they have to think twice about everything they do online in case they expose themselves to over-limit fees,” said Phillip Dampier.

“How many people measure how much they are using online?” said Dampier. “If you have kids that are teenagers and you are sharing an Internet connection, can you imagine the battles when the bill arrives – ‘Who ran up the bill?’

“If you thought cellphone bill shock was bad, imagine you have two teenagers living at home who are on the Internet all the time.”

Dampier said usage explanations by companies, such as Shaw’s graphic that shows 15 gigabytes of data equals 105,000 emails are useless for the average consumer.

“Shaw says these are generous; that’s all nice, but nobody needs to send out 105,000 emails. But what they do need to do now that Netflix has come to Canada is video streaming and you can blow through these usage limits a lot faster using online video.

“If you have Shaw’s lite service you can get through four movies tops, that’s it — no more emails for you, no web pages, or you can, but watch out, you’ll get a big bill at the end of the month.”

If you use Verizon’s forthcoming iPhone as a Wi-Fi hotspot, be prepared to pay $20 a month for a maximum of 2GB of usage per month.

Many smartphones have built-in capabilities to serve as temporary hotspots to let you use your Wi-Fi capable equipment on Verizon’s wireless 3G network.  But that doesn’t mean Verizon will let you use it for free.

The so-called “personal hotspot” enables up to five Wi-Fi equipped devices to share your connection, but not too much.  If you exceed your 2GB plan allowance, the overlimit fee is a striking $20 per gigabyte.  Those fees come in addition to your usual Verizon voice and data plan charges.

Verizon is not singling out the iPhone for the expensive data plan.  The pricing is equivalent to what Verizon charges for a similar service on its other smartphones, according to Brenda Raney, Verizon Wireless’ executive director of corporate communications.