Shaw puzzles by increasing speed on extreme

On April 20th, Shaw increased the bandwidth speed on their high speed extreme from 15Mbps to 25Mbps.  They have done this after a lengthy customer consultation spanning the month of February over the concept of Usage Based Billing. I’ve been thinking about this off and on since I heard about the increase, and even though I’m all for an upgrade in service to users; I quite frankly have no idea what to think, or what to say.  This does not make sense at all.  I don’t’ know where to begin, so hopefully I’ll get this off without too much ramble.

During the customer consultation session I attended, and reading from the notes of other consultations, Shaw’s message seemed clear.  Shaw wanted to put usage based billing into place because the company claimed that during peak hours there was too much congestion on the network, and the hope was that usage based billing would serve to lower the usage of heavy users, as well as help offset the costs of doing node splits, which increase the capacity and reduce the congestion on the network.

I, along with many other people, have explained almost to nauseam that this Usage Based Billing does not solve Shaw’s real problem.  You can find more info here, but to put it simply, amount of data and rate of speed are two completely different things.  And charging for the amount of data does not fix the problems related to rate of speed.  Shaw’s capacity is related to the rate of speed they can provide to its users, not how much data goes through.  The cost of 1 gigabyte of data is roughly the same, no matter how fast a user gets it.  The real cost, and where the capacity issues are, is in how quickly Shaw can provide the user with that gigabyte of data.

This is why I quite frankly don’t understand this move by Shaw.  If there is that much congestion on the network, why would they do something that would only increase the congestion?  During the consultation session we were told that most new customers choose the Shaw high speed extreme package, and that that package makes up a good portion of users at this time.  If there is this much congestion, why would Shaw take a move that would only make it worse?

Now, I do have a couple of theories on this. I will only share the one that I feel is most likely, for reasons that I will share at the end of this article.

What I think is most likely is that Shaw is trying to match Telus’ offerings in the Internet space, at least on paper. Telus Optik High Speed Turbo Internet, which is currently the company’s fastest offering, tops out at the same 25 Mbps. This puts each offering from the company at roughly the same price, within $1-2/month. Perhaps Shaw simply saw that Telus offered a similar product at a better price, and needed to move to match it.

If this is the case, this is likely a worst case scenario for Shaw.  If they are truly facing the congestion issues they say they are, increasing the congestion to match the competition is likely something they did not want to do.  Shaw is already struggling to meet advertised speeds during peak hours in dense urban areas, and increasing the cap will only make that worse.  My fear is that this will drive Shaw to re-introduce a Usage Based Billing model to recover the costs of more node splits to try to handle the increased congestion.  Perhaps Shaw is increasing the speed for that purpose exactly.  If congestion becomes more evident, it becomes easier for Shaw to take measures it says will help decrease that congestion.

As I began writing this article, I mused that it was difficult to write when I really had little information.  A Shaw representative reached out to me, and provided the following statement:  “We are always looking for ways to improve the Shaw Internet experience for our customers.  The Shaw extreme upgrades are the first step, and we look forward to sharing more details late May/Early June.”  The representative did also say that more information will be coming next week.  Based on that, I think I am going to reserve any more speculation or judgment to what I have already said, and wait for more news to come.

I still truly have no idea what’s coming from Shaw.  I have guesses that I’m going to keep quiet, because I don’t want to wildly speculate. I can only assume that this is the first step after the consultation sessions, it just seems to myself, and many other observers I have talked to, to be exactly the opposite of what they were trying to accomplish.  It will be very interesting to see what happens next.