The telecom regulator will release a ruling on wholesale pricing in the middle of the first Canadian Internet provider conference in years

ISP conference to be dominated by CRTC decision

Executives and technical staff from independent Internet service providers across the country are gathering in Toronto today for a three-day conference on surviving in an industry that has become dominated by telephone and cable carriers.

But all eyes will be on Ottawa, where on Tuesday the Canadian Radio-television and Telecommunications Commission (CRTC) releases a decision on how those incumbents can price their wholesale access for high speed residential service to the smaller ISPs.

“The decision … is going to be a landmark for this industry,” says William Sandiford, president of the 20-member Canadian Network Operators Consortium (CNOC), the lead organizer of the conference which represents some of the larger ISPs in the country including Distributel Communications of Ottawa, Primus Telecommunications Canada of Toronto and Chatham, Ont.-based TekSavvy Solutions. Sandiford is president of Telnet Communications of Oshawa, Ont.

“For the competitive ISP industry to continue to thrive in Canada, we need a decision that clearly has competition in mind. If that’s the case then business will be absolutely booming.” If not, ISPs will have to consider their options, he said.

Tom Copeland, who owns ISP Eagle.ca of Coburg, Ont. and heads the Canadian Association of Internet Providers (CAIP), a group of about 35 ISPs, said there are some independent providers who are surviving on “razor thin margins.”

“A bad decision will hurt them significantly,” he said, “some to the point where they can’t recover.”

Independent ISPs get their connectivity to the Internet by buying wholesale Internet access. Tuesday’s decision will actually be the second attempt the CRTC has made to decide the proper wholesale billing framework for incumbent carriers when selling connectivity to independent ISPs.

The first was a decision issued last fall and finalized earlier this year that allowed Bell Canada — the largest provider of access to ISPs — to impose what it called usage-based billing (UBB). The commission agreed with Bell that in order to ensure residential subscribers didn’t overwhelm the phone company’s network by taking advantage of the unlimited data plans some ISPs were offering, Bell could change its wholesale price structure to link pricing to the amount of data a subscriber uses Bell had already adopted usage-based billing for its own residential subscribers. The effect would be to eliminate the ability of ISPs to offer unlimited data plans. The decision was similar to one the commission made several years before for cable carriers.

ISPs protested that the decision meant their residential Internet plans would be identical to the carriers’, wiping out a competitive advantage. The commission doesn’t regulate retail Internet pricing, but ISPs said the decision’s effect was plain.

A consumer lobby group, OpenMedia.ca, took up the cry, gathering thousands of supporters. But when Prime Minister Stephen Harper and then-Industry Minister Tony Clement said publicly the government would not allow an incumbent carrier to dictate the pricing of competitors, the commission decided to hold another round of hearings in July.

At those hearings, in July, Bell insisted that some form of user-based billing had to exist. It suggested ISPs pay for the capacity they consume each month, plus a flat rate. CNOC countered by saying ISPs should only pay for the capacity their subscribers consume during peak hours when the network is used the most. Also proposed were models from a group of the biggest cable companies and from MTS Allstream.

The commission has to walk a tight line: The Harper government has set out one boundary – carriers can’t control competitors’ pricing. It has also said on more than one occasion it wants regulatory bodies only to interfere in the market if necessary. On the other hand the commission wants to ensure competition for residential Internet access.

Tuesday’s decision will be only one of two rulings ISPs are anxiously looking forward to.

Independent ISPs have been losing market share since the beginning of the decade, particularly when cable companies began boosting access speeds beyond 5 megabits a second.

An annual industry conference called ISPcon stopped being held. Then late last year CAIP, which represented most ISPs, fractured, with a number of providers leaving to form CNOC. Some felt CAIP was underfunded and couldn’t adequately represent their interests before the CRTC and on Parliament Hill.

But they have come together for this year’s conference. Although organized by CNOC, CAIP was invited to be a co-sponsor.

It opens this afternoon with the Internet Society’s ION Conference, one of a series of technical seminars held by the group in the Americas on issues such as how ISPs should implement protocols such as DNSSEC, IPv6 and other protocols.

The Canadian part of the conference on Tuesday includes panels on whether ISPs should get into the business of offering Wi-Fi and IPTV service to compete with incumbents.

The CRTC decision will be released at 4 p.m.

On Wednesday the conference will look at legal and regulatory challenges facing ISPs.

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