Shaw has written the next chapter in the ongoing usage-based internet billing saga – and it sure is an intriguing one.
The company announced new internet plans Wednesday night in conjunction with a follow-up consultation with customers. This, of course, follows on the hearings it had with customers a few months back after UBB exploded into a big political issue.
On the surface of it, Shaw’s plans look like a step towards reason – the company will be offering higher speeds and considerably bigger usage limits. For example, current customers on 7.5 mbps speed plans get 60GB of usage, but that will more than double to 125GB, with the same standalone price of $49 (or $39 in a bundle).
Things get more interesting the faster the speeds get. Shaw, which offers internet service in Western Canada, will roll out these new higher-speed packages over the summer. Its top-end plan will be a blazingly fast 250 mbps service with unlimited usage for $119 if bundled with so-called “legacy TV.” That’s still expensive compared to what places like Japan had even a few years ago, but at least the prices on these super-fast services is starting to come down.
Indeed, as observers like Michael Geist point out, Shaw’s plans are going to make other Canadian ISPs look bad. Rogers’ most comparable plan to Shaw’s 7.5 mbps service, for example, allows only 60GB of usage. The biggest effect will be on Shaw’s direct competitor Telus, which will have to offer similar plans or watch its customers defect. Shaw doesn’t offer service in eastern Canada, but Bell and Rogers will soon face pressure from their own customers. It’s probably really only a question of how long they can hold out with their comparatively uncompetitive plans before customers get really angry.
So, on the plus side, Shaw’s new plans look like an attempt at a reasonable compromise, as opposed to the blatant cash grab some of the other big ISPs are engaging in with usage-based billing.
The really interesting part of Shaw’s plans, however, is the apparent pinning of those higher-speed offerings to TV services. As several attendees to Wednesday night’s meeting pointed out, it doesn’t look like the company is planning on offering them on a standalone basis. That’s curious because it sure looks like tied-selling, which the Competition Bureau says “exists when a supplier, as a condition of supplying a particular product, requires or induces a customer to buy a second product.”
It’s hard to see how requiring someone to take a service they don’t want (TV) in order to get the one they do want (higher-speed internet) wouldn’t qualify as tied-selling. Of course, the Competition Bureau has been letting wireless companies get away with tied-selling for years. A customer can buy a cellphone outright from a provider but, with some exceptions, the carrier won’t unlock the device, thereby forcing the customer to buy monthly service from them as well. That’s tied-selling in a nutshell.
From Shaw’s perspective, it’s no surprise the company wants to lock customers into a service they don’t want. Like most other ISPs, the cable company is running scared of Netflix and other so-called over-the-top video providers, so this sort of tied-selling is a sneaky move. After all, does the company really care how well Netflix and other online video providers do, or how much data internet customers use when they’re still paying up for that TV service? Of course not. Shaw still gets the same revenue from the customer.
First, the big ISPs tried throttling, then they tried UBB. Neither worked, so now they’re collectively trying to slow Netflix et al with regulation. Unless Canadian regulators are a bunch of loonies (and the jury is out on that), that too won’t work. Tied-selling, where customers have to pay cable companies for video whether they want to or not, may be their final kick at the can.
Over to you, Competition Bureau.