Forgot your password?
typodupeerror
Canada The Internet News

Canadian Regulator Orders Telecoms To Tell Us What It Costs To Run Their Service 120

Posted by Soulskill
from the jig-is-up dept.
bshell writes "Canada's CRTC (like the FCC) has finally asked telecoms to provide information about how much their services actually cost. Quoting a Montreal Gazette story: 'In a report I wrote last year, I estimated the markup for Internet services was 6,452 per cent for Bell's Essential Plus plan, which provides a two-megabits-per-second speed for $28.95 (prices may have changed since last year).' The markup is likely similar in the U.S. It's about time that we consumers found out what it really costs to provide Internet service, and for that matter telephone and wireless services, so we can get a fair shake."
This discussion has been archived. No new comments can be posted.

Canadian Regulator Orders Telecoms To Tell Us What It Costs To Run Their Service

Comments Filter:
  • by queazocotal (915608) on Friday October 26, 2012 @05:03PM (#41783751)

    The cost of providing services can't ignore fixed costs.
    Sooner or later providers would need to install more hardware, or maintain the existing infrastructure.
    Costing is complex. Marginal cost is not the sole cost.

    • by geekoid (135745)

      Correct, OTOH what's the markup after that? a measly 3000%?

      • by ILongForDarkness (1134931) on Friday October 26, 2012 @05:20PM (#41783931)

        The markup is large but I suspect it is no where near that by the time you add in advertising (print, TV, cold/warm calls), collections activities, billing legal etc. The ISP business might very well be like Coke: 1% cost what is in the bottle and all the rest is branding and service around that. If investors really got to make 6000+% on there money the market would flood with people wanting those returns and the prices would drop.

        • But that is the big catch. They have concessions. No matter how profitable their business get they will have no further competition than they already do.
          • by ILongForDarkness (1134931) on Friday October 26, 2012 @05:58PM (#41784347)

            Rogers didn't have competition in the cable space in east Canada and then Bell got into the business. For phones you have Fido, Virgin etc entering the market. ISPs: the little guys have always been around. They get screwed over since they have to lease bandwidth from one of the big players (usually Bell since it is DSL) but still it is there. They have nothing like the advertising (I think they are so local the revenue can't get them TV time) but you can get a fastish (5Mbps) connection for ~$30 with no limits in most places, some of them even explicitly state they don't traffic shape, the connection is symmetric etc.

            • by Anonymous Coward on Friday October 26, 2012 @06:56PM (#41784931)

              Fido and Virgin are terrible examples, considering they're owned by Rogers and Bell respectively...

              • by Pope (17780)

                Fido was a separate company when they started, though. Bit of a difference. Koodo, Mike, Chatr, etc. are sub-brands of the Big 3.

            • Some times another company enters the market when the government wants to open a new concessions. That has nothing to do with the amount of profit though, and it will always be limited to the number of concessions the government wants to open.

              In the end as there are very few companies anyway, sometimes from the same owner, it is very easy for them to arrange for a mutual beneficial agreement regarding basically anything, including prices.
            • by ue85 (1961968)
              The same big three in phones are the same as they always have been. It is a pretend competition because the three others are simply faux-competitors: Fido is owned by Rogers Virgin is owned by Bell Koodo is owned by Telus You're still paying into the same pockets. Sometimes a lack of choices can drive prices down. In Nova Scotia for example you have to primary choices for services, either Eastlink or Bell-Aliant. Both are competitively priced and offer fairly decent bundled services. With their most commo
              • by CastrTroy (595695)
                Cell phones are getting cheaper if you live in they city. I'm using Wind Mobile and I save quite a bit over the other guys. $30 a month for unlimited text, data (slow down at 5GB) and local calling. The big three can't even come close to that price. Most people I know are paying double that. Sure those rates only apply when I'm in the city limits, but that's where I am most of the time anyway. I'd have to be doing quite a bit of traveling to make up for the price difference. Assuming (conservatively) I
            • by compro01 (777531)

              For phones you have Fido, Virgin etc entering the market.

              Hah. Fido, Virgin, and Koodo are wholly owned by Rogers, Bell, and Telus respectively.

              It's nothing but a shell game to create the illusion of competition.

        • by sycodon (149926)

          Because it's complex, what the should have done was send an army of auditors armed with a law stating cooperate or go do jail.

          Accounting techniques can make a money loser seem like a money winner and visa-verse.

        • by Lynal (976271)
          Research has shown that in some markets if we outlawed advertising, prices would drop while demand wouldn't decrease as significantly, and everyone would be better off.

          If you also consider that this may be a 'price as a signal' market, knowing marginal cost could let consumers make better choices, and we could get better outcomes.

          I'm an economist so I might be biased, but this seems like a good thing.
          • Research has shown that in some markets if we outlawed advertising, prices would drop while demand wouldn't decrease as significantly, and everyone would be better off.

            But, but... think of the advertisers! Everyone would be better off, except them...

            I'm an economist so I might be biased, but this seems like a good thing.

            I agree. What was that bit in Hitchhiker's Guide about the 'useless third' of the Golgafrincham population?

            Apologies for twisting your words - I just couldn't resist.

        • by TubeSteak (669689)

          The markup is large but I suspect it is no where near that by the time you add in advertising (print, TV, cold/warm calls), collections activities, billing legal etc.

          Companies wouldn't pay for any of those things (other than legal) if they didn't provide a positive return on investment.
          Most bad bills get sold off to a debt collection agency for pennies on the dollar, because trying to collect directly would cost far too much.
          Billing, even though it's the way they make money, has been heavily computerized in order to cut costs.
          Advertising... why are we even talking about this?

          • by ShanghaiBill (739463) on Friday October 26, 2012 @10:26PM (#41786443)

            The markup is large but I suspect it is no where near that by the time you add in advertising (print, TV, cold/warm calls), collections activities, billing legal etc.

            Companies wouldn't pay for any of those things (other than legal) if they didn't provide a positive return on investment.

            Just because something has a positive ROI doesn't mean it doesn't drive up costs. My wife made an iPad app. Initially she sold it for 99 cents. But we were able to double sales by running some Google ads. But the Google ads cost 20 cents per click and only a quarter of those clicks resulted in a sale. So that means the advertising cost was 80 cents for a 99 cent sale, which is a 10 cent loss after Apple takes their 30% cut. So we raised the price to $2.99. Now one click in seven leads to a sale, but the price is high enough to pay for the advertising and still leave a profit. So the advertising has positive ROI, but only if we raise the price.

        • by kenh (9056) on Friday October 26, 2012 @11:01PM (#41786621) Homepage Journal

          'In a report I wrote last year, I estimated the markup for Internet services was 6,452 per cent for Bell's Essential Plus plan, which provides a two-megabits-per-second speed for $28.95 (prices may have changed since last year).'

          That makes no sense.

          $28.95/64.52 = $0.45

          So the author of the original piece "estimated" that it only costs 45 cents to provide 30 days of wired internet access? That is nonsensical. The ISP can provide 30 days of ISP service for 45 cents? How much of that estimate accounts for the cost of electricity to rn the headend equipment to support the service? How much of that 45 cents goes towards mailing the bill to the client each month, etc?

    • by Anonymous Coward on Friday October 26, 2012 @05:11PM (#41783829)

      I don't get this issue here. Most of these companies are publicly traded, so you have access to their financials. Go look for yourself if you want to know what their operational profit margin is.

    • by Anonymous Coward on Friday October 26, 2012 @05:18PM (#41783917)

      actuallly, most of the fixed costs that you would imagine telcos pay to secure rights of way, lay wire, etc. etc. is heavily subsidized by taxpayers, so effectively we're paying for that part, too, even if we don't subscribe to their ridiculously overpriced internet service

    • Fixed monthly cost for maintaining the lines, then much smaller per-GB cost for bandwidth.

    • by Anonymous Coward

      It is simple. I would not believe that they don't track this information themselves. If they did not, they are a failure and they are surviving based on luck or abuse. Every business should know the cost of doing business.

    • by Tuoqui (1091447)

      You mean the hardware they dont install and dont upgrade or maintain their existing infrastructure with?

      Companies arent doing a whole lot of upgrading but they're still posting record profits so what does that tell you?

  • by wiedzmin (1269816)

    Yeah, make them reveal how much it costs them to send each SMS that they charge [gthing.net] is 15 cents to send and receive (unless we have a "plan").

    • by Mitreya (579078)

      Yeah, make them reveal how much it costs them to send each SMS that they charge is 15 cents to send and receive

      I especially like the part about charge-to-receive (I pay 20 cents each way). Imagine if post office charged you 45c for every letter you receive with no option to decline.
      How is this not illegal? It's out of my control.

      • by geekoid (135745)

        It takes people to get there government to create a regulation. That's how it stopped with phone calls in the US. SO when you are called on a land line, YOU don't get long distance charges.

        • I was under the impression that "caller pays" was always the rule for land line phone service, and this happened even without government edict.

          You have piqued my curiosity, do you have any more information on this?

      • by alannon (54117)
        You mean, exactly how many postal services ORIGINALLY operated? In the UK, it was receiver-pays until about 1840. Of course, that doesn't mean that the system wasn't terrible and unfair.
      • The actual cost is something less than 1c. SE Asian telcos are still able to make a profit at those levels. (1 second of voice transmission is about the same network data as 5 SMS messages and they're not time-critical. Do the math)
  • Yawn... (Score:5, Insightful)

    by NeutronCowboy (896098) on Friday October 26, 2012 @05:06PM (#41783777)

    What - did the regulator just find out that his industry is a natural monopoly, has a few very entrenched players facing almost no competition, and who are protected by near infinite barriers to entry? And did I mention that the service provided has morphed into a requirement on the order of electricity and roads?

    Welcome to market pricing when the market is not competitive and has highly inelastic demand. And if he tries to "get a fair shake", watch the telecoms pull out their infrastructure build-up costs from 30 years ago to justify pricing now. I expect that after the telecoms are done with their studies on their profit margins, they will lose $2000 on every byte they transmit.

    This is so doomed to fail.... I need to grab my popcorn.

    • Just for giggles, I wonder if the costs of lobbying against the requirement to provide cost estimates can be factored into the cost estimate?

    • by wvmarle (1070040)

      Exactly.

      Introduce competition (e.g. by decoupling ownership of the wires with providing services on those wires - a highly successful strategy used in many Euroean countries) and prices will come down. Then the provider that has the lowest cost (their own overhead as everyone pays the same access fees to those wires) will be able to set the lowest prices, and attract customers. Or they could start providing excellent support/customer service, extra services, whatever.

      What helped here is that most of these w

  • by fuzzyfuzzyfungus (1223518) on Friday October 26, 2012 @05:10PM (#41783815) Journal

    As if hundreds of Hollywood accountants suddenly received job offers from Canadian Telcom companies...

  • Canadian Regulator Orders Telecoms To Tell Us What It Costs To Run Their Service

    I wonder how many millions of jobs will be lost in Canada because of this new regulation.

    • Since Rogers, Telus and Bell have ~120k employees and also provide phone and cable services with those employees I'm willing to guess that the answer will round to zero millions. That is a lot of millions for a country as small as Canada :)

  • by SuperMooCow (2739821) on Friday October 26, 2012 @05:14PM (#41783875)

    The prices and the speeds could be better, but IMHO the real problem is the incredibly small monthly caps that we have up north.

    A monthly cap of 50GB is just proof that the companies are trying to use their ISP side to protect their media broadcasting side. Bell Internet is protecting Bell ExpressVu, the CRTC should not be blind to the conflict of interest in all this.

    The monthly cap should start around 100GB even for the slowest speeds and go up from there. My 2Mbps connection has a 35GB monthly cap with fees of around $5 per extra GB, which is insane when you consider the cost to Bell.

    • Do what I do ignore the cap. When you reach it they only charge you the $5 for the first 50GB or something. If you get a better package you usually get a smaller fee for the overages too. I have 150/10 with Rogers and only get dinged 50c per GB over 250GB. I'd like that it was free but I'll pay $25 a month for unlimited porn.

    • In Saskatchewan the competitors are Shaw and Sasktel. Shaw's caps start at 125GB/month but there is effectively no penalty for exceeding it, while Sasktel doesn't have any caps.

    • Ouch. They say broadband is bad in the US, but in Arizona my ISP gives a 30mbit connection for $60 with a 250gb cap that they've never actually enforced (and I regularly exceed it every month, sometimes doubling or tripling it.)

      Whats strange is there's no real competition here either.

    • by Maow (620678)

      The prices and the speeds could be better, but IMHO the real problem is the incredibly small monthly caps that we have up north.

      A monthly cap of 50GB is just proof that the companies are trying to use their ISP side to protect their media broadcasting side. Bell Internet is protecting Bell ExpressVu, the CRTC should not be blind to the conflict of interest in all this.

      The monthly cap should start around 100GB even for the slowest speeds and go up from there. My 2Mbps connection has a 35GB monthly cap with fees of around $5 per extra GB, which is insane when you consider the cost to Bell.

      I had a 300 GB soft cap when I first signed up with TekSavvy cable-modem based internet, for $35 / m. They reworked their plans and now, for $35 / m it's unlimited.

      Shop around, there are better deals out there.

      Even with Wind Mobile I have 5 GB / m before throttling kicks in (tethered), included in a $40 / m plan giving unlimited North America wide talk & text, unlimited global SMS, call management (vmail, call display, etc.), no contracts, *and* truly subsidized phone (HTC Amaze 4G for $99 if I keep my

      • I've checked around, but where I live there is zero alternatives to my current ISP, except going with a satellite connection. And we all know how those are even worst in terms of price, monthly cap, speed and lag.

        So yes, I know about Wind Mobile for cellphones and TekSavvy for internet, they're just not available in our small town.

    • by XenithOrb (649843)

      You're being rather modest there...

      That is, I don't have a cap... and it equates to me being able to download 6TB/mo if I choose to do so.

      100GB? ... Lowering it down to the exact amount that "average" Luddites use isn't a good idea. It's just going to screw the people that actually want to use their service the most, but with no actual justification since, as displayed in the article, the transfer cost is subject to a HUGE markup.

      There should be no capping, and it's just another industry following the lead

  • by MSTCrow5429 (642744) on Friday October 26, 2012 @05:22PM (#41783951)
    For the telco: Infinite

    For you: Zero

    Solution: Supply and demand

  • So.... (Score:4, Insightful)

    by RandomUsername99 (574692) on Friday October 26, 2012 @05:25PM (#41783979)

    This is good... we can know exactly how much they're screwing us. This will be yet another legal disclosure to be buried in fine print, surrounded by legalese, and whisked away from the collective consciousness. Do they expect enough people to cancel their internet access, on principle, to pressure the ISPs to offer more reasonably priced plans? Give me a break.

    This is yet another example of shifting the responsibility to individuals to work against gigantic corporations, which are designed specifically to insulate themselves from the actions of individuals. These companies are purposefully not giving the customers properly priced choices, because they know that there's nowhere customers can go to get properly priced choices. Until someone compels one or more of them to give properly priced choices, or gives consumers another option, the status quo will remain in effect.

    It's not price fixing because we haven't actually seen them talk about it... right? There's the "free" market for you.

    • by Anonymous Coward

      No, we will get nothing out of this. I think this is basically an excuse for the big three to show how "little" they are making and thus should be able to buy up competitors (Remember Bell just got shot down in it's bid to buy Astral). Basically, what's going to happen is the charges will be displayed, with hundreds of "out-sourcing" companies that charge $$ and thus Bell only makes a small profit (say 5-10%). The Regulators and investigators will ask for information about the "out-sourcing" companies and

  • We had states compete with Comcast and Verizon. Guess what, they got sued because it was found illegal for government to compete with corporations.(The stories were on Slashdot) Yet somehow UPS and Fedex haven't found a way to sue away the Post Office...
    • by gatfirls (1315141)
      Simple, the USPS does not a have a profitable business model.
      • Re: (Score:2, Informative)

        by Anonymous Coward

        Simple, the USPS does not a have a profitable business model.

        That's actually false. The USPS is profitable and self sufficient. All the dire warning crap you here about the USPS is because the owner of FedEx was good friends with the Bush family. In 2006, they managed to get Congress to require the USPS to fully pre-fund its retirement benefits for the next 75 years by 2016. 10 years to save enough to cover 75 years of benefits... that puts the USPS in the red every year. It is entirely an effort to break the postal union.

        read more here [firedoglake.com]

  • by EmperorOfCanada (1332175) on Friday October 26, 2012 @05:42PM (#41784159)
    This whole bidding billions for frequencies is a crock. Only a company that raises the billions can hope to bid. So the incumbents issue a bond or whatnot and buy up huge chunks of spectrum.

    Also they need to block the mergers. The pattern in Canada is that some snot nosed upstart gives them a run for their money and they buy them out. I suspect that the big guys get upset that the customers even got a taste of freedom.

    These guys have had enough of a free run so first don't let them buy one ounce more spectrum. Next any spectrum that hasn't been used should be returned with 12 months of winning it. Eastlink in eastern Canada has been sitting on some spectrum with no explanation as to why they aren't using it. They are saying soon soon. How 'bout no; use it or loose it. Next the CRTC needs to be able to go after individual executives much like the SEC can hammer individual executives. So if some executive breaks the rules he is banned from the telco industry for X years just like finance types are banned from fiance for X years.

    And lastly CRTC people need to be apart from the telco industry. If you worked for the telco industry then you can't be in the CRTC. If you are in the CRTC then you can't work for a telco company for 10 years.

    Although the CRTC just nailed Bell good with their denial of Astral. Keep up the good work there.
    • by MBC1977 (978793)
      I'm not from Canada so I don't pretend to understand the Canadian mindset... I do understand money though.

      " The pattern in Canada is that some snot nosed upstart gives them a run for their money and they buy them out."

      Your statement more than likely gives you your answer: offer enough money and people will sell. Why work harder than one needs to, if the opportunity cost: gain a large chunk of money in a short period of time, can occur? Granted, I'm certain - like in the USA - feel good thoughts and
      • The problem is that once they buy out the upstart the competition is gone. The big 3 telcos don't really compete with each other as is evidenced by the European countries (should have otherwise similar costs) where ten euros buys you a whole lot of cellphone usage. Britain has the fewest (that I know of) telcos and the highest costs. Yet in Germany where I can't count the number of telcos the cost is freakishly low.

        Thus the big 3 in Canada should be broken up in that they should be broken up.

        We have a
  • they don’t want to say how they have arrived at those numbers, only to say that Canada is a big country, and it costs a lot to provide infrastructure.

    It does cost to provide infrastructure, however the biggest tend to provide the poorest service. Bell is notorious for "accidentally" over-billing and messing up on contracted service plans for cellular. For internet service, when I lived in Toronto (biggest city in Canada), their internet/phone infrastructure seemed the worst. In one's connection wasn't

  • Next up, Cable Cards.
  • Next they'll tell me that it doesn't actually cost $84 to activate a replacement cell phone on my existing cell phone plan.

  • Separate the phones from the service providers and most of this BS goes away.

    Would you by GM gas that ONLY works in GM cars?

  • In a report I wrote last year, I estimated the markup for Internet services was 6,452 per cent

    It is actually better than that, much better. Somewhere along the line, a customer sent that data to an Internet Service Provider for free. By a simple exercise of elementary arithmetic, we can see that the markup charged on data transmitted and received is actually infinite. (Shhh! don't let anyone know).

  • Why not ordering CostCo what their costs are? Hell, why not ordering the CEOs disclosing how much they pay for their meals, trips, drinks and hookers? Now people dont like a capitalist regimen, odd. This measure is just probably to appease people, I very much doubt they wont cook up the numbers.

panic: can't find /

Working...