Perhaps the greatest change to rental services recently came through Netflix and online streaming of video content.
Netflix Canada offers a wide selection of movies at $ 7.99 a month unlimited. While not all studios have signed on, consumers are largely embracing the method of renting.
But with Internet streaming comes a hidden cost put forth by Internet providers. Usage-based billing caused a frenzy in early-2011 when consumers were being charged for every extra bit of broadband use they went over their usage caps a month.
Petitions from OpenMedia.ca’s Stop The Meter campaign led to a battle between federal government and the Canadian Radio-television and Telecommunications Commission on the issue.
The CRTC’s website says that “the CRTC regulates rates, terms and conditions between the telephone/cable companies and the independent ISPs,†but it doesn’t regulate consumer prices.
However, OpenMedia.ca says the CRTC has more to do with it than they’re letting on. “They don’t regulate consumer prices. But they do regulate competing providers and are supposed to ensure there is reasonable pricing,†says Lindsey Pinto, communications representative for OpenMedia.ca
“They were allowing larger providers to force smaller providers to adopt the usage-based billing system to compete,†she says.
“I can see why companies want this, especially when they regulate television product as well as Internet.â€
Many companies at this point have a cap system, including Rogers.
“At this point there is a cap. It hasn’t really caused a problem,†says Luiza Staniec, manager of public relations for Rogers, Quebec and Atlantic Canada region.
“If the cap begins to affect users online, we will abolish it,†she says.
The company offers different packages with different broadband caps, for all types of consumers. “If you watch a lot of movies, pick the package with the highest cap,†she says. “If you don’t watch too many, you don’t need the high cap.â€
As for the cap conflicting with Netflix streaming, Staniec says if the cap becomes an issue, “they can be adjusted to suit the consumers.â€
Netflix said in January that it expected $ 50 million in operating losses in international business this year. This could perhaps be due in part to the changes to usage-based billing in Canada, costing consumers more broadband to stream Netflix video than ever before.
Netflix previously stated to CNN that it was “comfortable with (the losses) given the size of the opportunity.†But a large portion of last quarter’s earnings report was devoted to explaining the Canada situation. Netflix called the per-gigabyte fees “excessive.â€
Netflix could not be reached for further comment. Eastlink, which provides cable services to Nova Scotia and Prince Edward Island, has a similar system to Rogers, where Bell Aliant has no cap at all.
The fight over usage-based billing is far from over at this point in time.
“The government has sent the CRTC back to the drawing board,†says Pinto. “There will be a hearing July 11th, and a decision will be made sometime in November.â€
But in the meantime, the costs to stream movies and watch Netflix may be too staggering for some consumers to handle.
“It takes a lot of bandwidth to stream a movie or watch Netflix,†says Pinto. “People will stop doing things that will bring them over the cap. There will be a disintegration from these services under this model.â€
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