Internet providers await CRTC ruling
Published Sunday, November 13, 2011 9:29PM EST
How much independent Internet providers -- known for their unlimited plans -- will pay to use the networks of big telecom companies will be in the spotlight again with a CRTC decision on Tuesday.
The federal regulator will issue a new ruling on how much large network providers such as Bell can charge for the use of their networks after a consumer backlash and concern from federal government last winter.
"Consumers have latched onto this," said Tom Copeland, president of Internet service provider eagle.ca in Cobourg, Ont.
"Consumers have woken up and said, 'You know what? We get it,"' Copeland said.
Consumers took to social media sites Facebook and Twitter to rally against what's called usage-based billing, fearing if their independent Internet service providers faced this kind of billing it would mean the end of these providers offering unlimited plans and would increase prices. The CRTC took note and back to the drawing board.
The original CRTC decision had given major Internet providers permission to change their billing practices for wholesale service to the smaller providers and critics said it would have put small ISPs at a disadvantage because they woud have paid on a per-byte, or usage, basis.
The issue also led to debate about how Canadians should be charged for Internet services and how much bandwidth they use.
But the Canadian Radio-television and Telecommunications Commission made it clear that its second look at the issue was only considering the wholesale prices that independent Internet providers pay for network use and not the monthly retail rates that are charged to their consumers.
"Consumers were upset because what they were being told -- right or wrong -- was that the unlimited usage plans that the alternative providers offered were at risk," said telecom analyst Mark Goldberg.
Bell has argued that independent Internet providers contribute significantly to network congestion, and the price they pay to large telecom companies should reflect their weight in data traffic.
Canada's largest telecom company has said wholesale independent service providers make up 17 per cent of users in Ontario and Quebec and drive 29 per cent of total traffic on Bell's network in those provinces.
Bell and Rogers declined comment, preferring to wait for Tuesday's decision.
Goldberg said he expects the decision will have some kind of "usage sensitive" component but with enough flexibility to allow independent ISPs to continue to offer unlimited plans.
"What they might have to do is ensure that they're able to attract enough low volume users to offset the heavy usage -- some of their higher volume users," said Goldberg, of Mark Goldberg & Associates Inc. in the Toronto area.
Analyst Troy Crandall said the CRTC decision has implications for future bandwidth consumption as more content is delivered via the Internet.
"Ultimately, I pretty much think it's a given that 'unlimited' is just not a sustainable business model," said Crandall, of Montreal-based MacDougall, MacDougall & MacTier.
"But as long as you get the right subscriber mix, it could still possibly work," he said.
Consumers were angry because they viewed the big telecom companies as "trying to stifle an alternative for them," Crandall said.
Mel Cohen, founder and president of Distributel, said he hopes the CRTC favours competition.
"If there's too high of a cost associated with usage, especially if it's 24-hour metering, it does make it very difficult to offer an unlimited plan," he said from Toronto.
Distributel has about 100,000 high-speed Internet customers with three-quarters of them using Bell's network, he said.
"If the rates that the commission approves are too high, it's just going to make it really, really hard for independent Internet service providers to compete and that will reduce alternatives," Cohen said.
The smaller ISPs have argued they would be driven out of business if they have to use the same pricing model employed by the large players, who usually charge extra if the retail customers exceed monthly usage limits.
Bell withdrew its usage-based billing tariff earlier this year and had proposed wholesale pricing for ISPs that reflects a flat-rate access fee on speed and charges 29 cents per gigabyte for any extra gigabytes needed to accommodate overall usage in a month.