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Over the past year, the CRTC, Canada’s communication regulator, let Bell and Rogers start charging extra for customers who download a lot of data. The growing demand for live-streaming and online movies gobbles up huge chunks of bandwidth on the World Wide Web.
Primus and Shaw have said they will begin passing on higher fees to their customers beginning Feb. 1. Primus, for example, rents bandwidth on Bell’s networks and said Bell is inflating the costs for everyone, including them.
The growing demand for live-streaming and online movies has prompted internet companies to announce plans to impose new fees and caps on internet usage.
“It’s an economic disincentive for internet use,” said Matt Stein, vice-president of network services for Primus. “It’s not meant to recover costs. In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”
There is definitely a conflict of interest when a media company is allowed to charge extra for alternative media consumption channels. I suppose that bandwidth consumption has increased markedly with the introduction of Netflix and iTunes. But, I wonder if the extra charges are really meant for cost recovery or a disincentive to use alternative media and stick with traditional outlets.
I very much doubt that the CRTC will investigate this.
The average price per megabit per second during the fourth quarter last year was about $5 in Western Europe, compared to more than twice that in the U.S. and Canada, according to data from market research company Point Topic.
In many European countries the regulators have managed to increase competition in the local loop, the link that connects subscribers to the operator network, according to Oliver Johnson, CEO of Point Topic. In the U.S. the local loop hasn’t been opened up to the same extent, and U.S. broadband users, mobile and fixed, are paying the price with higher monthly fees.
Arguably North Americans are already playing a price premium for their Internet access. This is because competition in North America is significantly less than in Europe. Certainly, this is true for cell phone access. Cell phone minutes and text messaging is considerably cheaper in Europe and Asia.
So what about those prices? The OECD has organized its pricing information in 13 different datasets (all data are available on the OECD Broadband Portal). Let’s look at two of these: average broadband monthly subscription price, by country (4e), and average broadband monthly price per advertised Mbit/s, by country (4f):
Average monthly subscription price: Canada ranks 23rd out of 30.
Average monthly price per advertised Mbit/s: Canada ranks 25th out of 30.
In case you don’t believe in large-scale international comparisons, I asked a colleague in Paris to send me some real-life numbers on the cost of broadband. Nothing fancy, no USD PPP or regression analysis, just Euros converted to Canadian dollars. That was in November 2009.
Unlike the CRTC, which looked at exactly two French services (France Telecom and Neuf Cegetel, the two biggest suppliers), we looked at several others, including Numericable, Free and SFR. Here’s what was on offer, with downlink/uplink in Mbps, and all prices in Canadian dollars:
France Telecom (100/100) = $102
France Telecom (100/10) = $71
Numericable (100/2) = $32
Free (100/50) = $47
SFR (100/50) = $47
Notice two things. First, in France you can get affordable symmetric connectivity. And in France, there are no bit caps, period. Now, check out these roughly comparable Canadian offerings (which may have changed):
Shaw (100/5 with 400 GB cap) = $157
Shaw (25/2 with 150 GB cap) = $96
Videotron (50/1 with 100 GB cap) = $80
The only Canadian offering here that matches the French services is the 100/5 Shaw service. It falls halfway between Numericable at 2 megs and France Telecom at 10 megs, whose prices are $32 and $71. That makes the Shaw service five times more expensive than Numericable’s.
What about bundles? Free, the French operator, charges the equivalent of $47 for the following triple-play:
TV (200 channels)
unlimited phone calls to 80 countries, including Canada.
Here’s a comparable triple-play from Telus Corp:
DSL (15/1) – cost $38
TV at lowest price in build your own package – cost $25
unlimited calls to US, CA + 1000 min international – cost $60
The Telus Total: $123. If you’re on Free, you can make unlimited calls across Canada for $47 – which includes your DSL, with nearly twice the bandwidth, and 200 TV channels. You could say based on these numbers that it’s now cheaper to call Canada from France than it is to call Canada from Canada. How do you like them apples?
It then turns out Canada and Australia are the only two in which 100% of all services observed carry bit caps. To get an idea how out of step this practice is with the rest of the developed world, consider that 17 of our sister countries are 100% bit-cap free – and in eight of the others, caps apply to 40% or fewer of the services observed.
Canadian get to pay more for comparable services and they get charged even extra for usage above an arbitrary cap.