Shaw Communications Inc. has become the first telecom company to alter its pricing plans as a result of public outcry over Internet pricing in Canada, more than doubling the amount users can download while introducing new, unlimited plans.
Any change to pricing, however small, can have a big impact in an industry that collects fees from millions of customers.
The move to increase download limits is seen by some critics as proof that current Internet plans offered by telecom companies are unnecessarily expensive. But Shaw's new plans also offer customers faster speeds for higher prices, part of the company's belief that greater Internet use by its clients should lead to higher profits.
"This can facilitate the Netflixes and the YouTubes that customers obviously want," said Shaw president Peter Bissonnette, alluding to online video-streaming services that have dramatically increased Internet use. "The patterns of usage by customers are changing, to the point where they will need more, they'll require more capacity. And we're able to provide that at a rate that is both perceived by our customers to be fair, but one also that gives us a return."
Shaw's actions come after consumer outrage sparked by a CRTC proposal earlier this year that could have killed popular unlimited plans offered by smaller providers. The anger prompted a political backlash reaching as high as the Prime Minister.
The new plans offered by Shaw will likely have reverberations in a sector where pricing changes are usually rapidly countered by eager rivals. Given that analysts had speculated earnings could be affected if the regulatory environment shifted dramatically, Shaw's move could be seen as an attempt to pre-empt changes.
Internet plans offered by Shaw and Telus Corp. in Western Canada are generally more generous than those in Ontario and Quebec, where outrage focused on the pricing schemes of BCE Inc. and Rogers Communications Inc. After the changes, Shaw's plans will in some cases double the download limits and speeds of Rogers' plans.
The move also comes ahead of Canadian Radio-television and Telecommunications Commission hearings in July on usage-based billing.
Although the CRTC cannot order telecom companies to change their retail pricing plans, Shaw's move is a sign that the threat of regulation gets results for consumers, says Michael Geist, a University of Ottawa law professor.
"Shaw is doing this because the writing was on the wall," he says. "When you're in a position to offer such better pricing and data caps than what you were offering before, it highlights just how uncompetitive this market has been."