ISPs accuse Bell of undercutting prices and sharing customer information

A group of independent Internet service providers is accusing Bell Canada of predatory pricing, saying its low-cost introductory offers for high-speed access are unfairly crippling small competitors. In a battle that has now made its way before the CRTC, Bell is quick to dismiss the complaints as "vague" and "misleading". It also warns that raising its prices won’t help small ISPs as much as it will the cable industry. On Aug. 15, the Independent Members of the Canadian Association of Internet Providers (IMCAIP), a sub-group of the Canadian Association of Internet Providers, took its case to the commission, alleging that Bell Canada, Bell Nexxia and Bell ActiMedia are undercutting prices to the detriment of the independents. Bell and its partners are following "a concerted strategy on the part of the respondents to completely dominate this segment of the market," IMCAIP’s Part VII application states. "This strategy, which has both a pricing and non-pricing component, is eroding the applicants’ base of dial-up customers while at the same time preventing the applicants from mounting a competitive response because they cannot provide a residential DSL service at a rate which matches the predatory rate that has been established by Bell Canada’s Sympatico affiliate." Predictably, Bell denies the accusations, saying it is simply reacting to market conditions. In an interview with Network Letter, Bell’s assistant general counsel says even if the CRTC sided with the ISPs, he doesn’t see how it would help their business. "All it will do is penalize Bell and the ISPs that have brought the application will still have to deal in the marketplace with the cable companies," says David Elder. He notes that Bell is responding to similar promotions in the market for cable modems, and that if the ISPs win this battle, "all that’s going to happen is we are going to lose customers to cable and so are the ISPs, unless they’re prepared to make the same offer." Initially the ISPs were upset that Sympatico charged its retail customers much less than the wholesale price assessed on Internet companies. "There’s no way that independents can offer a service at $29.95 themselves based on the wholesale rate that they have to pay," CAIP president Jay Thomson told Network Letter. "So the allegation is Bell must be doing something internally to cross subsidize its product with its monopoly revenues, something that independents can’t do." The ink was barely dry on the Part VII when Sympatico cut its retail price further, from $29.95 to $19.95 for new high-speed customers. Existing clients pay about $40/month for the service. Bell fired back Aug. 31 with a harshly worded response that questioned the association’s version of the facts. "Once again, IMCAIP has been, at best selective in its presentation of the facts upon which it relies, and at worst, deliberately misleading in its request," the telco’s chief regulatory officer Sheridan Scott writes to the CRTC. In a letter filed three days earlier, Bell asked the commission to deny the ISPs’ request for an expedited review, saying not enough information is available for Bell to respond, or for the CRTC to make an informed decision. "The companies have no objection to the commission giving timely consideration to the IMCAIP application," Scott writes, "provided that the application and its factual basis is well understood, that the companies are given an adequate period of time to respond and that there is a reasonably complete record upon which to base a commission decision." Scott also explained that the new pricing is a limited-time promotion, not a permanent reduction. "The offer is available only to Ontario residents and is not available to existing subscribers. The details of this promotion have been widely publicized through advertising and the bell.ca web site, and have been the subject of several media stories. IMCAIP was well aware that this was a promotion of limited scope and duration, yet chose to omit these important details from its alarmist letter." Is Nexxia sharing info with Bell? The ISPs who utilize Bell’s service actually make their arrangements with Bell Nexxia, the conglomerate’s broadband arm, rather than Bell Canada or Sympatico. CAIP asserts in its Part VII that Nexxia does not have a carrier services group (CSG) that would mandate confidentiality rules that regulated carriers must follow. "There’s allegations that Nexxia, the wholesale provider of the service, is sharing confidential customer information with Sympatico on the retail side," Thomson told Network Letter. "There’s no customer service group in place because Nexxia isn’t regulated and this means that this kind of information can be shared to the competitive detriment of the independent." The CRTC filing expands on this allegation. "The Independent Members of CAIP are aware of several instances where certain of their members have placed orders for DSL services with Nexxia on behalf of specific end-user customers (both business and residential), only to find out that these very same customers were then approached by Sympatico or Bell Canada employees and offered high speed Sympatico services at greatly reduced rates and/or with other added discounts or signing ‘incentives’," the application states. "That’s absolutely false and we’re not sure where they’re getting that information," says Elder. "They have since provided an abridged version of that but we still can’t really make heads or tails out of it. There is a CSG that operates for all the wholesale customers, so there are tight internal firewalls and there isn’t information that gets shared from the wholesale group with other parts of the company." Elder is an expert on the issue of confidentiality and sharing of information. Last November, Bell filed its own Part VII with the commission seeking removal of restrictions on passing data between corporate partners (NL, Dec. 20/00). The CRTC has yet to issue a decision on the application.

ISPs accuse Bell of undercutting prices and sharing customer information

News | September 11, 2001

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