Ballsy or stupid? Shaw reviving usage-based billing
It looks like usage-based internet billing may jump back into headlines this week, just in time for the federal election next Monday.
Over the weekend, the internet activist folks over at Open Media posted the audio of a recent conference call held for analysts by Shaw Communications, one of the country’s biggest cable and internet companies. As is often the case with these calls, the picture Shaw executives painted for analysts was very different than the one they have tried to present to their customers and the public at large.
When the whole usage-based billing situation blew up back in January, Shaw put its plans to introduce extra fees and caps on hold, saying it wanted to hear from customers. The company was true to its word and held hearings with its users to see what they had to say.
According to Shaw’s president Peter Bissonnette and CEO Brad Shaw, here’s what customers apparently said:
Through the course of conversation with our customers, I think what we’ve seen from them is a recognition that the principle of, ‘If you use more you should pay more holds true.’ We believe as we work our way through some of the feedback that there really is a win-win for our shareholders as well as our customers in the way that we offer our tiers of services.
And also:
Not one of those customers that came to those consultations was saying to us that if you do something we’re going to leave to go to a less-performing internet service. They all acknowledged that our internet service provides them with the kind of experience that they want. This is really just a value and a price situation for them with respect to a threshold and it is hard to know what they’re paying on a monthly basis. We think we can address that through the manner in which we offer our tiers of internet service.
And the money shot:
Our customers said, ‘We are prepared to pay more for a higher value service.’
I wasn’t at any of those meetings, but I’m fairly certain that unless they were strangely stacked with proponents of UBB, that’s not what customers were saying. Of particular interest is the Orwell speak in that second quote about how no customer is going to leave to go to a “lesser-performing” internet service. Hmm. That’s probably true, but just what the heck does that mean? I’m sure a lot of customers will leave to go to a cheaper-performing service.
The executives confirmed that usage-based billing plans will be making a return around the end of May or early June and suggested they may have higher monthly “thresholds” than previously planned. The rationale: big ISPs in the east of the country (Rogers and Bell) have had UBB for some time now but neither Shaw nor its western rival Telus has yet to institute it. Hence, prices have some room to climb in the west: ”Their pricing is higher than ours and we believe we still have that pricing power.”
So, Shaw is going to go ahead with UBB despite all political parties clearly opposing it. That takes either monumental balls or monumental stupidity. It’s no wonder the calls to split telecom companies are starting to get louder. But I’ll have more on that later in the week.
UPDATE: In keeping with the Canadian spirit of never maintaining a true, pro-consumer advantage for long, Telus says it too will implement UBB this year. It’s also another example of monkey see monkey do, where the phone companies do exactly what the cable providers do.
What the incumbent phone and cable companies do with their own Internet services isn’t as much of a concern to me as whether they are allowed to manipulate competing services. The connection between an ISP and customers over privileged right-of-way last-mile connections must be treated as a utility. While there may be a per-GB charge for *Internet* transit depending on the business strategies of an ISP, there should never be a per-GB cost for this customer-to-ISP data connection. This connection must be flat-rate based on speed, not based on usage.
As long as we have this, then free markets will win out. If our governments abandon any protection of free market competition, then Canada will become an even worse digital backwater.
You state that all parties clearly oppose it, but that’s not the case. While the NDP, Greens & Liberals have been vocal about their opposition, the Conservatives have been quiet during this election on the topic - as it was clearly stated in the OpenMedia article:
At this point in Canada’s electoral race, citizens have seen three parties firmly adopt stances against the new fees on Internet use: Green, NDP, and Liberal party leaders have signed on as pro-Internet candidates at http://openmedia.ca/candidate, thereby agreeing “to stop the pay meter on our Internet.”
While the NDP platform includes a promise to “prohibit all forms of usage-based billing (UBB) by Internet Service Providers (ISPs)” and the Liberal digital strategy “will oppose” UBB, the Conservative Party of Canada has remained eerily silent on this hot-button issue in the past several weeks.
That’s not really true. Industry Minister Tony Clement has been quite vocal about his opposition to usage-based billing. And to be clear, he doesn’t just oppose wholesale UBB, he also doesn’t think it should be happening in retail either: http://www.itworldcanada.com/news/clement-undercuts-defence-of-usage-based-billing/142632
Tony Clement credit and track record isn’t really here to confirm that he is against.
At no time during the campaign the CPC has promised anything (not that any of their other promise is valid, but….)
Also Tony Clement confirmed that by claiming he was against a functional separation of wholesale and retail. That speaks volume.
Well I’m not so sure the NDP with its loud stand on stopping UBB will have any effect at all, considering they intend to REINFORCE Canadian Ownership Rules for the telecom industry.
In other words, the right hand doesn’t know what the left hand is doing.
Like I said before… The so-called support of the existing parties towards an end to UBB is just political posturing, and the temporary reprive is just that: temporary. We have not nearly finished this fight, it will get uglier.
BTW they don’t say they’ll implement it for the GAS service. They already implement for their retail service. What’s the scoop?
Oh, this is very Orwellian indeed. I was at one of the UBB meetings and while I’d say they could be technically correct with some of those statements, they definitely didn’t capture the spirit of them, and any of the Shaw folks soliciting feedback at the meetings would know it.
“If you use more, you should pay more.”
What I heard people agree to was “If you put more of a burden on the system, you should pay more” and the inverse: “If you put less of a burden, you should pay less.” It seemed to be largely recognized at the meeting I was at was that their main concern was managing network capacity at any one time (i.e. how much is flowing through the pipes at this second). That was what drove the need for upgrades, etc. to their equipment. When I left that meeting, I’d been totally confident that we’d all agreed that by charging by the GB, they were not attacking the actual problem (someone who leaves an internet radio connection on through most of the day will not be harming network traffic, but they will go way over their cap).
“Not one of those customers that came to those consultations was saying to us that if you do something we’re going to leave to go to a less-performing internet service.”
It was recognized at these meetings that Shaw and the major telcos hold a virtual monopoly on broadband. What I heard a lot of is that, due to lack of competition, we don’t feel we have a choice. They also opened the conversations asking for constructive criticism and very much discouraged that sort of standoffishness. I think most of the people who came also came in the spirit of giving constructive criticism. Although I don’t have much choice, Telus offers 250GB/month at a similar plan that Shaw offers 100GB/month, and I would certainly consider moving if Shaw implemented the same plan they initially put forward. They didn’t hear about this because they didn’t ask about it and because the discussion was geared towards how Shaw could fix *their* plans.
“We are prepared to pay more for a higher value service.”
I’ll actually agree with this one. I heard statements like that, at least. What they neglected to mention was that, at least in the meeting I was at, these statements came along with a “but”: “…but right now, we’re paying too much.” In the abstract, everyone agreed that paying more for a better service is the way things work in a market. But people did point out that you can’t just say, “Look, you’re getting more GB and higher speed than you got 5 years ago!” when you’re talking about technology because the technology itself makes it easier and cheaper to deliver the same value as the years go by. I flat out asked one of the people there how much it costs them per GB, and they waffled between “confidential information” and “we don’t really look at it that way”. In fact, the one thing that a lot of people pushed for, transparency, seemed to be the thing that they were the most uncomfortable with.
If you’re interested in a writeup of one of these meetings from the non-Shaw point of view, I’m sure there are many. I made sure to write mine up soon after the meeting: http://www.dsackerman.com/2011/03/shaw-ubb-followup/. I knew people who went to the other meetings in and around Edmonton, and they seemed to have similar experiences.
Thanks very much for that David, it’s very illuminating. If anyone else was at the meetings, by all means share your experiences too.