Data caps and contracts in a free market
Let’s look back in time for a moment. Our telephone service was once controlled entirely by Bell Canada and our TV cable system was owned by Rogers. When the internet came along, there was only a choice of two companies. Competition was unheard of. For mobile phone services, we only had a choice of Bell, Rogers and Telus until Fido came along. Fido, a newcomer to the playing field was eventually bought out by Rogers which left only three companies competing for market share. There were no major differences for consumers between these companies for monthly cell phone plans and data packages. The only difference between these corporations were their names and business addresses. Basically a customer could only choose to go with a company based on name brand. One could say there was a monopoly held by these three companies offering almost exactly the same thing.
This lack of competition in Canada enabled these corporations to lock Canadians into two year contracts until three year contracts suddenly became the norm. These contracts consist of small print which is geared towards the benefit of the corporations only and not in the best interest of individual Canadians. For example, these contract subjected Canadians to exorbitant cancellation fees, system access fees (WHAT FOR?!!) and a default continuation of service and billing even after the contract ended, a 30 days notice to cancel the contract even though the contract is finished. There are relatively very few differences between the three major corporations providing cell phone and internet services and one could say these three companies held the monopoly on data and the cell phone market in Canada.
However, with the recent appearance of new companies such as Wind, Mobilicity and Koodo Mobile etc., and high speed internet companies such as Acanac, and Teksavvy, Bell, Rogers, (Fido) and Telus are experiencing a dramatic change in the market and unexpected competition. The newcomers are offering strong competition to the data & mobility cell phone monopoly firstly by offering their services without a contract in addition to no hidden fees, no system access fee, unlimited downloading, higher speeds at lower prices and basically overall: something the customer wants: lower prices. The big corporations then moved to cap data for customers and charge anyone going over what they consider “the limits.” This does not take into consideration that most average people never go over their limits.
Recently, the CRTC ruled that usage-based billing would apply to the smaller competitors of Bell, Rogers (Fido) and Telus. It would appear that the CRTC was acting in the interests of the major telecommunication giants who desired to crush the unwelcome competition of the newcomers who were offering unlimited data at high speeds. The big corporations had attempted to crush the competition and increase profits by putting data caps in place for their customers. The Harper government has decided to overrule the CRTC ruling, and so they should. Do Rogers and Bell have the right to use data caps? What is desperately needed is consumer protection for wireless consumers.
I am using Rogers High speed Lite for my internet and I don’t know how much longer I will be doing so. Rogers called me up a few months ago to offer me cheaper internet if I signed a one year contract. At the price they were offering me, this would still be more expensive than what was offered by Acanac internet providers. Then Rogers told me that their data speed was faster than Acanac’s. Since I was sitting at the computer, I immediately went to the Acanac and Rogers website which enabled me to compare and answer, “no, Acanac is still offering faster internet speed for less money.
They then tried to offer me true high speed internet at a slightly lower price if I signed a contract. I still said no, because at the time, Acanac was still offering unlimited downloading, higher speeds and a cheaper price – without a contract (isn’t this what everyone wants?). The person on the other end of the phone then told me that Acanac was using DSL lines for their internet which meant that if there was bad weather, I wouldn’t be able to get the internet service. Since I have confirmed this to be hogwash, I still declined Rogers’ offer, because, like everyone else, I’m asking: OFFER ME SOMETHING GOOD. But it also indicated to me that Rogers is aware that the days of long contracts are finishing. They are also realizing that the market is changing and they just may lose customers because of the new competition that is emerging in Canada. I know quite a few people in my office who have moved from Rogers to the cheaper internet providers already. Even the guy that sits next to me is planning to abandon Rogers internet soon. He says that the only service he will retain with Rogers is Cable services. All his other business is somewhere else now, contract free.
In an attempt to keep up with the cost of living and the recent demise of my local Blockbuster store, I signed on with Netflix (the video streaming company) which offers cheap unlimited movies for a mere $10 a month. We don’t watch many, say maybe four or five movies a month. However, we have noticed that our internet will suddenly switch off during the movie. I can’t help but be paranoid that this is the work of Rogers, because Netflix is also cutting into their market. Rogers is losing business to Netflix (and also to the internet because you can even watch TV on the internet these days). Rogers OnDemand movies cost a whopping $5.99 or $7.99, plus our Canadian high tax rates. Add that to your already big bill from Rogers and it bites. Sure, the movies at Rogers are recent DVD releases, but in these days of the vanishing Middle Class, one has to watch their budget more carefully. Therefore, we now have the emergence of Netflix, a more viable and cheaper option.
The CEO of Netflix, Reed Hastings has said “The ISPs that want caps, they want to be able to charge more, they want to be able to have bigger bills. He further added that “Internet traffic is extremely cheap and the problem is there’s not much competition and that’s why you get these big prices.”
Reed Hastings also says that the price of data is very cheap – just pennies a gigabyte, which I believe to be true when my internet stick’s contract expired. In an attempt to keep me as a customer after my contract of $35.99 per month ended, offered me the data for just $10. a month. (I declined because I’ve moved on to the iPhone). If you don’t believe that data per gigabyte is cheap, just check the rates for data south of the border and you’ll know what I mean. We, in Canada have some of the highest rates in the world for data and cellphone use.
Bell, Rogers, (Fido) and Telus, the monopolistic giants are going to have to get used to the competition, provide better service, reduce costs and get rid of contracts. It’s slowly becoming evident that customers no longer want to be tied to a company by the proverbial ball and chain contract. Provide the customer with exactly what he or she is looking for and they’ll stick with you forever.