This posting appears in today’s Financial Post as an OpEd, under the title: Net pricing means service flexibility: No network can handle every user around the clock
Internet pricing has become front page news in the wake of a CRTC decision (now being revisited) that changed the wholesale cost for some of the smaller service providers. In the confusion, the question of retail pricing for our home Internet service has become the subject of a parliamentary committee meeting, editorials and countless online debates.
For most Canadians, there is a choice between two large Internet service providers — the local or regional telephone and cable companies — that have built extensive fibre networks coupled with wire connections to 95% of our households. In addition, the CRTC estimates that there are 500 other Internet service providers of all sizes offering increased choice. With two large players and many others sharing a smaller position, it is a marketplace somewhat similar to the soft drink industry.
Just as we want Internet service providers to have the flexibility to offer unlimited plans should that be their business model, we need to ensure that there remains the flexibility for them to offer a variety of price plans that target other users, including low-cost entry level price plans.
About one in five Canadian households still have no connection to the Internet. More than half the homes in Canada’s lowest income quintile have no computer. Flexibility in Internet pricing is needed to give all Canadians, including those with lower levels of disposable income, an opportunity to participate in a digital future.
When we have a broadband connection to the Internet, it is accessing a shared resource. People choose from plans that offer a range of speeds that determine the maximum rate that data can flow between your computer and the rest of the world. These speeds contribute to how fast you receive your files and how high a resolution you see when streaming video.
As a shared resource, the quality of your connection also depends on how much other people are using their service and the level of investment being made by your service provider. The major phone companies and cable companies in Canada are investing billions of dollars each year, trying to stay ahead of demand that is growing by 50% each year as more of us consume more rich media over our Internet connections.
We have changed the assumptions that helped network engineers create affordable access. At one time, 20 or more households could share a high-speed connection without noticing any impact on their service. As more households adopt more advanced services, like streaming movies, more investment is being made to meet the demand. No network has ever been engineered to handle every user using the service around the clock. To do so would be irresponsible; we know that different users have different needs at different times and we can take advantage of that, statistically, to build networks more economically.
As the parameters change, the networks have evolved. For many of us who have been on price plans in the $40-$50 per month range, the speed of our broadband service has quadrupled over the past 10 years, delivered for about the same price. Lower-priced plans have appeared for people who don’t yet need the higher speeds and in many areas, ultra high speeds are being offered to the leading edge users who are the early adopters of what will seem commonplace in a few years.
Flexibility in pricing allows each of us to choose a service that matches our needs, priced to match our willingness to pay. Flexibility in pricing models means more choice and more opportunities to deliver options for Canadians who want to be part of Canada’s digital future.
There are more than 500 Internet service providers in Canada; there is no need for the government to regulate how I choose to buy my Internet service.
You need more competitors to enter the market in order for prices to lower, there is too much of a competitive monopoly over the telecom market in Canada.