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Rogers Takes Internet Meter to the Masses

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
6/9/2008
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Whether you agree or disagree with recent moves by U.S. cable operators toward consumption-based Internet business models, it's becoming clear the genie is out of the bottle.

Among larger MSOs, Time Warner Cable Inc. (NYSE: TWC) is taking its first stab at it in Beaumont, Texas, while Comcast Corp. (Nasdaq: CMCSA, CMCSK) is mulling over a more generous model that would cap consumption at 250 gigabytes per month.

BendBroadband , a smaller operator in Oregon, has introduced a usage allowance of 100 gigabytes per month, charging $1.50 per gigabyte beyond that limit. Insight Communications Co. Inc. , meanwhile, has no current plans to deploy a usage-based model but has left the door open, according to a recent blog entry by Insight's CEO, Michael Wilner.

But if you're wondering which North American cable operator is leading the way, look no further than Canada's largest MSO, Rogers Communications Inc. (NYSE: RG; Toronto: RCI). As other operators develop models of their own, it's likely that they'll study the Rogers model closely and even steal an idea or two.

Rogers, which has about 1.5 million cable modem subs, initially launched an "additional use" policy (a cap of 90 gigabytes, and $1.25 per gigabyte after that) more than a year ago for its high-end, 18-Mbit/s Extreme Plus tier.

In July, following a three-month grace period, the MSO will begin enforcing a new consumption-based model across its entire high-speed Internet customer base, with different data volume caps and charges for its various Internet access packages. That new model includes a small rise in the usage limit for the MSO's Extreme Plus users, who will be able to consume 95 gigabytes of data as part of their monthly subscription package.

Although Rogers will charge its broadband users for any bandwidth consumed beyond their allotted threshold, the operator has built in a $25-per-month limit for additional payments.

"We are moving quickly from one tier and from a concept to full implementation across the entire base," says Phil Hartling, the MSO's consumer market VP. "It's a natural evolution of the [service] category, and one that treats customers fairly. It's a critical step for ISPs."

The table below outlines the new Rogers policy and how it stacks up for most of its customers.

Table 1: 'Additional use' rates for live billing*

Tier Allowance GB Rate Ceiling
Extreme Plus 95 GB $1.25 $25.00
Extreme 95 GB $1.50 $25.00
Express 60 GB $2.00 $25.00
Lite 25 GB $2.50 $25.00
Grandfathered** Lite 60 GB $2.50 Unlimited
Ultra Lite 2 GB $5.00 $25.00
Grandfathered** Ultra Lite 60 GB $5.00 Unlimited
* Starting July 3, 2008
**Customer qualifies if signed on prior to Jan. 14, 2008
Source: Rogers Communications




Customers who signed up for the operator's "Lite" or "Ultra Lite" cable modem service tiers before January 14, 2008, are "grandfathered" into the MSO's initial consumption levels. That means that they are given a higher threshold than those who have signed up since January 14. Those "grandfathered" customers will have a larger allowance, but won't get the benefit of the $25 ceiling. To Page 2

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berty
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berty,
User Rank: Light Beer
12/5/2012 | 3:39:11 PM
re: Rogers Takes Internet Meter to the Masses
Rogers have had considerable complaints about this intiative, however they know they are on safe grounds with Bell and Rogers having it all to themeselves in much of Canada. The tame regulatory authority let them do what they want with most services, as a result prices are twice as much as they are in the US. Unfortunately Canadians appear not to worry about these expensive services.

One wonders if there is a cartel between the 2 main players.


bert
yarn
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yarn,
User Rank: Light Sabre
12/5/2012 | 3:39:10 PM
re: Rogers Takes Internet Meter to the Masses
If you start charging the sender per bit using a net neutral charging model I think that would kill the P2P model overnight. Because which calculating consumer in his right mind would want to subsidize other people in getting content from their PCs? Everyone would keep their own shared directory empty to avoid having to pay for uploads and that'll be the end of it.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:39:10 PM
re: Rogers Takes Internet Meter to the Masses
Moving to a usage based model seems like a perfectly good approach to me. Though it seems preferred if the billing party were a separate entity. Also, the idea that consumer pays for all traffic over the access network won't work well. Sender has to pay too. Imagine if UPS delivered packages only charging the recipient after dropping the package off. Advertisers would have field day and UPS trucks would be filled with garbage instead of real goods.
thebulk
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thebulk,
User Rank: Light Sabre
12/5/2012 | 3:39:09 PM
re: Rogers Takes Internet Meter to the Masses
I would have to say that a pay for usage model would be the best way for the provider to make money if they were indeed the only provider of the service. I can not see many subscribers being all that happy about service plans like thatGǪGǪ
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:39:09 PM
re: Rogers Takes Internet Meter to the Masses
Everyone would keep their own shared directory empty to avoid having to pay for uploads and that'll be the end of it.

Sometimes self interested and ethical behaviors align, though not always.
nodak
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nodak,
User Rank: Light Beer
12/5/2012 | 3:39:08 PM
re: Rogers Takes Internet Meter to the Masses
It is odd Internet providers are going in the opposite direction of mobile operators (and for that matter email providers like Yahoo, MSN and Google). While the mobile operators are busy trying to provide you more minutes/data access, ISPs are trying to cap it. How long are these caps really going to last? If people can turn to mobile networks for unlimited data transfer, don't you think the local Baby Bell and the local cable provider will have to react to avoid losing customers?

One last question: how long before TWC starts losing customers to the local Baby Bell who does not currently have a cap?
sunfanz
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sunfanz,
User Rank: Light Beer
12/5/2012 | 3:39:08 PM
re: Rogers Takes Internet Meter to the Masses
Let's move on. Free internet has to change some how to move forward. Metered internet access with cap is the de facto in Australia since day one there is Internet.

It's just a matter of time for this to happen. There is no free lunch. Sometimes, free things on the surface may indeed be the most expensive one.
thebulk
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thebulk,
User Rank: Light Sabre
12/5/2012 | 3:39:07 PM
re: Rogers Takes Internet Meter to the Masses
you bring up a good point, wireless providers have been improving there networks, and if they continue to do so they could offer an unlimited plan and pull customers away from the big MSOs.

if the current big providers do not watch there step they could end up alienating there customers; and that is never a good thing for a business.....
spelurker
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50%
spelurker,
User Rank: Light Beer
12/5/2012 | 3:39:06 PM
re: Rogers Takes Internet Meter to the Masses
How upset are customers really going to get? 99% of them are not going to hit their caps. I think it will hit those MSOs when signing up new subscribers who have the choice between a simple plan and one that's a little difficult to understand (I couldn't tell you how much I download in a billing period)

I don't see mobile providers' behavior to be a good indication of what an MSO should do. Mobile providers don't have the same network issues -- telephony bandwidth is well understood and well constrained [1 phone will never use more than 1 DS0 of voice bandwidth], and a cell phone is hardly a reasonable platform to download a hi-def netflix video to. Also, very few consumers consider mobile internet to be a viable alternative to a broadband landline.

I think upload limits are probably more helpful than download limits for a cable shop, due to the way those networks run, but I disagree with the UPS analogy -- the internet is essentially a system where the end user pulls data from network servers. Since end user nodes can get assigned floating domain names, a server push model is not very practical.
miar70
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miar70,
User Rank: Light Beer
12/5/2012 | 3:39:05 PM
re: Rogers Takes Internet Meter to the Masses
We've had caps for quite some time in Canada. Bell was the only one holding out, but that was mainly because they had slow DSL lines and needed a differentiator, but even at 1-3Mb/s they started to feel the pain of 24/7 transfer. They have moved to a capped model recently.

Reality is that it's inevitable. For those holding out hope that the cellular providers are coming to your rescue, consider that they use the fixed networks for their backhaul, so it will not get any cheaper than 1.50/GB anytime soon. Those wireless unlimited plans, mostly come with some 'reasonable limit' which in the case of Vodafone's 7.2 Mb/s service is 5GB/month.

Sprint has an unlimited plan and yes they have a few subscribers that are costing them thousands dollars / month in back haul costs. You can expect that to change in line with the other cellular providers and 5GB seems to be the number which is significantly less than the ~100GB you get with your fixed subscription.
http://www.intomobile.com/2008...

and for those south of the border wondering what it is like to be a subscriber of Rogers, a quick browse here should incite the right 'feelings'...
http://wirelessnorth.ca/2008/0...

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