Canada needs net integrity

Internet telephony provider Vonage Canada recently stepped up its campaign to have the Canadian Radio-Television and Telecommunications Commission (CRTC) strike down a $10 monthly fee that Calgary-based cable and broadband provider Shaw Communications recommends Vonage users pay. Shaw says the fee will ensure Shaw broadband subscribers who use Vonage will get good quality of service (QoS) on their voice calls. The unspoken, but implied, flipside of Shaw’s argument is that users who don’t pay the fee won’t get adequate call service integrity.

Vonage labels Shaw’s fee a “tax.” While it isn’t technically a tax, there are plenty of reasons the CRTC should toss out Shaw’s scheme. For starters, there’s no way of knowing whether subscribers are getting anything for their money. Shaw’s promising to implement higher levels of QoS, but it’s almost certain Shaw won’t allow any third party to monitor Shaw’s network to ensure subscibers are actually getting higher QoS. Also, how can anyone be sure Vonage subscribers not paying the fee will suffer?

Another solid reason for the CRTC to quash Shaw’s proposal is the fee implies that without safeguards, Vonage’s voice service isn’t up to par with other telephony services. Since Shaw’s a cable provider, this might not seem like a problem, until one considers that Shaw has a cable telephony service with more than 20,000 subscribers, making Shaw a direct competitor to Vonage.

Free market enthusiasts will no doubt claim all government regulation is bad and if Shaw, as the owner of the network that Vonage’s service runs over, wants to recommend a surcharge, it should be allowed. In a free market, the fee wouldn’t be a big problem. Shaw’s competitors could either decide to implement their own fees or differentiate themselves from Shaw by having no fees. The problem is the idea of a truly free, competitive market in telecommunications is a pipe dream. Shaw owns the lion’s share of the broadband market in Western Canada, so there’s not much competitive pressure on the company.

That’s not likely to change any time soon. Building telecom networks requires massive amounts of capital and time. Laying fibre is also disruptive and it’s in no one’s interest for streets to be dug up on a semi-regular basis so new providers can install their networks. That’s why the CRTC encourages existing network providers to share their networks with non-network-based outfits, like Vonage. And that’s why the CRTC needs to put a stop to Shaw’s recommended fee.

If the CRTC doesn’t stop Shaw now, Canadians and non-network-based service providers will undoubtedly get hit with more of these fees in the future and the idea of affordable broadband for all, which Canadian governments at various levels are keen to encourage, will wind up in the dustbin.

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