TekSavvy Raises Rates, Blames New Regulations

by Jordan Richardson on January 5, 2012

The first independent Internet service provider in Canada has raised rates as a result of the new pricing scheme. TekSavvy Solutions Inc. announced the rate changes Wednesday, revealing that rates for most of its residential Internet products would increase by between three and four dollars at the beginning of February.

TekSavvy says that the telecommunications regulator is entirely to blame for the rate increase, citing the new pricing model as “deeply flawed.” Higher costs should be anticipated, too, and TekSavvy may not be done with raising the rates.

“At this point we are increasing our prices as little as possible and providing innovative alternatives to help you mitigate those increases,” wrote TekSavvy chief executive officer Marc Gaudrault. “At the same time, we are actively pursuing remedies at all levels to head off the additional dramatic cost increases that this model will impose on Internet users over time.”

Gaudrault went on to urge customers to continue to take the fight to the regulators and to raise the issue. “Let’s join together to keep Canada from remaining one of the most expensive, uncompetitive Internet markets in the world,” he said.

TekSavvy is also planning to introduce a set of product changes and additions to help control costs. These include a series of high speed packages, including some unlimited usage plans, and unlimited off-peak hour usage for users between 2 am and 8 am. The off-peak hour usage plan gets underway for TekSavvy customers starting next month.

Bill Sandiford, president of the Canadian Network Operators Consortium, says that the CRTC’s shift to capacity-rate billing means that similar moves will be seen across the board of independent providers. There is simply no alternative.

“Whether those price increases come this month or next month or six months from now, if the current pricing stays in the current CRTC decision, there will be no choice for this to come,” Sandiford said on Wednesday.

Capacity-rate billing is, in fact, a variation of usage-based billing. The CRTC has essentially allowed the larger service providers to bill the independent providers for the amount of data customers download, which means that customers pay for the size of the pipe as opposed to the amount of data flowing through the pipe. Incumbents can also choose to charge a flat rate.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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