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Kiwi lessons on internet throttling?

By Peter Nowak, CBCNews.ca

The current dispute between Bell Canada and smaller independent internet service providers over the throttling of internet speeds carries echoes of a similar struggle that happened in tiny New Zealand not so long ago over an arcane telecommunications issue known as "local loop unbundling." The very different directions the two countries have gone in are interesting to say the least.

Basically, here's the simplified version of what local loop unbundling (LLU) is and how it works. Every house has a wire - known as the "last mile" - that goes to the telephone exchange, or a central building in their neighbourhood. Those exchanges are then hooked up to each other, forming the phone company's network. LLU requires the phone company to unhook that last mile and offer it up to smaller ISPs. The ISP then connects its own equipment, usually in the form of a Digital Subscriber Line Access Multiplexer or DSLAM, to the last mile, then again back to the main network. The DSLAM, which is essentially a middle man, allows the ISP to control the internet speeds they offer to customers.

Canadian phone companies have had LLU forced on them by regulations for the better part of the past decade. New Zealand, on the other hand, decided against regulated LLU in 2004, which had smaller ISPs crying foul. The result, they said, was slow internet speeds and high prices foisted on them by Telecom NZ, the nation's big phone company. Without LLU, they said they were forced to accept and resell the slow speeds Telecom gave them, which resulted in New Zealand being near the bottom of international broadband uptake rankings (the fastest download speed available until 2006 was 2 megabits per second). In 2006, the New Zealand government decided enough was enough and reversed its decision on LLU, and Telecom's network was forced open last year. There was much rejoicing in ISP land.

But not all was well. The ISPs feared that as soon as LLU was forced on Telecom, the company would begin pushing out its last mile access to the phone cabinets seen on many street corners, effectively side-stepping the regulation. That's exactly what happened - Telecom in November announced it was "cabinetizing" its network, not surprisingly starting with the very first exchanges that had been unbundled. The country's telecom regulator says it is now looking at sub-loop unbundling that will grant ISPs access to those cabinets.

Canada has gone in the opposite direction. ISPs here have not taken advantage of LLU, mainly because they say the same thing has happened - Bell has been "cabinetizing." Bell, on the other hand, disputes that reasoning because it has only been pushing the last mile out to cabinets recently, meaning the ISPs had a long time to get in on LLU but chose not to.

Whoever is right, the bottom line is the current throttling dispute might not exist if Canadian ISPs had installed their own DSLAMs on Bell's network. The CRTC in March ruled that such "cabinitization" constitutes new investment by phone companies, so it should not be regulated in order to not discourage such investment. In other words, no access to street cabinets for the ISPs.

So which country's regulator has it right?

CBC Radio's Spark program will have Bell's head of regulatory affairs, Mirko Bibic, on Monday to talk about the whole throttling issue. Spark is asking readers to suggest questions to ask of Bibic, so head over to the show's site and take advantage of this rare opportunity.

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