Shaw’s new Internet plans may not have national impact, analysts say

Industry experts are divided about what Shaw Communications Inc.’s new bit caps will mean for the rest of Canada's Internet service plans. Telus Corp. is expected to follow Shaw as the western company’s main rival, but no changes are immediately anticipated for eastern Internet service providers Bell Canada and Rogers Communications Inc. Shaw announced Wednesday a range of unlimited and 250-750 GB new broadband plans for customers in the Vancouver, Edmonton, Calgary, and Winnipeg areas. The launch of another plan with a terabyte limit is also expected to soon. Shaw president Peter Bissonnette said in an interview that the changes came as a direct result of the company's consultations with customers. “We have now created very extensive available data packages priced in a very positive way,” Bissonnette said. “So if a customer fits into a size 32, 42, or 44 pair of pants, we have something that will fit each of them.” Shaw is the first major telecom company to alter its pricing as a result of a public outcry last winter over usage-based billing. Skeptics as well as experts say the move is positive for Internet pricing, at least in Western Canada. Dvai Ghose, an analyst with Canaccord Genuity, said in an interview that Shaw’s new usage-based billing rates are a smart move because they alleviate some regulator and customer concerns. Ghose suggested that through an increase in data usage limits, consumers can use popular over-the-top services like Netflix, and by the same token, ISPs can increase their Internet revenues. “I don’t think it’s the worst thing for the cablecos and telcos because they can manage cost versus revenues effectively,” said Ghose. “They can actually increase their Internet revenues as a result of over-the-top services.” Ghose said he expects Western Canada-based Telus to follow Shaw’s move, and that, in the East, Bell and Rogers will eventually show some movement. Ghose told The Wire Report that he believes broadband is an emerging topic in the political sphere like wireless has been for the past two years. “I think the lessons from wireless are that if you make changes that are consumer- and regulator- friendly, it’s better than having changes forced upon you,” he said. Right now, Internet plans offered to consumers by Shaw and Telus in Canada’s western provinces are more generous than those offered in Ontario and Quebec. Shaw’s new usage-based billing plans are expected to almost double the download limits and speeds of Rogers’ existing plans. “I think that Bell and Rogers and the Eastern cablecos and telcos will have to be more relaxed in terms of their caps as well,” Ghose said. Under its new limits, Shaw increased the data offerings in all of its Internet plans. Phase one of the new provisions, set to launch in June, will offer packages ranging from $59 for the basic user to $119 for a high-end user. Shaw’s low-speed Lite plan offers a 1 Mbps downstream speed and is available with unlimited data for $27 per month if it is purchased with a $59 legacy TV or $85 personal TV package. Bissonnette said that the package is designed for data-heavy users, such as those who use BitTorrent or streaming services to download video. They can consume unlimited data for a reduced price as long as they aren't concerned with the speed. The $119 plan is considered to be a “high end” plan, offering 100 Mbps and no data limit. But Bissonnette said he anticipates the most popular plan in phase one will be the $59 plan that offers a 50 Mbps download speed an 400 GB of data per month. Scotia Capital analyst Jeff Fan said in an interview that there is no direct competition between Shaw, Rogers or Bell, and that the company's new Internet plans will not affect eastern service rates. “I think each market is very different,” Fan said. “And because each of them face different competitors, I really don’t see a link between what Shaw is doing and what Rogers may do or what Bell may do in Central and Eastern Canada.” The second phase of Shaw’s new usage-based billing plan is to be launched in August and will see new packages offering download speeds of up to 250 Mbps, upload speeds of 15 Mbps and bit caps of a terabyte, starting at $99. Bissonnette said the higher bit caps seek to reduce the probability that customers will go over their limits. “But if they do, there’s more alternatives for them—all the way up to an unlimited kind of package,” he said. Bissonnette said that, so far, responses to the new bit caps have been very positive. Shaw learned a lot from its consultations and wants to offer customers faster Internet services at a price that is fair to them, he said. “I think we surprised people, because they thought we were going to come out with just another mix on UBB ,” Bissonnette said. “They weren’t expecting unlimited packages and the kind of data capacity that we give with these packages.” Advocacy group OpenMedia.ca, which led the “Stop the Meter” campaign against wholesale usage-based billing, said it supports Shaw’s new plans. OpenMedia national coordinator Steve Anderson said the move is a positive step. “It’s good to see them reacting,” he said in an interview. “But we’re still really far away from where we should be on pricing in Canada.” Anderson Internet services are becoming more expensive for Canadians. This is a problem when, in the United Kingdom, Internet services are getting cheaper, he said. “In Canada, we pay twice as much as people in the U.K.,” he said. “So we’re still not meeting global standards; not even close.” Anderson also expressed concern at the way in which Shaw's bit caps are distributed. Anderson said that to tap into one of Shaw’s unlimited caps plan, it appears that users must first subscribe to the company’s TV service. “It’s a really anti-consumer measure because you’re forcing people to subscribe to something they don’t want,” he said. He added that the new plans are a move in the right direction and that he hopes that this is the beginning of a broader shift. “I hope this is the beginning of the telecom companies starting to loosen their grip,” he said. dgrenier@thewirereport.ca

Shaw’s new Internet plans may not have national impact, analysts say

News | May 26, 2011

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