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Internet prices climbing with no end in sight

20 Jun

How badly are Canadian internet users getting spanked? It’s amazing they can sit, according to numbers from PricewaterhouseCoopers.

Internet access revenues at service providers jumped by 17.5% in 2011, largely thanks to tiered usage plans, the professional services firm says in a new report.

“Canada’s broadband fees were lower than those in the United States in 2007-09, but as a result of large increases during the past two years, the average Canadian broadband subscriber paid 3.9% more in 2011 than the average U.S. subscriber did,” the report says.

But wait, there’s more. The average Canadian internet user can expect their bill to rise to $45 in 2016, from $38.43 in 2011. That’s another 17% increase. Overall broadband access spending, meanwhile, will grow by 9.9%, or nearly double the 5.5% in the United States. Ouch.

Why is this happening? There are two culprits. One is the fact that Canada ironically has a more competitive wireless situation than the United States. A few years ago, when the wireless new entrants – Wind Mobile, Mobilicity et al – were in the process of starting up, it was clear that was going to have repercussions on the wired side of things. With big incumbent cellphone providers set to start losing big bucks in wireless, logic dictated that wired customers would need to be milked.

As they say, you win some, you lose some.

It’s no coincidence that usage-based billing for home access started to become news at about the same time. Enter the second culprit for the steadily rising prices: the Canadian Radio-television and Telecommunications Commission. In the first part, the regulator accepted and condoned incumbent requests to use “economic measures” as an effective way to combat network congestion. In the second part, the CRTC also allowed those same incumbents to foist a watered-down version of this usage-based billing scheme onto smaller indie ISPs.

The actual existence of congestion was not proven in either situation. With monthly usage caps much larger in the United States despite the fact that incumbent ISPs there have considerably more users on their networks, it’s pretty clear that claims of congestion in Canada were largely exaggerated if not completely fabricated. Yet the CRTC swallowed them whole. Usage-based billing has always been a cash grab, plain and simple.

The gouging will continue, and really, why shouldn’t it? As I wrote last week, the regulator is too busy with make-work projects – like finding out whether subscribers are really getting 20 or 15 megabits per second – to focus on the real problems. This continued and increasing bilking of customers would figure high on that list.

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4 Comments

Posted by on June 20, 2012 in crtc, internet, ubb

 

4 responses to “Internet prices climbing with no end in sight

  1. Marc Venot

    June 20, 2012 at 1:18 am

    Maybe you can explain how to get enough of the data ration with only wireless?

     
  2. Alexander Trauzzi (@Omega_)

    June 20, 2012 at 12:04 pm

    I’ve said it before and I’ll continue to say it. So long as we put business men in power, we will continue to have these problems.

    Do we want to have better lives, or nurture a culture of greed and opportunism?

    Answer is pretty obvious.

     
    • Gary Fraser

      June 21, 2012 at 5:22 am

      You’re right Alex: business people suck. We need more state run operations, as they do in China, Cuba, Russia, other socialist countries. It works well there – why not here?…..

      Alex buddy – it costs to run things, and the more things we run – subsidized day care in Quebec, immigration programs that give more money to immigrants for benefits than our own citizens, wages and pensions to government workers that exceed those in the private sector – the more we pay in taxes, which increases the costs for everything to everybody. That is the real ‘problem’.

       
  3. Anakin

    June 21, 2012 at 3:38 am

    Very well written article and right on the mark. Hopefully, Canadians will wake up and realize that the network congestion problems the incumbents claim is the reason for the price hike, is indeed nothing but a well-orchestrated hoax. All the experts have been saying this all along.

    Time for me to make another donation to Openmedia.

     
 
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