160 Comments

Summary:

Low broadband caps in Canada put that country close to third-world countries, and overage charges almost amount to human rights violations: Netflix chief content officer Ted Sarandos blasted broadband caps and usage-based-billing employed by Canadian ISPs during an investor event Thursday afternoon.

parking meter

There’s no love lost between Netflix Chief Content Officer Ted Sarandos and Canada’s big Internet providers: “It’s almost a human rights violation what they’re charging for internet access in Canada,” Sarandos said during the Merrill Lynch Media, Communications & Entertainment conference in Los Angeles Wednesday.

Sarandos was referring to the low broadband caps in place at Canadian ISPs like Bell and Shaw, which force their customers to pay more if they exceed monthly caps that can start at just 15 GB. Netflix has sharply criticized broadband pricing in Canada before, with CEO Reed Hastings calling caps and overage fees like these “grossly overpriced.”

However, Hastings had initially said that he didn’t anticipate the caps to be a problem for Netflix’s business in Canada. The company eventually adjusted its streaming rates in the country, making non-HD streams the default option for Canadian users, and now it looks like it’s acknowledging that the caps are having an impact on subscriber growth.

Asked about it on Thursday, Sarandos had to concede that business in Canada could be better if broadband access came without caps and expensive overage fees. Said Sarandos: “The problem in Canada is… they have almost third-world access to the internet.”

To learn more about the future of TV, check out my ebook Cut the Cord: All You Need to Know to Drop Cable.

Image courtesy of Flickr user LWY.

  1. wow. well netflix should go ahead and liberate me from this tragic circumstance by building their own infrastructure so they don’t need the carriers.

    how silly. on so many levels.

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    1. Let me guess twospruces – you work for a Canadian Carrier?

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      1. Does it matter if he does? Or does it matter if you work for Netflix?

        Who builds a business plan that depends on deliverying product to their customer without having to compensate the deliverer for the delivery?

        The ISP sets a price for their service based on the cost of offering the service. When the cost of deliverying that service exceeds the revenue received the ISP has to do something to recoup the cost. They can either raise their rates or reduce their costs. The caps allow them to do that.

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      2. @onespruce You are completely misled or intentionally misleading others. Shaw’s lowest Exo package costs the consumer $90 a month. It costs Shaw less than $20 to offer that service to the customer, which includes cable, internet and phone. They are incredibly profitable, right now.

        The bandwidth limits have nothing to do with profitability. They have to do with protecting their cable offering by limiting bandwidth consumers already paid for, from being used for cable alternatives (youtube, netflix, bittorrent, etc…).

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      3. @Domenic Polsoni
        @theTruth
        You guys are forgetting about people.
        There are other cost.
        Paying employees.
        Paying R&D.
        Paying for legal fees for future development.

        Please think outside the box.

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      4. @Fred, the cost of employing people does not go up the more bandwidth someone use.

        NO cost goes up the more bandwidth you use. Bandwidth is not a finite resource, that can be “used up”. Sure, you can oversaturate it, or you can have excess, but at the end of the day you are not using up a commodity that Bell and Rogers have to go buy to resell to you.

        Even if Bell or Rogers had to pay additional peering costs because you are using more bandwidth, the price they are charging the consumer are about 10,000x what they would pay their peers.

        This is nothing like a business delivering a physical product, like a cart full of turnips. It does not cost more to deliver more, like turnips would. The people who can defend this from anything other than it “Theyre a business, they can charge you whatever they want” standpoint do not understand the technology. Think of the internet like a painting. Do you pay more for a painting the longer you plan to look at it each day? If an art dealer was to say “You will look at this painting an hour a day, so I will charge you 10,000 dollars. If you were only going to look at it, say, once a week, it would be 4 dollars”, would you be able to justify that in any possible way? The amount that the painting can be looked at is not a finite resource. If youre not looking at it, the painting is still there and its possible to go and enjoy it. Why would that cost extra?

        Also, websites do pay. They pay a hosting company for bandwidth so they can deliver their site to you, or they have an ISP that allows them to host their own servers. So the “Dotcoms shouldnt get a free ride” argument also cant really be justified. The money comes out in the wash at the peers, which connect the two ends.

        So tell me again why canadian telco’s should get a bigger cut at the consumer level? They can either take it up with their peering providers (Like Comcast tried to do with L3), or use the money you are paying to upgrade their infrastructure if thats where their problem is.

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      5. @onespruce: Do you ever make a phone call to a mobile phone? Who pays for that airtime?

        Do you not realize that it’s the *consumer* who pays for access to the Internet, and that they should therefore be getting reasonable access for what they’re paying for?

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      6. I’m sorry Fred, that’s included in the quoted bandwidth cost of $20, you’ll have to find someone else to try and feel superior to today.

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      7. @theTruth – the ISPs have been shown to be price gouging over and over and over again. Their prices are not connected to their costs. Do a little of your own research, and try to go beyond the information given by the ISPs – you might broaden your horizons, and learn the world isn’t as you thought it was.

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      8. Jeff seems to be the only one who gets it here. Maybe its because I’m an engineer, who knows, but I can’t even comprehend a world without the internet, let alone not understand how it works. The real key point here to take home with you is what has been mentioned above:

        The internet is NOT a finite resource.

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      9. The internet speeds in fucking MALAYSIA void all the arguments of you idiots who think the prices here are justified for what we get.

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      10. @onespruce

        Who builds a business plan that depends on delivering product to their customer without actually delivering products to their customers? If it weren’t for great internet products out there like Netflix, ISPs would have far fewer people demanding their product. People would be fine going back to dialup speeds. ISPs are in the business of delivering internet content. Without great internet content, they wouldn’t have anything to deliver and wouldn’t exist. The internet is continually becoming more advanced, and now Canadian ISPs are lagging behind and are unable or unwilling to satisfactorily deliver this content.

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    2. what would you propose for the online book retailer who wants to set up shop in iqaluit? should bell aliant run a subsea cable into frobisher bay for them?

      canada is a large and thinly populated place; not the lowest cost place to operate a network. I dont work for a carrier but i defend their right to run their business.

      the copper loop was unbundled; competition should happen to flatten things down.

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      1. twospruce it seems you know very little about the big Canadian telecom companies and not much about economics either. Even in Ontario the most densely populated province our rates and caps are unbelievable. 3 massive corporations hold almost all of our infrastructure and they know it. They push out new competitive firms and are able to charge waaaay above reasonable prices because people will pay them. Its more of an oligopoly than a competitive market where their prices would be around their average total cost to provide the service.

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      2. @funion

        So, what would you propose…? Last i checked it is referred to as free enterprise.

        Complaints bin by the door.

        I will repeat. The copper loop has been unbundled. Competition is possible. I use an alternative ip service provider, because i happen to live where that is possible.

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      3. Funion – Canada and the US tried competition, tried deregulation. In the US alone, dozens of CLECs started up trying to compete. With rare exception, they are all gone today. Now it is true that Canadian companies do play hardball, but the fact of the matter is that building new infrastructure is ridiculously expensive, so expensive that new competition can’t enter the market. Who is to blame? It’s not just the incumbents, it’s the suppliers of the equipment, and the overall state of affairs. This isn’t just in Canada, in virtually every 1st world nation the competitive landscape is an oligopolistic situation. What could regulation do? Zilch. The market controls the competition, not the government.

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      4. Give me a break, Rogers, Bell and Shaw have been gauging their customers from the onset. Our country is so big. What a load of crap. I am from Southern Ontario, one of the most populated areas in North America. And our internet speeds and rates suck! Why do they do this? No competition. That’s why. Tax payer money subsidizes the infrastructure these guys built. I am still waiting to see the benefit of these subsidies!

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      5. Stefan Alhmqquist Sunday, September 16, 2012

        Wow, you are really clueless about network infrastructure and basic business models aren’t you? Copper is the last thing an ISP in that situation should be looking at.

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      6. that is a misconception, most high network usage is condensed urban areas, they just use that excuse to justify charging insane rates

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      7. twospruces : God, are you being intentionally thick? You clearly don’t know shit about the whole issue, as others have subtly pointed out. So I suggest you STFU and get properly informed. Also, lay down Atlas Shrugged, it’s a load of crap. Free market/free enterprise does not foster healthy competition. It fosters monopoly unless the government steps in and cockblocks them to allow startups to be competitive. Wake up from your fantasies and again, get informed.

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      8. Actually @twospruces Rogers (the largest cable provider in Canada) offered an unlimited internet plan for $80 CA per month (I was a subscriber). The week that Netflix announced that they were coming to Canada, Rogers scrapped the unlimited plan and gave me an awesome 80Gb cap, citing that they were protecting us poor consumers from bandwidth throttling (which they do anyways). It has absolutely nothing to do with how “thinly” populated Canada is, and has everything to do with the fact that our Government has allowed Rogers, Bell and Telus to carve out a monopoly in our country, and this includes Cable, Internet and mobile service. Google the total cost to the consumer for an iphone 4, in Canada a three year plan costs the consumer $3,300, compared to $1,000 in the US.

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      9. Rogers_sucks_hard Monday, September 17, 2012

        “bell aliant run a subsea cable into frobisher bay for them?”

        Did bell actually do this? Lat time I checked the big two are reinvesting zero of their profits into infrastructure (aside from maintenance and newer cellular networks) – and the lines that all ready exist were installed by HYDRO CANADA and funded by the PUBLIC through taxes.

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      10. Canada is big, but southern Ontario is not. Even with enough people in rural areas we are still lucky to get anything better than basic wireless broadband. Bell keeps slowing down smaller ISPs development.

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    3. Domenic Polsoni Sunday, September 16, 2012

      Sure thing. Only Netflix will require several tens of millions of government subsidies in order to do so. I mean, it’s only fair when you consider that just about every other provider did. Ok? Thaaaaanks.

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      1. Google is already proving telecoms lie and inflate the true cost of installing a new updated fibre network by at least a factor of 50 . Competition will come and believe me when I say the telecoms giants all over the world will be looking for new business models just to stay relevant. WI-FI networks are the future but not in the way most people expect.

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    4. The infastructure is there, all that has to happen is consumers need to be educated. Not sure why people still buy capped connections.

      I use Distributel which resells me Rogers Cable internet (28mbit down/1mbit up) with no download or upload bandwidth cap. All for $60 per month.

      Teksavvy is another large reseller of Rogers Cable and Bell Fibe as their own without silly caps. I guess Netflix could also resell the internet service as ‘netflix internet’ without caps :) win – win!

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      1. It depends on where they are available. I tried to find an alternative, in Vancouver, and nothing was available in my area (near Metrotown). Now I live in an even smaller city and have no alternatives.

        $60 a month is not affordable either.

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      2. Wow, even the little-guy suppliers rip you guys off pretty bad. I’m paying $30/month for 25mb down/5mb up, no caps.

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      3. angela, try Telus. They don’t monitor bandwidth and have very cheap introductory prices with no contract. I’ve been very happy with them.

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    5. That would be illegal. Pretty much all places have laws forbidding anyone from setting up new networks because some people don’t want tons of cables hanging from every telephone pole or streets constantly being dug up.

      Internet service needs to be a public utility. It fits every criteria of a utility that I have ever heard of, and the benefits to society and the economy would be monstrously huge.

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      1. *AHEM**Sweden has free public internet**AHEM*

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    6. The infrastructure exists, the problem our gov. is allowing us to be gouged to a pathetic level. There is over 1000% markup on broadband costs in this country.

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  2. I’m so thankful I have TekSavvy available in my area. They offer 300GB and unlimited packages.

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    1. More power to TekSavvy!

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    2. Guillaume Couture-Le Friday, September 14, 2012

      Teksavvy really is amazing. I don’t know how I could ever go back to Rogers/Bell after this.

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    3. They are still ripping us off. I don’t put it on them, but on those who they rent the network from.

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  3. If the CRTC approves Bell Canada’s acquisition of even more of the market share we will see even higher prices and less choice in Canada. Bell wants to squish Netflix and all other competition like a bug.

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    1. Frankly, if I was Bell I’d want to take out Netflix as well. The very notion of an Internet company going after a high-margin service like video on demand without having the same infrastructure requirements must be infuriating. They have a highly unfair advantage and what do we see? They find a low-cost, low-data cap package on Bell’s website and go whining to their investors that with data caps like that, Canada must be a 3rd world nation. Meanwhile Netflix secretly knows that the majority of Canadians don’t own a base Internet package, they have a package 2 or 3 tiers up where customers have 5x to 20x more data allowance, which is enough for entire months of Netflix. So really, you are just seeing posturing from Netflix, they’re acting like bitches.

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      1. With respect, Canada’s internet pricing and infrastructure is still second rate, despite you being correct in most of your assertions. Unlimited bandwidth options in Canada exist, but they’re on average 90 times more expensive than other countries. The inability of Canadian carriers to provide competitive levels of service and pricing compared to other countries is a sad testament to the lack of diversity and competition in the Canadian marketplace.

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      2. Yeah, every restaurant should run their own water infrastructure and every retail business should run their own electrical grid. The fact they exploit the infrastructure like that is just disgusting! I want a cable for every single Internet-based business running from telephone pole to telephone pole. Just because the phone companies have fought every single step of development of the Internet, and depend COMPLETELY upon government protection from competition to remain in existence, that’s no reason why society should expect them to contribute something. We’re only talking about enabling the largest and most abundant economic opportunity for wider society that has ever been developed. The phone companies should definitely remain the sole ISPs and continue to be able to provide services like telephone and video distribution even though the Internet makes those services millions of times cheaper and easier to provide. When automobiles were developed, the government stepped in and forced automobile companies to require a buggy whip to be inserted into a special slot in the car before it could start because the buggy whip manufacturers wanted to continue making money, so they should step in again here and give the phone companies all of the benefit of connecting to the Internet even though the phone companies fought to stop it from happening!

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      3. You’re arguing against technological advancement. Netflix can offer a cheaper better service becuase of advances in technology. It’s not their fault Bell was too near sighted to set up the service before they did. Now, instead of competing in a fair market with netflix, they’re going to create unfair disadvantages for netflix to ensure their dominance and artificially high prices.

        It’s about as ethical as buying the world’s entire supply of flour and then quadrupling it because “it’s good business”.

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      4. My “2 or 3 tier up” Rogers cable package gives me 60GB of bandwidth a month, most definitely not enough to stream netflix like I watch TV. That was part of the reason I canned my netflix subscription, I wasn’t using it because there wasn’t enough content, and I don’t really wanna slam through my bitcap and have to fork more money to rogers.

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  4. Wow. Compare that to Finland, where the courts have ruled that broadband access really IS a human right. Or Sweden, where I just spent several weeks, and saw TV adds for 200 MBPs service with no bandwidth caps for SEK 499 a month (about USD $75). See https://www.comhem.se/bredband. By comparison, the rates in Canada are criminal. And the US isn’t much better. I’m paying Comcast $70/month for 30 MBPs at home.

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    1. You think that’s bad? I moved to Canada (where I’m a citizen), and we’re paying $170/month for 6 up/1 down, with a 125 gig cap, standard phone (no long distance, no caller id, nothing), and standard satellite – no DVR or anything.

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      1. Where do you live, John, and which carrier? And what are the names of the packages that you have? Please be specific. That seems rather high unless you are in a remote location. You can get all of that or more for under $100 from every ISP and Telecom company in Canada.

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      2. I would look for a better package dude, I live in souther ontario- wightman ISP – $59.95 10 calling feature phone with 2cents per minute long distance AND unlimited bandwidth on fibre optic from CO- to home with 20 meg down guaranteed speed- usually average 40 meg down 8 meg up

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      3. Sounds about right, I pay $170 for my 15d/1u 60gb capped + VIP cable on rogers, and I can’t even hit the 15Mbit. Compared to my $60 15/1 300GB capped only during day time hours Teksavvy DSL. I live in Kitchener,

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      4. Actually, to be fair, you can find areas in major cities with little to no access available.

        Case in point, an area in NW Edmonton has no Shaw access (estimated 9-12 months) for data or regular cable. Dish only.

        So, you figure you’ll go to DSL service. Well, that’d be Telus… Hmmm…6Mbps down, and 1Mbps up. Period. No eta when 15Mbps will be available.

        And this is in the provincial capital. I was shocked, since Calgary has much better coverage.

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    2. Please use Mb/s or Mbps when referring to Megabits per second. Your abbreviation of “MBPs” looks like Mac Book Pros.

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    3. I live in a very small town in Texas with DSL & get phenominal download speeds (very fue people on my node) & only pay $40 a month. you are getting ripped off @ $70 a month bro.

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  5. $100/mo here in Australia for 15up/2down 100gb on-peak + 100gb off peak per month. If my wife uses Tumblr too much we go over our cap :\

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  6. This is tight. On an average evening we download 20GB. I can imagine what a bill for a month would look like :)

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  7. I like your articles Janko. They are always informative and to the point. Thank you for sharing.

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  8. John Christopher Supertramp Friday, September 14, 2012

    Please help us!!! We have a 4Mbps down and 56Kbps up. Mamimum plans outside big city for New-Brunswick is Rogers Cable with 150Mbps down and 10 Mbps but for 229$/month and no dedicated IP

    For symetrical bandwidth, Bell Aliant charge for a 36 months commitment to service.
    – 550$ (+600$ installation) for 5/5Mbps
    – 750$/month (+600$ installation) for 10/10Mbps.
    – 1100$/month (+600$ installation) for 20/20Mbps

    Geez..

    We can’t run a business which need Internet as it cost more than the price of renting an office per month.

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    1. Not sure where you live in New Bruswick as internet of 10Mb/1Mb is available EVERYWHERE for about 60$ a month and pretty much every city is wired in Fibre for 50Mb/40Mb for 60$ a month…

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      1. I’m assuming those are business rates, and not residential rates. The last time I had a look at them they were insane. Fortunately, our business doesn’t need a fast speeds, or a high download cap, so a mobile stick suited our needs nicely.

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    2. That is a load of bull.

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  9. sad

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  10. I wonder if the fact that movie and show selection in Canada is just a fraction of what’s in US has a smidgen to do with subscription growth…

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    1. Nailed it. I’m sure that selection vs US Netflix (and word of mouth about the lacking Canadian service) has bigger impact than bandwidth caps in Canada. Better selection = more subscribers.

      I’m not letting the internet companies (who are also the cell phone companies, who are also the cable/satelite/IPTV companies) off the hook though. What a cartel they are!

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      1. Its absolutely about content. Canada Netflix has a horrible selection compared to US Netflix. I know several people who go out of their way to specifically get US Netflix, even though its costing the more money. Also its super frustrating that only a few titles are available in HD on the PC. I dont feel like running out and spending $100+ for a box just to watch the same stuff on my TV that I can through my already connected PC. Add more HD content to the PC and I’d be more willing to recommend the service to others.

        Shaw backed off of Usage Based Billing last year and actually provides a very good service now. I’m paying about $50/mo for 25mbit down, and 2.5mbit up with a 250gig cap. Plenty for us. For $10 more I could get 50mbit down and 3mbit up, and 400gigs of bandwidth. Also for $110/mo you can get 250mbit down, and 15mbit up with 1terabyte of data (they eve have an unlimited data plan).
        http://shaw.ca/Internet/Compare-Plans/

        I think the real issue is out in Eastern Canada where Bell and Rogers are screwing their customers. Shaw tried to follow suit, but after a huge pushback from their users they smartened up.

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    2. The irony is the poor selection is ALSO caused by those selfsame incumbent carriers that are offering the moronic caps, as they are huge, vertically integrated companies that are not only providing the connections, but are huge media distribution owners/producers as well. They buy up the rights to everything under the sun for “Canada”, and then refuse to share those rights with Netflix and other alternate entertainment providers, while at the same time squeezing those providers with the ridiculous and ethically questionable data caps. And the only ones who might be able to step in and so something about it, the regulators, are almost entirely under the sway of said incumbents.

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      1. This. I know that Netflix Canada has an uphill battle getting the content people expect from them, but I’m happy as a consumer. And even if I wasn’t, I’m happy to support a company that is trying to make it work in such a terrible market for them to be in.

        And Netflix Canada still gets content that the US doesn’t. And not just crappy stuff. People just never talk about the positive aspects. People just like to complain.

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    3. You can thank the lovely CRTC and their Canadian content laws for that!

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    4. For sure it’s the selection in Canada. If it has been released after 2005 it won’t be on Netflix in Canada. This is exactly the same issue we have paying MORE here than the same product in the US. And what does NetFlix say? Oh your market is too small to support more content. This would be like me buying a car made in the US but it doesn’t come with Tires and windows because the market doesn’t support it. Yet i’m pay the same or More the same product. Netflix is just as bad as the ISP’s here in Canada they truly don’t care about the customers.

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