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LTE pricing won’t help mend digital divide

31 Aug

Canadian wireless carriers are in the process of rolling out next-generation networks and, as is usually the case with these things, there is the reality and there is some rhetoric.

Rogers launched its fourth-generation (4G)  Long-Term Evolution (LTE) wireless network in Ottawa last month. At a briefing at the company’s headquarters in Toronto on Tuesday, the company outlined its plans for a rollout in the nation’s biggest city, which will happen on Sept. 28. John Boynton, executive vice-president and chief marketing officer of Rogers Communications, told our small group of journalists that the new network will cover all of the 416 area code in Toronto. Rogers has also confirmed Montreal and Vancouver launches in the fall, with other Canadian markets coming in 2012.

If you follow this stuff, you know that LTE is important because it’s super-high-speed wireless internet that can be used by smartphones, tablets and computers that have data sticks plugged into them. The technology is capable of a theoretical 150 megabits per second, which is about as fast as any wired internet connections currently available to home users in Canada. Realistically, though, Rogers says it will be offering customers a “commitment speed” between 12 and 25 megabits for downloads to start with.

In tests at the briefing, the speeds were in fact blinding. The existing Rocket stick currently being sold in Ottawa, was zooming along at close to 50 megabits per second, with an upload around 20 megabits. A newer Rocket stick, which is currently being certified and targeted for fall availability, cranked out 100 megabits down and 30 up.

I asked whether there would be any commitment speed on uploads, but alas, Rogers is staying mum on that. I’ve written before about Canada’s woeful upload speeds and how they’re an obstacle to innovation. Without anything else to go on besides the existing state of wireline speeds, it’s reasonable to assume that Rogers’ upload capabilities on LTE will be held back and slowed down. And, as one carrier goes, the others are likely to follow (Bell, Telus and Wind have all announced future LTE plans). There aren’t really any good reasons to be optimistic about these upload problems getting better any time soon.

Where things get sticky, as usual, is on pricing and usage. Rogers hasn’t yet announced these details for phones and tablets that will run on the new network, but the Rocket stick will be available with several options on the “Flex” plan: $45 for 1.5 gigabytes a month; 3GB for $60; 6GB for $75; 9GB for $90; and $10 for each additional gigabyte.

Those prices are obviously enough to give anyone a heart attack – not only are they significantly higher than what Verizon is offering in the U.S., they’re also for miniscule usage limits. Anyone plugging a Rocket stick into their laptop is sure to quickly chew through their monthly data limits if doing anything besides email.

Boynton defended the caps, saying that LTE is not meant for heavy-duty usage like watching full-on video. It’s more of a “displacement” technology that people might pick up when a wired connection isn’t available. “We don’t see people watching all their TV on LTE just because it’s available,” he said.

When talk turned to the upcoming spectrum auction – the one that will result from the airwaves being freed up by the impending shut-down of over-the-air analogy television signals – the rhetoric ratcheted up. Rogers has previously said it needs more spectrum if it is to roll LTE out into rural markets, so new cellphone providers – the likes of Wind, Mobilicity and so on – shouldn’t get any special benefits in the auction, like they did in the previous one.

Boynton added that it’s important to not give advantages to foreign billionaires, an obvious jibe at Wind’s Egyptian backer Naguib Sawiris, and instead focus on the companies that will service customers outside of major cities. “We’re committed to delivering to rural markets,” he said.

There has been much talk, both in Canada and abroad, about a digital divide forming between urban and rural dwellers. People who live in cities usually have several internet providers to choose from, so they therefore have better speeds and prices. As a result, they’re considerably more turned on to the benefits of the internet.

Wireless technology has often been considered a possible solution to this problem, since it is significantly cheaper to roll out in sparsely populated rural areas than cables.

Rogers’ LTE prices, however, are not going to do much to help that digital divide if applied similarly to these areas. Allowing rural customers to use between 1.5 and nine gigabytes a month is not going to allow them to even remotely catch up to what their city cousins are doing. Maybe they’ll get on to email, but they certainly won’t do more – like telehealth, cloud computing or online gaming and other entertainment.

Rogers’ altruistic claim that it needs spectrum to deliver high-speed internet to rural areas and mend the digital divide therefore rings somewhat hollow.

The only way that’s going to happen is if multiple providers – especially hungry ones – service those same customers. Indeed, if reversing the divide is a priority for the federal government (and there’s no reason to believe it’s even on the radar), rural customers might almost be better served if new cellphone companies are given all kinds of special benefits, such as exclusive blocks of spectrum in such areas. That’s obviously interventionist and anti-market-forces, but if the likes of Wind or Mobilicity started rolling their networks into sparsely populated areas, the big carriers would waste no time stampeding in behind them. Maybe rural dwellers would finally get good, cheap internet access.

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5 Comments

Posted by on August 31, 2011 in internet, mobile, rogers

 

5 responses to “LTE pricing won’t help mend digital divide

  1. Alex T

    August 31, 2011 at 8:23 am

    “Rogers’ altruistic claim that it needs spectrum to deliver high-speed internet to rural areas and mend the digital divide therefore rings somewhat hollow.”

    Hear hear.

    $45 a month for a displacement service is a pants-on-head ridiculous waste for all Canadians and we do a great disservice to each other by even entertaining the option!

    When are Canadians going to stop letting these con-men lie to us about what it takes to deliver communications services?
    It seems like every week, there’s a new excuse that people are swallowing whole to rationalize bad prices and service – whether the consumer is misinformed or some wannabe expert buying into a collective misunderstanding to further their career.

    Despite what most say, some kind of government intervention is required, if at the very least to ensure a standard form of measurement of these resources. Similar to how we standardize scales for meat and produce.

    We are long overdue for a timely end to the stranglehold service providers have on our internet access. Make no mistake, it has already made Canada a technology dead-zone.

     
  2. Eric Hacke

    August 31, 2011 at 9:56 am

    It’s pretty clear that Rogers and Bell both plan on using wireless service in place of wired for servicing any existing areas that don’t have DSL or cable. Cable and DSL service have completely stopped expanding, if you don’t have it now, you’ll never get it.

    The motivation for this is clear, lack of competition. In wired service they are forced to wholesale their service, driving profits down. So rather than build out wired service that they’ll be forced to share, they’d rather expand wireless service that allows them to return to duopoly profit margins.

    Forced wholesale of wireless, or forced reasonable roaming charges, would be a potential solution here. If WIND could buy roaming from Rogers or Bell at reasonable wholesale rates, they could get the coverage they need to compete, giving them the income they need to build out their own network.

     
  3. Marc Venot

    August 31, 2011 at 1:21 pm

    “Cable and DSL service have completely stopped expanding, if you don’t have it now, you’ll never get it.” In Vancouver my building near science world in Vancouver will be connected by fibre cable next october.

    I want to buy a new computer because they seems so much better than the one I use. In principle to get a new mac mini should be enough. So I looked using a search program. I quickly discovered that it’s the same price everywhere in Canada since the discounters like Amazon don’t deliver in this country.

    I do prefer to live in Canada but it has a cost.

     
  4. Myles

    August 31, 2011 at 9:34 pm

    Easy solution to the absurd high cost of Rogers data plans… In my case thankfully there is competition. XploreNET with 30GB per month is $80 and with Rogers its $322. We gladly signed a 2-year contract with XploreNET wireless (to also obtain a 6 month promo). In the end, Rogers didn’t get our business so they won’t be seeing any revenue from us.

     
  5. Paul Goodrick

    September 7, 2011 at 5:11 pm

    Germany had an interesting condition in their last spectrum auction where rural users needed to be covered before carriers could deploy LTE in the more profitable urban centres, which led to a rapid rollout for generally underserved customers. (http://fastnetnews.com/a-wireless-cloud/61-w/4062-germanys-100-coverage-with-telefonica-o2)

    I think geography would make it too costly to have all rural Canadians covered before gaining some urban revenues but with modified conditions, it could be more productive then rural set asides for the smaller players.

     
 
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