Monopoly Money

Do Not Enter

This isn’t the Usage Based Billing post I promised a friend recently; that’s on its way. This one is just some math.

An uncompressed 720p HDTV signal is about 740 megabits per second of information. That’s a 720px by 1280px image, 12 bits per pixel, sixty times per second. Around 80 megabytes per second, uncompressed. That’s a lot, but for the most part video compression works pretty well, so over your modern TV cables you’re getting a bit more than a tenth that, between 9 and 12 MB/sec. Let’s call it 10 Megabytes Per Second, just for argument’s sake.

Pretty fast! And it comes out to be about 25 to 30 GB/hr.

Did you know that the average Canadian watches about 16 hours of TV per week? It depends on your demographic, of course. And increasingly people get their TV, and indeed most of their media, from the internet instead of straight from the tube or via PVR.

So If we count television then the average Canadian will hit that 25GB/month bandwidth limit before dinner on the first day of the month, every month. Every hour of TV after that will cost about 50 bucks, and the average Canadian television bill will go up around $3000 every month.

They didn’t mention the three thousand dollar cable bill, did they? Huh. That’s because that won’t actually happen, of course; that data somehow doesn’t count. And, of course, I know the infrastructure is a little different, but when Bell and Rogers will both rent you a PVR so they can sell you pay-per-view services, you have to know they’re not that different. We’re all just going to pretend that the movie-bits over here are Data, and the movie-bits over there aren’t – they’re TV.

Make no mistake, that’s what this is about: preventing you from replacing that cable, or getting your media in any of the myriad ways people can in this networked modern age of ours, from anyone but Bell, and thwarting competition thereby. And it’s great for Bell, but it’s really, really bad for Canadians.

(Updated: corrected some math. Which made the situation worse, not better.)

8 Comments | Skip to comment form

  1. j2

    I think your numbers are (still) off – MythTV FAQ says 7 GB/hour for ATSC HDTV, looking at some MPEG2-TS streams I’ve recorded I’m seeing between 7 and 7.5 GB/hour. Not that it helps that much. (0.75 * 3000 = 2250).

    It’s probably worth pointing out that these are OTA streams as well – where there is no benefit to compressing them, unlike fixed bandwidth channels with growing program scopes (i.e. cable and satellite). (Aside: I’m still pissed that Space was the _most_ compressed channel on Videotron).

    This still represents a compromise of quality vs. cost which an above average internet user could take advantage of but it would be cheaper and easier to buy it from Bell.

    (Check and mate, as Bell would say)

    Finally, the numbers are slightly different for Quebec: new bandwidth limit is 60GB/month, but the overages are more expensive. I’m not familiar with the costs of buying the insurance blocks to comment on how they affect the numbers.

  2. Jamie Wells

    Having already listened to a couple of representatives of stumble through radio interviews, trying to explain the issue and failing due to over-complicating the issue (thus boring the listener) and an obvious lack of media training, your summary here (regardless of any niggles) demonstrates exactly what needs to be stated.

  3. Mike Richters

    I haven’t heard much about this, so there’s one thing that confuses me about your statements above, Mike. If Bell grossly overcharges for internet service, won’t that simply drive customers to ISPs that don’t? Does Bell already have a monopoly on residential internet service in some markets? Or are all the ISPs colluding in order to support the ones that offer television service as well?

    I’m not claiming you’re wrong — it’s just that there’s this huge gap in the story that is unexplained (to me, anyway).

    This issue is particularly relevant to me and Melanie, since we stopped subscribing to cable television in favor of getting our moving pictures from Netflix a while back. Incidentally, it’s great to not know what people are talking about when they discuss television commercials.

  4. mhoye

    If Bell grossly overcharges for internet service, won’t that simply drive customers to ISPs that don’t?

    The “Usage Based Billing” thing you’ve heard about forces resellers of Bell’s bandwidth to charge users within 15% of what Bell charges, but makes no accommodation for the things like delivering HD video and waiving overage fees that Bell does routinely. It’s the subject of another post, but Bell has effectively put themselves, with the CRTC’s help, in a position where they can fix the prices their competitors charge at no impact to themselves.

  5. John

    @Mike Richter:

    There are two and only two companies that provide high-speed internet access in Canada – Bell and Rogers.

    Bell and Rogers are legally required to allow third-party ISPs to use their backbone and resell their services to consumers – so that Bell is not allowed to be *the only* DSL seller in the area and must compete with other DSL sellers, even if those sellers are required to pay Bell for access to Bell’s lines to provide DSL.

    This ruling allows Bell to charge $2/GB for traffic to their lines, even if the traffic is to a reseller.

    This ruling does not require Bell to charge that much – but they’ve already told all resellers that the resellers will be charged that much, while end-users contracted to Bell directly will not. Bell *can* give their users discounts, while they *can* raise the prices of their competition way, way, way out of the normal range.

    As such, they’ve basically crippled all non-Bell DSL companies in Canada. If you want DSL, you either go Bell, or you go nobody and get nothing, firmly re-establishing Bell’s monopoly on phone lines.

    Meanwhile, Rogers has not announced their intention to do the same thing with Cable, but nothing stops them from doing so – and, given Bell and Rogers’ past (highly illegal) collusion in price fixing on broadband access, and Rogers’ current monopoly on cellphone access and accompanying usurous prices, it is unlikely they will wait long to follow suit now that the CRTC has given Bell a license to print money.

  6. Mike Richters

    Well, that explains it. Thank you.

    However, I must pose the question: Is this really true? I live in Winnipeg (for now) and get internet service via cable from Shaw Cable. I was under the impression that the cable lines were their own, not re-sold by Bell or Rogers (or MTS). I don’t know this to be a fact, but seriously? How have Bell and Rogers prevented everyone else from building infrastructure? If they’ve got huge profit margins by overcharging consumers, there should be plenty of space for someone else to build lines and charge lower, but still profitable prices.

    The CRTC clearly lacks the willingness to do much for consumers (can I have a cable card, please?), but what is preventing competition from starting? If there’s so much money in it, why can’t someone raise the capital to build an independent fiber-optic network in Toronto, and connect it to the internet via Detroit?

  7. mhoye

    Rogers (and hence Shaw, I expect) hasn’t moved on the UBB ruling yet, but they’re definitely allowed to do so.

    The thing about new competition is that every home in the country already has two wires going into it, the phone and the cable. With little exception that’s entirely a sunk cost for the incumbents (one of which sunk that cost with significant help from the Canadian government, of course) that would be a prohibitive barrier to entry for competitors.

  8. Mike Richters

    Oops. I forgot to check back after my previous comment. There’s one more element worth bringing up in this discussion, I believe, which you only mentioned very briefly in your next post. That’s the fact that the Canadian residential internet infrastructure is poor quality by today’s standards. A new infrastructure-building venture would only make sense if it was a new fiber-optic network, rather than cable, a la Verizon FiOS (which I enjoyed briefly while I still had my house in Massachusetts). I suppose the sticking point for an independent network builder would then be access to the poles. I only vaguely recall that RCN had some issue with this when they started building their network in the Boston area, but I don’t know the details, and they were dealing with different regulatory powers and incumbent monopolists.

    Anyway, doesn’t it seem inevitable that new, much higher capacity residential networks will be built, either Bell, Rogers, et cetera, or by new operators?