Primus Canada is getting rid of the unlimited Internet plans that customers used to enjoy, starting Feb. 1.

Primus will offer 25 GB (gigabytes) of monthly usage for $34.99, charging $2 per GB to those who exceed that amount (to a maximum of $60 a month). It will also offer plans to cover additional usage of 40 GB.

“How is it possible that a contract can be changed so arbitrarily?” asks Valerie Dixon, who’s upset to find her Primus triple value bundle plan is going up $5 a month.

Margaret Bradley switched her Internet and home phone service to Primus (from Rogers) last October in order to save about $30 a month.

“In hindsight, I’m not sure this was a good decision, since the unlimited Internet I signed up for is no longer unlimited,” she says.

“I had 60 GB of Internet usage with Rogers. Now I find Primus is offering me less than half of that.”

Most customers don’t use enough Internet bandwidth to be hit by the caps, says Rob Warden, Primus head of residential services.

He asked why Bradley was complaining about a 25 GB cap when her household usage last November was only 1.65 GB.

“I usually complain when I don’t receive what I think I purchased,” she replies.

Another provider – Shaw Internet – will also raise rates and impose caps on Feb. 1. Most of its customers are in British Columbia and Alberta.

Smaller companies have used unlimited Internet service to gain market share from their larger rivals.

But many won’t offer it any more after the Canadian Radio-Television and Telecommunications Commission approved Bell Canada’s request to introduce usage-based billing for wholesalers that use its network.

Bell argued that its capacity was being eroded by clients of niche providers, such as Primus, who were hogging bandwidth.

“This ruling is not great for competition. It reduces our ability to differentiate ourselves,” Warden says.

“We can’t absorb these costs that have been imposed on us. We have to pass on these costs to customers – and we’ve certainly heard from them.”

Primus requires customers to give 30 days’ notice before cancelling service. But those with bundle plans will have to pay a $99 cancellation fee to break their contracts in the first year.

Teksavvy Solutions, based in Chatham, Ont., is a small player that attracts heavy Internet users. It hasn’t decided how to react to the CRTC’s decision.

“It’s hard to compete when all areas of competition are being regulated out. Seems there’s a general lack of understanding of just how much innovation and pricing discipline that competitors bring,” says chief executive Rocky Gaudrault.

“I do know that consumers are really going to feel the financial pain over this as time passes.”

In his view, 25 GB caps aren’t enough for average Teksavvy clients today. This will become worse when Internet television plans – such as Netflix and Apple TV – become a popular alternative to cable and satellite service.

“Four hours per day of viewing, using one television, can consume upwards of 60 GB a month. This means an additional $70 of usage for one TV,” Gaudrault says.

Independent providers had a 25 per cent market share in the days of dial-up Internet service. Today, they have just a 5 per cent share.

“These companies, such as Primus and Teksavvy, can’t grow. No one will lend to them now,” predicts John Lawford, a lawyer with the Public Interest Advocacy Centre, an Ottawa-based consumer group.

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“Customers will have overage charges, no matter which company they use. And there will be a small rump of competition that doesn’t threaten the pricing structure of the major providers.”

This is an important issue for consumers, even those who don’t come close to exceeding their limits right now, since their monthly fees may soar once the Internet becomes more video-based.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.