Law Times

lAw Times • April 18, 2011 FOCUS Bell's about-face not enough: group BY ROBERT TODD Law Times wholesale Internet customers has failed to silence those who be- lieve Canadians continue to pay too much to get online. "It's good to see that Bell is B willing to move and it's good to see that they have basically admitted that the fees that they were trying to apply to wholesal- ers and indie ISPs was inappro- priate," says Steve Anderson, ex- ecutive director of the non-profi t group OpenMedia.ca. Yet Anderson says Bell's new approach, which revolves around aggregate usage pricing, isn't that far off from its original usage- based billing proposal. "It's just kind of a diff erent way of going about it," says An- derson. "Our view is that while it's a step in the right direction and does bring down the costs so they're a little more reason- able, it's not nearly enough. Th ey're taking a very small step in the right direction." Bell appears to have caved to a public outcry — and a pledge from the minority Conservative government to block the plan that would have seen higher pric- es for consumers — following the CE Inc.'s decision to drop a controversial plan to change the way it charges announcement of its intention to impose usage-based billing on wholesale customers. Th e new approach will see the telecom- munications giant aggregate the amount charged to wholesalers that lease bandwidth on its net- work based on the total amount of data they use. "By enabling wholesale ISPs to purchase network capacity based on overall volume of usage rather than on a per-customer basis, the new model gives wholesale ISPs greater fl exibility to off er service packages based on their own business objectives and require- ments," Bell said in a statement. Anderson points to recent studies suggesting it costs large telecommunications compa- nies about one cent to provide a single gigabyte to wholesalers — or about eight cents per giga- byte after accounting for infra- structure and other operational costs — yet it intends to charge about 30 cents per gigabyte. "Th at margin is inappropriate and it stifl es independent ISPs," says Anderson. "But more impor- tantly, it makes it really clear how ridiculous the retail prices are. Rogers is talking about charging upwards of $5 per gigabyte." Th ese pricing markup levels appear to be evidence of an anti- competitive marketplace, he says. While they don't constitute price CRTC rulings lauded Continued from page 9 Exempt transmission appa- ratus has traditionally includ- ed things such as routers and network control devices that foreign companies are able to operate under the Telecommu- nications Act. "So in a way, this deci- sion was about what is opti- cal networking equipment," Gates remarks. "Is it exempt transmission apparatus or is it something more than that?" He adds that the CRTC ap- pears to have realized it would have disrupted the market if it had restricted foreign companies from leasing and using their own equipment to light dark fi bre. Having said that, Gates wouldn't have been surprised if the regula- tor had taken the opposite view. "In the current environ- ment, had they felt that was the right decision, they would have reasoned their way through it," he says. "Th e CRTC right now is, I fi nd, reaching very clear, well- considered, rational decisions. It has taken a very even keel and [is] being both reasonable and rigid when it needs to be in terms of how it's dealing with industry. I think it's never been stronger in that regard." Meanwhile, Gates says the question for the telecommu- nications industry now is how many other foreign companies will change their approach to lighting dark fi bre as a result. He notes it makes sense for companies to use their own infrastructure to light dark fi bre because it aff ords far more con- trol over service. "You're bringing in your own optical equipment and you're taking these unlit glass wires and you're eff ectively creating a virtual network over them," Gates explains. As the U.S. telecommunica- tions industry catches wind of the CRTC's decision, it's prob- able that more companies will take the hands-on approach. "Canada is a very attractive market for U.S. communications companies because of Toronto, Montreal, Vancouver — all of the large metropolitan areas," says Bill Hunt, special counsel to Kelley Drye & Warren LLP in Chicago. He adds that those markets are also attractive due to their proximity to large U.S. cities, which makes it that much easier to expand networks. According to Hunt, the U.S. market views the CRTC's dark- fi bre ruling as a positive devel- opment but it continues to look for further loosening of foreign- ownership restrictions. Some believe a federal Conservative government, if voted in follow- ing the May 2 ballot, could take steps to make that happen. "If the Conservatives win and they get a majority, maybe they feel they can move forward with liberalizing the ownership restrictions," says Hunt. "If not, at least this new interpretation gives people the opportunity to at least operate on dark fi bre that they've purchased." LSUC_LT_Apr18_11.indd 1 www.lawtimesnews.com 4/13/11 11:48:06 AM fi xing, Anderson says it's clear that large ISPs have established price parity. "It's in their interest not to drive down the prices," he says. While the immediate conse- quence of this is higher prices for Canadian consumers and independent Internet service providers in comparison to sim- ilar services in other countries, Anderson believes the issue runs much deeper. He says it makes it diffi cult for online in- novators in Canada to succeed when they're competing against individuals and organizations in other countries that benefi t from cheaper, faster, and more open Internet services. "Th e tech industry often com- plains about there being a lack of venture capital in Canada for startups," says Anderson. "We're not going to see that change while we're falling behind on Internet access speed and costs." As a result, Anderson and OpenMedia.ca have proposed a few ways to improve Canadians' Internet experience: • Independent ISPs should pay for the cost of delivering the service with a 10-per-cent markup to help invest in the future of the network. • Smaller players should have Pensa LLP in London, Ont., agrees with the idea that Internet service must remain accessible if Canada is to continue to compete in the global marketplace. "Th e future of not just Can- ada but the world is digital and online," he says. "For Canada to continue to grow and for indi- viduals and business alike to be able to just keep up, let alone innovate and have a chance of getting in front of anything, the ability to connect to the Inter- net is absolutely crucial." Th e Canadian Radio-televi- Internet accessibility is key for Canada's global competitive- ness, says David Canton. the ability to deliver match- ing speeds to those of the big telecommunications compa- nies that should in turn have to give access to the "next generation" Internet to spur competition. • Incentives, such as tax breaks or direct government investment, should be avail- able to smaller ISPs to help them develop their own in- frastructure. David Canton of Harrison sion and Telecommunications Commission will hold a public hearing on July 11 on the issue of billing practices for whole- sale residential high-speed ac- cess services. Parties interested in appearing at the hearing must notify the commission by May 12, and comments must be fi led by April 29. Meanwhile, Anderson and OpenMedia.ca hope to make Internet costs an issue in the federal election. Th e organiza- tion has created a campaign of its own, Vote for the Inter- net, that aims to create a bloc of voters pledging to support candidates who have vowed to take action on the issue. PAGE 11

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• Alleged Discrimination
• Troubled System
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