Canada’s Netflix Rebellion Against Bandwidth Caps

We want our Netflix! (s NFLX) That’s the message Canadians are sending to their elected officials this week, in response to mandatory bandwidth caps put in place by regulators. Canada’s Radio-television and Telecommunications Commission (CRTC) finalized a decision last week that will allow big ISPs like Bell Canada to charge their wholesale customers usage-based bandwidth fees.

The change, which goes into effect on March 1, will mean smaller ISPs will have to cap their customers’ bandwidth at 25 GB per month in some markets. Anyone who exceeds this limit will face extra fees. A petition aimed at reverting the decision has been gaining steam in recent days, however, attracting more than 330,000 signatures to date. And now politicians are starting to step in as well: Prime Minister Stephen Harper said this week on Twitter that he’s “very concerned” about the impact of the decision, and wants it reviewed.

Big ISPs like Bell and Shaw have had bandwidth caps for customers in place for years, and we’re not talking about Comcast-like 250 GB caps (s cmcsa). Bell’s basic Internet plan offers users as little as 2 GB, with fees of $2.50 Canadian for each additional GB used. The higher-priced premium plan caps out at 25 GB for users in some of Bell’s markets.

Bell is reselling its DSL service to many smaller ISPs without access to the last mile, and it has been pressing for a long time to also charge these ISPs based on the bandwidth used by individual customers.

Bell's Internet plans: Not enough bandwidth for Netflix.

We already argued back in 2009 that this kind of metering could turn Canada into an oldteevee wasteland without any hope for a thriving online video market – but the issue became even more pressing when Netflix entered the Canadian market last September. Netflix isn’t offering any DVD rentals in Canada, instead solely relying on its online streaming.

The company has said that it expects its Canadian operations to be profitable in the third quarter. However, it also warned that usage-based billing could negatively affect the company, and said that usage-based-billing schemes for wired networks are “grossly overpriced.”

Many observers took these comments as a warning to U.S. ISPs, but Netflix is quickly becoming one of the key issues in the Canadian rebellion against bandwidth caps as well. The NDP said last week that usage-based billing is an effort by large ISPs who also sell TV services to “limit competition from online viewing sources like Netflix.” The New Democrats were joined by Canada’s Liberal Party in opposing usage-based billing this week, with a spokesperson saying that the “CRTC decision will limit Canadians’ ability to use services like Netflix.”

Image courtesy of Flickr user LWY.

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