We'll Lift Your Internet Cap – If You Buy Our Cable TV

Canada's ISPs may be backing off usage-based billing, but new problems are arising.

Shaw announced plans to implement a new regime for its internet services last week. There is much in the announcement to be commended, and much still to rail against.

First, the much-welcomed headline news is that Shaw’s new plan basically doubles the bandwidth caps for its Lite and High-Speed services, while the caps for the Extreme service will be increased from 100 to 250 GBs. The prices and the speed for each service will remain the same. Nice start!

Second, Shaw is promising much-needed investment in broadband networks, and that it will convert all of its television channels from analog to digital. As the company notes, “In making this move, we will triple the capacity of our network, freeing up space for more internet, HD, and On-Demand programming.”

Third, the new pricing regime makes available some of the fastest and most generous high-speed internet services in North America. This will put pressure on the other “Big 5” internet service providers (ISPs) – Bell, Rogers, Quebecor, Telus, and Cogeco – to fall in line.

Shaw’s new bandwidth caps will be between two (Rogers) and five (Bell) times as great as those of the other dominant ISPs.

The commitment to a “major upgrade of our network” will bring Shaw more in line with global trends. It also dovetails with the “hierarchy of priorities” that the Canadian Radio-television and Telecommunications Commission (CRTC) set out in its "net neutrality" decision, where “network investment” is the preferred method for dealing with any congestion that exists – rather than “throttling” or the much loathed usage-based billing (UBB).

But now for the odious bits of Shaw’s intended course of action.

First, the highest-speed services with the most generous bandwidth caps, or with no caps at all, are only available when bundled with either Shaw’s Legacy TV or its Personal TV model. The bundled internet services offer speeds between 50 and 250 Mbps and bandwidth caps between 250 GB and a voluminous one TB per month, and, in some cases, there are no bandwidth caps at all.

But tying the highest-performance internet service to its television services is, first and foremost, Shaw’s first line of defence for its cable and satellite distribution system, including the Global TV network (which it owns) and a suite of cable and satellite TV channels. Signing up for Shaw’s internet services also enrols you, unwittingly, into the Shaw business-projection plan for all these other services.

The fact that Shaw is able to leverage control over its networks to influence the channels of communication flowing through them is not surprising. The problem is as old as Roman roads and Venetian canals.

Indeed, Shaw’s new plans to bundle connectivity and content under one corporate umbrella is one of the biggest problems with vertical integration. It always has been, and always will be.

The CRTC can do something about this after its vertical integration hearings next month. It could declare such activities out of bounds, or even break up Canada’s Big 5 integrated telecom-media behemoths – Shaw/Global (Corus), Bell/CTV, Rogers/CityTV, Quebecor (TVA), and Cogeco (Radio). But hell will freeze over before that happens.

The government could set up the Canadian National Broadband Company (CNBC) as a rival entity, similar to what the Australian government did. But that’s not likely to happen either.

The CRTC should seriously consider imposing “functional separation” requirements on the Big 5; it would be a good compromise. Call this the Goldilocks solution to vexed internet-policy issues.

Shaw has moved the ball forward, and we should not only hope, but also push, to have the remaining Big 5 ISPs fall in line.

The advances so far have not come from the good graces of Shaw. They have come from an intense pressure placed on the major ISPs by a number of sources: OpenMedia.ca; the "tweet" in the night from then industry minister Tony Clement, who scolded the CRTC for its UBB decision in January; the upcoming regulatory hearings that are to be held on vertical integration and UBB as a result of the CRTC’s January decision; and investment bankers, who see public anger and the threat of regulation as a potential danger to ISPs’ bottom line.

Ultimately, we should appreciate what Shaw has put on the table, but this should not divert our attention from the fact that much remains to be done. It should not give Shaw a free pass when the CRTC examines vertical integration and UBB over the course of the next two months.

Photo courtesy of Reuters.