Category Archives: shaw

Does Shaw know or care about internet rules?

What’s going on with Shaw Communications? Of all the telecommunications companies in Canada, none seem to be more schizophrenic than western Canada’s largest cable provider, if recent actions are any indication.

The company was back in the news late last week, but likely not for the reasons it hoped. While its announcement of a rival service to Netflix - called Movie Club - was the intended headline grabber, Shaw instead took flak for what looked like a blatant net neutrality violation.

Movie Club, according to the Calgary Herald, will essentially replicate Netflix’s all-you-can-eat movie service for a monthly fee. But, as company president Peter Bissonnette said, watching stuff on Movie Club won’t count against Shaw customers’ monthly usage caps:

As well, subscribers to Movie Club — who initially can watch on their TV or computer, with phones and tablets planned to come on line later — can view content without it counting against their data plan. “There should be some advantage to you being a customer,” Bissonnette said.

To anyone familiar with net neutrality, that would of course be a violation in the first degree. Net neutrality rules in Canada require telecom and cable companies to treat all services that run over the internet equally. By not counting the hefty gigabytes that online movies chew up, Shaw’s Movie Club would inevitably be cheaper and more desirable to use than Netflix.

Not surprisingly, Shaw took heat for the move. Michael Geist said a complaint under the Telecommunications Act to the CRTC would be inevitable while Open Media said it was a clear attempt to try and turn the internet into a two-tier service. I was pretty shocked at Shaw’s blatant anti-neutrality move myself and said on Twitter that it was either incredibly bold or amazingly dumb. More on that in a minute.

A day later, on Friday, Shaw shifted into damage control mode. Through Twitter and other statements, the company clarified that the Movie Club service going through cable subscribers’ set-top TV boxes would not count against monthly data caps, but if customers used it over the internet - on their computers or tablets, for example - it would. Net neutrality concerns were therefore not necessary, since Shaw’s service will play by the rules. As the company said on Facebook:

Shaw Movie Club is intended to be watched through your set-top box. You can order your movies online through and send it to your set-top box for viewing - watching movies on your set-top box won’t affect your included Internet data. However, you can also stream your Movie Club movies online to your computer – this WILL contribute to your Internet data.

Movie Club thus sounds like two different services. The internet portion, which will count toward users’ monthly data limits, sounds very much like an “over-the-top” service such as Netflix. The TV version, however, sounds more like a repackaging of the cable provider’s existing video-on-demand service. Rather than VOD users paying per selection, they’ll simply get unlimited access for a monthly fee instead.

Open Media still has problems with this set-up, but I’m not as concerned. Bandwidth isn’t much of a problem when it comes to traditional cable, so if Shaw wants to be able to introduce a Netflix competitor that way, it shouldn’t just be allowed to - it should be encouraged to do so. It is when such a service is offered in a discriminatory manner over the internet that the problem occurs, which doesn’t appear to be the case with Movie Club.

However, it’s starting to become clear that Shaw’s left hand might not know - or agree with - what the right hand is doing. Bissonnette, one of the company’s top executives, was pretty explicit in saying that Shaw customers should have some advantages in using Movie Club over non-customers, a position the Herald reporter stuck to in her follow-up story. Yet a day later, someone else at the company - it’s not clear who - either overruled or corrected him.

The company was similarly lost in the woods on the usage-based internet billing issue. Back in May, when Shaw introduced new internet plans that feature large usage caps in response to user complaints about UBB, company executives also gave people the impression that they’d have to subscribe to cable TV to get those plans. According to multiple reports from people who attended meetings with the executives, the company wasn’t planning on offering standalone super high-speed, high-usage internet plans, thereby raising the spectre of tied-selling, a practice that is illegal in Canada.

The company has since made standalone internet plans available, albeit at a $15 markup, but that particular bullet from the Competition Bureau has been dodged, for now at least.

That brings us back to the question of whether the company is incredibly bold or amazingly dumb. In both the Movie Club and UBB cases, executives have shown themselves to be oblivious to how their products may violate existing CRTC or Competition Bureau rules. In both cases, executives touted services without apparently knowing whether or not they were legal. That either means they simply don’t know about the rules, or they don’t care about them. Quite frankly, I’m not sure which is worse.


Posted by on July 19, 2011 in net neutrality, netflix, shaw


What to do about vertical integration? Absolutely nothing

There’s a fun spectacle going on in Ottawa right now called the “Vertical Integration Hearings,” which is basically a pillow fight by the telecom industry in front of the CRTC over who owns what. It’s fun when you consider that the whole exercise is a complete waste of time other than being regulatory theatre at its finest for fans of that sort of thing.

In a nutshell, Canadian telecom is now lorded over by four relative giants: Bell, Rogers, Shaw and Quebecor. Each has telecom concerns, such as internet, wireless, television and phone businesses, as well as broadcast and print holdings. For those keeping score, Bell has CTV and the Globe and Mail, Rogers has CityTV and a host of magazines including Macleans, Shaw has Canwest (Global) and the National Post, while Quebecor has the Sun newspapers and TV and a bunch of French channels. Because these companies own both the content and the methods of distributing it, they are considered to be “vertically integrated” (as opposed to horizontally integrated, which is what you sometimes become with your significant other).

The point of the hearings is to answer the question: What’s to stop these companies from keeping their content from the other guys? If CTV (via TSN) has the rights to NHL programming, for example, what’s to stop Bell from offering hockey only to its own customers? And what if Rogers chose to do the same with MLB baseball or some other sport? In such a scenario, customers would have to get TV subscriptions from both Bell and Rogers if they wanted to get all of that programming. The same concerns also apply to the internet and wireless, where all content is migrating to.

Such a situation would of course be a nightmare, yet there have already been instances of it - in May, Bell announced it would stop carrying Sun TV because Quebecor was apparently charging too much for it. (Not that many would consider living without Sun TV a nightmare, but you get the drift.)

A number of commentators have argued that this is very bad and consumers will ultimately suffer for it, which means the CRTC must put rules into place to prevent it from happening.

I couldn’t disagree more. This is a classic case of the CRTC needing to stay the hell away because it’s related to several other issues the regulator has recently messed up or is currently in danger of messing up.

The answer to the question above, about what’s to keep companies from tying up exclusive content, is simple: competition, which comes in several forms. Firstly, as York University professor David Ellis so eloquently argued recently, the regulator needs to get its “grimy paws off my Netflix.” To summarize, the CRTC is currently considering whether it should regulate so-called over-the-top internet services, including Netflix, YouTube and the like, but it most certainly should not. If the CRTC foolishly decides otherwise and does try to get involved, it will enter its own regulatory form of the Vietnam or Afghanistan war. Its mission will be hopeless and it will be endless.

Over-the-top services need to be left alone and possibly even nurtured as competition to vertical integration. Of course, the CRTC has already nearly screwed that up when it gave its blessing to usage-based internet billing, which would have effectively castrated such services. Amazingly, and somewhat perversely, the market responded by working as it should. Since the regulator fouled up, the public got outraged, the government threatened action and the industry - Shaw and Telus so far - have responded by significantly increasing their internet usage limits. The others will have to follow suit or risk even more consumer anger.

If the vertically integrated companies want to shackle down content with exclusivity, they should be allowed to go ahead and try. If consumers have all the internet data they want to play with, they will quickly find their content through other legitimate over-the-top services and, failing that, they’ll turn to less-legitimate options such as BitTorrent.

This sort of “piracy” is the ultimate competition. File-sharing and other questionably legal methods of acquiring content are constantly improving, both in terms of ease of use and encryption. It’s been proven over and over that when content providers make it more difficult or expensive for consumers to acquire the stuff they want, they not only turn to alternative means, they feel justified in doing so. It’s also been proven that legal and technological responses can’t stop this sort of thing, they only make it improve even more.

So bring on the exclusive vertical integration. Anyone who tries it will soon learn the folly of their ways as consumers turn to other options, as well as the fact that many people who do go that route never come back.


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Shaw’s last stand against Netflix

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.


Posted by on May 27, 2011 in netflix, shaw, telecommunications


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.


Posted by on April 25, 2011 in internet, shaw, telecommunications


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