Blog Post

Canada’s Netflix Rebellion Against Bandwidth Caps

We want our Netflix! (s NFLX) That’s the message Canadians are sending to their elected officials this week, in response to mandatory bandwidth caps put in place by regulators. Canada’s Radio-television and Telecommunications Commission (CRTC) finalized a decision last week that will allow big ISPs like Bell Canada to charge their wholesale customers usage-based bandwidth fees.

The change, which goes into effect on March 1, will mean smaller ISPs will have to cap their customers’ bandwidth at 25 GB per month in some markets. Anyone who exceeds this limit will face extra fees. A petition aimed at reverting the decision has been gaining steam in recent days, however, attracting more than 330,000 signatures to date. And now politicians are starting to step in as well: Prime Minister Stephen Harper said this week on Twitter that he’s “very concerned” about the impact of the decision, and wants it reviewed.

Big ISPs like Bell and Shaw have had bandwidth caps for customers in place for years, and we’re not talking about Comcast-like 250 GB caps (s cmcsa). Bell’s basic Internet plan offers users as little as 2 GB, with fees of $2.50 Canadian for each additional GB used. The higher-priced premium plan caps out at 25 GB for users in some of Bell’s markets.

Bell is reselling its DSL service to many smaller ISPs without access to the last mile, and it has been pressing for a long time to also charge these ISPs based on the bandwidth used by individual customers.

Bell's Internet plans: Not enough bandwidth for Netflix.

We already argued back in 2009 that this kind of metering could turn Canada into an oldteevee wasteland without any hope for a thriving online video market – but the issue became even more pressing when Netflix entered the Canadian market last September. Netflix isn’t offering any DVD rentals in Canada, instead solely relying on its online streaming.

The company has said that it expects its Canadian operations to be profitable in the third quarter. However, it also warned that usage-based billing could negatively affect the company, and said that usage-based-billing schemes for wired networks are “grossly overpriced.”

Many observers took these comments as a warning to U.S. ISPs, but Netflix is quickly becoming one of the key issues in the Canadian rebellion against bandwidth caps as well. The NDP said last week that usage-based billing is an effort by large ISPs who also sell TV services to “limit competition from online viewing sources like Netflix.” The New Democrats were joined by Canada’s Liberal Party in opposing usage-based billing this week, with a spokesperson saying that the “CRTC decision will limit Canadians’ ability to use services like Netflix.”

Image courtesy of Flickr user LWY.

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10 Responses to “Canada’s Netflix Rebellion Against Bandwidth Caps”

  1. TimeKeeper

    There are a few things to remember on this:

    1) Bell has been imposing caps and using metered billing for years now. This effects Bell Bandwidth resellers only, which were reselling unlimited packages to their customers.

    2) While the consumer loves Netflix, the content creation community is scared to death by it. Now there is a US company pumping shows to a Canadian TV audience completely bypassing the Broadcaster. This is critical – Creators get money to produce Canadian shows as long as those shows go to a Broadcaster. The Broadcaster has to follow certain Canadian Content (CANCON) rules imposed by the government. This gives the creators a market for their shows. It’s a virtuous (cough, cough) cycle. The ecosystem is in place due to decades of heavy government lobbying by both the producers and Broadcasters.

    Netflix shows up and bypasses the whole TV Bureaucracy and gives the viewer what they want. They don’t care about CANCON, they don’t care about funding, they just want to get people to subscribe to their service. Heck, they are not even collecting taxes (GST or HST) for their service. (I predict this fact will hurt them in the end. If they are not a Canadian Company or collecting and remitting Canadian taxes, they will not have a voice at the table when it is critical for them to be heard.)

    For Netflix not to like metered billing is irrelevant as they do not participate in the established content value chain that is fully entrenched in Canada. In fact, they undermine it.

    3) Also note that the BIG ISPs are also Broadcasters. They are going to take their pound of flesh any way they can. If you don’t watch their channel on Cable and get content of the net, they’ll ding you for bandwidth.

    The BIG ISPs and the CRTC have done an amazingly poor job of getting the facts out. Bell puts a condescending corporate talking head on TV telling everyone that its going to be OK – most consumers are paying this way already. (WHAT?!) The CRTC decision is being questioned by the government showing weakness and confusion. This will all shake out in the end.

    The argument that this will stifle innovation is BS. It is times like this where innovation flourishes. I look forward to a return to progressive small ISPs and better video compression codecs, to name a few.


    • Vancouver-web-development

      The fact is that new impose billing system will bring Canada in Internet Stone Age, it with billing $2.5 up to $4 per 1Gb over the quota of 25 Gb, for my average use as a web developer I will pay internet over $100 per moth. This also mean that we can forget about online backup system.
      CRTC do not care about Netflix because they already cripple Canadian Netflix content wise, Canadian netflix has about 10% of USA Netflix content, they fighting torrent downloads.

      • TimeKeeper

        I’m not sure how $3/GB is going to put Canadians in the stone age. It should cause them to innovate and move more data with less bits.

        As a web developer, you use the internet for your business. Paying $100/month to access your clients isn’t really that much.

        Don’t get me wrong, paying more for anything is bad. If metered billing is the way to go then the ISPs should blow away bandwidth speed limits and let you download as fast as you can. The more you download, the better it is for them. Also, if ISPs limit you, they should also roll over any bits you didn’t use from the previous month. That way you pay for what you use.

        I don’t think the CRTC thinks that way and was listening the the big ISPs only. There could have been a bit of give and take in that process.