May 31st, 2008

Canada’s carriers undermine Canadian innovation

in: Startups

The Ottawa Net Neutrality rally last week was a decent effort, but Canadian consumers need to get fired up about their information infrastructure for it to catch on as an issue politicians care about. Canada’s telco monopolies — each of which is part of a major media conglomerate — have no reason to play fair on this. Bell’s land lines are dwindling (down 9.9%) according to its 2007 annual report; and revenues from long distance (down 8.1 percent) are vanishing to VOIP.

But the problem is that telco stuff like net neutrality isn’t sexy, as extralife brilliantly points out. Class action lawsuits might make people care — particularly if there’s a $2,000 windfall at the end of them.

Bell itself admits, “Data revenue growth was driven mainly by higher Internet revenues, resulting from an increase in the total number of access service
connections, increased sales of PC Fusion, and price increases at both Sympatico and our SMB unit.” In other words, to stay afloat they have to milk residential broadband for whatever it’s worth and maintain wireless pricing that is five times as high as U.S. alternatives.

Here’s a great comparison of those rates. In 2007 Tom Purves estimated that 500MB/month of mobile data costs $1,600 from Rogers compared with as little as $58 in the US, or even $74 in Rwanda. A significant portion of Bell’s annual report is devoted to various lawsuits and CRTC regulations that allow them to maintain their own pricing. Another good analysis points out the astonishingly high charges for US data roaming.

Even when Canadian carriers claim to introduce unlimited data plans, it’s a half-hearted effort– for $84 you can’t “consume excessive capacity,” stream multimedia or VOIP that isn’t through Bell, or to operare mail, web, news, or chat. So, umm, what’s it for? Bell has a cheap data plan for the HTC, but it’s only valid in Canada and can’t be used as a modem.

On the upside, in chats with a variety of Canadian tech types I’ve met over the last few weeks, Canadian plans are about to drop sharply. Rogers is already starting the drop. With the iPhone nearly here and TMobile coming to the North. But it’s a tragedy that it’ll take outside competition to finally force Canadian carriers to act in the best interest of Canadians. Isn’t that what the CRTC is for?

It’s high time Canadian watchdogs, consumers, and regulatory bodies addressed this. Internet technology is a cornerstone of Canadian innovation, and wireless and Internet services are a fundamental part of business. If you’re a startup, a disproportionate amount of the money you spend goes to staying in touch with employees, partners, and customers. Limiting Canadian entrepreneurs by allowing near-monopoly behavior in an era of global competition is irresponsibility bordering on treason.

Tags: broadband, Canada, monopolistic, net neutrality, pricing, telecom, wireless

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