Bell and CAIP: the saga continues

Bell Canada and the Canadian Association of Internet Providers (CAIP) have been butting heads again, this time involving Bell’s wholly owned subsidiary Bell Nexxia.

Bell Nexxia is Bell Canada’s new national broadband company (“Bell winds its way westward,” NWC, Feb. 26, 1999, page 1). Nexxia issued a press release in February detailing a deal with Prism Communication Services Inc. (formerly Transwire Communications) of New York City. The five-year deal has Nexxia providing connectivity, Web design, and technical and project management services for Prism’s new high-speed Internet service, called “Red,” for small- and medium-sized businesses.

The latest problem with CAIP erupted because of a statement in the release saying, “Prism plans to extend this service to…Montreal and Toronto in April.”

Ron Kawchuk, president of CAIP, explained his group was concerned Bell was offering services to an American company that won’t be available to Canadian ISPs until June or July.

“They promised an April delivery in their press release…They called everyone and said it was a terrible mistake and they didn’t really mean April for [Prism], however, they have yet to correct their Web site,” said Kawchuk in an interview on March 8.

Stuart McLeod, vice-president of Bell Nexxia in Toronto, said the error was not meant as a slight to CAIP or its members.

“We should have been more specific, I guess. Really what Prism is saying there is they intend to start marketing the product in April. As far as Bell Nexxia is concerned, Prism has access to all of these services in exactly the same time frame as the members of CAIP do,” McLeod said.

As for the issue of working with American companies, McLeod said, “Nexxia is not only intending to do business nationally in Canada, but also intending to do business in the United States.”

McLeod acknowledged that bringing Prism’s Red services into Montreal and Toronto will mean competition for Bell’s own ISP, Sympatico.

“If you talk to the people in the Sympatico arena, they probably think we’re nuts,” McLeod said. “But at the end of the day, this is going to happen whether Bell Canada or Bell Nexxia provides the service and support or not. So we figure we want to participate in the expansion of these products and services even if we are going to be competing with other Bell groups.

“[Prism is] a large customer of Nortel in the United States for 1-Meg Modem technology for ADSL. They were on the verge of launching their ISP-related services in Manhattan, and they called upon Bell Canada for our help to get their service launched,” McLeod explained.

McLeod said Nexxia was designed to address the broadband and IP network needs of Bell’s top 300 Canadian customers, but explained the subsidiary will provide more than just broadband services, as it will with Prism.

“While we are focusing our new services on broadband and IP communications technology, we also assume from Bell Canada and the Stentor companies all of the communications requirements of these top 300 (customers), so we will be dealing with voice and all existing data services as well,” McLeod said.

In this regard, Nexxia has taken on another CAIP issue in terms of the pricing of ADSL. CAIP has an ongoing proceeding before the CRTC over the issue of Bell offering ISPs what CAIP said was an unfairly high rate on ADSL lines (more than $150) while its Sympatico subsidiary has been allowed to assume a debt at that rate and offer ADSL to customers at $39.95.

Nexxia issued a statement on March 5 to address this pricing issue. The release said ISPs will be able to get ADSL lines for “as low as $24 per month per access on a wholesale quantity basis.”

“It’s certainly a step in the right direction. [The rate] varies between $24 and $33,” CAIP’s Kawchuk said.

But Kawchuk said there are still problems and inequities to be resolved between the two parties, especially the fact that Sympatico has been able to offer ADSL at the lower rate since December.

“[Bell is] really good at spins. It almost looks like a victory on our part to have now got something six months later at a price that we knew we could have had in December,” Kawchuk said. “Sympatico has been out there selling since December with nobody else being able to offer a service. I think that might be called undue preference.”

Kawchuk said the $24 monthly rate is a good improvement over the previous offer of $160 to $200 per access line, but that it’s still going to be difficult for ISPs to turn a profit on ADSL. He said they have to charge $39 to compete with Sympatico, but the $15 dollar difference will be overshadowed by the other costs of an ISP’s business. He said after the $24 to Bell, there’s still at least another $24 of cost, plus the cost of the Nortel 1-Meg Modem.

“Right now, they’re giving the modem away for free to Sympatico customers. The ISPs have to make an arrangement to buy it or sell it to the customers,” Kawchuk said.

He said the pending proceeding before the CRTC still has unresolved issues, particularly CAIP’s request to have Bell’s Internet business regulated.

“Bell doesn’t want to be regulated. I don’t think we really want Bell to be regulated, because there are certain issues with that. But if that’s what the Commission needs to do to bring this gorilla under control, then that’s what we want them to do,” Kawchuk said.