Content may be king but when it comes to people being able to access content, the value lies in the pipes from cable and telephone companies. The broadband market is an oligopoly with a handful of players offering service. As a result, they can charge pretty much whatever they want. If you don’t like it, there are few, if any, alternatives.
In Canada, most consumers are lucky if they have two options – cable or telephone. Not only do Canadians pay high prices but the new golden goose being embraced by broadband companies is data. With video, cloud computing, social media, gaming and telephony becoming more popular, consumers are gobbling up lots of data
For broadband companies, it offers a great opportunity to charge consumers for the privilege to using lots of data. This explains why data caps have quietly been put into place. They are not something broadband companies are actively marketing – speed is still the sizzle they want to highlight – but data caps are becoming a fact of life.
Aside from being an easy cash grab by broadband companies, bandwidth caps pose a major threat to innovation and how Canadians can use and take advantage of the Internet.
It wasn’t that long ago Canada was among the world leaders in broadband access but our status as a global tour de force is disappearing. The lack of competition is a sad state of affairs, and the fact broadband companies can pretty much do what they want is troubling.
It is a marked contrast to the wireless market in which the federal government has bent over backward to make sure there was more competition, led by the apparent need for more innovation and lower prices.
What’s puzzling is the potential of Inukshuk building a nation-wide wireless network to compete against the cable and telephone companies was snuffed when the federal government allowed it to be purchased by Rogers and Bell.
This has left Canada with an uncompetitive broadband market in which one player simply has to keep up with the other player to keep customers from jumping ship. And while the cable and telephone companies have invested a lot of money to build out their broadband networks, innovation isn’t a word that is used a lot. For Bell’s marketing push about the speed of its Fibe network, broadband speeds in Canada pale to other parts of the world.
If the federal government was serious about broadband competition and innovation in Canada, it would create real incentives for more players to enter the market, while keeping the existing players at bay – much like it is doing in the wireless market. Maybe this will happen when the foreign ownership rules are relaxed, which could encourage U.S. companies to move begging for more choices.
In the meantime, Canada will continue to suffer from a broadband infrastructure that is, at best, good enough as opposed to world-class. As a result, it stifles the development of innovative new services that could leverage real high-speed networks to meet the needs of data and cloud hungry consumers.
