Rogers Cable's decision to impose limits on how much Internet surfers can download in a month could trigger a price war between two of Canada's largest broadband providers.
The limit — known in the industry as a "bit cap" — is expected to lead to a two-tiered pricing system for Rogers subscribers, in which light users of the Internet could subscribe to a plan that charges less per month than those who use it heavily.
"With a bit cap we hope to make the system more efficient," said Rogers Cable senior vice-president of sales and marketing Alek Krstajic.
The company expects to institute a bit cap within 90 days, Mr. Krstajic said.
Sympatico, the Internet division of Bell Canada, is cautiously saying it is considering the same move, but has made no decision yet. However, company representatives have admitted that if Rogers imposes a bit cap, Sympatico would respond in some way as well.
Sympatico made a move in this direction on Monday, when it changed its acceptable-use policy. It now bans residential users from running any kind of server, such as an FTP or e-mail system, on the Sympatico service.
"There are members who use considerably more bandwidth than others," said Sympatico spokesman Andrew Cole, "and that is something we are going to have to look at."
All Mr. Cole would say about pricing, however, is that Sympatico will continue to offer broadband services to new subscribers at $24.95 per month for five months. Then the rate is expected to go back up to $44.95 per month, the same as the current flat rate Rogers charges its customers, though that may change.
"We may extend or modify it based on competitive and market conditions, but no decision has been made at the moment," Mr. Cole said.
The switch to a tiered model became possible for Rogers when it was forced to buy new equipment to make the switch from the recently bankrupt ExciteAtHome service based in California.
The move required an enormous expenditure of about $60-million on new servers and infrastructure to replace the technology that ran Excite. The servers at Excite had never been equipped to put a meter on each subscriber's account and count the bits — the individual packets of information — as they are downloaded and uploaded by individual users.
As for Sympatico, it can already meter an individual's use of the Internet. The digital subscriber line (DSL) used by Sympatico is attached to the user's telephone number, which has been monitored for its use for a long time, Mr. Cole said.
But the looming battle is not likely to stop at a price war. Over the next few weeks, both Bell and Rogers are expected to roll out new services with flexible purchasing plans to attract new users.
Some of the new services may be pay-per-use, and others offered as part of the standard user contract.
Among them, Rogers is planning a new portal with all-Canadian content to replace the rich content no longer offered by Excite. But the company has still to make a decision whether the content will be created by an in-house production company or outsourced to a contractor.
For its part, Bell has already rolled out three small e-business Web packages — SmartWeb, SmartStore and Smart Buy-Me Buttons. Also in the process of being launched is Gamesmania, a portal through which subscribers can rent computer games on-line instead of paying $60 to $80 to buy them.
On Tuesday, Bell launched an Internet telephone service called Voice Over Internet Protocol, or Voice Over IP (VoIP), featuring a telephone system that has its own IP telephone number. So far, the system is available as a product for small to medium-sized businesses only.
Bell is also experimenting with a residential version of Internet-based telephone service with Net2Phone, a U.S.-based company specializing in software-driven telephone calls. That service is expected to be some time from a commercial launch, because the heavy flow of Internet traffic results in time delays that make conversations difficult using current technology.
Also in the works is VOEMail, or voice over e-mail, a service in which users can record a video of themselves and send it as e-mail. The service would reside on a separate server, and recipients would simply log in and fetch the video.
Although both Sympatico and Rogers say some type of bit-cap or usage limit is definitely in the works in the near future, neither knows what will constitute a reasonable limit for Internet users or what kind of price the heavy Internet users will have to pay.
