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Rogers' strategy is short-sighted

Jack Kapica, March 28, 2008 at 12:08 PM EDT

The issues raised by Rogers' decision to impose new bandwidth caps on its users are complex. I described some of them yesterday. There is yet another issue that needs to be addressed.

While its competitor Sympatico has installed bandwidth-shaping technology, which identifies the kind of traffic you create and “shapes” it by deciding which kinds of traffic get priority, Rogers has approached the issue from the other side. Instead of slowing down bandwidth-hungry traffic such as BitTorrent, Rogers will take a “Net-neutral” approach and simply charge individuals extra for traffic over and above what Rogers identifies as “average.”

Each system is designed to slow the flood of traffic, specifically those involving file-sharing. But the comparisons stop there.

Rogers seems to be motivated by two principles. One is that raising the basic rate Rogers charges its Internet customers is inviolate, and changing it would be folly, because the backlash will be terrible. The other is the recent humiliation suffered by the U.S. cable company and Internet service provider Comcast, which went so far in its effort to use bandwidth-shaping technology that it incurred the wrath of U.S. regulators, forcing the company to retreat to a position that it does nothing with those whose use of the Internet is way beyond average. If Rogers is fearful of sharing Comcast's fate, it is left with only one alternative: charge for what telcos (of which Rogers is one) call “overages” — a charge for use beyond a certain amount.

Rogers seems willing to take the gamble that this might scare off a small number of subscribers, perhaps a number the company can afford to lose (this was the explanation for introducing bandwidth caps in 2002).  This time, however, the company is offering four different plans, each with a different maximum cap: Ultra-Lite subscribers 2 GB per month; Lite limits its subscribers to 25 GB per month; Express to 60 GB, and Extreme to 95 GB.

The company says that its caps will handle much, much more than the “average user” will need — its own website says that only one gigabyte lets users view 26,000 Web pages, or send 105,000 e-mails, or attach more than 2,000 Microsoft Word documents about 10 pages each, or receive up to 1,000 digital photos, or download more than 200 songs, or stream 18 hours of music from the Web, or download 1.5 movies (or 2/3 of a movie in high definition) or play games online for 240 hours, or 10 days. And multiply that by 2, 25, 60 or 95 per month before you start getting charged.

Sounds reasonable, doesn't it? In fact it does: Very few people will need that much bandwidth, so Rogers'  logic appears to be sound. With pricing like this, the caps are clearly designed to discriminate mainly against those who download stuff 24 hours a day.

But it's still an odd strategy. Almost all Internet providers are using bandwidth-shaping technology of one kind or another, and many people have ceased railing against the practice. In fact, even Rogers is using it (begging the question of whether it will continue to do so).

By taking the bandwidth-cap approach, Rogers is painting itself into marketing corner. At some point, as we start downloading our favourite TV shows and high-definition movies, any cap will start to appear inadequate, or the overage charges might have to be raised, or the low-end subscribers will have to upgrade their plans. That means subscribers will, from time to time, get a surprise in their monthly bill, and how many subscribers does Rogers plan to keep when that happens?

With this move, Rogers is coming closer to the way telcos charge their cellphone subscribers. This logic might fly in Rogers' marketing department, but Internet use is a far different animal from cellphone use. Cellphone subscribers still view the extras Rogers sells them as either small conveniences, such as mobile e-mail (very few people archive all their e-mail in a cellphone), or nice but unnecessary luxuries, such as downloadable music videos. These are not luxuries for the desktop computer — as we move to a more multimedia model, desktop computers are expected to handle everything we want from them. Moreover, cellphone contracts are for finite periods (usually one, two or three years), but home subscribers sign up with much longer expectations, and are less tolerant with changes.

Rogers' gamble of setting caps might pay off for the foreseeable future, especially among those of us whose use of the Internet is below the cap. But at some point, the caps will become inadequate, and the company's marketing department will have to change its strategy again.

  1. Leonard Eichel from Montreal, Canada writes: There is something very critical to this whole debate of net neutrality that most columnists seem to miss or ignore and that is the cost of the backbone connectivity that Internet Service Providers incur as their primary cost of sales.

    If an ISP would open the pipes wide, and not charge of excess usage, who then will pay for the underlying transport that ISPs incur? You are right that, as time goes on, more and more of us will be using the Internet to download video, a notorious bandwidth hog. As more of us do so, the ISP has to order more connectivity in the form of GigE circuits that it pays a cost/megabit fee. More circuits, more cost but not necessarily more revenue. The result could be a lot of bankrupt ISPs in short order and then where would the customer be?
  2. Ross MacGillivray from Vernon, B.C., Canada writes: Traffic Shaping is acting as a proxy for another technical mechanism called admission control (the lawful right to present traffic into a network). IP networks simply do NOT support an admission control feature, by design. The lack of an admission control feature for IP networks was not a technical error, it was a choice made by the early architects of IP technology and networks many years ago.

    The correct resolution to the issue of lack of IP network capacity currently being solved by traffic shaping (as a proxy for admission control) is more capacity in the IP routed networks, and probably also more capacity in the SONET Fiber Optics that underly the IP Routed networks, and very likely appropriate near real time bandwidth control in the Fiber Optic Networks.

    In short money needs to be spent to expand the capacity of the Internet and the underlying fiber optic networks in order to properly support bandwidth hungry applications such as streaming video on demand on the Internet and in the future, believe it or not, streaming high definition video on the Internet.
  3. Albin Forone from Canada writes: I've been under the impression that the current bandwidth problem - and it is one that Net Neutral folks should 'fess up to for credibility's sake - will be solved with better transmission protocols and not a huge new hardware and cable build out. Japan has much faster service but uses traffic management. Here is a recent proposal to improve the TCP algorithm (long piece on the history and issues, solution here): http://blogs.zdnet.com/Ou/?p=1078&page=4

    WRT Rogers, I've been on Sympatico Total (equivalent to to Rogers Express, but $5 cheaper) for six months with a 7meg theoretical download and 60 gig monthly cap, and according to Bell's calculation normally use about a tenth of it. It would be interesting to know how many hours per day of "unthrottled" downloading it takes to use up the 60 gig, or 100 gig for the heavy user packages. If this is about a bunch of pimply kids saving themselves and their friends peanut$ and clogging up more important applications of the internet, I'm not neutral.
  4. Northern Girl from Nunavut, Canada writes: Adding to this problem is that we have people that are leaguing together to get the telcos to use the Deferral Fund to give back a small rebate (of $5-$6/person) rather than to use it as it was intended to - to increase the necessary infrastructure in, especially, rural and remote communities. There are plenty of ISPs out there that have no choice but to do traffic shaping because the costs of improving the backbone are just WAY too prohibitive.
  5. Dodge Chaarger from GTA, Canada writes: I am on Extreme and they have CUT the cap from 100 gigs to 95. Now for me to keep the same level of service that I had before I have to pay an extra $25 for those five gigs and so my total monthly cost rises to $80 per month!

    Up until not I have been pulling down about 100-105 gigs per month. If the max they can charge me extra is just $25 then I will pay the extra $25 and then download 300 gigs!

    Stupid stupid stupid
  6. Not right or left from Canada writes: As far as I'm aware, Rogers does throttle bittorrent traffic.
  7. N. Harmon from Vancouver, Canada writes: They already promote and charge for a set bandwidth, then they add a cap to how much you can actually download. That is fine, but not also keeping the bandwidth throttling.

    If someone goes over their download limit, it's fine to cut them off or throttle them. It's not ok to throttle everyone, and still say you have x amount of bandwidth. That bandwidth they promoted and sold to people is the throttled amount already, since if you were the only one on their network you would get more than that.

    This is a reason to cap everyone's downloads, and speeds to far below their promoted numbers so they don't have to add network hardware.

    If they were transparent, they would show you your statistics about how much you downloaded in the last 30 days, the average speeds, and possibly the time of day.

    The problem is more than people using more than their cap; the problem is they oversold their hardware abilities, and even the lower end users are increasing their needs.

    Dealing with the top 2% of extreme users is really easy. Easy to detect, easy to bill, or easy to cut off.

    Why throttle everyone who isn't near their caps, except to say that they can't provide the services they promoted?
  8. Chris S. from Kitchener, Canada writes: In an environment lacking regulation, an industry will regulate itself. Whose interests will be in mind when doing so? Certainly not our own.

    Where is the almighty CRTC? It can no longer afford to sit idly by and shirk its responsibility to the Canadian public, lest it be relegated to obsolescence.

    As a consumer, I demand a quality service, unfettered and unmolested by anyone else. I am willing to pay a reasonable price for this service. Why are we being forced to settle for less?
  9. Gyula Voros from Oakville, Canada writes: I much prefer Roger's stated approach (caps) to throttling. I recognize that bandwidth is not free, and am more than happy to pay for what I use -- as long as this is reasonable. The price of bandwidth should decrease over time, with increased infrastructure investment and technological breakthroughs.

    Unfortunately, both Bell and Rogers are imposing caps, while still continuing to throttle traffic. And now Bell is imposing that throttling on third party providers. And unlike Comcast's new throttling policy, it picks on certain protocols (BitTorrent and other peer-to-peer technologies, encrypted traffic I need to work from home, etc) while leaving others alone.

    Throttling the way Bell and Rogers have implemented it is akin to the hydro company telling me which appliances I can and cannot plug in, or the phone company dictating which languages I can speak over the telephone. This reeks of anti-competition (especially since both Bell and Rogers are providers of old media such as Television).

    It is simply unacceptable. I pay for my connection. I have been saying for years, if I use too much, charge me more. But don't you dare tell me what I can and cannot do with the bandwidth I have paid for.

    Rogers is halfway there; if only they would drop their practice of throttling...
  10. S B from Canada writes: Different approaches by Bell and Rogers is in the end a good thing since it gives consumers a choice.

    For a given price, let the consumer choose between content size vs. speed. It's a distribution choice that currently exists for physical goods and I don't see why the choice can't exist for digital content.
  11. Derek Adams from Toronto, Canada writes: If this is true, then Rogers is going down the right path. Bell has gone down the wrong path. This article does not understand the problem.

    I am happy to pay for what I use, but please give my the freedom to use my bandwidth how I want, the way I want.

    Bell is now throttling all P2P and encrypted traffic including P2P, VPN, Skype (P2P), Torrent, Online Trading, Online Banking, Joost (online tv), VOIP, etc.

    The point of "Net Neutrality" is so that nobody can tell us what we use the internet for. If Bell does, then that is the end of innovation on the net in Canada. It is essentially a form of protocol censorship, or innovation throttling.

    Bell is even throttling ISP wholesalers so that nobody offers a superior service over Bell. Talk about anti-competitive behavior!
  12. old Curmudgeon From Ottawa from Canada writes: two words describe Rogers, Telus and Bell: Robber Barrons.

    We are held hostage by this cartel who collude to offer the priciest service that people will pay for, then nickle and dime us to death with surcharges.

    I pay a premium for high speed service. Im supposed to get 7MB/s. On a good day I get 2Mb/s.

    I am not happy and there is nowhere else to go.
  13. Dodge Chaarger from GTA, Canada writes: How much does "bandwidth" really cost? If you look at GoDaddy webhosting, for US$7 per month you get 150 GB Space and 1,500 GB Transfer! Amazing - for $7 I get 1,500 gb transfer but with Rogers, for $55 I get 95 gb transfer. Come on do you think we are all that stupid?
  14. B . from Canada writes: The caps that they have set out more than allow for the usage I need. If there are people who want to download excessive amounts of data that it far beyond what is reasonable, then they should have to pay for it..and they should not be allowed to impact the usage of others.

    As for these "peer to peer" networks, if you are serving up things like that, you are running a server. This is against the terms of service for most if not all residential connections. I have a difficult time believing that peer to peer systems are a legitimate use of the net. However, if they are, the people who use them should not complain and pay what they need to pay. The internet is not free.
  15. James Canada from Ajax, Canada writes: Both ISPs use a "packet shaper" and both ISPs have bandwidth caps. There is no difference except one offers more bandwidth for the same price. This is another money grab to get its subscribers to pay more money. The first money grab was the bandwidth cap just introduced last summer. Now, there will be new plans or additional charges for people who want to use P2P (peer to peer) applications with no packet shaping (or slowing down the speed plan that you have already paid for!). The CRTC should not have allowed ontario ISPs (ontario is the only province in which there is a bandwidth cap) to introduce a cap. Now ISPs are using packet shaping. If the CRTC is not going to stop this money grab they should be allowing new ISPs from the U.S. Yes there are other ISPs in Canada but they all have to buy bulk bandwidth from the 2 giants ROGERS AND BELL which means they are still affected by packet shaping.......its all about controlling the consumer(YOU) and their(ISP) bottom line.
  16. david y from Edmonton, Canada writes: IMO leave the net neutral as to protocol and have a cap on usage, go beyond that cap and your speed gradually is throttled down. Factor in peak hours (use bandwidth heavy during peak and pay higher throttling charge), and usage over period of days/months, don't penalise someone if they are only heavy users one month out of year.
  17. Donnie Cluney from Toronto, Canada writes: I called rogers when I got the letter about this. The lady I talked to kept beating around the bush when answering questions. It took 15 minutes to get a straight answer, but i finally found out when you get to $25 worth of extra charges for badwidth use they suspend your service. So the way I see it come june when they start charging for the extra bandwidth i'll be switching to primus or Adanac service (By the way my bandwidth use for the last three month was 121G, 132G and 141G. LOL)
  18. C L from T O, Canada writes: Fact of the matter is Rogers' bandwidth ceilings (before overages) are very generous and even heavy users will be hard-pressed to go beyond them. Couple that with the higher internet bandwidth offered by that fat cable pipe and, any way you slice it, Rogers has a winner over Bell and ADSL, no matter what the pricing policy.

    FYI, I use the 7MB (ultra?) service quite heavily, and rarely go over 2GB per month. I cannot even imagine what I would need to do to get to that 60GB that I'm allowed.
  19. Anon Ymous from Canada writes: To reference the article title, those not concerned about these usage caps and throttling are being "short-sighted".

    Not too long ago, early nineties-ish, when most Internet traffic consisted of text, it was neigh inconceivable that anyone could use more than a few KB of traffic a month. But then people started to send around GIFs and JPEGS, and use these newfangled webpage thingies. What few users there were had to fight just to get a couple MB per month usage allowance.

    Since then, we've had the explosion of email, the web, compressed music (MP3's off iTunes), and low grade video (youtube) to help push ISPs to deploy faster connections and higher bandwidth caps. However, with each of these developments, there's always been that period of time where early adopters suffer ISP backlash for all this new bandwidth they are using. If you use any of these things on a daily basis, you should thank these innovative users for the battles they had to fight to get ISPs to allow this sort of usage.

    For those that can't imagine "legitimate" uses of 100GB per month, iTunes, in the US for now, allows for HD movie rentals. Even with their ultra compressed HD video, you can expect 10GB per download easy. A Blu-ray movie is an HD video that is significantly less compressed and it's up at 25-50 GB. That gives you somewhere between 2-10 movies per month and this application is here now, nevermind what's coming down the pipe in 5 years when studies plan to move entirely to digital distribution.

    The real issues here are that protocols should not be regulated as that hinders innovation, under-provisioning by ISPs not allowing us to use the bandwidth we pay for, and not recognizing that bandwidth will continue to be used up.

    Again, thank the people that are fighting this battle now so that you won't in the years to come when you want to watch the latest Harry Potter movie in HD...
  20. Derek Griffiths from Ottawa, Canada writes: You're article is actually in correct. Rogers already performs significant traffic shaping on bit torrent. Even encrypted traffic is filtered. They allow you to download but not to contribute to the swarm (upload). In fact, the upload is so slow that you can rarely get more than 2 kbps seeding.

    It's totally pathetic that Rogers is only willing to allow their users to leach and not to contribute to the Internet.

    Ironically, their own webpage is much larger than the example webpage size they suggest you can download 26,000 times. In fact, theirs has embedded flash and tons of images.

    ISPs don't pay for bandwidth traffic -- they just pay for their connection to the internet. Rogers and Bell are just being cheap and refusing to pony the cash to upgrade their network as Canadians become more and more connected. Bell's hilariously slow expansion of high-speed internet service is a perfect example of this.

    Our mobile phone data rates are more than 10 times any other nation. Iraqis get better rates.

    Our telecommunication industries are holding Canada and her economy back. They need a push.
  21. Dodge Chaarger from GTA, Canada writes: I can't believe some of the people here who say "Well I only use 2 gb per month so noone else should need more". I for one download HDTV movies which I pay for. Each movie is about 8 gigs. I also download TV shows which in HDTV are 1 to 2 gb! it adds up pretty quickly. I also have a slingbox which I use to place-shift my TV viewing. What is the point to paying $55 per month for 7-10mbps service if I am not allowed to use it! Get real people - the Internet is changing and consumer demands are changing. Rogers is just in this for the money grab (or to minimize the expense to improve their network). Or is Rogers trying to prevent competitive services from taking root? I hate Rogers Cable and Rogers Internet - but I have no other options. Don't monopolies suck?
  22. Robert Fisher from Canada writes: How is this pricing scheme fundamentally different from cell phone service? Arguably it's even more unconscionable (if you believe it to be unconscionable in the first place) with cell service because once the transmission tower infrastructure is in place there's no additional 'pay as you play' cost for the cell provider. There'll be additional capital costs as the provider needs to upgrade the network of course. If it's acceptable for cell service, why isn't it acceptable for internet service? Or are people still stuck on the 'the internet should be free' mantra? I'm on Rogers Extreme. Under the new plan I'll get 95GB of data transfer in either direction each month (it's not just download folks, it's both ways). I use the internet pretty heavily. I'm on the web most of the day for work, fairly heavy email usage and I use VOIP for my office telephone. I don't download music much nor video, it's just not my thing. I do buy software and download that but that's only on occasion. I received a package in the mail yesterday from Rogers outlining the new plans. With all my activity, I use about 15GB/month of transfer. The limits that Rogers are putting in place will be more than enough for all but the most aggressive users. I'd venture that for probably 99.9% of people, these new plans won't make a difference now or into the foreseeable future.
  23. Robert Fisher from Canada writes: To clarify, I meant total for both ways, not 95GB in each direction.
  24. James Wilson from Ottawa, Canada writes: Quick question for anyone who knows - how does usage for online gaming, e.g. an MMORPG like World of Warcraft, compare to the usage for downloading movies and the like? I don't download movies but I do play a lot of World of Warcraft.

    Thanks!
  25. H M from Canada writes: Depends on your MMO- a great deal of WoW content is already downloaded onto your computer, while a game such a Guild Wars has less on-computer content and more online content. I haven't the foggiest what either actually uses, though.
  26. tony danart from North York, Canada writes: in the United States you can get true unlimited fast net for $25.
    true unlimited.
    shouldnt the goverment of Canada help us stop THE ROGERS MONOPOLY

    lets face it... the only competition in canada is BELL and that is hardly real competition at all.

    us canadians pay higher amounts on every service due to government protectionism.

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