Rogers cuts service, maintains prices in wake of Netflix announcement

By: 
David Anderson

Rogers Communications has announced stricter bandwidth caps on its cable broadband services only days after Netflix, an American online video provider, announced it was coming to Canada.

What seems to tie the decision in with the Netflix announcement is that the changes were effective immediately. The Rogers Lite broadband service will be limited to downloading 15GB of data per month, with Extreme subject to a monthly maximum of 80GB.

However, Lite and Extreme customers who signed up before July 21 will still be able to download a monthly maximum of 25GB and 95GB, respectively.

One consolation prize: Rogers upped the speed of the Extreme plan to 15 megabits per second from 10.

Netflix allows customers to rent an unlimited number of online movies for $9.99 a month. On average, each two hour movie requires 3GB of data. At these rates Rogers Lite subscribers could watch 10 hours of HD video before reaching their cap – assuming they weren’t doing anything else on the Internet.

In effect, what Rogers is doing is implementing an 11% decrease. If a customer wants to get to a 90 GB allowance, new customers will now have to pay $10 more for the $70 a month Extreme Plus service plan, a 16% increase in order to maintain the same level of service.

And in the future, Rogers’ $36 a month Lite service will have service levels cut by 40% (from 25GB a month to 15GB per month). To get to the 25GB cap, new Rogers’ customers will have to sign up for the Express package which is $40 a month, a 39% increase.

This could be a potentially lucrative opportunity for Rogers when it comes to overcharges. With the Netflix announcement, Canadians will have the ability to legally and inexpensively download Hi-Def, potential cutting into Rogers’ media revenue. It would seem this is a way to recoup some of that (potentially) lost revenue.

This is part of a multi-year trend: a new Rogers Ultra-Lite customer in 2006 was given an unlimited bandwidth cap, but in 2008 the cap was cut to 60GB, and this year it was pulled back dramatically, to 2GB. Now in order to have a 60GB cap a new Rogers’ customer would have to sign up for the $47 a month Extreme package, an increase of 75%.

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