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Ballsy or stupid? Shaw reviving usage-based billing

It looks like usage-based internet billing may jump back into headlines this week, just in time for the federal election next Monday.

It looks like usage-based internet billing may jump back into headlines this week, just in time for the federal election next Monday.

Over the weekend, the internet activist folks over at Open Media posted the audio of a recent conference call held for analysts by Shaw Communications, one of the country’s biggest cable and internet companies. As is often the case with these calls, the picture Shaw executives painted for analysts was very different than the one they have tried to present to their customers and the public at large.

When the whole usage-based billing situation blew up back in January, Shaw put its plans to introduce extra fees and caps on hold, saying it wanted to hear from customers. The company was true to its word and held hearings with its users to see what they had to say.

According to Shaw’s president Peter Bissonnette and CEO Brad Shaw, here’s what customers apparently said:

“Through the course of conversation with our customers, I think what we’ve seen from them is a recognition that the principle of, ‘If you use more you should pay more holds true.’ We believe as we work our way through some of the feedback that there really is a win-win for our shareholders as well as our customers in the way that we offer our tiers of services.”

And also:

“Not one of those customers that came to those consultations was saying to us that if you do something we’re going to leave to go to a less-performing internet service. They all acknowledged that our internet service provides them with the kind of experience that they want. This is really just a value and a price situation for them with respect to a threshold and it is hard to know what they’re paying on a monthly basis. We think we can address that through the manner in which we offer our tiers of internet service.”

And the money shot:

“Our customers said, ‘We are prepared to pay more for a higher value service.’”

I wasn’t at any of those meetings, but I’m fairly certain that unless they were strangely stacked with proponents of UBB, that’s not what customers were saying. Of particular interest is the Orwell speak in that second quote about how no customer is going to leave to go to a “lesser-performing” internet service. Hmm. That’s probably true, but just what the heck does that mean? I’m sure a lot of customers will leave to go to a cheaper-performing service.

The executives confirmed that usage-based billing plans will be making a return around the end of May or early June and suggested they may have higher monthly “thresholds” than previously planned. The rationale: big ISPs in the east of the country (Rogers and Bell) have had UBB for some time now but neither Shaw nor its western rival Telus has yet to institute it. Hence, prices have some room to climb in the west: ”Their pricing is higher than ours and we believe we still have that pricing power.”

So, Shaw is going to go ahead with UBB despite all political parties clearly opposing it. That takes either monumental balls or monumental stupidity. It’s no wonder the calls to split telecom companies are starting to get louder. But I’ll have more on that later in the week.

UPDATE: In keeping with the Canadian spirit of never maintaining a true, pro-consumer advantage for long, Telus says it too will implement UBB this year. It’s also another example of monkey see monkey do, where the phone companies do exactly what the cable providers do.


Peter Nowak is an award-winning journalist and author of the best-selling book Sex, Bombs and Burgers. He has been a staff writer for the CBC, National Post and New Zealand Herald, while his work has appeared in the Boston Globe, South China Morning Post, Sydney Morning Herald and the Globe and Mail, among others. His personal blog can be found at www.wordsbynowak.com.