Bell Canada has won a major victory with the CRTC refusing to end its internet throttling. (Ryan Remiorz/Canadian Press)

The CRTC is launching a public consultation on internet traffic shaping after rejecting a request by smaller Canadian internet service providers to end Bell Canada's throttling practices, saying the companies had failed to demonstrate that their businesses will be irreparably harmed by the action.

The Canadian Association of Internet Providers, which represents 55 smaller ISPs that rent portions of Bell's network in order to provide internet services to their own customers, had asked the Canadian Radio-television and Telecommunications Commission last month for an urgent cease-and-desist order.

Bell has been slowing the speeds of its own subscribers who use peer-to-peer applications such as BitTorrent since November, and extended the practice to its wholesale customers in March, prompting the complaint by CAIP. Bell has said it was doing so in order to prevent a small portion of users from slowing down internet speeds for the majority.

CAIP had asked for temporary relief from the throttling while the CRTC fully probed the issue.

"The commission finds that CAIP has not demonstrated that its members will suffer irreparable harm if the interim relief was not granted," the CRTC said on Wednesday, citing two previous Supreme Court of Canada decisions that spelled out criteria for such action.

The CRTC also said it would address the larger issue of a full probe in a letter to Bell and CAIP to be sent on Thursday. Peggy Nebout, a spokesperson for the regulator, said the letter would start a process that will allow the public to comment on the issue of traffic shaping. The CRTC expects to make a decision in the fall, she said.

The CAIP rejection represents a victory for Bell, which has come under fire from a number of organizations, including the NDP, the National Union of Public and General Employees, and the Canadian Internet Policy and Public Interest Clinic (CIPPIC). Although other major Canadian ISPs, including Rogers Communications Inc., also throttle speeds, Bell has been targeted by critics because it is the only phone company in Canada to engage in the practice. Phone companies are required by CRTC regulations to rent out their networks to smaller providers.

Bell in April asked the Federal Court of Canada to scrap that requirement.

Mirko Bibic, head of regulatory affairs for Bell, said the CRTC's decision to reject CAIP's request was the correct one.

"It was certainly the right decision based on the facts that were before the commission," Bibic said. "We look forward to dealing with the final disposition of the CAIP application in accordance with whatever process the commission sets out tomorrow. We look forward to that because we'll be able to get more facts on the table."

Tom Copeland, chair of CAIP, said he was immensely disappointed with the decision. More than 1,100 individuals wrote letters to the CRTC in support of the group's request, Copeland said, which indicated that the larger public good was at stake.

Public good not considered, CAIP says

"They didn't consider the public good simply because they felt we didn't meet the test for irreparable harm," he said. "The public good in this case is stronger than most regulatory issues they take up."

Copeland said the group is reviewing its options, which could include an appeal.

University of Ottawa internet law professor Michael Geist said he was not surprised the CRTC rejected CAIP's request for immediate action.

"That was a tough standard to meet, so it's not particularly surprising... but the substantial questions that CAIP has raised remain unanswered," he said.

The CRTC will also on Thursday open up its framework on the regulation of new media in broadcasting for public consultation. Geist, who has seen a draft of the framework, said it contains provisions for limiting how much control ISPs have over how people use the internet.

"The issue of net neutrality will be put on the table from a broadcast perspective. This decision puts it on the table from a telecom perspective as well," he said. "It's clear that many groups were seeking to jump in on this issue, and many more will come to the fore."

Bell must also now deal with a complaint filed by CIPPIC to the Privacy Commissioner earlier this week. The Ottawa-based legal clinic said traffic shaping and use of "deep packet inspection" technology by Bell and other large ISPs is a violation of the Personal Information Protection and Electronic Documents Act.

Bibic said CIPPIC's complaint is based on an incomplete understanding of DPI technology, and Bell looks forward to setting the record straight.

"It's based purely on conjecture," Bibic said. "It would have been far more constructive to have a dialogue with CIPPIC than for it to send out an application like this to the Privacy Commissioner."