Teksavvy announces price increases of up to 15%

[xpablo]

So far it looks like prices in B.C. are not going to increase.

The minute they do I'll be switching back to Shaw.

[Tezster]

I'm on Teksavvy cable, and the e-mail notice I received does not specify that the bandwith meter is turned off only for DSL customers, although I see this is stated on Teksavvy's new pricing page. At this point, my assumption is that this should also apply for cable.

I also see that the Bandwith Usage form still doesn't work for cable accounts.

Considering the alternatives, I'm not too unhappy about the price increases, so long as they don't go up any further. However, the Teksavvy letter seems to imply that these may be temporary/interim prices while they continue to investigate and explore ways to mitigate costs.

[avengingangel]

Originally Posted by hugh

My mistake, only DSL users on 300GB packages get unlimited downloading between 2am and 8am.

According to the letter I received, which is slightly different than what you posted (I'm a currently Teksavvy Extreme Cable Pro subscriber), the off peak unlimited applies to BOTH cable and DSL.

Here is the letter I received :

Pricing Notification

Dear TekSavvy Customer,

First and most importantly, all of us at TekSavvy want to wish you and your families a very healthy and happy new year. Last year was very challenging for our industry and we expect 2012 to be more of the same. Rest assured though that we will continue to provide our subscribers with the best value in internet service on the best terms.

As you know, for quite some time now we have been working to ensure fair-pricing in residential internet service. And while we won the battle against the imposition of usage based billing last February, we have not won.

In addition, we have been seeking to obtain wholesale access to high-speed DSL service, so that we can offer 12, 16 and 25 Mbps packages to our subscribers. In this regard we have been successful. The CRTC mandated that access last June, and we began offering high-speed DSL service with pricing based on an interim model.

On November 15 the CRTC introduced a new wholesale internet pricing model, intended to implement the final price of high-speed DSL service as well as address the UBB issue.

The decision in part reflected our success in our struggle against UBB; the new model bases pricing on two elements, a fixed cost per subscriber as before, and a variable portion based on capacity utilization, rather than usage. That is a reasonable model in principle, and the fixed element is acceptable, but the variable portion remains deeply flawed.

Fixed Portion
In fact, the fixed portion has been reduced, which has permitted us, for now, to reduce the cost of our 12 and 16Mbps packages, as the fixed portion is substantially lower than the interim rate set last June.

Variable Portion
However the variable portion, based as it is on the incumbent’s purported cost of peak capacity, has the potential to become unjustifiably very substantial.

This is because the variable portion is based on tariffs which use costs submitted by incumbents, such as Bell and Rogers. In the view of virtually all independent ISPs and consumer groups some of the tariffs, in particular those applicable to Bell’s DSL service and Cogeco's cable service, are unusually high.

Unfortunately, the tariff setting process is less than transparent; the incumbents make submissions, which are not subject to the review of those who probably can best assess them- other ISPs.

If left to stand, these prices will ensure that residential internet service prices will increase dramatically as consumer usage at peak times increases. We are pursuing strategies to reverse or materially mitigate this element of the decision, and more on that later. But for now we have to accommodate the pricing model that will come into effect February 1.

TekSavvy has always viewed fair pricing to be at the core of its value proposition, and we remain committed to providing the best mix of competitive pricing, virtually unfettered usage, best-in-class service and flexible terms available in the industry. However, to continue to be able to do so in the face of the recent decision we have to modestly adjust our rates.

As of February 2 we will be introducing new high-speed packages in cable and DSL which will offer our customers all the speed options they need. At that time, in order to attempt to address the impact of the new pricing model, we will also be changing the pricing of all of our high and unlimited usage packages.

300 GB Packages
The cost of most of our 300GB packages will increase. However, the 300GB meter will not run between the hours of 2am and 8am, effectively offering unlimited services for all downloading in that off-peak period. We are pleased to be the first in the industry to offer unlimited off-peak bandwidth.*

Unlimited Packages
We will continue to offer unlimited packages for our more avid internet users, with increased pricing that will reflect the greater demands that significant usage makes on our capacity requirements. We understand and share the desire to enjoy all that the internet offers, but this unjustified pricing model compels us to adjust our prices accordingly.*

These are the rates we currently feel we are able to offer, together with our off-peak usage innovation, to minimize the impact of the new pricing model. Over the next six months or so we will find out if these rates are appropriate, as the usage patterns of our subscribers come into focus with the introduction of new rates and speeds.

Please rest assured that we are still working to change this. This cause is an extremely important one. Even before this decision, Canada was an international laggard when it comes to the cost of internet service, with per Mbps costs well above most of the rest of the industrialized world. These regulated wholesale rates that are in place from our suppliers only make matters worse. In our view, while these tariffs remain in effect Canadians will continue to be punished for the “sin” of enjoying the benefits and pleasures the internet has to offer. Unique in the industrialized world, Canadians will be forced to carefully select what, when and how they engage the world through the internet.

This new wholesale pricing is a big win for the incumbents, especially Cogeco and Bell, whose tariffs are noticeably out of line with most of their competitors. Unfortunately it is a big hit to everyone else – independent ISPs and customers alike.

At TekSavvy we do not believe this situation can remain unchallenged and unremedied.
What we are doing

TekSavvy is committed to maintaining its unique value proposition - low prices, no contracts, great service, and industry-leading usage packages.

At this point we are increasing our prices as little as possible and providing innovative alternatives to help you mitigate these increases. At the same time we are actively pursuing remedies at all levels to head off additional dramatic cost increases that this model will impose on internet users over time.
What you can do

We will make every effort to keep you informed, either through our blog or through the mainstream media, of new developments. In the meantime we encourage you to stay informed, alert your friends and family to this important issue that will have a long term impact on Canadians, and keep this issue alive. Let’s join together to keep Canada from remaining one of the most expensive, uncompetitive internet markets in the world.

We regret the price hikes, but they reflect our mission to be fair to our customers, and at the same time allow us to remain a robust force in the industry, offering competitively priced, high-quality service, with all the usage you desire.

Thank you for your continued support,



Sincerely,

Marc Gaudrault - CEO/TekSavv

Personally,
I'm fine with the price increase assuming Teksavvy can offer a more consistent experience. Up until now, I have been quite tolerant of significant speed DECREASES during peak times (7pm - 10pm) resulting in max speeds of less than half of what I am paying for.

With this increase in price, I will expect more consistent download speeds on the cable side and will be complaining come February if it continues to be a problem.

On a side note, I have a Speedstream 516 modem lying around that I previously used for their 5Meg DSL service. Can this modem be used for the 16Meg / 25Meg DSL service as well or is a different modem required?

[hugh]

AvengingAngel, I don't think TS can get it right. On your email its Cable and DSL. On their website its DSL only. My advice is for cable customers to call them and confirm if its important to you.

[ScaryBob]

The new pricing structure is <see link in post #1> for both DSL and Cable. It includes some new unlimited plans. I'm guessing, but this is probably the fallout from the recent CRTC wholesale pricing decision, discussed here. It's also only the second price increase in 8 years, both of which were announced after a CRTC decision that allowed an increase in wholesale rates. Can't complain too much about that.

[nursedude]

if there will be a price increase for the login only accounts? I have an acount with them that I use in case my primary connection fails.

[TorontoColin]

I prefer to think of it as the cost associated with the bump from 200 to 300 GB which happened (for free) in the summer.

[scrooloose]

Teksavvy sure likes to play the victim card. Must be nice for them to blame all their troubles on the companies that make their service possible. When I read about 300GB and unlimited caps, I wonder who is (or was) subsidizing that? Seems like these price increases are reasonable and targeted at those that should be paying more.

-Mike

[XM4243]

Teksavvy sure likes to play the victim card.

My thoughts exactly. Airing their dirty laundry in public. If anything goes wrong technically it's Rogers fault. If the price goes up, it's the fault of the CRTC and Rogers and Cogeco.

[dezzpayne]

Bandwidth is not a non-renewable resource. There is an unlimited amount of it and when you compare profits made to capital spent to provide that bandwidth it's enough to make the greediest investment banker drool.

Rogers and Bell want to convince people it's like oil. Has to be carefully managed, even restricted to keep the prices high so it's not wasted. Maybe that's the brave new CDN world. Where we ask "What's a TB of data selling for in the markets today"? Up $3 a TB, awesome!!

[scrooloose]

Internet Bandwidth is infinitely upgradable but at a cost. Perhaps if society didn't measure the success of a company on the size of its profit, they would more willing to put that profit back into improving the service - but it doesn't work that way. I'm sure Teksavvy wants to improve its profit just like the rest of them. The playing field is being leveled and that's what has Teksavvy worried.

-Mike

[Francois Caron]

TekSavvy already explained why they bumped the cap from 200 GB to 300 GB. It's because the cost of obtaining network access from their corporate Internet providers went DOWN instead of up! They realized they could increase the limits without affecting their bottom line.

Billing by the byte is outright fraud. The only real cost factor here is speed, not volume. Networking equipment really doesn't care how much data flows through them. You can saturate a network connection to its maximum throughput, and all that will happen to the equipment is that it will simply not process the information any faster. It won't burst like a water pipe because networks have no concept of pressure. The only real cost here is building the necessary infrastructure to provide faster speeds for all.

I've already created a video about the UBB deception many months ago, and the reasons why incumbents may be pushing so hard for a UBB based business model. It has nothing to do with network capacity or operating costs, and may have everything to do with protecting the antiquated business models of the incumbents.

And while the current pricing plan imposed by the CRTC might not be the best that we can get, at least it still offers an "unlimited" window where even people with capped services can benefit from it.

Should be interesting to see the TorIX bandwidth measurements in a couple of months.

[hugh]

I am surprised at how people are so forgiving of Teksavvy's price increase. If a big company did this, we'd be screaming.

In examining it, Teksavvy admits their fixed costs have gone down but claim the "variable" costs have skyrocketed. So why not create a 100GB or 200GB cap cable package and charge less or the same price?

Why do they have to raise prices?

If the variable costs are the big problem as they say then why not create more modest 60 and 100GB packages which take advantage of lower fixed costs and downplay the variable costs. IF they did this then they could actually offer packages for less than the current price without big price increases.

Could the change in the existing pricing paradigm simply be a way to put through a sizable price increase to boost profits and shift the blame to Rogers/CRTC etc?

[Francois Caron]

This is not the first time TekSavvy had to adjust prices to take into account decisions made by the CRTC or the incumbents. And every time they did, they always did their best to adjust everything so that it will impact their customers as little as possible.

And unlike the incumbents, TekSavvy doesn't increase their prices each and every year regardless if it's necessary or not.

And as I've already said, my switching from unlimited to the 300 GB cap service will actually SAVE me $5 per month, with little or no changes required in my Internet surfing behaviour.

[TorontoColin]

Well there are a few reasons. For one, some of their prices went down while some went up. If this was all about profit, why drop the 12/16/25 DSL costs? Though my plan is going up, that makes me feel like it's less of a straight price increase and more of a restructuring.

Teksavvy also is far more open about why they make changes, although we have no way to actually fact check them.

The off-peak downloading is also a nice new benefit, which will allow some users to actually save money by switching to a 300GB plan.

I wonder if Teksavvy might not want to implement low-cap plans beyond the super-basic entry cable plan, because they might be worried that the optics might weaken their case against UBB. If many of their customers are comfortable on low-caps, it might be harder to rail against them.