Dear TekSavvy Customer,
First and most importantly, all of us at TekSavvy 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 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 for residential Internet service. And while we won the battle against the imposition of usage-based billing (UBB) last February, we have not yet won the war.
In addition, we had been seeking to obtain wholesale access to high-speed DSL service so that we could offer 12, 16 and 25Mbps 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 address the pricing of high-speed DSL service as well as the UBB issue.
The decision in part reflects 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; the fixed element is acceptable, but the variable portion remains deeply flawed.
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.
However, the variable portion, based as it is on the incumbents’ purported cost of peak capacity, has the potential to become unjustifiably very substantial.
This is because the variable portion is based on tariffs that 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 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 2.
TekSavvy has always viewed fair pricing to be at the core of our 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 cable and DSL packages that 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 our high and unlimited usage packages.
● 300GB Packages. The cost of most of our 300GB packages will increase. However, for DSL customers, the 300GB meter will not run between the hours of 2 am and 8 am, effectively allowing 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 best rates we currently 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 whether these rates are appropriate, as the usage patterns of our subscribers come into focus with the introduction of new rates and speeds.
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 came 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 the Internet has to offer. Unique in the industrialized world, Canadians will be forced to carefully select what, when and how we 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 those increases. At the same time, we are actively pursuing remedies at all levels to head off the 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 the 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.
Marc Gaudrault - CEO/TekSavvy