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Dump big internet service providers, lobby group says by Jason Magder

Nov 20, 2011

Source: Montreal Gazette

MONTREAL - About 94 per cent of Canadians get their Internet service from one of a handful of large telecom companies.

Now a net neutrality lobby group is urging people to dump big Telecom in droves, in the wake of a decision Tuesday by the Canadian Radio-television and Telecommunications Commission.

The CRTC ruling corrects one that was reversed in February, in which the CRTC ruled that large telecom companies like Bell, Videotron and Rogers could set usage caps for the independent Internet service providers that use their networks and resell that service to Canadians. The Conservative government overturned that decision, saying it was anti-competitive, and ordered the CRTC back to the drawing board.

As a result of Tuesday’s ruling, the telecom companies can choose to either charge independents a flat rate for usage, or based on capacity, and independent ISPs will have to decide each month how much bandwidth to purchase.

One of the lobby groups advocating loudest against telecom companies was Vancouver-based Open Media, which hailed the decision, saying it will keep independent ISPs competitive with the likes of Bell and Videotron. The group started an online petition against what was called usage-based billing, which was signed by 500,000 Canadians. It’s new campaign calls for Canadians to dump their large telecom providers and to get their Internet from independents, many of whom currently don’t impose caps on the amount their customers can download.

“With this decision, it’s safe to say that these smaller companies will now be around for a while,” said Steve Anderson, the executive director of Open Media.

But as Anderson was claiming victory, the largest independent ISP said the rates adopted by the CRTC will hurt its business.

“Right now, the rates are extremely high,” said Patrick Lehoux, chief business development officer for Sudbury, Ont.-based Teksavvy, which has about 160,000 subscribers across Canada.

“At Teksavvy, we have always offered large data usage caps, and a lot of unlimited packages, and these rates are a threat to those packages. They don’t make sense.”

In fact, the large telecom companies also claimed victory in the wake of the decision, saying it supported their ability to manage traffic and discourage bandwidth hogs.

Iain Grant, the executive director of the Seaboard Group, a technology research and strategy consulting company, said Tuesday’s ruling didn’t necessarily improve the competitive landscape in Canada, but it at least didn’t make it worse.

“It’s better than the last ruling, which was much more directly in Bell’s favour,” Grant said.

“It’s a tough life being an independent ISP under the rules we have in Canada.”

Grant said there is still a competitive disadvantage for the independents especially considering the larger telecom companies can offer bundled discounts to customers who have Internet, television, telephone, and cellular phone service.

Anderson said some of the independent ISPs already offer phone service, and are looking to offer competing television service, delivered over the Internet, much like Bell’s IPTV service called Fibe TV.

But Grant said that seems like a bit of a pipe dream.

“They would have to buy the programming,” he said, adding that telecom companies Bell, Quebecor, and Rogers all own television networks as well, so they can set prices for those services.

Grant said to make the competitive landscape more equitable, Canada should consider what’s called structural separation, which would essentially take ownership of the network infrastructure away from Bell and Videotron, and create new companies that would manage the infrastructure and sell the service back to the service providers.

“In this instance, Bell would spin off the plumbing side of its business, and then it would buy from that company, and so would everyone else,” Grant said.

“And since the company is no longer reporting to Bell, it can offer equivalent service to everyone.”

This is a model that was adopted in the U.K., which had the second-lowest rates for high-speed Internet according to a recent study by the Organization for Economic Co-operation and Development.

Anderson said structural separation is his group’s ultimate goal, but he knows it will take a long time to get to that point.

He said this week’s CRTC decision, could be one step toward correcting what he calls “broken telecom.”

“Policy doesn’t move fundamentally in huge jolts,” Anderson said.

“But I think we can get there.”

Spokespeople for Bell and Videotron declined requests interviews on this subject.

© Montreal Gazette