Bell billing idea will stifle internet competition, CRTC told
Bell's motivation for wanting to bill competing small internet service providers based on the volume of customers' internet usage was questioned Wednesday by a CRTC commissioner examining the issue.
Small internet providers have made a "compelling" case for a proposal that they be billed by peak network traffic and not the total volume of internet usage by their customers, said Tom Pentefountas, the CRTC's vice-chair of broadcasting, responding to a presentation by Matthew Stein, vice-president of network services for Primus Canada.
"If I was Bell, I'd go with peak traffic billing, if we assume what you say is correct," he added.
Stein was speaking at a CRTC hearing to determine how small ISPs are charged for network access that they rent wholesale from large telecommunications companies such as Bell. Bell and other "incumbent" telecommunications companies are required to rent access to their networks to independent ISPs — their wholesale customers. That allows the small ISPs to create internet packages to sell to their own retail customers and meet the CRTC’s goal of boosting internet competition.
Pentefountas asked why Bell wouldn't support the proposal by a group representing small ISPs, the Canadian Network Operators Consortium: "What's the motivation for them asking for volume-based and not peak traffic?"
"I'd be guessing at motivation," Stein responded.
But he suggested that Bell is trying to pass on an economic disincentive for internet use by customers of small ISPs. Bell has said that only its proposal "sends the right economic signals" to make small ISPs manage their networks in a way that reduces congestion.
"Bell's expectation obviously from that statement is that this system will force competitive ISPs to pass per gigabyte pricing and therefore all the pluses and minuses that it creates along to those end users," Stein said. "Per gigabyte pricing will really be the only game in town."
Pentefountas asked the same question to Mel Cohen, president of Distributel Communications, who began by suggesting that Bell is trying to discourage internet usage, which would affect applications like watching movies.
"Discourage use and put you guys in the same mould where you're all offering the same?" Pentefountas asked. "It doesn't allow you the flexibility to be innovative and offer a different approach than the telcos and the cablecos?"
Cohen agreed, but pointed out that what small ISPs want is for customers who cost ISPs the most — not those who use the most internet — to pay more.
On Monday, the first day of the hearing, Bell pitched a proposal called "aggregate volume pricing," which would see independent ISPs buy pre-paid network access based on a cap on the total volume of internet usage by their customers. Bell proposed charging $200 per terabyte, plus a surcharge of 29.5 cents for each gigabyte over the allotted block.
However, Stein told the CRTC that data volume or usage is difficult to predict and measure, and isn't directly related to congestion. He added that as a result, his industry tends to focus on measuring and managing data traffic peaks, measured in bits per second.
"Volume of data transferred is irrelevant to understanding the capability or congestion of a network unless you consider the amount of time that the transfer took," he said.
Shaw open to peak-based billing
Representatives from cable giant Shaw Communications, led by Peter Bissonette, president of the company, made the next appearance at the hearing. Shaw supported Bell’s proposal. However, Shaw said it already does peak measurements and could modify the system to allow billing based on such measurements.
CNOC had proposed measuring peaks at the point where small ISPs' own networks connect with their wholesale provider’s network, which could be measured by both parties. Shaw said peak measurements would need to be taken at many other points in order to be "accurate."
Company officials reiterated what executives from other cable companies had said earlier in the hearings – that the results from measurements of aggregated volume and peak usage "may not be that different at the end of the day."
Lawyers with the Public Interest Advocacy Centre, which represents consumer groups, opposed both Bell’s and CNOC’s usage-based billing proposals in its presentation Wednesday afternoon, saying it is against policies that "penalize users based on their use of the internet."
"Canadian consumers and businesses should be encouraged, not discouraged, from making use of the growing range of applications, sources of information and entertainment made available by the internet," said John Lawford, counsel for the group.
Jean-François Léger, another lawyer working with PIAC, said the group is seeking a solution that allows different ISPs to differentiate themselves from one another. He added that the group is opposed to billing methods that bundle a fixed amount of usage into a basic charge, whether that amount is used or not, which PIAC considers "inconsistent with the promotion of customer choice and, more generally, of competition."
Consumer group proposes incentives for ISP mergers
The group also suggested that when the CRTC decides on its wholesale network access rates for small ISPs, it should consider building in discounts for larger volumes of usage, "which could promote consolidation."
Len Katz, the CRTC’s vice-chair of telecommunications, said he was "taken aback" by that suggestion at a time when the CRTC is trying to create more competition.
The PIAC representatives responded that they’re proponents of greater competition.
"We’re proponents of greater competition, but we wonder how in the long term all these ‘mom and pop’ type operations will be able to compete with these very, very powerful incumbents," he said. "So what we’re saying to you is we have this expectation that in time, there may be some benefit to having larger entities compete with the incumbents."