Netflix CEO: “I Don’t Quite Understand” Why Canada Has Very Low Internet Caps

In a recent video interview with The Globe and Mail, Netflix CEO Reed Hastings spoke about Canada’s capped internet plans compared to the rest of the world. We transcribed one of the most interesting questions posed to Hastings about Netflix doing business in Canada:

The Globe and Mail’s Omar El Akkad:

How difficult is it to launch a streaming internet-based service, in a country where the majority of internet users face pretty significant caps to their internet usage limits?

Netflix CEO, Reed Hastings:

Well Canada has the misfortunate of being the country with the lowest internet caps maybe in the world but certainly in the developed world and in all of the Netflix world. In Mexico, internet is largely uncapped; in the US it’s largely uncapped; in the UK it’s completely uncapped; in Canada there’s a number of providers with very low caps…I don’t quite understand it.

For whatever reasoning in Canada there’s very low caps on internet usage and it’s a real problem for people in terms of using internet; it’s not based on cost–cuz those same costs are in all the other nations…just a simple example…the biggest plans from Rogers, Videotron are like 100-200GB…the smallest plan you can get with Comcast in the USA is 300GB. Okay, and most are just uncapped. So the way of the future is just uncapped internet and hopefully the local ISPs here in Canada will adjust to that.

We’ve previously covered Canada’s dismal track record when it comes to bandwidth costs compared to the rest of the world and internet speeds. Former research by Google’s MLab noted Rogers throttles internet more than any other company on the planet.

In response to our low bandwidth caps, Netflix introduced video quality settings in March of last year to help Canadians preserve internet bandwidth. I don’t quite understand why we have such low internet caps either, as Hastings stated. Like he said–how are the costs of internet by ISPs in Canada different than those from providers around the world? What do you think about the internet caps we face in Canada?

Netflix is available in Canada for $7.99/month and works on the Apple TV, iOS devices, computers and gaming consoles.

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Boutros

    It’s because the people selling internet are also selling cable TV. Why would they want to stream anything? It’d hurt their cable divisions….

  • MikeJenkinson

    Not that I’m going to defend Internet caps, but really now…

    Shaw’s *smallest* Internet plan is 125 GB. From there, it’s 200 GB, 400 GB, 500 GB and 1 TB.

    Not to mention, my household has and 3 computers (desktop and 2 laptops), 2 iPads, and numerous other iOS devices, and the most Internet we’ve ever used in a month is still less than 100 GB.

  • Whats not the understand? Its a duopoly of providers in Canada. with many former Rogers & Bell executives on the CRTC board, the Canadian telecom market is in their pocket.

  • swotam

    Pretty straightforward, we live in a country where the government permits the telco’s and cable companies to own media companies while at the same point preventing any foreign competitors from entering our market unless they make a co-branding deal with the aforementioned incumbents or are so crippled from day one that they can’t gain a foothold in the market. Add to this a telecom regulator with the collective IQ of a bucket of insect larvae that seems dead set on doing all it can to completely screw over the consumer while protecting the interests of the incumbents at every turn and you more or less sum up why our telecom and Internet services are a pathetic joke while sub-Saharan African nations can get 5 bars in the middle of the savanna and our American friends are complaining because they “only” get speeds like 170 down / 35 up for $50/month.

    As for usage, many people like to pull out the “I only use a small amount of my cap anyway so why complain” card. Just because you don’t use it today doesn’t mean you won’t use it tomorrow, and given that most of the incumbents offer pathetically small caps unless they charge stupid amounts of money you really aren’t able to freely use your service unless you compensate the incumbents for the money they are losing by over-paying for your monthly service.

    Shaw seems to be the exception to the rule. Bell, Rogers, and Cogeco on the other hand need to DIAF.

  • Cormang

    I get 40mbps down and 6 mbps up with no cap in Nova Scotia. With that said, the obvious answer is that the internet service providers are also the television providers. They want you to use their streaming services rather than Netflix. I’m glad I live in Nova Scotia where these caps are either non-existant or above 250GB a month. I could kill 250GB a month with HD streaming, backups, and downloads.

  • That’s awesome but you haven’t mentioned what content you use. That’s like saying I own three SUV’s but I barely drive them so gas isn’t THAT expensive.

    It’s not about devices, it’s about consumption. If all I have is an Apple tv, a television an internet service agreement, I should be able to watch as much tv as I want without being required to get cable too.

  • Jason

    My family gave Rogers the middle finger salute and signed with TekSavvy, local internet provider here in Toronto. For $20 less than what we were paying to Rogers, we got more speed, no more throttling, from a 60gb/month cap to unlimited, and never ever worrying about overages. I feel like a sales person but seriously, Rogers and even Bell want to lock down everyone and cap them all – they seem to care only about getting more money from customers while giving out as limited as possible services/features as they can.

  • Kellie

    Coming from a numbers person, Rogers HAS to charge more to make up for the incredibly high overhead. It’s gross margin is high, much higher than Comcast but then you draw down the numbers and overhead costs are crazy compared to them. Is there room to have a lower margin? Maybe. But thats a big risk that could create a huge red number that may not recover. It’s easy to say “oh that country gets it cheap why can’t we”. We have a ton of safeguards in place here that safeguarded us from too high of a recession that I am grateful for that to the downside, us as consumers have to find somewhere

  • Greg

    LOL. I just have 1 desktop and my an iPhone, and I easily surpass 1TB a month.

  • reformcanada

    I’ll tell you why! The CRTC is the problem. They create the anti competitive environment and refuse to let free market work! We need more competition.

  • gtasscarlo

    It’s simple, as Canadians we are stupid. We pay the highest gas,food,internet,taxes and etc. The only thing we got is “free” health care.

  • draz

    All of the ISP’s that operate the last mile also operates TV stations.

    I switched to Teksavvy more than a year ago. Way less than Rogers and getting a whole lot more. Awesome decision, and I have got many of my friends and co-workers to switch too.

    Netflix is set for highest quality and VPN to US Netflix setup too!

  • If you are with eastlink you have a 250gb cap. The only uncapped plans in nova scotia are the base eastlink 20mbps service and fibreop from bell (only fibreop, not the normal high speed)

  • Jon

    None of you gets it. Lower caps = higher frequency of overage. More overage = more overage FEES. More FEES = More INCOME.

    It’s all about money and the CRTC is blind to it.

  • johnnygoodface

    Yeap! Got a 80GB contract with Cogeco in Quebec, and it barely suffises to cover Netflix’s medium quality streaming. Yes we’re beeing scr… up, but my quality of service is 99%. This said, what can we do to put some pressure on our dear Canadian ISP providers!? They all have comparable plans and since there’s no real competition, well they would be crazy to lower their costs (or uncapped internet plans)…

  • Don

    Cogeco is the worst for capping. $105 per month for 250Gb. Everyone needs to leave them. The only other choice was Bell with their stupid caps.

  • Nick pemberton

    We are on Rogers in Toronto. While we have a “cap” of 250 GB, we regularly blow through it, sometimes double. However, Rogers never charges us more that $50 for overage. I’ve picked the plan that gives me the speed I need for iTunes and Netflix to stream well in HD, and don’t care about the cap.

  • James H

    Yes, we are stupid because we should go with the other option of not driving to work, not eating and not surfing the internet. Like we have any option.

    Don’t tell me we need to vote differently, because we all know whether PCs, Liberals, NDPs, nothing would change and the current ISP cartels would still be screwing us.

    The only thing that would cause dramatic change would be rules like, content providers can not own content delivery lines. Clearly Cogeco, Rogers etc that have their own On Demand services have a direct conflict of interest with web streaming of any kind.

  • James H

    I don’t buy the protecting us from recession part at all.

    Of course the overhead is higher in Canada and no one expects it to be as cheap as the USA, but ISPs in Canada have actually shrunk cap limits and profits have continued to climb every year.

  • James H

    Buy something like MLB.TV and see how far standard packages from Bell or Cogeco get you. (25GB and 80GB respectively)

    If all ISP’s standard package started at 200GB I bet there would be less complaining.
    Levels like the ones quoted above for Bell and Cogeco are pretty much useless for anything but absolutely basic Internet use. Forget HD.

  • I live in NB and Bell Aliant here has no caps. I have a 70MB down and 30 MB up fibre-op connection and I stream Netflix on a daily basis. Rogers… I’m not sure why they are allowed to get away with that or any other ISP with caps. Noone else in the developed world has a strict a cap as Rogers. It’s ridiculous. Speak out with your wallets. Switch providers. You have a CHOICE.

  • And if you think about it… we’re talking about regulating 1’s and 0’s here. It’s not like we’re metering WATER or NATURAL GAS.

  • Jay

    I suppose if you can afford to pay the extra for going over your ok. But not everyone can afford it. I’m from the UK and will be moving to Canada in JAN. The internet in the UK is far superior except for lower upload speeds. It looks like I’ll be ending up with Teksavvy as they seem to be the only company in the Greater Toronto area that offer uncapped data. If companies are worried about people not using there services maybe they need to re-think their incentives or lower their prices. I personally don’t watch TV because all you get is re-runs and too many adverts. In England I’m with Virgin which is the leading provider for Cable Internet, as well as it’s other services. I wish Mr Branson would introduce a competitive internet company in Canada, I’d sign up in a heart beat.

  • clean ur hands

    That’s a LOT of porn.

  • Defected

    Internet is new so ISP will change or grow . Sick of few selections ! There should be more high speed providers who , want to cash in on the better deal . Right now we only have few choices and , these companies hitlertize your rights . Fact that USA and Canada rated lowest for internet services ?

  • tom

    It’s because Canadians are meek sheep and never complain about anything. We always take it lying down. We should be more like Yankees and stop letting big companies and incompetent amateurish government push us around. We also pay the highest cell phone fees in the world, not to mention the highest taxes. This has to stop somewhere. We need to stand up or our children and grandchildren will have nothing. Nothing but “free” healthcare where the line up is a mile long