Quebecor Media Inc.’s Vidéotron ltée subsidiary is challenging the CRTC’s decision to allow Bell Canada to price its IP telephony service differently in Ontario and Quebec. The company filed two appeals late last month asking the commission to revoke approval of Bell’s Digital Voice tariff.  On October 27, Vidéotron submitted an application noting that Bell was illegally restricting the availability of its IP telephony service to residents of Montreal. The Quebec cableco wants the CRTC to immediately revoke tariff approval. Bell announced in an October 25 news release that it has started offering its Digital Voice service to residents of the Greater Montreal Area – a move Vidéotron says is illegal because ILECs aren’t allowed to target service this way.  Highlighting a passage from the pricing approval decision (Telecom Decision 2005-62), the CRTC indicates that the service must be made available to all customers in all of Bell’s serving territory, not a select area: "The commission considers that Bell Canada’s proposal would therefore not permit it to target small geographical areas within rate bands…" More important is an application Vidéotron filed on October 31, requesting the commission review and vary 2005-62 because it made an error of fact in characterizing Bell’s Digital Voice service as a Voice over IP (VoIP) service. Vidéotron says an access dependent VoIP service requires a broadband connection and voice adapter over which telephone calls can be made and received. Bell’s digital voice service doesn’t. It should be considered primary exchange service (PES) and therefore regulated as such, Vidéotron argues. Vidéotron points to Bell’s own tariff notice as evidence the service is not VoIP. "Bell Digital Voice allows users to originate and receive calls from the PSTN. Bell Digital Voice does not use a customer premises-based voice adapter; to improve reliability, the analogue to digital conversion is central office based," reads Bell’s tariff notice. Writes Vidéotron in its application, "This is precisely what is done with Bell’s primary exchange service…From a voice transmission perspective, there is simply no difference between Bell Digital Voice and PES." The company believes the commission’s assumption that the Bell Digital Voice offering is a VoIP service is wrong because it "relies on a standard telephone and on the existing narrowband analogue connection between a customer’s premises and the Bell central office." Therefore, Vidéotron submits, this results in an error of fact in the CRTC’s determination and "warrants a review of the decision and withdrawal" of tariff approval.  While Vidéotron has signaled its dissatisfaction with the commission ruling by launching an appeal of the decision, other competitors are equally unhappy with the ruling.  "Our feeling is it’s a bit of a hasty decision," says Rob Warden, VP of residential marketing for Primus Telecommunications Canada Inc., who adds that it doesn’t seem in step with the commission’s decision to regulate VoIP the same way as traditional local. "It’s a little bit of an about-face. I thought it came from extensive lobbying for some restrictions to be lifted, and I am a little surprised with the way went on this."  Chris Peirce, executive VP, government and regulatory affairs for MTS Allstream Inc., echoes Warden’s statement. "I think is quickly hollowing out the value of the VoIP decision," he says. "That was a well articulated and reasoned decision that was, to our mind, standing on pretty firm ground. Now that ground is slowly being taken away, shovel-full by shovel-full, by these decisions that give Bell the effective ability to operate in a less and less regulated fashion with respect to a market that it still clearly has a stranglehold on."  The ruling will allow Bell to price its Digital Voice service differently with respect to provincial boundaries. They are restricted to offering one rate to all bands in Quebec, and another to all bands in Ontario, preventing them from de-averaging rates within certain areas of either province. But as Peirce points out, the Quebec City-Windsor corridor represents both the economic heart of the country and of Bell’s market, regardless of provincial boundaries.  In spite of any immediate impact, the competitors are more concerned about the future. "The more exceptions that could be made, the more ability it will give the incumbents to hang on to their 90-plus-percent share of the local market," says Warden. "As exceptions start being made that can become a bit of a slippery slope."  Peirce believes that it speaks directly to the aims of the CRTC: "While you get these big-picture decisions, or these big-picture proceedings, that seem to have a commission that is prepared to recognize market power and deal with it, you get these when-the-rubber-hits-the-road decisions that continue to give, in very prompt fashion, the increased ability to Bell to target ."  Instead of granting small freedoms to Bell, the competitors would rather that the commission wait to deregulate until competition reaches the criteria established for forbearance. Both MTS Allstream and Primus have similar theories on why the CRTC approved this application. "They’re afraid of Bell," offers Peirce, "and it’s a pattern of behaviour that we’ve seen from the commission before. They respond to public criticism, especially when it comes from one of the most powerful economic forces in the country, which is Bell Canada." He adds that the commission could be granting these freedoms to Bell as a way to keep the government from intervening on the deregulation issue, thereby diminishing the CRTC’s authority.  Continues Warden: "Bell is lobbying pretty hard to have more flexibility so they can hang on to as much of their local market share as possible." It’s this notion – the need for incumbents to maintain their dominant place in the market – that makes the decision even harder for the competitors to swallow. While Primus and MTS are taking a ‘business as usual’ approach following this ruling, they are not happy with what it says about any effort to bolster competition. "In our mind, what the government and the regulators should be concerned about is nurturing and facilitating broad-based competition," says Peirce. "They should not be worrying that the large incumbents are kept whole. These guys are more than whole and are more than capable of taking care of themselves."  He continues, "If you think that your paramount concern is to, as quickly as you possibly can, give the party with 100% of the market, or a diminished 95% share, greater flexibility, you’re looking through the wrong lens."