Shaw, Vonage engage in war of words over internet phone service

Shaw Communications says telephone internet provider Vonage Canada's complaints about subscriber fees are "wrong and misleading."

The dispute between telephone internet provider Vonage Canada and cable company Shaw Communications heated up Wednesday, with Shaw calling Vonage's complaints about subscriber fees "wrong and misleading."

In a release Tuesday, Joe Parent, Vonage's vice-president of marketing, said Shaw was asking its high-speed internet customers to pay a $10 "quality of service enhancement" fee if they use a Voice over Internet Protocol phone service from a provider such as Vonage Canada.

These so-called VoIP calls use a system whereby telephone calls are routed through a computer internet service, instead of the usual telephone system. That makes long-distance connection considerably cheaper, because the user does not have to pay telephone charges.

Parent accused Shaw of levying a "thinly veiled VoIP tax" to unfairly drive up VoIP prices in Western Canada. He said a request has been filed with the federal communications regulator asking for an investigation.

In response, Shaw (TSX:SJR.NV.B) issued a release of its own on Wednesday acknowledging that it offers customers "the opportunity" to improve the quality and reliability of internet service that's used to carry voice traffic.

But it said "the service is completely discretionary to our customers."

Shaw said all public internet networks, including its own, encounter intermittent shortfalls in bandwidth that can result in some frames of voice and data traffic being dropped during periods of peak usage.

"Shaw's quality of service enhancement helps address these shortcomings with internet telephony," it said.

"This is an old and tired complaint from Vonage," said Shaw president Peter Bissonnette. "We think [the timing of the news release] has more to do with their Initial Public Offering and the fact they have so few customers in Canada rather than any real concerns about consumers."

In an interview with Canadian Press, Vonage's Parent dismissed the argument that some types of traffic over the internet should get higher priority than others.

Instead, he said Shaw should increase the capacity of its networks to handle the peak loads without requiring prioritization of the traffic flows.

Shares of Shaw Communications were up 29 cents to $29.69 on the TSX on Wednesday.