A CRTC hearing that could determine the internet prices and options available to Canadians has closed with a look at a freshly revised usage-based billing proposal from Bell.

The hearing, which wrapped up Tuesday, is intended to help the commission determine how independent internet service providers are billed by companies such as Bell for access to their networks.

That access allows the small ISPs to connect to individual customers and create their own retail internet packages — which is meant to satisfy the CRTC's goal of boosting competition in the market.

BigTelco vs. IndyISP

Confused about how wholesale and retail internet connect with customers and each other? Our infographic explains.

Bell presented its new pricing proposal late Monday afternoon, the first of two days reserved for participants to counter arguments made earlier in the hearing.

The new proposal includes a fee of 17.8 cents per gigabyte of usage by independent ISPs. That is slightly lower than the $200 per terabyte (19.5 cents per gigabyte) fee that Bell originally proposed when the hearing opened on July 11. In addition, the fees would no longer have to be paid in advance, and there would no longer be a premium price for usage above the pre-paid terabytes ordered by the independent ISP.

Bell said the revised proposal was based on its costs, rather than the market prices it had proposed earlier.

Thumbs-down from independents

Independent ISPs and representatives for consumers remained unanimously opposed to Bell’s proposal.

Jean-François Mezei, a consumer advocate who made Tuesday’s first appearance, said Bell’s proposal would still pressure independent ISPs to mimic Bell’s plans for its own retail internet customers, which include usage-based caps and surcharges for each gigabyte over the cap.

"You don’t know what your bill’s going to be next month," he said. "It depends on what your users do."

That unpredictability could make it difficult for independent ISPs to avoid charging their own customers per gigabyte, Mezei said. He alleged Bell's plan is designed to stifle competition against its own retail internet packages.

Bell disagreed, saying its network expansion costs are proportional to the volume of usage, and that the proposal would allow independent ISPs to have flexibility to design their own packages. If they wanted to "play the averages," they could allow light users to subsidize heavy users and offer unlimited internet plans, said Mirko Bibic, senior vice-president of regulatory and government affairs for Bell Canada Enterprises.

"No one’s holding them to our pricing plans."

Earlier in the hearing, two  proposals had been presented to the CRTC:

  • The Canadian Network Operators Consortium (CNOC), which represents small ISPs, proposed a "95th percentile model," which measures the peak network traffic travelling at the point where the independent ISP’s network joins the network of wholesale network providers such as Bell.
  • MTS Allstream, which buys wholesale network services from companies such as Bell in some areas and rents its network to independent ISPs in other areas, proposed that wholesale providers charge independent ISPs based on the capacity of the link between the wholesaler’s network and the independent’s network. The price includes the cost of upgrading other parts of the wholesale provider’s network to accommodate traffic from the independent ISP for the next 10 years. The independent ISP would be free to set the speed of the connection for their customers.

Some of the consumer advocates and CRTC commissioners said they liked the way the MTS Allstream plan shared risk between the wholesale network providers and the independent ISPs.

Plan slammed

However, both CNOC and Bell argued forcefully against MTS Allstream’s model this week.

CNOC expressed concerns that MTS Allstream’s model would force independent ISPs to pay for capacity they didn’t use, especially if they purchased an extra link as a backup, but didn’t intend to ever use it unless their primary connection was temporarily not working.

Bell agreed that that was a problem. However, its biggest issue was the fact that MTS Allstream’s plan would allow independent ISPs to pay a flat rate for an interconnection and decide what speed they offer customers. Bell currently charges both retail and wholesale customers higher rates for higher speeds, and is required to make the same speeds available to retail customers as it does for independent ISPs.

"We think it would be a perverse outcome that we can’t offer speed at retail unless we make it available at wholesale," said Mirko Bibic, senior vice president of regulatory and government affairs for Bell Canada Enterprises, "but now suddenly, a wholesale ISP can offer speeds that we don’t offer."

He was adamant that Bell should not be forced to allow that.

The company reiterated it was opposed to capacity-based pricing models because it believes they will encourage internet usage at off-peak times, which would in turn boost the cost to upgrade its network. Bibic said that in order to implement such pricing plans, a lot of work would be required to estimate costs in a completely new way and would likely push wholesale network prices above the price for retail internet.

But Christian Tacit, a spokesman for CNOC, urged the CRTC "not to let implementation details related to billing and costing be an impediment," to implementing the right pricing model.

CRTC chair Konrad von Finckenstein closed the hearings by thanking all the participants.

"I think we had a very full debate, a very spirited debate," he said. "I think we’ve all learned it is a very difficult subject, but thanks to your help, I think the commissioners now have a full understanding of the issue and hopefully we will make the right decision."

Participants have until July 29 to file more written comments before the CRTC makes its decision.