Happy news for Canadian movie lovers. Netflix has announced that it's setting up a new Internet-only service for the Canadian market. The innovation marks the company's first experiment with solo streaming. Here in the US the service's selling point is DVDs by mail, of course, but lots of Netflix's 13 million subscribers also watch movies via its website.

And it looks like this is just the beginning of the Netflix international empire, as the company's co-founder Reed Hastings disclosed in 2009.

"Looking at next year," Hastings confided, "given our success to date on streaming with domestic consumers, with global studios and with global CE companies, we are planning our first international effort in the second half of 2010, which would include streaming but not DVD. Our basic approach is to start small, prove out our model and then expand into other countries one by one. For competitive reasons, we won't be more specific at this time about which market is first in our expansion."

Generosity

Unfortunately, one of Canada's biggest ISPs is welcoming Netflix with some less welcome news for Canadian consumers: lower data caps. In the case of two tiers, the total drop in allowed monthly data is 25 GB.

At present, Rogers Communications offers the following "generous" monthly data allowances for each of its tier plans:

Ultra Lite - 2GB

Lite - 15GB *

Express - 60GB

Extreme - 80GB **

Extreme Plus - 125GB

Ultimate - 175GB

But if consumers follow those asterisks to their reference sources, they'll discover that some changes have been made as of Thursday.

*Note for Lite customers: If you signed up for Lite before July 21st, 2010, your usage allowance remains at 25GB. Additionally, if you are a Lite customer living in the Atlantic, your usage allowance remains at 25GB. **Note for Extreme customers: If you signed up for Extreme before July 21st, 2010, your usage allowance remains at 95GB. Additionally, if you are an Extreme customer living in the Atlantic, your usage allowance remains at 95GB.

In other words, the caps on two of Rogers' key plans have been heavily shaved by 10GB and 15GB respectively. At present "Lite" costs CAN$35 a month; "Extreme" costs CAN$59.99 a month.

No fair

"Will I be charged if I go beyond my monthly usage allowance?" Rogers' FAQ page rhetorically asks.

You betcha, the ISP responds, to the tune of 50¢ a GB for "Ultimate" customers down to CAN$5.00 a GB for "Ultra Lite" subscribers. The maximum monthly extra payout is CAN$50, but ironically, the "lighter" you go, the heavier your data allowance plan gets in terms of extra payout.

The FAQ page continues with an imaginary conversation between Rogers and a disgruntled subscriber. "I don't think it's fair that I can be charged for usage when I get spam and pop-up windows," the consumer protests.

"Although they're inconvenient, spam and pop-ups accumulate very little usage," Rogers replies. "It would take several hundred thousand e-mails, for example, for you to reach your usage allowance. But we understand your concern. That's why Rogers Yahoo! Mail offers free spam protection. To access Rogers Yahoo! Mail (your @rogers.com email address), go to www.rogers.com/begin and register today."

This prose doesn't calculate how many movie downloads or Netflix streams would gobble up the "Lite" plan limit of 15GB a month. But if you use Comcast's measurements to explain its 250GB/month limit, here's what the US ISP says you can do with that sum.

Send 50 million e-mails (at 0.05KB/email)

Download 62,500 songs (at 4MB/song)

Download 125 standard-definition movies (at 2GB/movie)

Upload 25,000 hi-resolution digital photos (at 10MB/photo)

Going by these metrics—2GB a movie in particular—a Rogers subscriber will get about seven movie downloads per month on the ISP's Light plan. The Evdoinfo.com site calculates a one-hour high definition Netflix stream as snarfing up 1.67 GB in data.

So we're talking about nine hours of Netflix movie watching per month for Lite users. That assumes a consumer doesn't do anything else with her account. If she does (and of course she will), she's running into the Lite-$4.00-per-GB overtime zone, and fast.

French over time

Rogers has a reputation for these sort of fun and games. As we've reported, back in 2008 it launched an "Unlimited On-Device Mobile Browsing Plan" that turned out to have a cap on text and picture/video messages. There have been controversies over DNS redirects, injecting content into webpages, and the cost of Rogers' iPhone 3G packages.

But this sudden lowering of the data allowances on two of its key broadband tiers raises the question of how viable the streaming movie business will be, not only in Canada, but anywhere this sort of pricing strategy becomes the norm.

Netflix says its new "Netflix Canadian service" will start with English movies, but the company "expects to add French language capability over time."

Hat tip: Broadband Reports