Sidebar: Significant 2009 regulatory rulings


—-Traffic management:
The commission ruled that carriers are free to slow Internet traffic to certain subscribers to manage their networks, and by extension the networks of those who buy access from them. But there are limitations. They can’t block access to content without the OK of CRTC, which would only grant it in “exceptional circumstances.” Non-time sensitive traffic can be slowed, but if it controls traffic, then prior approval is needed. Time sensitive audio-video can be slowed, too, but when noticeable degradation occurs, it amounts to controlling the content and influencing the meaning and purpose of the telecommunications. Therefore prior approval is needed.

Notice of traffic management policies must be given to service providers who buy access, and the carriers’ rules must be explained to the public.

WINNERS: Incumbent carriers, because they can punish subscribers who consume bandwidth by downloading and uploading beefy files, thus slowing the network for others.

LOSERS: ISPs who buy wholesale access from carriers. If traffic from their supplier slows, so they can’t promises faster speeds to their own subscribers. That makes it hard for them to differentiate their service from the incumbents.


—- Foreign control:

While Industry Canada makes sure operators meet statutory requirements before awarding spectrum licences, the CRTC does the same before giving carrier licences. That means both examine whether they meet the standards of the Telecommunications Act. Startup Globalive Wireless Management Corp. was in a bind: While the majority of directors are Canadian, all of its debt and 68 per cent of its equity comes from Egyptian-based Orascom Telecom S.A.E. Globalive officials insisted Canadian management was in complete control. However, the commission said that in addition to the equity and debt, Orascom is the main source of Globalive’s technical expertise and owns its Wind Mobile brand. Therefore, it concluded, Orascom has the ability to determine Globalive’s decision-making.But after Globalive appealed to Ottawa, cabinet said the commission was wrong: The law doesn’t require the CRTC to conclude that a carrier is controlled by Canadians, but that it is not controlled by non-Canadians. Cabinet was satisfied that Globalive isn’t controlled by foreigners, and therefore overturned the ruling. It also said that the CRTC’s decision deprived the country of wireless competition. Cabine also specified that the decision only applies to Globalive.

WINNER: Globalive, which shortly after the decision opened its doors.
INITIAL LOSERS: Incumbent wireless carriers, who now face a well-funded competitor, and the telecom industry, which wonders what the investment rules are.
—–Speed matching
In 2008,Calgary-based Internet service provider Cybersurf Corp. (now called 3web Corp.) applied for an order forcing Bell Canada to let it match any speed the telco offered its own retail customers. The commission agreed, and then in 2009 made it clear that decision applied not only to an incumbent telco’s copper networks, but its new fibre networks as well. But Bell and Telus Corp. appealed to the cabinet, arguing the ruling would be a disincentive to invest in improved networks. In December, cabinet sent the rulings back the commission for a second hearing, asking it in particular to consider the investment argument, as well as whether if there was no speed-matching there is enough competition to protect the interests of subscribers. The week-long hearing is scheduled for May 31.
WINNERS: Initially, ISPs
LOSERS: Initially, incumbents. But they get a second kick at the cat. Will the CRTC back its original decision?
—-Usage-based billing
Bell and its Bell Aliant partner applied to the commission to add new speed options for their own customers, and to start usage-based billing. The new speed options would be up to 2 Megabits per second (for residential subscribers) and 1Mbps (for businesses) over their legacy ATM networks. Almost every ISP in the country opposes the application, because these are speeds they get a lot of subscribers with. Bell says it’s fair because the proposed speeds are consistent with the CRTC’s ruling on speed matching. The commission agrees on an interim basis.

As for usage-based billing, Bell argued that in 2006 it began transitioning its retail (Sympatico) customers to this, and most were on it by end of 2008. As a result it should be able to extend to the ISP wholesale buyers of access. It notes that the commission already approved UBB for incumbent cablecos to sell to third parties. Opponents said it’s anti-competitive and unduly preferential. Commission approved usage-based billing on interim basis to give ISPs time to prepare their customers.

WINNERS: Incumbent telcos and cablecos.
LOSERS: ISPs. Incumbents can force usage-based billing on ISPs, who get a lot of business by offering unlimited service. Now they have one less way to differentiate their offerings from incumbents.


Ethernet/Essential services 
As part of its deregulation mandate, the commission has been looking at what essential service an incumbent telco has to offer competitors. If it isn’t essential, the telco doesn’t have to offer it. In 2008, the commission ruled there’s enough competition in Ethernet services, which carry an ever-increasing amount of IP-based traffic, that in five years they can be dropped as essential services. Manitoba-based telco MTS Allstream, appealed the ruling, arguing the commission erred in assuming that a high incidence of self-supply by competitors proves there are enough alternatives on a national scale for Ethernet services. MTS argued that a competitor will only build where there is a business case. Therefore a competitor would develop its network facilities incrementally as its customer base grows, using incumbent facilities to fill in gaps.

However, citing confidential data provided by providers, the commission concluded that Ethernet access and transport networks have already been duplicated by competitors. The commission believes competitors have sufficent opportunites and incentives to invest in compteting network facilities, so refused to change its mind. Last December the cabinet refused to overturn the commission’s ruling.

WINNERS: Bell and Telus.
LOSERS:  Any other service provider. However, the commission noted that cabinet’s framework for the May 31 speed-matching hearing includes whether that decision creates a disincentive for network investment. As a result, what constitutes an essential service will be opened up again.