Northwestel Charges Heavy Internet Users a 7600% Premium

A piece of 2-by-4 lumber in Whitehorse costs about $2.57. In Toronto it costs a bit less: about $2.49.

A litre of regular gas in Whitehorse costs about $1.13. It’s a bit cheaper in Ontario. Some places, like Costco, discount it down steeply to about 98¢.

How about a cantaloupe? You can buy a couple for $5 at Sobey’s in Toronto this week. Surprisingly, though, they’re cheaper at Superstore in Whitehorse: just $1.50 each.

We generally expect things in northern centres to cost a little more, usually in the range of 5% to 10%. Cantaloupes are apparently an exception.

So it’s surprising when Northwestel prices that standard, popular, and common internet commodity, the GB, excessively at a 7600% premium.

That’s right. Once you exceed the monthly “cap” on your internet account, Northwestel jacks the price of a GB to the astronomical level of $10.

Northwestel’s parent company, Bell, sell its customers the same item for a mere 13¢.

If cantaloupes were as expensive as a Northwestel GB, they’d cost over $175 apiece.

This $10 fee of which I speak is Northwestel’s “Extra Use” charge.

All of Northwestel’s internet packages are “capped” and offer a limited amount of data use, measured in gigabytes, or GB.

If you go over the cap, you’ll get dinged by Northwestel at a rate of $10 for each GB you use.

It’s an inflated and exorbitant rate that’s punitive and unfair.

A GB, for those who don’t know, is a volumetric unit that measures digital stuff.

Roughly 600 songs are a GB, for example. So are about 3,000 photos.

So a GB is a lot. Or it isn’t.

On the video side of things, one HD episode of Glee alone is about 2 GB.

And that’s where the cost of a GB matters, because that’s where the internet is going.

Within a couple of years most television and movie content will be downloaded.

In fact, almost all media we currently consume through other means will soon be accessed and consumed online.

So it’s important that a non-competitive regional provider like Northwestel work in the best interests of its customers to drive down the cost of accessing the internet.

Interestingly, Northwestel is generally doing a great job of that.

You can pay as little as about $1.32 for a GB of data with Northwestel, if you stay within the cap on their top-end internet package.

And that’s a decent price. It’s higher than what I found to be the national average of about 93¢, but it’s reasonable.

How, then, does Northwestel defend the practice of jacking up that cost over 700% if you slip beyond the cap?

After a recent chat with Curtis Shaw, a Vice President at Northwestel, I’m convinced the company can’t.

Instead of explaining any sort of business logic behind this ridiculously high fee, Mr. Shaw related it back to a time when the company saw fit to punish a select minority of its customers.

At the turn of the Century, Northwestel offered uncapped ADSL services.

A few customers abused this. So Northwestel introduced data caps and a hefty $10-per-GB “extra use” fee to drive their point home.

The targeted customers of the day presumably got the message and backed off.

The problem is, though, that cruel fee has stuck ever since. To the point that it’s now not only laughably out of date, but ridiculously high.

The next-highest “extra use” fee in Canada is Vidéotron’, at $2.10 per GB. Most providers charge less than a dollar (see the inset chart for a broader overview of other providers’ extra use fees).

Customers can get as low as 13¢ with Bell if they subscribe to the company’s $5 monthly “Usage Insurance Plan”.

On the other hand, as I mentioned, the cost of a sub-cap GB from Northwestel (which averages $2.07 across its product line if you exclude the valueless “Lite” plan) is relatively reasonable, despite the fact that it’s still much higher than the Canadian average.

But that’s okay. I can live with a 100% or so cost difference.

Well, maybe it’s not okay, but I can’t imagine how it could possibly be otherwise. We all do live in the middle of freakin’ nowhere, after all.

Plus, whereas other commodity providers such as lumberyards, gas stations, and grocery stores share the cost of the physical transportation infrastructure with one another and the government, Northwestel fully bears the burden of hauling GBs into our homes.

It’s unfortunate that our government doesn’t participate more in ensuring that we have affordable and dependable access to the internet.

And it’s especially too bad that Bell apparently doesn’t share its bandwidth-buying brawn with its subsidiary, Northwestel.

Because, really, you have to give kudos to Northwestel for even trying. I sometimes wonder why the company does.

An improved internet threatens to undermine, even destroy, the company’s key revenue drivers, like long distance phone calls and cable television.

But even with that meagre defense, the fact remains that Northwestel’s legacy $10-per-GB “extra use” fee remains not only punitive in nature, but unnecessarily high.

I can understand how expensive bandwidth was a decade ago, and how even a small portion of abusive customers could have damaged Northwestel’s bottom line.

But these days bandwidth is cheap. And the more you buy, the cheaper it gets.

So Northwestel shouldn’t feel compelled to punish its heavy users any more.

In fact, I’d argue the company should reward us.

Heavy internet users are barometers. We enable the company to analyze and understand upcoming trends and emerging demands. We give them the information to prepare business plans and marketing strategies.

Without us, they’d be groping blindly in the dark about what the future of the internet in the North even looks like.

And while I realize full well we need to pay for what we use, heavy users shouldn’t feel punished and maligned for being on the bleeding edge.

Heavy users are not abusers. We are the voice of the future.

Northwestel must cut that $10 extra use fee down significantly. The new rate has to be something that they can argue a business case in support of, and that case must be fair charge for fair use.

Otherwise they’re just selling us $175 cantaloupes.

Originally published in the Yukon News on Friday, October 15, 2010.

8 thoughts on “Northwestel Charges Heavy Internet Users a 7600% Premium

  1. A few other tech pundits out there are concerned that once services like NetFlix, Google TV, Apple TV, etc. really take off, that there could be a return to the outrageous internet pricing again – or they simply block traffic from NetFlix, etc. I really hope the companies can work out a deal so this does not happen. I bought an Apple TV last week, and have consumed more hours on it than our cable subscription. It’s amazing what happens when you have quality content at your finger tips and not endless repeats of the shows that you have already seen.

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  3. Has anyone ever found out the actual price to send a gig of information up here from northwestel? Does south I am reading a cost of 2 – 3 cents per gig, if thats true then they are charging a 33,000% markup. Even if it costs them 25 cents per gig, thats still a 4000% markup for that extra gig of info. If Anyone with the info of costs could respond, would be greatly apprieciated.

    thanx
    Whiotton35

  4. @whitton35 It actually costs nothing to ship a gig of data, maybe $0.01 for the electric bill. It is just a packet of electrons, what is expensive is the routers, kilometers and kilometers of line, maintenance, and the over paid useless techs that populate the Yukon. So wha you are actually paying for is not the water but the pipes, etc as an anology. Bad as it was lol.

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