[csousa]

I became curious about whether or not the different plan tiers combined with data plans showed a relatively fair and sensible charge per Gb of usage.

Doing extraordinarily simple analysis, I can safely conclude that Shaw's pricing scheme is anything but sensible.


Here is the basic calculations:

Point 1: Bandwidth Cost is Not Uniform. Overage charges are double the cost / Gb in most plans.
Now....notice the most popular package, the "Extreme".

At its base price of $57 (unbundled price) you see a cost per Gb of $0.57. Since part of your pricing basis is your speed, lets call this the "base cost" per Gb for that plan.

Now notice....The more expensive plans are not uniform in pricing. Nitro should be cheaper per Gb than Extreme but it isn't (priced based on how popular it is perhaps?)

A fair pricing scheme for over-use of data would at least preserve the base $/Gb of your current monthly plan. In any plan, the overage charge of either $1 or $2 is a gouge even against the base price per Gb.

Customers are penalized heavily when they can't forecast use. Instead of $0.33 / Gb for a data pack (if you could predict usage), you'd get hammered at triple that rate.

Point 2: Isn't Speed more Reflective of Network Use/Congestion?
The last time I checked, network planning and management is a function of the number of devices (subscribers) and the speed cap (i.e., maximum load) that could theoretically be placed on a network.

Take a look at the plans with lower caps. Those low end users pay a hefty fee for their 1Mb/s pipe and don't get much for it.

So the pricing structure is inverted. "If you want slower speeds, you are going to pay proportionally more than those that create higher demands on the network."

Your thoughts on the pricing?

[source of data: www.shaw.ca, Data Pack pricing obtained by phone from Shaw Customer Service]

 

[Civuck]

Well done.

Certainly a lot of things there that "fly-in-the-face" about what Bell and CRTC are trying to sell the public on.

I totally agree re: network congestion is attributable to speed, not how much data has been sent through in a month. I think these ISPs need to stop marketing 100Mb/s or 50Mb/s residential service if they really believe congestion is an issue.

In the case of 100Mb/s service, they've given one single customer the ability to use as much bandwidth as twenty 5Mb/s customers. And by extension, ten 100Mb/s customers could theoretically be using 1Gb/s of bandwidth which is equivalent to two hundred 5Mb/s customers.

One other argument I haven't seen brought up re: UBB - television doesn't use UBB, why should Internet service? There are people who watch 5 hours of TV a day versus those who maybe watch an hour yet both customers with the same package pay the same amount.

 

[csousa]

Adding a Data Pack - Don't Count on Doing it Mid-Month

One more tid-bit......

Suppose you are like me and use an online backup service. You just returned from vacation with a pocket full of high capacity SD cards loaded with HD video and photos.

Your a week into your billing cycle and think "jee I am going to be uploading 80-100Gb just for my backup of these photos, I should add a data pack before I do that tomorrow"

Shaw's current billing approach would not allow you to add a data pack mid month. Likely because they don't tally usage on a daily basis (only monthly). This is in sharp contrast to all of their other services to which mid-month changes can be pro-rated.

What does this mean? It means you'd have to wait until next month to backup your precious vacation photos unless you wanted to risk exceeding your monthly bandwidth limit.

Chat transcript on this topic with Shaw Customer Service below.....

csousa (14:45:01):
If I see that I might need more bandwidth for the remainder of the month, can I add a data pack for that month and avoid the $1/Gb?

Shaw Customer Service (14:46:02):
I actually checked on that yesterday, and when you add a data package it comes into effect on the next billing period, according to the information our support group had for us.

Shaw Customer Service (14:46:25):
So the higher available data transfer amount would be available starting on the next billing/usage calculation period.

csousa (14:47:31):
So there would be no way, early in the month to say "next week I need to upload a lot of data" and add the data pack for that month.....good to know.

Shaw Customer Service (14:48:10):
Correct.

 

[csousa]

One other argument I haven't seen brought up re: UBB - television doesn't use UBB, why should Internet service? There are people who watch 5 hours of TV a day versus those who maybe watch an hour yet both customers pay the same amount.

Exactly. Watching unlimited Movie Central On Demand on my Shaw terminal incurs no bandwidth while Netflix does.

I understand that the underlying technology might be somewhat different but logically, to a consumer, content is content. In this case you pay extra for one service (beyond the monthly fee) and nothing for the other.

Its a bit like saying.....
"We own the roads. If you are driving to businesses and locations that we also own/operate you can use the roads all you want for a flat fee. But if you drive to one of our competitors, we are going to charge extra tolls."

Remember when we used to call the Internet the "Information Highway", it seems ISPs and government have lost sight of the fact that it needs to be an open highway.

 

[csousa]

The Utility Argument
And lets not forget that super-imposed on these arguments is that the Internet should be like a utility "pay for what you use".

If this were the case, we would see a more uniform cost per Gb but we don't.

Fluctuation of Rates for a Utility? Really?
Is anyone aware of any public utility that increases the RATE per commodity as you use more? Although the ISPs are quick to draw the Utility analogy, the comparison is flawed because they alter the price of the commodity radically.

This would be like saying: "your cost per KWHr for electricity can be up to triple what you normally pay in response to how much you have used in the billing period".

I am aware of caps and quotas existing for water or electricity shortage scenarios, but I highly doubt that bandwidth is on the endangered species list as a commodity.

If the ISPs want to bill for usage like a utility then the pricing needs to be regulated and uniform regardless of usage volume.

 

[Civuck]

I understand that the underlying technology might be somewhat different but logically, to a consumer, content is content.

I've actually been trying to think this one through.

Is it more expensive to deliver an IP signal to your computer or an A/V signal to your TV?

 

[Civuck]

If the ISPs want to bill for usage like a utility then the pricing needs to be regulated and uniform regardless of usage volume.

Good points here that I totally agree with.

It's all "smoke & mirrors" by the big ISPs - trying to equate Internet service to things like electricity and water. There is NO comparison here.

Reminds me of Bush's government trying to associate Iraq with 9/11. The propaganda is pounded into the minds of the public until they believe it.

The sad thing is, the CRTC is helping with the Bell propoganda by making those same analogies of data being like water or electricity.

 

[csousa]

I dont think there is a difference (truly) in the case of on-demand services. I am not a telecomm engineer, but I would assume that the technology differs in terms of protocol only (the type of addressing and packets).

A video on demand service is not a pure AV broadcast signal to out TVs it is sending digital data to be decoded by our Shaw cable box. Perhaps this is more efficient than ip-based services?

 

[Civuck]

In the case of Rogers, I wouldn't be surprised if their IP network is cheaper to manage than their television distribution network.

Video broadcasting gear is purpose-built and therefore equipment prices are very expensive.

IT gear on the other hand is far more ubiquitous and crosses over between many types of industries and as such, will be cheaper.

 

[tux]

Last time I checked, all of our cable boxes have embedded DOCSIS 2.0 modems. I'm pretty sure that the VOD streams are being sent as data, through the embedded DOCSIS modem.

However, if you order that same VOD, and choose to watch it online through your computer, that VOD stream is being sent as HSI data, and would therefore count towards your data usage limits. In this particular instance, the data usage costs Shaw $0 for internal data transfers (within the Shaw network), as opposed to $0.03/GB (for internet data transfers).

From my understanding, the difference between VOD and Shaw On Demand (online) is one goes through the DOCSIS modem embedded in the cable box, while the other goes through the DOCSIS HSI modem.

 

[csousa]

However, if you order that same VOD, and choose to watch it online through your computer, that VOD stream is being sent as HSI data, and would therefore count towards your data usage limits. In this particular instance, the data usage costs Shaw $0 for internal data transfers (within the Shaw network), as opposed to $0.03/GB (for internet data transfers).

From my understanding, the difference between VOD and Shaw On Demand (online) is one goes through the DOCSIS modem embedded in the cable box, while the other goes through the DOCSIS HSI modem.

I believe you are correct and you've raised a very important point:
- Shaw is playing "half fair" meaning that if you watch one of their services directly from the source/supplier on your IP device it counts as usage.
- I say "half" because they still leverage the fact that they own the cable into your home to create an anti-competitive advantage using their specialized equipement and network which makes their cable box ondemand content "usage free" while Netflix comes at a bandwidth premium.
- it would be fully fair if there were rules which allows Services like Netflix to enjoy the same delivery option ( imagine a docsis-based netflix box sitting beside your shaw pvr with no usage tally)

 

[audacity]

Warp is Shaw's 50mbps service, Nitro is their 100mbps service. The OP has them mislabeled.

 

[csousa]

Warp is Shaw's 50mbps service, Nitro is their 100mbps service. The OP has them mislabeled.

Thanks for catching that. I had accidentally transposed the two.

"Warp" always sounds faster than "Nitro"......"Sulu, slow down from Nitro to Warp speed"...kind of implies that the Enterprise would have been faster with a little red button labeled "NOS" (nitrous oxide).

 

[tux]

Not only that, but with VOD online, Shaw's actually charging you twice to view the content:

$7.99 for the VOD movie, plus $2.00/GB for the bandwidth used by having Shaw stream the movie to you.

Assuming an SD movie is 700 MB in size, that would be an extra $1.40 in bandwidth fees just to watch the content you already purchased from Shaw. That's roughly 20%.

 

[csousa]

Here is some additional What If Analysis

Paying for Usage: A fair price, with a fair policy.
If Shaw is prepared to sell customers data packs at amounts which net to $0.33/Gb, then why not use this as the overage rate? Removing the data pack concept and just charging a flat fee of $0.33 for anything over your base plan usage?

What would charges be if there was a flat / Gb Rate for overage?
In my case, I had two months in the past 6 months where I exceeded my 100Gb cap. All other months I was under my 100Gb.
Month 1: 153Gb, Month 2: 175Gb

Pricing Scenario 1: I paid for 6 months of Service With Data Packs: $97/Month = $582
To add data packs to cover up to 200gb, my plan would cost me $97 (versus the current $57)


Pricing Scenario 2: 6 Month Without Data Packs, 2 months went over: $470
Month 1 Over Use: $53, Month 2 Over Use:$75

Pricing Scenario 3: Flat Fee of $0.33 / GB for OverUse: $385
Month 1 Over Use: $18, Month 2 Over Use: Over Use: $25



The current pricing models say the following to Shaw Customers:

"We want to penalize you if you can't predict or control how much you use. We are not really interested in having you pay for usage. Instead of charging a flat rate of $0.33/Gb (which is how we price our data packs), we want 3x as much when you exceed our low, arbitrarily defined limit."

 

[qVAMPIREp]

The only acceptable UBB is no UBB. If Shaw starts charging us anything it won't be more than a few years until we're back at $1-2/GB. We have already paid for every GB with our monthly bill based on the speeds we all selected.

 

[JohnnyCanuck]

I think it's a pretty good analysis. Obviously based on what Shaw announced its plans were until the consumer backlash has caused them to rethink. It will be interesting to compare what they actually do with this a few months down the road.

 

[maniac123]

Shaw clearly needs to increase revenue to help pay for the aquisition of Glowball. No matter what happens you will pay more for using Shaw in some way.

 

[audacity]

I think any reasonable analysis of the situation will conclude that there should be a fixed price and variable priced component of your internet bill. The cellphone pricing model of caps + data packs is the wrong direction to take things.

You should pay a fixed price for your connection, because Shaw has some fixed infrastructure costs that it must pay to install and maintain the piece of wire that connects to your house. It should be reasonable, and should be based on the fixed costs associated with getting that technology to your house, with reasonable profit margin. If Shaw starts investing in better infrastructural gear (e.g. fiber to the home), then it would be reasonable for this cost to increase.

You should pay a variable price for the amount of bandwidth you use. Of course, this value should be re-priced regularly, and should drop significantly over time as bandwidth costs go down.

Nobody should pay for bandwidth that they do not use, so don't include bandwidth in the base internet fees. Instead, just have a standard (reasonable) rate for bandwidth over and above your connection price.

You also don't want to remove the economic incentive for ISPs to provide higher service levels (fiber to the home is the gold standard right now).

The problem with a lot of the arguments that anti-UBB people are making is that they make statements like "bandwidth costs nothing", which obviously isn't true. It makes more sense to provide a more nuanced argument that correctly values the different services based on the costs incurred to provide them.

Otherwise, Shaw will just jack up their prices with the assumption that everyone is going to be streaming Netflix 24/7, and it's your parents who just use the internet for the web who get screwed.

 

[Rift]

I'm sorry, but in an age when I can get an unlimited voice and data plan for my cellphone for a reasonable price then I do not understand why a company with a direct connection into my home can't do the same.

Forcing variable pricing onto this market segment now is a step in the wrong direction for consumers.