Bell to put ‘thinking cap’ on to look at usage-based billing options

OTTAWA—Bell Canada is considering the implementation alternatives to the CRTC's usage-based billing policy, Mirko Bibic, Bell's senior vice-president of government and regulatory affairs, told the House industry committee Thursday. “There are a lot of procedures that are going to go forward on that separate CRTC process,” he said, referring to the CRTC’s review of its usage-based billing policy for wholesale Internet access services. “We're going to put our thinking caps on as well and see if there isn't a different way to address this, but we believe fundamentally that what is ultimately ruled on by the CRTC has got to accept the principle that those who use the most, pay the most.” Facing a growing public outcry over usage-based billing, the CRTC announced last week it would review certain aspects of its policy, which was originally set to come into force March 1. The CRTC has said the review is self-initiated, but it remains under pressure to come back with a different policy that will satisfy the incumbent telcos, small ISPs, and the Conservative government. Failing to do so, Industry Minister Tony Clement has said the government would overturn the policy. The House industry committee is also now reviewing the policy in a separate study. On Tuesday third-party Internet service provider (ISP) TekSavvy Solutions Inc. told the committee the commission's policy amounted to a form of “price-fixing” by Bell. But Bibic told the committee Thursday that usage-based billing in some form is a necessary measure to ensure all customers are treated equally. “From a billing perspective, we believe there should be no discrimination between retail and wholesale customers. All customers should be treated in the same way, and usage-based billing is the fair way to price Internet use,” he said. “Simply put, the heaviest users should pay more than those who use less.” Bibic said it's false that usage-based billing would prevent third-party ISPs from differentiating their products, noting that they would receive “significant” regulated discounts under the CRTC’s policy. But small ISPs argue otherwise. The CRTC discount is set at 15 per cent off retail prices, and many third-party ISPs have already issued customers letters notifying them of the introduction of usage caps and a revised pricing scheme similar to that of Bell's. Third-party ISPs also argue that Bell has failed to prove that the resellers’ customers congest Bell’s network—one of Bell's main arguments in favour of usage-based billing. In a brief interview following the hearing, Bibic said all of the traffic generated by third-party ISPs must flow through Bell's network. “If you are a TekSavvy customer and you live here, you would be riding on the Bell network all the way down to where their location is, and your traffic is co-mingled with my traffic,” he said. “Wholesale ISP end users are 15 per cent of the end users on our network, but they represent 30 per cent of the capacity used on our network. You can see that they use disproportionately more bandwidth than our customers.” Bibic told the committee that Bell makes significant investments to prevent congestion and ensure its network delivers optimal services to its customers. Shaw Communications Inc. also appeared before the committee Thursday to discuss network investment. Ken Stein, Shaw's senior vice-president of corporate and regulatory affairs, said Shaw has spent over $7.3 billion since 2000 and continues to invest in its network as consumption for online video grows. “Network congestion slows speeds for all customers on the network. To address this we must invest in advanced technologies,” he said. “These are costly solutions.” Stein said demand on Shaw's network increased by 100 per cent last year. Faced with this growing demand, he said it is critical that Canada thinks carefully about how to implement a consumption policy. On Tuesday Shaw announced it would hold a public consultation with its customers before implementing usage-based billing measures. But Jean Brazeau, Shaw's senior vice-president of regulatory affairs, said that in light of the heavy costs of investment, the CRTC's approach to usage-based billing is fair. “We believe that the CRTC's approach to usage-based charges has appropriately balanced the needs of small ISPs and telecommunications and cable ISPs,” he told the committee Thursday. “We require the market-based tools necessary to manage the network for the benefits of all consumers and to sustain broadband investment.” Following Bell’s presentation, Liberal MP and committee vice-chair Dan McTeague entered a heated exchange with Bibic about the company's position. McTeague said Bibic was “throwing numbers around,” referring to the amount of customers affected by the policy. Over the course of the week Bibic has said usage-based billing would affect two per cent of Internet customers, but during his appearance before the committee he referred to one per cent. Bibic said he did not have a precise figure, but said it is very small. But McTeague continued to press Bibic, saying that Bell is using usage-based billing to suppress competition and fund its network investments. “How is possible that you can come here today to defend charging data over 25 GB when it has no bearing on the costs your company has to incur to provide that service,” he said. “Coming from a 120-year advantage, I find it a little rich for you to be here to say that somehow you need these kinds of changes that are onerous not only for consumers, but that will ultimately stifle innovation. That's a charge, Mr. Bibic, and I want you to answer it.” Bibic said that if Canada wants to position itself as an innovator, companies like Bell, Shaw and Rogers Communications Inc. must be in a position to make major network investments. When asked whether Bell would be willing to adopt different compensation models for usage-based billing, Bibic said the company would participate in the CRTC's review but would stick to the principle that heavy users shouldn't subsidize light users. On Tuesday consumer group the Public Interest Advocacy Centre (PIAC) said an option would be to impose extra charges on consumers only when they use the network during peak times. But Stein said networks weren't built in a way to bill users based on their consumption at different times of the day, and that imposing such a model would be “draconian.” The Canadian Network Operators Consortium Inc. (CNOC), Union des consommateurs, the Canadian Association of Internet Providers (CAIP), MTS Allstream Inc. and OpenMedia.ca, which all oppose usage-based billing, also appeared before the committee Thursday. MTS Allstream's presentation echoed previous arguments from TekSavvy, arguing that usage-based billing amounts to price-fixing because Bell's retail prices, which set the basis for wholesale billing, are market-driven and unregulated. CNOC said prices for wholesale customers should be based on the actual cost of delivery, not retail prices. kfournier@thewirereport.ca

Bell to put ‘thinking cap’ on to look at usage-based billing options

News | February 11, 2011

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