Tuesday, April 26, 2011

CRTC said to step in if Internet companies raise prices.

A few months ago the CRTC announced a ruling to charge more for Internet usage, based on how much a user downloads. This was not a very popular ruling in the eyes of the public. In February the Canadian Government stepped in, saying if the CRTC does not overturn their previous ruling of charging more for Internet usage, that the Canadian Government will do it for them. The Canadian Government feels it only benefits large Internet companies, and has no benefits for the consumers.

With rising costs of food, gas and other consumer products, the new consumer debt load is likely to rise even more in 2011. Now there is more talk about Internet companies raising the price on Internet usage to subside with rising business costs. Experts are saying this price hike could ultimately impact consumers purchase patterns online.

It’s going to be tough for consumers who have depended on a low interest rate environment, said TD Bank economist Francis Fong, adding that rates are expected to go up this summer. “The rising interest rate environment, this high household indebtedness situation – that’s all going to impede the ability of consumers to spend going forward,” Fong said.

Stats Canada has noted an increase in retail sales by 0.4% during the month of February, giving some online retailers good news after a somewhat slow start to 2011. As an avid online shopper, this new upcoming price hike will definitely affect my online shopping habits.

The Retail Council of Canada said consumers are “still hanging back a little bit,” especially now that they have to spend more of their incomes on food and gas.

Prof. Ken Wong of Queen’s University business school said once consumers pay down debt and spend more money on food and gas, there isn’t much left for anything else. “You have to ask yourself what can be delayed and what can’t be delayed,” Wong said of consumer purchases. “We cannot rely on interest rates remaining as low as they are as long as they have been going forward,” said Wong, who teaches business and marketing strategy.

Lets hope the Canadian Government steps in to ease a moderate price rise.

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