Shaw's new pricing: Iron fist replaced by the velvet glove?

Shaw announced plans to implement a new regime for its Internet Access services this 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 plans basically double the bandwidth caps for its Lite and High Speed services, while the caps for the Extreme service will be increased from a 100 GB cap to 250. The prices and the speed for each service will remain the same. Nice start!

Second, Shaw is promising much needed investment in broadband networks over the next year and a half and will be converting all of its television channels 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. It will most certainly, as Michael Geist, Peter Novak and others have noted, put pressure on the rest of the ‘big 5 ISPs’ – Bell, Rogers, Quebecor, Telus and Cogeco – to fall in line. At least this will be so for the issue of bandwidth caps, where Shaw’s new limits will be between two (vs Rogers) and five (Bell) times as fast.

A basic comparative profile of five of the major ISPs in Canada and Comcast in the U.S. can be seen in the table below:

The commitment announced to invest heavily in a “major upgrade of our network” and the conversion of all its digital channels should be extremely welcomed. It is exactly what is required to bring Canada closer into line with global trends (not American, which are low).

The emphasis on network  upgrades also dovetails with ‘hierarchy of priorities’ set by the CRTC in its Network Neutrality decision, or as it prefers to call it, the Internet Traffic Management Practices decision. Regardless of terminology, that decision rightly puts the emphasis on Network Investment as the preferred method of dealing with any congestion that exists.

Only then are ISPs to use economic measures (bandwidth caps, Usage-Based Billing, ‘excess usage charges’) and/or technical measures (throttling), in that order.  Shaw’s plans helps to put the house in order on this score, since the CRTC’s hierarchy of priorities has largely been ignored up til now. This aspect of Shaw’s initiative could also act as a much needed spur for greater investment from the other major telecom and ISP providers.

Iron Fist Replaced by the Velvet Glove?

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

First, the packaging anticipates that people will not only take advantage of the improvements of its existing offerings but moving to one of two new, more expensive tiers that require that high speed Internet services to be bundled with Shaw’s Legacy TV or what it calls its Personal TV model as its networks are upgraded over the next 18 months.

The good news about these bundled packages is that they put into place an extremely high speed Internet service of between 50 and 250 Mbps. They will also implement genereous bandwidth caps of between 250 GB per month and a voluminous 1 Terrabit (TB). The caps are removed altogether in some cases. This appears to bring Shaw’s offerings closer into line with ‘global best practices’ in terms of both speed and bandwidth caps.

This too is a much welcomed improvement, but the fly-in-the-ointment is that you can’t get this kind of service unless you buy into Shaw’s cable television service as well. And that is important because it ties access to true high-speed broadband Internet to a thinly-veiled bid to protect Shaw’s cable television distribution business. It is also a line of defense for its Global television network and big suite of cable and satellite television channels. Call this the Netflix Protection Plan.

While Shaw trumpets the notion that converting analog tv channels to digital ones is a bright new idea that will open up much more capacity on networks, this is overdue and as far as its over-the-air television stations are concerned, it simply coincides with date for the mandatory switch over to digital broadcasting set by the CRTC after years of foot dragging, i.e. August 2011.

The fact that it still contains measures that bias the network in favour of its own television services is to be expected, but also to be resisted. It is one of the most unsavoury parts of what Shaw put in the front window for show. It is no doubt designed in part by the desire to head-off the threat of regulatory intervention that could stem from CRTC’s vertical integration hearings scheduled for next month.

While those are the big bad bits, there are other points that range from things to quibble about to be quite serious in their own right.

There are several other measures still buried in its acceptable use policies dealing with how people can and cannot use their Internet connections and that set out an overly broad assertion of its authority when it comes to policing the boundaries of copyright on behalf of the entertainment industries and in terms of making ‘editorial judgments’ about other kinds of content hosted on and moved through its pipes. Shaw is not unique in this regard, and such problems remain for all of the rest of the major ISPs in Canada.

It must also be remembered that while the existing plans have been doubled in terms of bandwidth, they still retain the odious Usage Based Billing format as well as punishing ‘excess usage fees’ remain intact for those who do go over the raised limits.

So, to repeat and overall, Shaw’s new regime will move the ball forward and we can hope that the remaining ‘big five’ ISPs in Canada: Bell, Rogers, Quebecor, Telus and Cogeco will at least rise to the higher bar it has set.

Yet, we must also remember that this did not come from the good graces of Shaw, but rather the extraordinary political pressure put on all of Canada’s ISPs by, most notably,

• OpenMedia.ca and the massive public that it helped to mobilize;
• the ‘tweet’ in the night by then Industry Minister Tony Clement scolding the CRTC for its UBB decision in January of this year and the upcoming hearings to be held by the CRTC this July into the matter;
• and crucially, the pressure from investment bankers, who saw the mounting public pressure and threat of regulation as a threat to Shaw and the others’ bottom line and their ability to raise capital.

What this announcement must not do, however, is divert our attention from the remaining issues at hand or give Shaw a free ride when it comes to the CRTC’s upcoming hearings on vertical integration.