The recent LCBO report says that ‘People are buying Pinot Noir and Ripasso’. Roughly translated the message is ‘we’d like more people to buy these, and other wines in the $16–$20 range, and not the cheap South American stuff. Please be trendy and support our profits.’
[. . .]
In case you’re not clued into the workings of LCBO promotions I suggest you read the fine print on the inside back cover ‘this advertising is paid for by participating suppliers’. It’s no different than all the other fliers.
Billy Munnelly, “LCBO Trend Report”, Billy’s Best Bottles Wine Blog, 2011-04-20
May 3, 2011
QotD: The LCBO’s Trend Report
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February 9, 2011
Real usage-based billing might work, but not the current form
Tim Wu contrasts the way the UBB issue is being presented and how it might actually be successful:
The issue of usage-based billing is a little tricky because such systems are not inherently evil. When you think about it, we usually pay for things on a usage basis. Gasoline, electricity and even doughnuts are generally billed based on how much you use. And the fact that usage-based billing sounds reasonable in theory is surely why the Canadian Radio-television and Telecommunications Commission approved the new rules.
But take a closer look and something far more insidious is going on. If bandwidth were actually billed like electricity or water, that might be fine. But what the CRTC approved is something different. Claiming that its profit and consumer welfare are exactly the same thing, Bell wants to remake Internet billing. It wants to make use of the most lucrative tricks from the mobile and credit-card industries by preying on consumer error to make money. And this ought not be tolerated.
Any rule that asks the consumer to guess at usage, and punishes you if you’re wrong, is abusive. Imagine being asked to guess how much electric power you need every month, with a penalty for mistakes. Yes, that’s what cellphone companies do — or get away with — but that hardly makes it a model. It’s a system of profit premised on human error, and this begins to explain Bell’s deeper interest in usage-based billing. Bell wants to make the horrors of mobile billing part of the life of Internet users. And that’s a problem.
H/T to Michael O’Connor Clarke for the link.
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February 3, 2011
CRTC head called to testify before Commons committee
In what some are hailing as a victory for Canadian internet users, but might well be just another Conservative sop to public opinion, the head of the CRTC has been called before a Commons committee:
The chairman of the CRTC will appear before the Standing Committee on Industry, Science and Technology on Thursday, as the regulator’s decision on usage-based billing for Internet services continues to generate anger among consumers and businesses.
Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission, will appear before the committee of federal MPs to explain the regulator’s decision, which allows large Internet providers like Bell Canada to charge smaller providers who lease space on their networks on a per-byte, or usage, basis.
On Tuesday, Prime Minister Stephen Harper vowed to review the decision, lending clout to Industry Minister Tony Clement’s announcement to examine the CRTC ruling a day earlier. Mr. Clement and Mr. Harper’s cabinet, of course, have overturned the CRTC before — most notably by striking down the regulator’s ruling that Globalive, which now operates Wind Mobile, couldn’t launch service in the regulated sector because of foreign financial backing.
The problem for the government is that they need to be seen to do something, but the best “something” would be to open up the Canadian market to foreign competition in order to drive prices down toward world levels. That would upset too many cosy arrangements for the current beneficiaries of licenses to print money government approval to operate.
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February 2, 2011
QotD: “Welcome to the Canadian Internet. Now stop using it.”
Welcome to the Canadian Internet, where extreme concentration in telecoms and a weak, lame regulator have given rise to a nation where your Internet access is metered in small, ungenerous dribs, and where ranging too far afield during your network use results in your ISP breaking into your browsing session to tell you that you’re close to being cut off from the net.
The incumbent telcos have successfully petitioned for “usage based billing,” wherein their customers only get so much bandwidth every month (they’ve also long practiced, and lied about, furtive throttling and filtering, slowing down downloads, streams, and voice-over-IP traffic). This will effectively make it cheaper to use their second-rate voice-over-IP and video-on-demand service than it is to use the superior services the rest of the developed world enjoys.
If you were a Canadian entrepreneur or innovator looking to start your own networked business, this would be terminal. How can an innovative service take hold in Canada if Canadians know that every click eats away at their monthly bandwidth allotment? I can think of no better way to kill Canadians’ natural willingness to experiment with new services that can improve their lives and connect them with their neighbours and the wide world than to make them reconsider every click before they make it.
Cory Doctorow, “Welcome to the Canadian Internet, now stop using it”, BoingBoing, 2011-02-02
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February 1, 2011
Now roiling the hoi-polloi: bit-by-bit billing
The internet is about to become a political topic . . . not the internet itself, but the prices Canadians will have to pay to get online:
Industry Minister Tony Clement says he is looking closely at the “usage-based billing” decision issued last week by the CRTC that has consumers, businesses and citizen groups’ decrying what they see as a price hike for Canadian Internet services that could clamp down on innovative technologies.
“I can assure that, as with any ruling, this decision will be studied carefully to ensure that competition, innovation and consumers were all fairly considered,” Mr. Clement said in a statement obtained by The Globe and Mail.
The decision will allow large Internet service providers (ISPs), such as Bell Canada and Rogers Communications, to charge smaller ISPs that lease space on their networks on a volume basis. Executives at smaller providers have already begun phasing out popular “unlimited” Internet packages because it has become economically unfeasible to continue offering them.
I wondered how long the current situation would last: Bell and Rogers used to tout their “unlimited” internet access, but if you read the fine print, it wasn’t really “unlimited”. Like any resource that is “free”, some will use far more of it. In the early days of broadband, that didn’t matter, as there were not enough users to consume all the bandwidth anyway. Now that there are many more subscribers, the heavier bandwidth users are causing problems.
In addition to the sheer number of broadband customers, another change that was not fully foreseen was the way those customers use their internet connections has changed. When Bell and Rogers got into this market, there were far fewer options for using the internet. You could visit websites all day long, read email, listen to cheesy renditions of popular music, and (for some) download pirated movies for hours on end.
Now that TV and movie viewers have better viewing options through their internet connections than they get over-the-air or through cable or satellite TV, the nature of internet traffic has been revolutionized, and not in a way that Bell and Rogers were anticipating.
Update: Michael Geist thinks I’ve been taken in by the big guys’ propaganda:
[. . .] arguments in support of UBB are frequently accompanied by the claim that the approach is like any other service — you pay for what you use. Yet Bell’s UBB plan approved by the CRTC does not function like this at all. Its plan features a 60 GB cap with an overage charge for the next 20 GB. After 80 GB, there is no further cap until the user hits 300 GB. In other words, using 80 GB and 300 GB costs the same thing. This suggests that the plan has nothing to do with pay-what-you-use but is rather designed to compete with similar cable ISP bandwidth caps. In fact, Primus has gone further, stating “It’s an economic disincentive for internet use. It’s not meant to recover costs. In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”
He also points out that the Canadian market is very tightly controlled by a oligopoly of key players:
While the CRTC’s UBB decision provides the immediate impetus for public concern, the reality is that the bandwidth cap issue in Canada is far bigger than just this decision. The large Canadian ISPs control 96% of the market, meaning the independent ISPs are tiny players in the market. Even if the CRTC denied Bell’s application for wholesale UBB, it would still only constitute a tiny segment of the overall Canadian Internet market.
As virtually every Canadian Internet user knows, the Canadian market is almost uniformly subject to bandwidth caps — the OECD reports that Canada stands virtually alone with near universal use of caps. The scale of the Canadian caps are particularly noteworthy — while Comcast in the U.S. imposes a 250 GB cap, Canadian ISPs offer a fraction of that number:
- Videotron starts at 3 GB for Basic Internet, 40 GB for its next plan and tops at 200 GB for very fast speeds at $149/month
- Rogers Lite service caps at 15 GB, it fastest service stops at 175 GB
- Bell’s Essential Plus service offers a 2 GB per month cap, climbing to 75 GB for its fastest service
The caps are already having a consumer impact as Bell admits that about 10% of its subscribers exceed their monthly cap (a figure that is sure to increase over time). Moreover, the effect extends far beyond consumers paying more for Internet access. As many others have pointed out, there is a real negative effect on the Canadian digital economy, harming innovation and keeping new business models out of the country. Simply put, Canada is not competitive when compared to most other countries and the strict bandwidth caps make us less attractive for new businesses and stifle innovative services.
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November 11, 2010
Chinese wine buyers get all-VQA store that Ontario wine buyers can’t have
I’m all in favour of improving the visibility and availability of Ontario’s VQA wines in other markets, so this news is both good and infuriating simultaneously:
A couple of weeks ago the Government of Ontario announced the opening of an all-VQA wine store in China (in the city of Zhengzhou, the capital of Henan Province). Oh happy day — now the Chinese can drink (and copy) all the Ontario icewine they want . . . but this begs the question: why should the Chinese have an advantage that we Ontarians do not? Do the Chinese drink more Ontario wine? Why is it so important that China get the opportunity to drink Ontario wines that folks in Thunder Bay, Sault Ste. Marie and Sudbury can not?
I have nothing against the Chinese getting their hands on our wine; I’m glad to see a country embrace our wines as so many of us have embraced their food. But seriously, why should folks living in China have more and better access to Ontario wines then those of us living in the actual province. When I first heard the news, all I could say was an incredulous, “Seriously?” Has Ontario really become, as wine writer Dean Tudor puts it, every time he mentions Ontario, “a have not province”? When it comes to our own wine industry it keeps getting more and more “have not” and won’t get.
See what I mean? Great that they’re opening outlets in a new foreign market, but we still can’t get that kind of opportunity to buy here at home? All-VQA stores have been discussed (and rejected) before, but they’re apparently a great idea for foreign markets.
Update: Fixed the broken link.
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May 3, 2010
The end of a monopoly
Wine bottles have been sealed with natural cork for hundreds of years. It is an extremely good, natural product that has been used by almost all wine producers because it was better than every other economic sealant available. But cork has a problem that, as a natural product, it is subject to certain risks, the worst of which from a wine viewpoint was contamination with the chemical compound called 2-4-6 Trichloroanisole (usually abbreviated as TCA).
It only takes a tiny amount of TCA to ruin a bottle of wine: and it occurs naturally in the trees from which the cork is harvested. Wine producers and consumers were demanding a solution (wine writers have estimated that between 10% and 15% of all wines suffer from TCA tainting). As monopoly suppliers, however, the cork producers did very little — where else were wineries going to get their bottle closures?
Enter the competition:
By the 1990s, retailers and wineries were clamoring for a solution to wine taint but the cork industry didn’t respond. “No industry with 95% to 97% market share is going to see its propensity to listen increase —and that’s what happened to us,” says Mr. de Jesus from Amorim.
The outcry was just the opening needed by Mr. Noel, a Belgian immigrant who in 1998 began making what he calls “corcs,” he says in part to avoid lawsuits from cork producers, in his North Carolina plastics factory.
Mr. Noel, whose company had specialized in extruded plastics such as pool noodles, named the new business Nomacorc LLC. He eventually built a new, highly automated factory that does nothing but churn out the plastic stoppers, 157 million a month.
The business took off as wineries, desperate for closures that wouldn’t cause cork taint, lined up to buy his product. Nomacorc now has plants on three continents, which produce 2 billion corks a year.
I’m not a big fan of plastic corks — I’m starting to prefer modern Stelvin twist-off closures — but at least with a plastic cork, there’s almost no chance of TCA contamination. I don’t buy very expensive wines, so the most expensive wine I’ve lost to cork taint was only about $60, but that’s still more money wasted than I’m willing to put up with.
If you’ve ever had a glass of wine that smelled of mouldy cardboard, you’ve had TCA-contaminated wine.
April 2, 2010
QotD: The KGBO, er, I mean LCBO
Because we live under a monopoly regime that has no intention of loosening restrictive laws, we will never see “wine bar/stores” like this. Americans are jaded to these luxuries of free market access to wine and loads of selection. You read magazines where they tell you to talk with your retailer about finding the best wines from out of theway places and dedicated small producers, and the knowledgeable Ontarian’s reaction is “Yeah, right not in my lifetime will I see that.” While in the U.S. the ‘little guy’ whose passion for wine you can feel the moment you walk in the door and engage in a “which wine should I get” conversation. A recent discussion with an ex-pat American wine collector and drinker (just recently moved north of the 49th parallel) elicited disgust about the LCBO and its selection. “I’m from Chicago,” he tells me, “and I can’t find a decent bottle of wine up here and the selection is . . .” he trails off and shakes his head. Ontarians are used to it. We’ve grown up with Big Brother’s iron fist clamped firmly around our throat and his sweaty palm covering our eyes to what the world outside our borders is doing with booze (wine in particular).
I usually urge you to take a trip to wine country, but this year I want you to take a trip abroad, not to a wine country or region, but to a U.S. wine retailer or specialty shop, a grocery store will do in a pinch (yes I did say a grocery store). Check out, not only the selection but the price, what’s on sale and for how much, wines for under $4, 2 for 1, 3 for 1 or sometimes more for one low price. Discounts for multiple purchases, sale prices that actually seem like you are saving money and not just a dollar or two off. Pay attention to what you see, then ask yourself, “why don’t we have that here in Ontario?” You know the answer, it stares at you with big white letters on a big green background and they go by a four-letter acronym (do I really have to spell it out?) How about this, their first letters are L.C., although they should be K.G. If you are any kind of oenophile, be it novice or pro, you’ll realize that a trip across the border is enthralling and liberating — but then it’s back to the oppressive world of Ontario with Big Brother’s hands shielding you and stopping you and then you tell me honestly, which system would you like to live under?
Michael Pinkus, “Is it a Shop or is it a Bar? Whichever it is, I want one here”, Ontario Wine Review, 2010-04-01
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February 25, 2010
“Ontario will have the highest electricity rates in North America”
Parker Gallant is quite disturbed by the most recent annual report from Hydro One, Ontario’s government-owned electrical transmission corporation:
No major media reported on Hydro One’s annual statement to “investors,” as the company puts it, even though the report is a dog’s breakfast of warning signs and bizarre trends that spell trouble.
[. . .]
As debt rises, Hydro One’s debt-to-equity ratio weakened from 1.71:1 to 1.91:1. It borrows money to pay for capital costs surrounding the province’s Green Energy Act and puts the company at risk of a debt ratings downgrade, which will drive borrowing costs up.
Return on equity is down to 8.7% from 9.7% in 2008, indicating an overall decline in the value of the company. Return on assets fell to 3% from 3.5%. As a result, the dividend payment to the province was $188-million, down 27.4%. But the CEO says the company is “on target.”
Even though revenues and costs are rising, and profit falling, Hydro One handles less electricity — 139.2 terawatts, a decline of 6.4%. The cost of distribution per terawatt was up by 14.9%. Operations and maintenance costs keep rising as power transmitted declines. The number of employees rose 7.7%. Since 2002, when the company had 3,933 employees to distribute 153.2 terawatts, total employment has jumped 38% to 4,400 to distribute 9% less power. Are these additional 1500 staff working in the field or at head office working on rate increase applications?
February 5, 2010
Amtrak’s odd pricing policies
Jason Ciastko sent this tale to one of the mailing lists I’m subscribed to:
Go to www.amtrak.com
One way ticket from Erie PA (ERI) to Elkhart IN (EKH)… One adult passenger, no discounts or anything else… The day I picked happened to be tomorrow, but it should not matter….
Now your options should be train 49 (Lake Shore Limited) that departs Erie at 0136 and arrives in Elkhart at 0825 or train 449 (Lake Shore Limited again) that departs Erie at 0136 and arrives at 0825… Those observant will notice this is the same train… 49 is the New York to Chicago section and 449 is the Boston to Chicago section… They are combined into the same train in Albany New York (well before Erie PA…
The riddle is I got a ticket cost of $47 for train 49, and $59 for 449… Probably be in the same seat…
One heck of a way to run a railroad…
I’m sure there’s a rational explanation for this . . . but I can’t come up with one.
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January 27, 2010
Where Virginia is headed, will Ontario follow?
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January 15, 2010
Why China won’t be able to corner the rare earth market
Tim Worstall looks at the importance of rare earth to the modern electronics industry, and why China’s ongoing attempt to corner the market won’t work in the long run:
The Chinese government is trying to corner the rare earths market and that isn’t good news for the tech business. Those with good memories of Chemistry O Level will know what the rare earths are: the funny little line of elements from Lanthanum to Lutetium at the bottom of the periodic table, along with Yttrium and Scandium, which we usually add to the list.
The reason we like them in the tech business is because they’re what enables us to make a lot of this tech stuff that is the business. You can’t run fibre optic cables without your Erbium repeaters, Europium, Terbium and Yttrium are all used to make the coloured dots in CRTs, the lens on your camera phone is 25 per cent Lanthanum oxide (yes, really, glass is made of metal oxides) and without Neodimium and Dysprosium we’d not have permanent magnets: no hard drives nor iPod headphones.
[. . .] it is still true that we get all of them – apart from Scandium, which is a rather different little beastie – from the same ore. In fact, we tend to get them not just from the same ore, but from the same mine: Bautou in Inner Mongolia (that’s the Chinese part, not the independent country).
And that’s where our problems really start. Over the past couple of decades China has been cracking down on small mines, usually in the name of environmental policy. That even may have been the real reason, as rare earth mines can be messy things. The outcome is that now 95 per cent of the earth’s supply comes from this one mining complex and the Chinese Government has just announced export restrictions.
So, if they have a monopoly on 95% of the world supply, why won’t it hold up? Because in spite of the name, they’re not as rare as all that . . . and there are substitutions that can be made for some or all of the current application needs. By restricting the supply and/or driving up the price, China will spur new competitors to enter the field and new sources of rare earths to be developed. In the short term, it will definitely create price increases (which, of course, will be passed on to the consumer), but in the medium-to-long term they will create a vibrant competitive marketplace which will almost inevitably drive the prices down below current levels.
Isn’t economics fascinating?
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