Bell Canada is fighting back against claims that it doesn’t have the right to charge independent ISPs an additional fee per month for using loops to offer DSL services.  Mirko Bibic, chief of regulatory affairs at the telco, tells Network Letter that the company does in fact have the right to use the surcharge to recoup the cost of the underlying facility, but that it is only assessed when the DSL customer doesn’t have primary exchange service (PES) into the home. PES is a home phone number from an incumbent and competitive telephone service provider.  In circumstances where there is PES in the home, there is no additional charge applied to the customer’s bill, regardless of the company providing the DSL service because the cost of the underlying facility is recouped through the monthly telephone bill.  Bibic says the surcharge is only applied to both consumers who don’t have a home phone and to independent ISPs using dry loops to resell DSL to consumers who don’t have PES.  The added fee was implemented so the company could recover the cost of providing wholesale DSL into the home. If Bell isn’t allowed to recover the cost of providing that facility, from where is the underlying loop cost going to be recovered? Bibic asks.  "Somebody’s got to recover it somewhere and in that particular instance we’re saying to the independent ISPs, you’ve got to lease an unbundled loop because the facility needs to get into the home and that cost needs to be recovered. Now they don’t have to pay that independent loop in the case where the customer is a primary exchange service customer because somebody else is paying for it. But in the case where there is not primary exchange service the cost has to be recovered somewhere and we’re saying it’s the same thing," he tells Network Letter.  A group of independent Quebec-based ISPs and the Independent Members of the Canadian Association of Internet Providers (IMCAIP) complained last month after the CRTC approved Bell Canada Tariff Notice 6862 on an interim basis, opening the door for Bell to offer "naked DSL." They said Bell was charging select non-PES customers a surcharge of $10 per month.  IMCAIP also raised questions surrounding service bundling. "IMCAIP believes that the commission should consider whether there is a need for Bell Canada to comply with the commission’s bundling rules when it combines Category 1 competitor service (i.e., an unbundled local loop) with a forborne telecommunications service (i.e. Internet access service," the association writes.  The independent members of CAIP further stated that "the commission must ensure that Bell Canada does not use forbearance of a retail service (I.e. Internet access service) as a method to ‘re-price’ a monopoly supplied facility, such as unbundled local loops. If Bell Canada is permitted to do indirectly, that which it is not permitted to do directly, the impact on all competitors could be devastating." Writing on behalf of the Coalition of Quebec ISPs, AEI Internet says the surcharge being applied by Bell is further squeezing prices and making it very difficult to compete. "Coalition members propose that the commission order Bell Canada to waive charging Coalition members an extra surcharge to recover the costs of its loops since charging anything would further aggravate the price squeeze that is currently prevailing in the market to the point of endangering the financial health of Coalition members," the company writes. While no hard facts were available to determine the number of households in Ontario and Quebec that don’t have primary exchange service, it is widely believed to be quite low. Canadians cutting cord – those who don’t have a landline, opting instead to use their cell phone as their primary number – is estimated to be around 3%. Naked DSL, says Bibic, is supposed to enhance competition in the market. "(The offering of naked DSL) is an attempt by Bell to enhance competitive options for consumers, and hence indirectly, for independent ISPs. It’s what the industry wanted. It was an issue in the VoIP hearing. We came to the table and we did it. It’s a perfectly rational position (to want to recoup the costs of offering it)," he says.