Shaw Internet - Magical New Speeds and Lots-o-bandwidth, fickle geeks appeased

[Jimmy Stang]

Originally Posted by FlamesPuck12

I wouldn't be surprised if there are a lot of users who believe their bill will go down based on their low usage. Obviously they don't know that there is still going to be a monthly rate on top of the UBB.

That was the sentiment at the consultation. People don't mind paying for their usage if a) the rate is fair and even regulated, and b) there is no monthly fee as well. Shaw even admitted that, traditionally, the light internet users have been subsidizing the heavy ones. What they want is the same monthly fee from grandma, and then cash in on overage fees from others.

[OilKiller]

Originally Posted by Jimmy Stang

What they want is the same monthly fee from grandma, and then cash in on overage fees from others.

So basically their cake and eat it too? Kid of like having my wife and something else on the side. Cool...got it. Guess I might be leaving Shaw after all.

[FlamesPuck12]

Originally Posted by Jimmy Stang

That was the sentiment at the consultation. People don't mind paying for their usage if a) the rate is fair and even regulated, and b) there is no monthly fee as well. Shaw even admitted that, traditionally, the light internet users have been subsidizing the heavy ones. What they want is the same monthly fee from grandma, and then cash in on overage fees from others.

Well someone posted an article awhile ago which quoted one of the guy from Netflix saying the cost of internet per GB is around 2 cents. If we go with that number, I doubt that the light users are subsidizing the heavy users given that the markup is so high. They're probably still making profit off from the heavy users as well. They just can't gouge money out of the heavy users as they are doing with the light users.

[photon]

Originally Posted by Jimmy Stang

Yes, usage is increasing, but the graphs were without metrics and the Shaw people weren't able to tell us the scale. At times, people were grilling them pretty hard about the actual cost to deliver internet, and the answers would be vague and incomplete.

This is entirely reasonable, you don't want to share too much with the competition.

Originally Posted by Jimmy Stang

People indicated that they wouldn't mind paying for internet like a utility, but that would mean that a gig would cost x dollars a month, that it would have to be tied to the actual cost to deliver the product plus a markup, and would need to replace a monthly flat rate. So if you are on vacation and use no internet, you pay nothing. If you are an avid torrenter, you pay more.

Well sure, coming up with schemes where people pay less is easy. But that is counter to what a company wants to do; charge as much as they can for the largest # of customers. That is to say maximize profits.

Of course it's always a balance; charge too much and people leave, charge not enough and you leave money on the table.

But how much they charge and the levels provided are very much based on psychology and market, not on actual usage, because people shop based on perceived value and emotion. That's why I doubt they'll ever switch to a low base rate + $x usage model unless forced to.

I expect Shaw's charges to be very similar to what they have now, with overages cheaper than what they presented but not hugely so, and higher caps but not hugely so; definitely not enough to satisfy the power users' perceptions.

Originally Posted by Jimmy Stang

I'd like to see what Shaw's plans are before passing judgment, but the statements that "our customers told us at the consultations that they like usage based billing" are complete and utter nonsense.

But you said yourself that the people themselves in the consultations even proposed usage based billing, so it isn't nonsense. It's a question of what kind of usage based billing.

Anyone that expects Shaw or any company that's on monthly flat rates with tiers to switch to a usage based model is fooling themselves... How exactly do you present that to shareholders without losing your job, because it either will result in a huge drop in revenue (since what people think is "reasonable" is far lower than what you'd have to charge to maintain your revenue and you're switching from a model where people pay for potential rather than actual use), or tie revenues to people's usage rather than how many customers you have, from something you can control to something you can't.

Lets look at it this way. Say Shaw has 1000 customers. 800 of them use a fraction of their monthly bandwidth (say an average of 25%), 100 use close to the limit, and 100 go over. The limits are 100GB/month. Each customer pays $50 a month.

So total bandwidth usage is 800 x 25GB + 100 x 100GB + 100 x 200GB = 50,000GB. 1000 customers pay $50 a month so that's $50000 a month.

So lets switch that to a usage based model, and maintain the same revenue. That's $1 per GB. 800 customers pay $25 a month, 100 pay $100 a month and 100 pay $200 per month. Most of your biggest customers will leave to other companies that don't go by the usage based model and you're left with 800 people paying $25 a month, and your revenues are down 50%. Share prices plummet, investors sell stock, company shrinks, you can't spend as much on infrastructure, etc etc...

A pure usage based system won't work, especially when competition can have a model where they can attract the larger users on the backs of the smaller users.

Originally Posted by The Yen Man

Who in their right mind would believe Shaw when they said their customers told them they welcome usage based billing? I'm sure everyone is thrilled to pay more money for the same service they were getting before.

Those two things aren't necessarily the same thing even though you are equating them. Jimmy Stang himself said people at the consultations were fine with some forms of usage based billing. The forms that of course favored them. Shaw favors forms of usage based billing that favors their bottom line.

[Jimmy Stang]

^ Perhaps I put too much emphasis on the utility-type of billing, because personally, I don't think it would be a bad thing, but Shaw would never do it for the same reasons that Photon pointed out. There were lots of ideas being thrown around, this being one of them. And yes, some people were open to some forms of usage based billing. But the notion that the consultations reaffirmed Shaw's plan to introduce UBB is a giant miscalculation. That's the impression that I got from the leaked conference call - "yep - we were right. Our customers like UBB, so let's do it." Shaw's version of UBB was definitively and angrily rejected at the consultations. Sure, people suggested alternatives that Shaw will likely never implement (like the utility-type of billing), and if Shaw is using that to say that their customers want the same UBB that was suggested previously, they are misleading the public and themselves.

I think that the disconnect comes with how Shaw defines it and how the customers in the consultations did. They are using those suggestions, which were radically different from what they were proposing, as justification to proceed with a similar, repackaged offering. Why they expect it to go over any better this time around is a bit of a mystery.

Another type of pricing that was suggested was a "matrix" type of system where users who want faster upload, moderate download, and a generous cap would be able to get that, and a grandma who checks email once a week would be able to get a plan that suits her needs. Essentially you'd have more than 3 options for internet - more like 9 or 12. That would mean that a large number of Shaw's customers would be able to reduce their bill based on their usage, although I don't expect that will be an option. It seems that Shaw's idea of usage based billing is to keep collecting a monthly fee, even when it is much higher than that person's usage, and then charge others obscene amounts for going over their cap.

I know that I'm probably sounding like a broken record, but Shaw knows that consumers have a very limited choice when it comes to ISPs, particularly in Western Canada where Shaw's markets are the strongest. With actual competition, UBB would be corporate suicide. I get that they are trying to maximize returns for their shareholders - that's business. But I think that they are alienating some of their best customers in the process.

[Tinordi]

The problem isn't Shaw acting like a business as photon points out. It's with Shaw's market power and was the impetus for the UBB revolt. When you force a business model on your competitors achieved through a monopoly over infrastructure originally the legacy assets subsidized by taxpayers because there's no other competition then you have problems.

Internet consumers basically have no choice and they have no choice because of nefarious tactics like the incumbents making it extremely difficult to use their infrastructure even though they're mandated to.

So in the end it's Shaw looking bad. But I guess things have to get worse before they get better and if this is one step towards us nationalizing the last mile or enabling other legislation to promote real competition then so be it. I dont' think anyone thinks that this is an ideal market setup for the most important and nascent telecommunications infrastructure of out society.

[photon]

That's what they call "spin" The question is are they spinning for the investors or for the customers.

The devil will be in the details of the plan they use, but I expect it'll be exactly what you say, some softer variation on what they had before, and people will react just as strongly.

Unless they put in much higher caps, so that only the guy that runs torrents 24/7 even has to consider worrying.

EDIT: And Shaw's taking the heat here, but does anyone really think that Rogers, Telus and Bell won't get in on the action too?

[Jimmy Stang]

All of that being said, I am curious to see what these new plans look like. I hope that the consultations weren't a charade because there really were some good suggestions made. And Shaw appeared to be genuinely interested in them.

It is too early to pass judgment, but a little bit of "don't screw us, Shaw, we're still watching" as they revise their plans could benefit everyone involved.

[secol]

Originally Posted by photon

That's what they call "spin" The question is are they spinning for the investors or for the customers.

The devil will be in the details of the plan they use, but I expect it'll be exactly what you say, some softer variation on what they had before, and people will react just as strongly.

Unless they put in much higher caps, so that only the guy that runs torrents 24/7 even has to consider worrying.

EDIT: And Shaw's taking the heat here, but does anyone really think that Rogers, Telus and Bell won't get in on the action too?

not really, but they're pretty damned smart for letting shaw test the waters considering how contentious the issue is and shaw is stupid IMO if they want to be the ones who step up again and take all the flak

[photon]

Well they certainly were stupid the first time then since the usage billing was limited to just Shaw.

If they learned anything they'll let Shaw test the waters with their revised system, let everyone switch, then introduce their own usage based billing.

EDIT: Seems they aren't even that smart:

http://www.digitalhome.ca/2011/04/sh...ter-this-year/

Shaw customers thinking of switching to Telus Internet Service later this year in order to avoid usage-based-billing will be disappointed to learn that Telus is also planning on introducing usage based fees later this year.

After the Shaw news got out, Shawn Hall, a spokesperson for Telus, told CTV News that his company would also be implementing such fees later this year.
“It’s only fair that people pay for how much Internet capacity they use,” Hall reportedly said to CTV.

While the news that Telus and Shaw were going to implement UBB shouldn’t surprise consumers, the decision to go ahead with UBB before upcoming CRTC hearings looking into the matter is surprising.

[Rathji]

Originally Posted by photon

Well they certainly were stupid the first time then since the usage billing was limited to just Shaw.

If they learned anything they'll let Shaw test the waters with their revised system, let everyone switch, then introduce their own usage based billing.

EDIT: Seems they aren't even that smart:

http://www.digitalhome.ca/2011/04/sh...ter-this-year/

Actually that is funny because earlier in this thread, there is a quote from a Telus rep explaining they would never implement UBB.

[secol]

Originally Posted by Rathji

Actually that is funny because earlier in this thread, there is a quote from a Telus rep explaining they would never implement UBB.

lol so we got a gouger and a liar

[Bobblehead]

Originally Posted by photon

Well sure, coming up with schemes where people pay less is easy. But that is counter to what a company wants to do; charge as much as they can for the largest # of customers. That is to say maximize profits.

Of course it's always a balance; charge too much and people leave, charge not enough and you leave money on the table.

But how much they charge and the levels provided are very much based on psychology and market, not on actual usage, because people shop based on perceived value and emotion. That's why I doubt they'll ever switch to a low base rate + $x usage model unless forced to.

And analysis like this is fine when you you have true competition, but in this arena it is an oligopoly. What happens when there are only a few real options?

One company bites the bullet, the others follow suit, and the consumers have no real alternative other than cancelling the service.

I don't believe internet access is a luxury like it once was, when I had to pay $30 a month for a 14.4 modem connection. In today's knowledge based world more people need to be connected.

And that means if we do want a chance at a competitive environment, either let other international big players attempt to enter the market (which are currently prevented by Canadian law) or force the companies in control of the backbone to resell access to the backbone at a fair cost, which Bell revealed they don't want to do.

[photon]

Originally Posted by Bobblehead

And analysis like this is fine when you you have true competition, but in this arena it is an oligopoly. What happens when there are only a few real options?

One company bites the bullet, the others follow suit, and the consumers have no real alternative other than cancelling the service.

Exactly, and that's what we're seeing. Shaw says they'll do it, Telus does as well, the rest will follow along because you can make more money by charging your existing customer base more money than you can by siphoning off a percentage of the top using customers from someone else.

Originally Posted by Bobblehead

I don't believe internet access is a luxury like it once was, when I had to pay $30 a month for a 14.4 modem connection. In today's knowledge based world more people need to be connected.

And that means if we do want a chance at a competitive environment, either let other international big players attempt to enter the market (which are currently prevented by Canadian law) or force the companies in control of the backbone to resell access to the backbone at a fair cost, which Bell revealed they don't want to do.

Or turn data into a utility.

Look at how Shaw/Rogers/Telus/Bell market their television services, with tiers and groups of services structured to push you into buying more addons to get the channels you want. I'm sure they'd love to do that with the Internet too. Unlimited bandwidth for these 10 sites, $5 more to add unlimited bandwidth for this other group of sites, etc. Mobile carriers do the same thing, any service type product is going to try and increase profits by shuffling their existing products into forms that get people to pay more.

[llama64]

Originally Posted by photon

Or turn data into a utility.

Look at how Shaw/Rogers/Telus/Bell market their television services, with tiers and groups of services structured to push you into buying more addons to get the channels you want. I'm sure they'd love to do that with the Internet too. Unlimited bandwidth for these 10 sites, $5 more to add unlimited bandwidth for this other group of sites, etc. Mobile carriers do the same thing, any service type product is going to try and increase profits by shuffling their existing products into forms that get people to pay more.

Violates net neutrality and everything the Internet represents. This would be a sure fire way to guarantee Canada falls behind the rest of the world in technology innovation.

I hope our Government isn't dumb enough to allow this situation to happen. Though I'm sure some would see it as valuable to be able to buy access to facebook and hotmail for $5 per month. I wonder what the tech support call for someone with a plan like that trying to access some lolcat picture outside of their zone will sound like...

[Bobblehead]

Originally Posted by photon

Look at how Shaw/Rogers/Telus/Bell market their television services, with tiers and groups of services structured to push you into buying more addons to get the channels you want. I'm sure they'd love to do that with the Internet too. Unlimited bandwidth for these 10 sites, $5 more to add unlimited bandwidth for this other group of sites, etc. Mobile carriers do the same thing, any service type product is going to try and increase profits by shuffling their existing products into forms that get people to pay more.

They already do that. The obvious ones are bundling of home phone/data/TV.

The not so obvious ones are things like Video On Demand. That is exactly the same as Netflix, but I bet you won't see the VOD traffic included in your metered usage. So that service (along with IP telephony as another common example) is being "bundled" in your service, but most people won't recognize that until it is brought to their attention (*cough*net neutrality*cough*).

[photon]

Or Rogers offering "unlimited social networking" on their phone data plans, so you get 500MB data, but any browsing on specific social networks don't count towards your data.

[photon]

Originally Posted by llama64

Violates net neutrality and everything the Internet represents. This would be a sure fire way to guarantee Canada falls behind the rest of the world in technology innovation.

Agreed, but given how the government has been so amenable to a US style copyright bill, it wouldn't surprise me.

The Liberals and NDP have both said they support net neutrality and (I think) ISP audits.

And traffic shaping based on the content is already something the ISPs have done.

[Shazam]

Ideally, they'd do something about the 2% of users they claim are the heavy bandwidth hogs.

But this whole exercise is just an excuse for them to charge more to everyone.

[Jimmy Stang]

The previous way of dealing with bandwidth hogs was to contact them individually and tell them to either tone it down or upgrade their plan. Seems reasonable in extreme situations, on a case by case basis.

But, to beat a dead horse even further, while the previous method surely addressed the technical aspect of bandwidth hogs, it lacked a widespread revenue generating element and didn't factor in people's lessening dependence on traditional cable and broadcasting products.