Here’s an fascinating trend, as illuminated by headlines from the past months:
Customers “shocked” by Shaw hiking web prices.
Telus will now charge for web usage exceeding plan.
Rogers increasing web rates again. (Rogers ownsCanadian Business)
Teksavvy prices increasing.
Yes indeed, the cost of web services is steadily going up across much of Canada. The culprit: tv.
See Shaw’s latest quarterly results, reported on Tuesday. The cable & web provider attributed a drop in second-quarter profit to more TV customers cutting the cord than expected. More specifically, the company blamed a recent ruling by the Canadian Radio-television & Telecommunications Commission that now lets TV subscribers cancel without giving 30 days notice.
It’s no secret more people are getting more of their entertainment online. An increasing number of subscribers are re-evaluating their expensive cable packages as a result.
Indeed, a document from Convergence Consulting Group, also issued Tuesday, suggests the cord-cutting trend is going to speed up dramatically in 2015.
That acceleration could turn in to a veritable massacre next year, when the CRTC’s new “skinny basic” as well as a la carte channel rules take effect. TV providers are set to lose massive bucks over the next years & beyond as they are forced to offer smaller, more affordable packages.
Naturally, they’re going to look to recoup that lost revenue somewhere. Web cost hikes so far might appear quaint a few years from now.
Financial analysts are saying as much. As the Globe & Mail reports:
[Shaw’s] losses in the quarter “reflect a growing industry concern that cable & satellite services are quickly losing pricing power & may now be reflecting cord-cutting,” said Macquarie Capital Markets Canada’s Greg MacDonald. He added that his view is that Shaw is implementing the “right strategy” by increasing prices on high-speed web to address those losses.
 This is all happening against the backdrop of large regulatory events. The first is a wholesale review initiated by the CRTC back in 2013, which wrapped up this past December. At issue is how large network owners such as Shaw, Rogers & Bell sell broadband access to independent service providers such as Teksavvy & Distributel.
The smaller companies have argued in favour of getting access to newer, faster network parts owned by the bigger players, including fibre. They also need the cost of such wholesale service reformed. Both, they say, are integral to providing competitive net services.
It’s also vital for new TV providers to spring up, which the CRTC looks to be encouraging with a new wholesale regime it’s in the technique of establishing. Wholesale TV providers will need cheaper wholesale net rates in order to get IPTV services off the ground.
The large companies, in turn, would like wholesale ISPs to go away entirely because the net market is already supposedly competitive.
That’s a hard pill to swallow since Canada isn’t exactly cheap when it comes to net service. Ookla’s Net Index ranks Canada 20th in relative cost of broadband – or the cost of a subscription divided by a nation’s gross domestic product per capita. That’s second-worst among G7 countries, with only Japan faring worse.
The Organization for Economic Co-operation & Development also ranks Canada as among the costliest across its various measures.
There was also the document recently issued by the Public Interest Advocacy Centre that found net & other telecommunications services are unaffordable for a large number of Canadians. The CRTC seems cognizant of the issue, having recently launched a large-scale review of telecommunications services—the second event that will doubtlessly deal with net cost hikes.
 The regulator will spend the next year finding out whether web service ought to be made essential, what speeds ought to be regarded as minimal, and what pricing looks like overall. If it goes the same way as the recently concluded Let’s Talk TV review, there could be radical changes in store for web service in Canada.
Meanwhile, Canadians will likely must endure some large increases to their web bills. With the main network owners all being gigantic, vertically integrated companies with lots of businesses, hitting them with revenue-killing rules in area only shifts the costs to consumers to another.
In this case, it’s TV over to the net. The game of whack-a-mole continues.

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