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Bell Canada has proposed an alternative to usage-based internet billing. (Sue Ogrocki/Associated Press)

Telecom giant Bell Canada has pulled its plan to impose usage-based billing to wholesale internet clients, following a widespread public outcry.

In a statement released Monday, the company said it has proposed an alternative plan to the Canadian Radio-television and Telecommunications Commission, including an "aggregated volume pricing" structure for wholesale internet services.

"By enabling wholesale ISPs to purchase network capacity based on overall volume of usage, rather than on a per-customer basis, the new model gives wholesale ISPs greater flexibility to offer service packages based on their own business objectives and requirements," Bell said in the statement.

The news came on the day of the filing deadline for the first round of submissions to the CRTC's usage-based billing hearing. The CRTC originally decided Internet wholesalers would be forced to charge customers that use excessive amount of network capacity.

Vancouver-based Openmedia.ca, an organization that has been critical of the CRTC's decision and started an online petition against the move, said Bell is "clearly squirming under pressure" from Canadians.

"We're pleased that Canadians will now have the option to use indie ISPs like Teksavvy and Acanac to access the unlimited internet," OpenMedia.ca executive director Steve Anderson said in a release.

"This is a giant step forward for the Stop the Meter campaign, and a victory for those who support competition and choice in Canada's internet service market."

'Band-Aid solution'

However, Anderson said the move is a small step in the right direction.

"While this is a positive move, it is only a Band-Aid solution to a much larger problem," he said.

"We at OpenMedia.ca hope the CRTC takes Bell's submission as a sign that widespread usage-based billing is not an acceptable model for internet pricing, and that it creates policy to support the affordable internet."

Public outcry over the CRTC's decision to allow the big internet service providers to change their billing practices so they could charge wholesale customers, such as smaller ISPs, by the amount of bandwidth used gained huge traction online and through social networking.

The sticking point was whether smaller internet service providers, which connect to the large networks owned by companies such as Bell Canada, Rogers and Telus, would be able to offer unlimited plans.

Bell and other large Internet service providers, who compete with their wholesale customers for consumer and business users, have argued that their networks shouldn't be clogged by a small number of heavy users with no-limit service.

The smaller ISPs argue they will be driven out of business if they have to use the same pricing model employed by the large players, who charge extra if the retail customers exceed monthly usage limits.

Among those who spoke out against the CRTC's policy was Prime Minister Stephen Harper, who said on Twitter that he had asked for a review.

"We're very concerned about CRTC's decision on usage-based billing and its impact on consumers," Harper tweeted in February.

The federal Liberals also said they opposed the CRTC decision.

The regulator has since launched a review of its decision, inviting comment from the public and industry players such as Bell and the smaller Internet providers.

With files from The Canadian Press