ISPs upset with latest CRTC ruling

A recent series of regulatory rulings favouring Bell Canada over Internet service providers is prompting ISPs to rethink their dealings with the telco.

This month one of them, Toronto-based Yak Communications, a Toronto-based Internet service and long distance provider, said it is starting to turn its back on Bell in part because it believes rulings by the Canadian Radio-television and Telecommunications Commission (CRTC) will cost it subscribers.

“We’ve seen a gradual progression of tariff changes in relation to Bell last-mile access,” said Edward Antecol, vice-president of regulatory and carrier services for Yak’s parent, Globalive Communications. “It has not been a good trend, so long term we’d like to be rid of it completely.”

Last month Yak began that by shifting from reselling connectivity from another provider – who was buying from Bell – to buying a direct Internet connection from a Tier 1 provider, which means it can by-pass Bell to its business customers. That doesn’t cut the wire completely from Bell, because Yak still has to buy last-mile connectivity to some 10,000 homes in Ontario, Quebec and Alberta from the telco. However, it is looking for ways to get around that as well.

Antecol said Wednesday that Yak might offer residential customers wireless connectivity from Globalive’s sister company, the soon-to-launch Wind Mobile, which would cut the connection to Bell. It would also be a way for Wind to bundle wireless with Internet service. Backed in part with millions of dollars from Oracscom Telecom Holding SAE, Wind says it will start cellular service either late this year or early next year.

“There have been a couple of [CRTC] rulings that have made it difficult for resellers of Bell’s DSL service,” Antecol explained. The most recent, on Aug. 12, gave Bell permission to start charging ISPs for the amount of data residential customers use. Bell has had usage-based billing for its own Internet service for some time, while many ISPs offer unlimited Internet connectivity plans. Now they fear they will have to offer packages with download limits.

Antecol said in July Globalive heard that the CRTC ruling was coming and began buying equipment so it could have a direct Internet connection.

The ruling, to take effect in November, is an interim decision subject to Bell answering a number of questions from the commission. But it is one of a number rulings that ISPs are fed up with. Last November, the commission said Bell could impose its traffic management policies on its ISP customers. Earlier last year the commission also ruled that it won’t regulate the rates Bell charges ISPs for access to its Ethernet network.

Bell says traffic management and usage fees are its weapons against a minority of Internet subscribers who hog bandwidth with peer-to-peer applications like BitTorrent, slowing down speeds for everyone. But ISPs complain Bell is interfering with their businesses and their ability to set different rates from the telco.

The Aug. 12 decision would mean IPSs buying Bell’s Basic 5 Mbps service would have to charge customers extra if they use more than a combined download and upload of 60 megabits of data a month. Many ISPs have no data limits on Basic service.

Meanwhile, a group representing many ISPs is trying to decide how it can fight the Aug. 12 ruling. The decision “caught us off guard,” said Tom Copeland, who heads the Canadian Association of Internet Providers (CAIP). A number of association member buy Internet connectivity from Bell in Ontario and Quebec, and from its Bell Aliant unit in the Atlantic provinces.

“We certainly feel there are a number of problems with the way the commission has approved this,” said Copeland, who runs a Cobourg, Ont. ISP called CAIP may ask the commission to look again at its decision, asking the Federal Court to freeze the ruling or appealing to the federal cabinet. It has already asked the commission to revisit its November decision in part because the CRTC is in the middle of a hearing on its authority over traffic management.

Copeland said the CRTC should have delayed the Aug. 12 decision until the end of the traffic shaping hearing and until the commission has dealt with its challenge to the December ruling. Copeland also objects to ISPs having only 90 days from the Aug. 12 decision to change their billing systems.

“We’re not going to less this pass without a fight,” said Paul Louro, president of Toronto-based ISP Acanac Inc.

For its part, Bell spokesperson Julie Smithers said there is no reason for the telco to wait for the CRTC traffic management report to be issued. In December, she pointed out, the commission said Bell could go ahead. The commission allows cable companies to pass on usage-based billing to its wholesale customers, she added, and Bell shouldn’t be treated differently.

Iain Grant, managing director of SeaBoard Group, a Montreal-based telecommunications consultancy, has no sympathy for the ISPs. “This wasn’t a surprise,” he said of the Aug. 12 ruling. On the other hand, he added, Bell wouldn’t have stood for the CRTC ordering it to change its billing practices in 90 days. The proper strategy for the ISPs, he said, is to appeal closer to the end of the period for an extension.

Meanwhile, he added, the ISPs don’t have to deal with Bell. They could link to the Internet directly, buy connectivity from providers who have wireless Internet connectivity or strike a deal with a cable company.

However, Matt Stein, vice-president of network operations at Toronto-based provider Primus Canada, which connects to Bell in two of the six provinces it operates in, doesn’t believe ISPs who buy connectivity from Bell have many options.

“The economics of [converting to] cable are so unfavourable,” he said Wednesday. “It’s a money-losing proposition.” Primus has tested Wi-Fi-based home and business connectivity, he added, but “we don’t feel the technology is robust enough to consistently offer the bandwidth our customers are looking for.” Primus has been selling wireless since its 2003 acquisition of MIPPS.

“Everybody reselling on Bell’s hands are tied,” he said.

As for usage-based billing, Stein said “there’s nothing we can do to stop that.” What the CRTC has done in its Aug. 12 ruling, he said, “is given Bell licence to dictate the structure of our service and how we offer it to our customers.”