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Competition, Not Cost, the Real Story Behind TekSavvy's Pricing Changes

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TekSavvy announced a series of new pricing plans for its Internet services yesterday in the wake of the CRTC usage based billing decision. The focal point of most media coverage (National Post, CBC, Globe) is that costs are increasing by $3 - 4 per month, a move attributed to the CRTC decision which implements a capacity-based model for pricing of wholesale Internet services. While Peter Nowak says this portends a "dystopian future", I remain far more optimistic.

The TekSavvy plans offer both cable and DSL services at different price points, speeds, and usage rates. For example, its fastest cable service offers 24 Mbps with 300 GB per month for $46.95 or an unlimited amount of data for $61.95. The DSL service offers even greater variety with higher price points for its fastest service and a very basic, cheap service of 3 Mbps with a 25 GB cap for $24.95 per month. The DSL service also introduces off-peak usage for the 300 GB plan with usage during off-peak periods not counting against the usage cap. 

These plans are far superior to those offered by Rogers or Bell. The most comparable Rogers plan offers the same speed (24 Mbps) but imposes a 100 GB cap for $60/month. In other words, same speed, same price but 100 GB vs. unlimited data. The Rogers basic lite plan of 3 Mbps has a 15 GB cap for $35.95 per month (less data and significantly higher price). The Bell pricing is similar - its 25 Mbps service is $59.95/month ($27.48 for the first 12 months to get customers to switch) but comes with 100 GB cap. Its basic service costs $33.95 per month for 2 Mbps and just 2 GB of data.

Meanwhile, Montreal-based ISP Electronic Box has also announced new rates in Quebec that feature similar differences between cable (cheaper) and DSL services. In fact, the Electronic Box pricing is coming down for its cable package as consumers will be able to purchase a 60 Mbps service with a 250 GB cap for $54.95. The same speed service previously came with a 150 GB cap priced at $79.95. The DSL pricing is going up but the ISP also offers an off-peak plan that does not count against the cap and is longer than TekSavvy's as it runs from 2:00 am until noon (TekSavvy until 8:00 am). By comparison, Videotron charges $82.95 for its 60 Mbps service with a 150 GB cap.

So what is the real story here?


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