Third-party IPTV providers to struggle under usage-based billing, Mediatube says

The CRTC's usage-based billing decision doesn't account for the “last mile” from DSL loops to the customer, which may prevent small competitors from offering Internet protocol television (IPTV) services, says Ted Chislett, president of Mediatube.tv. Mediatube.tv is in the process of applying for a broadcasting distribution licence to offer IPTV. Chislett said in an interview that when companies lease “unbundled loops” from Bell Canada, they won’t be charged on a usage-based billing model. But the loops would reach only about half of Mediatube’s planned customers, Chislett said. Roughly the other half of the customers are further away, requiring the distributor to go through Bell’s wholesale gateway access services, which are subject to usage-based billing. “The bottleneck is that access to the last mile to the customer,” he said. “Competitors need to have access to the underlying bottleneck facilities to … provide service on their networks … As soon as you do that, you're stuck in Bell's throttling, usage-based billing, and other restrictions.” Many small, third-party telco providers rent wholesale access to the incumbents’ DSL networks. Under the CRTC’s recent usage-based billing ruling, Bell can charge third-party telcos a monthly fee for connecting to their network, plus charges based on the amount of data used by customers. The usage-based billing decision could impact IPTV because it consumes comparatively large amounts of data. The Wire Report also hears that Atop Broadband, which recently received a television distribution licence to offer IPTV services in the Toronto area, will now have to adjust its business plans in reaction to the new rules. Atop declined to comment. IPTV has traditionally offered the benefits of lower costs and increased interactivity and portability, but Matt Stein, a spokesperson for the Canadian Network Operators Consortium, said in an interview that those benefits may change under the new ruling. “If you watch an hour of TV over IPTV, you’ve downloaded a gigabyte ... even though you may not have thought of it in those terms,” he said. “So, at two hours a day, you’ve downloaded 60 gigabytes, but your cap is 25. That means an end-user will be paying for an additional 35 gigabytes a month.” Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP), said in an interview that companies planning to offer IPTV will have to review the financial viability of the services under the CRTC decision. “Any of the companies that are developing over-the-top IPTV applications or services are going to have their deployments seriously impacted by the decision,” he said. “Even though UBB is positioned as a wholesale tariff, the commission has approved the rate at the same levels as the incumbent carrier charges their retail customers. How that can be used by a wholesale provider to differentiate itself is bewildering.” Bell spokeswoman Jacqueline Michelis said in an email that that competitors can lease unbundled loops and provide IPTV services “without any extra fees being charged by Bell.” She added that the company supports the CRTC’s usage-based billing ruling because it allows the company to “proceed with wholesale UBB, which is a key economic traffic management practice in an era of heavy bandwidth consumption.” But Stein said the ruling gives Bell an unfair competitive advantage. “When Bell does IPTV, they do not charge for the usage IPTV consumes,” he said. “That same capability is not afforded to resellers and wholesalers.” He added: “I’d say that so drastically changes the economics of offering IPTV so as to make it effectively impossible to deliver IPTV over Bell’s service.” Communications lawyer David Elder, counsel at Stikeman Elliot LLP, said in an interview that Bell could run into problems under the non-discrimination rules in the Telecommunications Act. “It’s an interesting question, and one that hasn’t received any formal consideration from the CRTC,” he said. In a follow-up email, Elder agreed with Bell that the usage-based billing ruling won’t affect IPTV providers that run their own networks, such as “leased local loops.” But he added: “It’s a problem of convergence if a competing IPTV provider has to acquire its network functionality from an incumbent, yet the incumbent doesn’t have to follow the same rules for its retail pricing." news@thewirereport.ca

Third-party IPTV providers to struggle under usage-based billing, Mediatube says

News | 11/25/2010 3:08 am EST

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