Article content continued

And it’s only getting worse: The report compares plans offered by selected Internet service providers (ISPs) in 2005, to those they are offering today. While most countries saw prices drop, the one Canadian company on the list had increased its price and capped the amount of bandwidth its customers could transfer over that eight-year period.

For companies such as Netflix, the prevalence of bandwidth caps — which make people pay extra if they use too much data — hampers their ability to grow. Although the amount of data offered with each package, and how strictly the rules are enforced, seems to vary between provinces, the fact that all the major service providers have such caps means people will be less inclined to pay for services that use a lot of bandwidth.

On first blush, charging Canadians for Internet access and then metering their usage may seem like double-dipping. But it costs ISPs money to transfer large amounts of data, and to upgrade their networks in order to accommodate services such as Internet phones and streaming video. And while there is nothing inherently wrong with charging what the market will bear, the high price of Internet service in Canada is directly related to a lack of competition in the marketplace.

One of the problems is that the same companies control this country’s Internet backbone — the high-capacity lines that carry data between networks — as well as the last-mile connectivity — the wires that connect individual households to the network. Although the government has rules governing how smaller providers can gain access to these networks, they rarely prevent the big telecommunications companies from engaging in anti-competitive behaviour. The smaller companies have to rely on their competitors to fix their customer’s problems — a serious conflict of interest that puts the second-tier ISPs at a competitive disadvantage.