Shaw’s enforcement of hard limits on residential Internet usage an insult to their customers

What online innovations have had the most impact on our lives over the past five years?

Online gaming?

Streaming video?


It could be any of these, or maybe something different. But whatever it is for you, odds are it relies on ready access to high amounts of bandwidth.

Which is why I was so disappointed to hear that Shaw cable will be applying and enforcing a set of arbitrarily low set of caps on monthly Internet usage by residential customers. Shaw customers who exceed their monthly caps will be charged between $1 and $2 for every gigabyte they exceed their monthly allotment by, which varies depending on which plan you are on.

As you can see from the link above, Shaw’s plans vary considerably in their limits, from 15–175 gigabytes of monthly data usage. Customers with the higher-limit plans probably have nothing to worry about, but I can imagine more than a few families, maybe they have three computers between five of them, who might be getting by with the $40 plan, until Shaw decides to enforce the 60 gigabyte limit that plan comes with. That means that they’ll be charged for overages, or have to migrate to a more expensive plan with a larger limit — either way, Shaw will be very happy.

Is it any surprise that Shaw is doing this mere months after Netflix became available, and subsequently popular, in Canada? If you watch an hour of HD programming on Netflix daily, that means you’ve already hit your 60 gig cap just by watching one show a day. How can this be considered a usable cap?

As Netflix co-founder and chief executive Reed Hastings discussed in this CBC interview, download caps are a real problem for his service. He mentions that typical caps in the U.S. are around 250 gigabytes, which he says is essentially no cap. And Telus and Rogers, while having usage caps, have theirs typically at over 100 gigs, and only enforce overages for customers who consistently go over their cap by a significant amount. So why is Shaw taking such a different line than their competitors?

While it might seem a little tinfoil hat-ish, blogger Tyler Hardeman has a likely theory for the move at his blog, thewunderbar:

One Shaw rep has said that 9% of users use 50%.  Is that a problem? In many ways, yes.  However, I personally believe that will even out over time as more users discover things like Netflix, or other similar streaming services.

Shaw sees the coming threat of those online services to it’s cable TV service.  Shaw Video on Demand movies are in the $5/each range, where Netflix is $8/month for unlimited video.  Why would people want to pay/rent a Shaw DVR when you can watch TV shows that are missed online legally for free with ads, or pay $2 to watch them on iTunes.  Of course Shaw would rather you pay to use their service than pay someone else to get that same content.  The goal here seems to be making all of the other services so expensive to use that the majority of people will have no choice but to use the Shaw services.  That seems the most likely explanation.

Another possibility, one which I have no real proof at all, is that Shaw is in the middle of two very expensive endeavours.  They just purchased the Global TV network for $2 Billion.  Shaw is also building out a wireless network, and will be launching a Cell Phone service in Western Canada in 2011.  These are very expensive programs, and Shaw probably needs ways to recoup that cost.

Private corporations get to make a lot of their own rules, and that’s just kind of the way it is. But when a company up and decides to change things up on customers like this, especially when those customers are on a contract with those companies, it stinks something fierce. Shaw obviously does not hold their customers in high regard, because to spring something like this on them is hugely disrespectful. If they want to start enforcing a hard download limit, they should be obligated to wait until a customer’s current contract has expired. That would give them a fair shake at weighing the pros and cons of Shaw’s limited service versus the services of their competitors. That would be a fair and honest way to do it — this is just moving the goalposts.

But what should really concern consumers is that it probably won’t be long until Shaw’s competitors follow suit. Why wouldn’t they? If Shaw thought that they would see a mass exodus of customers to Rogers or Telus or someone else because of this move, they wouldn’t have made it. I’m willing to bet that the other ISPs are going to be enforcing similar limits within a year or two, and Shaw knows it’s coming. After all, it becomes a level playing field when everyone’s racing to the bottom.

And when it comes to bottoms, this is pretty low.