Yesterday marked a monumental day for the Telecom industry. Finally (!) some measure of real autonomy from the trappings of the incumbent pricing models. But at what cost? Telecom Notice 2011-77 was decided yesterday and though I agree with the usage model selected by the CRTC, they really missed the mark on the costing! The rates set by the CRTC are not good for Canadian independent ISPs or consumers. It’s a strange feeling truthfully for it to be so right and yet so wrong at the same time. On the one hand we’ve got a solid win in the way of the usage model, which is based on speeds and which is similar to how the incumbents’ networks are built. On the other hand the rates set in the ruling will definitely lead to higher prices for consumers and hinder competition, since the rates are artificially set too high. It’s the ultimate “Here’s your cake but you can’t eat it!” approach.
Let me explain a bit further. When we look at what’s going on around the country and around the world, what we see is that Canadians are leaders in the adoption of technology and online services. Canadians are inherently technology savvy consumers! We want and need a policy that matches our appetite!
Today Canadians are trending toward high bandwidth usage for everyday functions. We have multiple devices connected in our homes, we rent or purchase movies and download them through services like AppleTV, Netflix and CinemaNow to name a few. There are content providers and new Cloud services of all kinds, not to mention IPTV. Google opened a new online music store today, as it happens. The usage growth in the market is tremendous and the trend won’t slow down. This ruling will increase costs for Internet into the home by forcing artificially high usage costs. Each year your costs will get larger and larger for Internet with these new rates. At some point this decision will force Canadians to make a choice as to what services they can afford to use through the Internet.
The road forward is uncertain. We need to digest this further and see what can be done from here. Consumers need to pay close attention to this. I know that for myself and TekSavvy it’s not something we’re going to take lightly. Too much depends on getting this right and I think most technology savvy Canadians can resonate with that. We need to be world leaders of the telecom industry and it starts by getting the policies right!
In short, the numbers are incredibly wrong. What does that mean to Canadian ISPs? What does it mean for innovation? What does it mean for the average Canadian family? What does it mean for our customers and competition? There are many questions concerning the impact of this decision that will need to be answered in the coming days. For our customers nothing will change overnight. We are looking at what this means for us, for you and, in usual TekSavvy fashion, we will fight to ensure our customers are taken care of.
Marc – CEO/TekSavvy
I have my home phone & internet with Teksavvy. If the prices go to high; I may have to disconnect. I hope we can continue to go on fighting; even if I am getting too old for this crud..LOL!
“Today Canadians’ are trending toward high bandwidth usage for every day functions … we rent or purchase movies and download them through services like AppleTV, Netflix and CinemaNow … content providers and new Cloud services of all kinds not to mention IPTV … The usage growth in the market is tremendous and the trend won’t slow down.”
It sounds like what we really need is a pricing model that would scale from a low-bandwidth email checker to a high-bandwidth heavy video/IPTV user. Some way that would allow users to control their own costs while simultaneously guaranteeing service providers increased revenue as demand increases.
Oh wait…
Technology is always ahead of established businesses. What may mark individual companies as different, is their ability to use, or innovate, using existing & future technologies. Many of today’s ‘buggy-whip’ manufacturers are innovating & using new technology with web sites, such as Netflix, or any firms trying to offer services for Canadian consumers built on the information superhighway.
That ability to create, to use technology is hand-in-hand with available resources. Bandwidth; capacity, or usage of the Internet needs to be available and affordable to Canadian consumers and innovators. Is Teksavvy one of those innovative, creative, resilient and forward thinking companies? Yes, I believe so.
Good luck in your endeavors, Sir.
Hi Marc. Could you be more specific about what the rates are and why you think they will lead to higher prices for independent ISP customers in the future? What should the rates have been to avoid an increase?
I’m with Rogers at the moment, and I was waiting to see the result of the ruling before I consider moving to TekSavvy, or any other independent ISP with lower cost. I’m getting 60GB a month for nearly $50 a month after tax, and that’s just pathetic. My heavy internet usage almost always starts after 10PM EST and if I ever need to download anything big – like games I bought from Steam, for instance – I almost always do it over night because I’d be watching things when I’m awake. That means I’m putting no constraint to Rogers’ network whatsoever but I’m still being punished unfairly. This month, my bandwidth went over 60GB again and I still have 10 days to go before my billing cycle clears. I had enough with this crap, and I’m desperately looking for alternatives.
It looks like I might have to wait a little longer though because the monthly cost CRTC set sounded artificially high. $1251 a month for Rogers and $2213 a month for Bell… Looking at that pricing scheme, I just can’t convince myself that TekSavvy can continue to maintain the value it provides to Canadians today. I heard when TekSavvy has a problem with Rogers or Bell’s network, there’s nothing they can usually do because Rogers and Bell would not try to resolve issues immediately. Despite having low cost option, that was the reason I could not switch to independent ISPs like TekSavvy initially. I made up my mind now though, and if I can be sure the monthly prices won’t increase, I will be cutting ties with Rogers and definitely move on to independent ISPs.
Hey, just wondering, what do those costs mean? According to the CBC the “capacity rate” was $1251/month for 100Mbps – but that doesn’t make any sense, there is no way they could charge $313 for a 25Mbps connection. If anyone knows how that works, or a more accurate percentage increase, could they post it?
The difference comes from the fact that not everyone uses their connection at full speed 24/7. TekSavvy only has to buy as many of those 100Mb/s blocks as are required to serve all their customers combined at one time. Even during peak periods the total bandwidth is less than 1/10th the theoretical combination of everyone’s connections.
Years ago ISPs were classified in tiers. Tier 1 ISPs were the ones that had peering arrangements with other Tier 1 ISPs in other countries.
Why can’t TekSavvy get a peering arrangement(s) for themselves and bypass the incumbents altogether?
What you are referring to deals with actual IP/Internet traffic. The CRTC ruling being discussed deals with the access to the last mile itself. These are two unrelated things unfortunately. TekSavvy can source IP transit and peering with anyone they chose to but they are beholden to Bell/Rogers for access to last mile (DSL lines, FTTN, cable infrastructure, etc) and this is what these rates apply to.
This makes the $2213 rate above even more offensive. Bell thinks that $2213 of data agnostic transit is a ‘fair rate’ for independent ISP’s to pay – indy ISP’s who then need to pay for hardware infrastructure, marketing, customer service AND IP Transit costs in addition.
The CRTC seems to have demonstrated in dramatic fashion just who it is they work for with this ruling… and it’s not the Canadian public.
I guess i’m a heavy internet user since i do around 300GB/month
I have a unlimited DSL 5mbps/0.8 internet connection for 35$/month taxes included.
So i can’t wait to see those new pricing ! especially TekSavvy cable in Quebec city.
I was shopping for a better internet speed (20mbps or more) then saw the CRTC decision so i’m just waiting before making my move. I was told that the 25/7 is coming early december in my area. Will have to check out this one too. I’m willing to pay 60$-70$ per month to have either 25/7 or cable 30/2 with 300GB cap or more. Of course Unlimited would be better since consumption only grow with time. Keep up the good work Marc, you might get a new customer
Thanks for sticking up for your customers. The condescending attitude was one of the major reasons I switched from Rogers.
Can someone possibly Marc, explain how that cost model works? What does $1251 get “you”?
$1251 gets TS 100 mbps service from Rogers that will be resold to you the end user. With this, if 10 users were to all be on at peak each day in a month, using their 10mbps, the cost for TS to provide that service would be $14.25×10 to connect plus another $1251 for the required capacity.
Result is they would have to pay $139.35 per month to Rogers to give you service. The only way to make profit in this system is to oversell which means we as customers are gonna see huge slow downs during peak hours.
Just my take on it of course.
You’re assuming that 100% of users are downloading at 100% of speed for 100% of peak time. In reality, it’s nowhere near that. Stuff gets averaged out, and contention ratios are closer to 10:1 or 15:1 (for basic connection speeds anyhow, the figures change for different connection speeds).
For example, I have 50 meg service from TekSavvy. Based on Torix’s graphs, peak time lasts roughly 4 hours. If I downloaded at full speed for that whole period every single day (which would be required for 1:1 contention rates, for everyone to do this), I would be downloading 2640 gigabytes per month, during peak time alone. Now, I’m a REALLY heavy user, but even I am only doing 200-500 gigs a month, and that’s spread out over much more than four hours per day.
I simply do not understand why a wholesaler would get a rate that is 6x that of a consumer when the only thing being used is the last mile.
I hope this results to better pricing and service. I’m new to Canada and as much as I was excited to try 10mbps+ (only had 1mbps previously) the 60gb limit is terrible limitation. I can’t even try netflix and google music (in the near future) because I can’t stream, download or upload the content with that small cap.
I’m hoping to switch to TS once my contract is up. I hope by then we’ll have fair deals to all Canadian users (whatever their ISP maybe)
the end result to me will likely mean a price increase in the long term…
taken from dslreports :
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TekSavvy is pleased with the rate structure adopted, but the actual rates will increase the cost of Internet for Canadian consumers. “The CRTC decision is a step back for consumers. The rates approved by the Commission today will make it much harder for independent ISPs to compete”, said Marc Gaudrault, TekSavvy’s CEO. “This is an unfortunate development for telecommunications competition in Canada”, he added.
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I was hopping to switch from Videotron to Teksavvy if they were able to offer a higher cap for the same speed (I currently have TGV60 with Videotron)…
but it looks like that it won’t be the case…
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Why doesn’t the CRTC regulate Internet services?
In 1999, the CRTC studied the Internet and decided not to regulate it. Access to Internet services was competitive, and both creativity and innovation grew in an environment without regulation. While there was some broadcasting content being offered, most Internet services at the time were text based. The CRTC concluded that the Internet was meeting the objectives of the Broadcasting Act and Telecommunications Act.
The CRTC periodically reviews its policies to ensure that the objectives continue to be met.
Just like Microsoft, the CRTC and company (Bell, Rogers, Shaw…) seriously underestimated the multitude of uses for the Internet in the mid 90s. It was priced on the high side but it was new. But once it was discovered that it could do everything that Bell, Rogers and the others could do these companies slapped on extremely low usage caps to protect their core business. They are hoping they will be allowed to act as monopolies and drive the price of service extremely high for anyone that wants to compete.
The CRTC put on a good show but in the end we all knew the result – Bell got exactly what they requested.
To see any change some form of the following needs to happen:
1) The government needs to nationalize the provision of Internet service.
2) The government needs to consider the Internet an essential service and fix pricing.
3) The government needs to lift all restrictions on foreign investment/ownership.
4) The government needs to prohibit ownership of Internet providers, cable services and entertainment providers (CTV, Global, CityTV, etc)
5) Internet providers need to eliminate the need for using the current network infrastructure. As we all know, the future will not involve connecting a device to a wire.