A decision by Canada’s telecommunications regulator that overhauls the way small internet providers pay for bandwidth access could lead to higher costs for Canadians, independent internet service providers warned Tuesday.
However, big telecom companies, like Bell, say the decision means the small independent providers who buy wholesale residential bandwidth from them will actually get a break on the rates they are paying now.
Meanwhile, the CRTC says its decision will help ensure Canadians have a variety of options for internet services and will provice large telecom companies with incentives to keep investing in their networks.
“The net effect of it is there will be no caps, no limitations, no metering of use for retail customers as a result of the CRTC decision,” said CRTC chairman Konrad Von Finckenstein.
The comments came after the Canadian Radio-television and Telecommunications Commission rendered a much-awaited decision on the thorny issue of how independent internet service providers should be charged for the wholesale bandwidth they get from large telecom companies Bell, Rogers, Telus and Shaw.
The CRTC’s earlier decision to allow Bell to introduce a system of usage-based billing for wholesale internet services triggered a political firestorm and a grassroots protest by those concerned it would force small ISPs to fall into lockstep with Bell’s pricing packages.
In a decision made public Tuesday afternoon, the CRTC outlined two pricing systems for large telephone and cable companies to sell wholesale bandwidth to independent ISPs.
Under the first, a capacity-based approach, ISPs will have to determine in advance how much bandwidth they will need to serve their customers. If customers use more bandwidth than the ISP predicts, it will then have to manage its network until it can buy more bandwidth.
Under the second model, large companies can charge independent ISPs a flat monthly fee for wholesale access, regardless of how much bandwidth their customers use.
Rates are based on an individual cable or telephone company’s costs to provide the wholesale service, plus what the CRTC described as a reasonable markup. The CRTC is also allowing telephone companies to change an extra 10 per cent markup for usage and access to faster fibre-to-the-node to encourage companies to continue to invest in that technology.
Under both models, independent ISPs are free to design their own service and pricing plans.
While the decision doesn’t exactly mirror the proposals from any of those who testified during hearings in July, it comes closest to the system proposed by MTS Allstream.
In a second decision, the CRTC set a flat-rate-only model for wholesale business services.
However the CRTC’s ruling quickly came under fire from independent ISP TekSavvy which said it was pleased with the rate structure adopted, but the rates set by the CRTC will increase the cost of internet for Canadian consumers.
“The CRTC decision is a step back for consumers. The rates approved by the commission today will make it much harder for independent ISPs to compete,” said Marc Gaudrault, TekSavvy’s CEO. “This is an unfortunate development for telecommunications competition in Canada.”
Those thoughts were echoed by the Canadian Network Operators Consortium (CNOC), which represents independent ISPs. It said the rate structure will affect prices and make it very difficult for those who provide video over the internet to compete with telephone and cable companies.
“The CRTC decision is only going to entrench the duopoly that exists between the large telephone and cable companies in the provision of internet access services. The rates approved by the commission today do not promote innovation and consumer choice,” said Bill Sandiford, president of CNOC. “CNOC is very concerned about the fragile state of wireline broadband competition in Canada in light of this decision.”
Bell, the company whose initial request to the CRTC triggered a series of events that led to Tuesday’s decision, had a somewhat warmer reaction.
“While we would have preferred the CRTC to accept our proposal, its decision does at least ensure that we can now charge our ISP customers for the network capacity they consume,” said Mirko Bibic, senior vice-president of regulatory and government affairs.
“At the same time, independent ISPs have full flexibility to manage their businesses and set their retail prices as they choose. Independent ISPs have also received significant discounts to the monthly rates they pay us for access to our network.”
Tuesday’s decision is the latest development in a saga that began in 2009 when Bell proposed a usage-based billing plan for small wholesale residential internet service providers that use its network, arguing it needed to prevent congestion.
When the CRTC approved the plan, it triggered a political firestorm in February that prompted former industry minister Tony Clement to announce, via Twitter, that he was sending the CRTC back to the drawing board because the UBB plan didn’t allow for enough competition and consumer choice.
Speaking to reporters Tuesday, Von Finckenstein said Clement was right and the original CRTC decision was flawed.
“Our original decision was clearly not the best one. It was wrong as it was pointed out by a lot of people including Minister Clement. He was right. We have today fixed it. We have made this new decision.”
Von Finckenstein said he believes the new decision strikes a better balance, sharing the risk between the ISPs and wholesale providers, such as Bell and Telus.
New Democratic Party digital issues critic Charlie Angus praised the ruling, but said it will only affect the six per cent of the market occupied by the independent ISPs.
“We’re happy to see the CRTC finally listen to voices against usage-based billing,” Angus said.
Angus said the government should now do more to protect consumers from other unfair billing practices, such as bandwidth caps.
Liberal industry critic Geoff Regan called the decision an improvement, but said he still has concerns about its impact on consumers.
“Liberals continue to believe that an effective wholesale regime that allows smaller internet service providers to lease broadband infrastructure at fair prices is vital for the Canadian economy in the digital age.”
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However, big telecom companies, like Bell, say the decision means the small independent providers who buy wholesale residential bandwidth from them will actually get a break on the rates they are paying now.
Meanwhile, the CRTC says its decision will help ensure Canadians have a variety of options for internet services and will provice large telecom companies with incentives to keep investing in their networks.
“The net effect of it is there will be no caps, no limitations, no metering of use for retail customers as a result of the CRTC decision,” said CRTC chairman Konrad Von Finckenstein.
The comments came after the Canadian Radio-television and Telecommunications Commission rendered a much-awaited decision on the thorny issue of how independent internet service providers should be charged for the wholesale bandwidth they get from large telecom companies Bell, Rogers, Telus and Shaw.
The CRTC’s earlier decision to allow Bell to introduce a system of usage-based billing for wholesale internet services triggered a political firestorm and a grassroots protest by those concerned it would force small ISPs to fall into lockstep with Bell’s pricing packages.
In a decision made public Tuesday afternoon, the CRTC outlined two pricing systems for large telephone and cable companies to sell wholesale bandwidth to independent ISPs.
Under the first, a capacity-based approach, ISPs will have to determine in advance how much bandwidth they will need to serve their customers. If customers use more bandwidth than the ISP predicts, it will then have to manage its network until it can buy more bandwidth.
Under the second model, large companies can charge independent ISPs a flat monthly fee for wholesale access, regardless of how much bandwidth their customers use.
Rates are based on an individual cable or telephone company’s costs to provide the wholesale service, plus what the CRTC described as a reasonable markup. The CRTC is also allowing telephone companies to change an extra 10 per cent markup for usage and access to faster fibre-to-the-node to encourage companies to continue to invest in that technology.
Under both models, independent ISPs are free to design their own service and pricing plans.
While the decision doesn’t exactly mirror the proposals from any of those who testified during hearings in July, it comes closest to the system proposed by MTS Allstream.
In a second decision, the CRTC set a flat-rate-only model for wholesale business services.
However the CRTC’s ruling quickly came under fire from independent ISP TekSavvy which said it was pleased with the rate structure adopted, but the rates set by the CRTC will increase the cost of internet for Canadian consumers.
“The CRTC decision is a step back for consumers. The rates approved by the commission today will make it much harder for independent ISPs to compete,” said Marc Gaudrault, TekSavvy’s CEO. “This is an unfortunate development for telecommunications competition in Canada.”
Those thoughts were echoed by the Canadian Network Operators Consortium (CNOC), which represents independent ISPs. It said the rate structure will affect prices and make it very difficult for those who provide video over the internet to compete with telephone and cable companies.
“The CRTC decision is only going to entrench the duopoly that exists between the large telephone and cable companies in the provision of internet access services. The rates approved by the commission today do not promote innovation and consumer choice,” said Bill Sandiford, president of CNOC. “CNOC is very concerned about the fragile state of wireline broadband competition in Canada in light of this decision.”
Bell, the company whose initial request to the CRTC triggered a series of events that led to Tuesday’s decision, had a somewhat warmer reaction.
“While we would have preferred the CRTC to accept our proposal, its decision does at least ensure that we can now charge our ISP customers for the network capacity they consume,” said Mirko Bibic, senior vice-president of regulatory and government affairs.
“At the same time, independent ISPs have full flexibility to manage their businesses and set their retail prices as they choose. Independent ISPs have also received significant discounts to the monthly rates they pay us for access to our network.”
Tuesday’s decision is the latest development in a saga that began in 2009 when Bell proposed a usage-based billing plan for small wholesale residential internet service providers that use its network, arguing it needed to prevent congestion.
When the CRTC approved the plan, it triggered a political firestorm in February that prompted former industry minister Tony Clement to announce, via Twitter, that he was sending the CRTC back to the drawing board because the UBB plan didn’t allow for enough competition and consumer choice.
Speaking to reporters Tuesday, Von Finckenstein said Clement was right and the original CRTC decision was flawed.
“Our original decision was clearly not the best one. It was wrong as it was pointed out by a lot of people including Minister Clement. He was right. We have today fixed it. We have made this new decision.”
Von Finckenstein said he believes the new decision strikes a better balance, sharing the risk between the ISPs and wholesale providers, such as Bell and Telus.
New Democratic Party digital issues critic Charlie Angus praised the ruling, but said it will only affect the six per cent of the market occupied by the independent ISPs.
“We’re happy to see the CRTC finally listen to voices against usage-based billing,” Angus said.
Angus said the government should now do more to protect consumers from other unfair billing practices, such as bandwidth caps.
Liberal industry critic Geoff Regan called the decision an improvement, but said he still has concerns about its impact on consumers.
“Liberals continue to believe that an effective wholesale regime that allows smaller internet service providers to lease broadband infrastructure at fair prices is vital for the Canadian economy in the digital age.”
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