Sunday, May 29, 2011

Shaw shakes things up: New high bandwidth packages may put the squeeze on other providers

Shaw Communications, one of Canada’s major internet and cable providers took a step forward in announcing a host of new internet service plans with markedly higher download speeds and bandwidth caps. 
This move by the provider is evidently a direct response to the popular “internet rebellion” taking place among Canadian consumers. This move by Shaw lends credibility to critics who say that usage based billing is nothing more than a revenue stream. To quote prof. Michal Geist’s blog: “it is not about network congestion nor about paying for what you use. Rather, UBB in Canada is simply a cash grab by network providers with sufficient market power to demand it.”

Image by gsagri04
The move by Shaw came after customer consultations held by the company where customers had the opportunity to air their grievances with the company.  According to an attendee of a March 28th consultation, Shaw representatives essentially admitted that their UBB pricing scheme is a blunder and that they “were open to considering anything”.  

The sincerity of these statements is not the topic of discussion of this article. The numbers on the other hand do merit mention.  According to prof. Geist, for $69.00, Shaw is offering 500GB of bandwidth with 100Mbps download speed. For the same $69.00, Rogers offers 125GB and 25Mbps download speed. Bell’s fastest commercially available plan (Fiber 25) only offers 25Mbps download speed with 100GB of bandwidth for $55-$58 (depending on what Province you reside in). 

From one perspective this move by Shaw is truly a breath of fresh air.  I have commented before that there are two ways to resolve the internet situation in Canada.  One is through stricter regulation on what is and is not acceptable by the CRTC; the other is to allow the market to self-correct this issue through healthy competition.  The CRTC does not set prices precluding the first option. As for the second, it was previously believed that there simply weren’t enough players in Canada (unlike the United States) to instigate a real change in pricing.  

Shaw has, to some extent, debunked this notion.  The question now becomes how impactful this move by Shaw (particularly for those outside its service area who cannot opt for one of these new plans) really is.
Some say people outside the Shaw service will be wholly unaffected by this change.  Others may say that even a regional shift in pricing can have a national effect.  If Bell lowers its rates to compete with Shaw in one market but leaves its prices at the current level in other markets, surely consumer outrage would follow.  Or perhaps a massive and unjustified inequality like this will boot the CRTC into action as this shifts from a price setting issue to a national price uniformity issue.  

Regardless, this move by Shaw represents the first step (be it a large or small one) in the direction of eliminating the oppressive bandwidth caps plaguing Canadian consumers.

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