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28-Jan-2011 | Reggie | Over the past 15 years the internet has been one of the biggest sources of innovation and growth in the world. Businesses like EBay, Amazon, Skype, Google, and Facebook have all been huge innovations that have changed our lives increasing our standard of living. These businesses have been the future that made it easier to shop via finding hard to get items at great prices, talk to businesses or family members across the globe for pennies. Google indexed billions of web pages and made it incredibly easy to find absolutely anything on the web, including just about any address on the globe. Facebook allows millions of people to keep in touch at once. The service is so popular it has eclipsed Google in the number of page views it receives. In short, these innovations that have made our lives less expensive and far more convenient have been made possible thanks to the internet. Unfortunately, many of these innovative new services are in direct competition to the owners and providers of internet service in Canada. Hello Bell, Shaw, Telus, and Rogers.
In case you missed it, the CRTC (Canadian Radio-television Telecommunications Commission) just passed a bill which allows the internet service providers to charge for internet based on usage. Simultaneously, most providers silently lowered the maximum amount of data allowed. With no other internet providers available, this leaves customers in a bad position as smaller internet providers such as Primus buy their internet from the big guys. This ruling will result in some pretty serious consequences for Canadian consumers as the internet has been absolutely vital in opening up new alternative businesses for Canadians.
When you look at all 4 of these companies you see that they offer very similar services to each other, cable/satellite TV, landline phones as well as cellular services (all except for Shaw which has been thinking about joining the cellular market for some time), and of course internet services. These Canadian telecoms have often been accused of being anti-competitive, and too comfortable and complacent while offering Canadians fairly poor service relative to their peers internationally.
Canadian long distance rates have always been quite expensive. When companies such as Skype came along and offered users extraordinarily cheap international calling rates (around 2 cents a minute if you’re calling a landline or free computer to computer www.skype.com) people rejoiced at the opportunity to use a different company than the oligarchs they have been stuck with for years. For comparison, the average landline long distance rate for a bell customer is around 8 to 10 cents per minute in Canada. If you were to make a call to Hong Kong, that rate would jump to $1.15 and a whopping $3.69 a minute if you had to make a call to Saudi Arabia. (http://www.bell.ca/web/wireline/en/all_regions/pdfs/LD_OverseasSched_1.pdf)
Cable and/or satellite TV are staples of many homes across Canada. Digital cable from Shaw starts at $36.95/month and goes up to $79.95/month for a premium service which includes a few movie channels along with the specialty networks. Digital TV also offers some on demand movies along with a plethora of pay per view movies which will set up back about $6 a movie. Back in November Netflix announced that they would be making the move to Canada offering their streaming service to Canadians for $8 per month. Users can then pick for a plethora of TV shows and movies and watch them streamed through the internet with the ability to pause, fast forward, and rewind at any time. It is extremely convenient and of great value for its users. It is easy to see how Shaw, Rogers, Telus, and Bell see Netflix (www.netflix.ca) as a serious threat to their service. Shortly after getting Netflix I canceled my premium cable service.
These actions seem extremely anti-competitive and as a pretty clear cut way to take the rug out from under the telecoms innovative competitors. There has been quite the outrage so far as businesses and consumers worry about the increase in charges they could soon be facing and the limit in choice that goes along with that extra cost. If the CRTC decision is over ruled, there could be some major implications for the telecoms as these new innovative companies look to take away market share with their superior service and price.
