CRTC not enforcing internet ruling

A CRTC order issued nine months ago that requires phone companies to give wholesale customers access to faster internet speeds is in limbo as the regulator is still puzzling out whether or not it should be enforced.

A CRTC order issued nine months ago that requires phone companies to give wholesale customers access to faster internet speeds is in limbo as the regulator is still puzzling out whether or not it should be enforced.

"It's still in process," said Denis Carmel, spokesman for the Canadian Radio-television and Telecommunications Commission. "This is linked to so many other things and it's so complex."

The order, issued on Dec. 11, 2008 in response to a complaint from Cybersurf, a small internet provider based in Calgary, required big phone firms such as Bell and Telus to make all the internet speeds they offer to retail customers available to wholesale companies as well, if requested.

Those wholesale companies, which are typically smaller internet providers such as Cybersurf, Teksavvy and Acanac, rent parts of the phone firms' networks to provide their own customers with service.

The CRTC gave the phone firms 45 days from the issuing of that order to file the fees they intended to charge wholesale companies for the faster speeds. The prices were to reflect the actual cost of the service, plus a reasonable markup.

Bell and Telus offer their own customers download speeds of up to 16 and 15 megabits per second respectively, while wholesale companies are typically limited to around five or six megabits.

Tom Copeland, president of the Canadian Association of Internet Providers — a group that represents about 50 smaller ISPs — said several requests have been made by member companies for those higher speeds, to no avail.

"Bell and Telus continue to ignore those requests and outright defy them," he said.

The CRTC has received at least two separate requests to obtain a court order to enforce its decision and is effectively giving Bell and Telus a free pass, he added.

The regulator, however, doesn't want to take the matter to the courts until it rules on requests from Bell and Telus for a stay on the order.

"We'd rather deal with the stay before going into enforcement," Carmel said.

Access to networks ruled crucial

The CRTC has for years given wholesale companies access to phone firms' networks because it has recognized that building such large-scale infrastructure is prohibitively expensive. Parts of those networks were built when phone companies were government-sanctioned monopolies, so they were effectively subsidized by taxpayers.

The regulator has also considered small ISPs an important part of boosting broadband competition, which keeps service levels up and prices low.

Bell and Telus have argued that cable companies such as Rogers and Vidéotron provide more than enough competition, and that wholesale customers should not get access to higher speeds because they are offered over newer fibre networks, which were built through large investments of shareholder capital.

In March, the two companies appealed the CRTC's order to the government and are still awaiting a response. Cabinet has until December to make a decision — the government can overturn the CRTC, ask the regulator to review its decision, or reject the appeals. At the same time, the firms asked the regulator for a stay on implementing its order.

Michael Hennessy, head of regulatory affairs for Telus, told that giving competitors access to newer infrastructure acts as a disincentive to invest in such networks, which are vital to compete against cable companies. The CRTC also erred in broadly applying an order resulting from a dispute between Bell and Cybersurf to all phone companies, he said.

"As we have made clear in our appeal, this issue is of critical importance [to our fibre] investment strategy to close the cable gap. Contrary to assertions of monopoly power, cable actually has 1.4 times the internet [subscribers] we do," he said. 

Telus was astonished that previous rulings and expert recommendations were reversed and "peremptorily dealt with in a complaint process between Bell and a small ISP."

A spokesperson for Bell declined to comment.

Multi-layered battle

Bell, Telus and wholesale ISPs — including MTS Allstream — are locked in battles over various issues. For its part, MTS is appealing a different CRTC decision on what are considered essential wholesale services to cabinet, with a decision due by December.

MTS and Acanac, a small Toronto-based ISP, this week also filed documents with the Federal Court of Appeal to reverse an August ruling by the regulator that would allow Bell to charge them extra for the bandwidth they use each month.

MTS teamed with a number of small ISPs last week to launch the Campaign for Competitive Broadband, an initiative designed to muster public support for the companies' various appeals. The companies say the various CRTC rulings have given big phone companies an advantage in offering internet services and will result in smaller ISPs going out of business, which will lead to degraded services and higher prices.

Chris Peirce, head of regulatory affairs for MTS, said the CRTC is showing a pattern of giving in to "bullying" from the likes of Bell and Telus.

"When that lion roars, they react, yet when we provide them with evidence-based material that is not challenged at any substantive level, we find it remarkably difficult to move them," he said. "They're still apparently bewitched by this notion that competitors should just be allowed to build their own networks."


Peter Nowak


Peter Nowak is a Toronto-based technology reporter and author of Humans 3.0: The Upgrading of the Species.