The days of the cheap broadband free-for-all are ending.

Until now, Alberta customers of residential high-speed Internet have been getting a steal. That’s about to change, according to industry analysts and the big players themselves.

Both Shaw Communications and Telus, the two giants of the local high-speed game, are planning to increase their rates, along with the available options.

“Right now, Shaw and Telus are losing money on (residential) high-speed Internet,” says Russ Reid, of Telecommunications Management Consultants Inc. in Vancouver.

“ADSL, for example, is not making money. I don’t think Shaw was making money at $39.95 (per month) for their home service. Now that Shaw is raising prices, they probably realize that they have got market share and it is time to make some profit. Up until now, they certainly haven’t been.”

Reid estimates an eventual price point near $60 per month per connection.

Shaw recently announced high-speed residential customers would be paying an extra $3 per month as of May.

A Telus spokesman hints that his company will follow suit. “(A price increase) is a little more than theoretical right now,” says Telus Consumer Services director of Internet services Mike Black. “As the insurgent, not the incumbent, in this high-speed game, we’re making sure we understand the movement of the market, and then we will respond accordingly.”

That market has been going upward right across North America. Western Canada has been slow to follow the trend, but it is virtually inevitable that Telus’s high-speed service will rise in lockstep with Shaw’s. In fact, as it stands today, Telus is the last major local holdout.

Last November, Rogers AT&T’s (cable) and Bell Sympatico’s (ADSL) high-speed offerings each jumped by $5 per month, to $44.95. They were following a trend that started mid-2001 in the U.S. Prices there are now about $50 US for residential broadband.

But while such hikes will generally sting those intent on maintaining current levels of service, both Telus and Shaw are considering options to help customers save money, if they are willing to sacrifice either speed or traffic volume.

In February, Shaw quietly rolled out Lite-Speed Internet ($24.95 with cable, $29.95 otherwise), an option with speeds that fall somewhere between broadband and dial-up, but with always-on convenience (Rogers pioneered this in Eastern Canada).

Kevin MacDonald, Shaw’s marketing manager of Internet services, has apparently found the response to Lite-Speed underwhelming: “We are not finding the kind of migration (from Telus dial-up) that we thought could be possible.”

The risk for Shaw – and Telus if it ever should offer such a mid-speed service – is that they lose some of their higher-margin customers (about 85 per cent of them) to lower-priced plans.

As it stands today, both Shaw and Telus are struggling with that small percentage of users (10-15 per cent, presumably music/movie swappers and such) who generate about 80 per cent of the traffic.

Both MacDonald and Black told Business Edge that a day is almost certainly coming when customers pay for traffic usage as well as speed.

The technology is already in place for Shaw and Telus to bill customers according to the amount of data they upload or download, for example.

This would keep the moderate users from subsidizing the bandwidth maniacs.

The market is not yet ready for this kind of feature, both companies admit, but as prices climb and the computer-savvy few start grabbing bigger portions of the bandwidth buffet, customized options will have to follow.

MacDonald put it this way: “You know we will have to get to a point where we either start incrementally charging customers for use above and beyond our acceptable-use policy (AUP), or we continue to monitor the network so that customers are not going beyond AUP.”

Rogers in Ontario is promising such measures by June. It’s bound to come to Alberta.

While prices were low, such a system remained too sensitive to touch.

With prices climbing, it may be the only way to hang on to customers.