CRTC’s usage-based billing proceeding already getting stormy

The CRTC's review of its usage-based billing policy is already getting stormy. A call for comments to determine just the scope of the review, not the policy, has generated nearly two-thousand comments and widespread disagreement among industry players and consumer groups. At issue are what points should be addressed during the commission's review. Some say it should be so large as to examine the regulation of retail prices for Internet users. Others say it should be as limited as how best to ensure that ordinary consumers don't “fund the bandwidth” of the heaviest Internet users. On Feb. 8, the CRTC opened a proceeding to review its usage-based billing decisions for wholesale Internet services due to public, industry and political discontent. The commission gave parties until April 29 to comment on how best to ensure ordinary Internet users don't subsidize the heaviest bandwidth customers, and whether the commission should set a minimum threshold level for the large distributors’ sale of bandwidth to small competitors. The commission also asked whether is appropriate to hold an online consultation and an oral public hearing. But on Feb. 10, consumer group the Public Interest Advocacy Centre (PIAC) wrote to the commission asking that the review also look at usage-based billing in the retail market. The following day, the Canadian Network Operators Consortium (CNOC), a coalition of small ISPs, wrote to the commission to say that the proceeding should be expanded to include a comprehensive review of the regulatory framework governing the incumbents’ sale of wholesale Internet services to small competitors. In light of the requests, the commission wrote interested parties a letter calling for comments on the scope of the proceeding. That request now seems to have created a proceeding inside of a proceeding. “In our view, it is entirely appropriate to question whether UBB has any relation to ISP costs or actual value of the delivered service and indeed, if such billing will retard Canadian competitiveness and the social utility of the Internet,” PIAC wrote in its submission. The group said the commission should use the proceeding to examine whether usage-based billing practices should be applied to retail customers, as is currently the case. The Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), which wrote the commission on behalf advocacy group OpenMedia.ca, supported PIAC's recommendation. Tamir Israel, CIPPIC's staff lawyer, said by phone that the CRTC should look at retail pricing in conjunction with wholesale pricing. If enforced as it exists, the commission's usage-based billing policy would effectively impose the incumbents' monthly retail bit caps on wholesale customers, preventing reseller competitor ISPs from offering unlimited usage plans. “Where they're getting confused is they're trying to have one foot in each bucket. They're saying, ‘This is a traffic management practice, it's addressing congestion, but we're not going to put any limitation on what type of monthly caps the ISPs put in place to address congestion on their networks because that's just a pricing mechanism and we're not regulating pricing,’” he said. “They're going half way.” But on Friday, CRTC chairman Konrad von Finckenstein told The Wire Report that the commission will look at the potential regulation of minimum bandwidth caps. Netflix Inc. told the commission in a letter that the proceeding should be expanded to review the effectiveness of usage-based billing as a retail practice. “It appears that the commission may not have fully considered the potential market distorting and other potentially inefficient economic effects of the incumbents' retail UBB pricing structure, particularly if this structure were passed on to wholesale rates,” Netflix wrote. But Internet services are currently unregulated, and PIAC's request to look at retail billing practices has large service providers up in arms. Telus Corp. wrote in a submission that PIAC's recommendation “cannot be seriously considered.” “Should the commission wish to entertain the notion that retail Internet prices should somehow be regulated, including any restriction on usage-based billing, it can only do so in the context of a dedicated proceeding,” Telus wrote, adding that the current timetable does not allow for a detailed economic study and costing analysis. Cable carriers Cogeco Cable Inc., EastLink Cable Inc., Quebecor Media Inc., Rogers Communications Inc. and Shaw Communications Inc. also told the commission in a joint submission that they oppose PIAC's request. “Direct regulation of retail Internet services in the Canadian market would not be 'efficient or proportionate' nor 'interfere with the operation of competitive market forces to the minimum extent necessary,’” they wrote. Bell Canada told the commission that there must be market failure to warrant the regulation of Internet services. Bell, along with the cable carriers and Telus, also took issue with CNOC's request to broaden the scope of the proceeding. CNOC told the commission the review should touch on all services that incumbent telcos provide to competitors, including the ability of competitors to differentiate themselves and innovate, wholesale pricing, and access to services and facilities. The coalition said the existing framework artificially favours the incumbents and needs review. “If the commission does not ask the right questions, it cannot possibly hope to get the right answers,” CNOC wrote. William Sandiford, CNOC president and chair of the board, said by phone that the coalition's position is in line with a dissenting opinion by CRTC commissioner Timothy Denton published in the commission's ruling on wholesale high-speed access services in August. Sandiford said the commission has failed to give small ISPs the tools to provide competitive services. “That's why we're asking them to take a look at the framework ... for the ability to effectively compete,” he said. CIPPIC supported CNOC's recommendation in its letter, arguing that there isn't enough competition in the Internet services market to ensure fair pricing. Consumer group the Union des Consommateurs also supports CNOC’s position. But the cable carriers said CNOC's proposal would amount to a review of the commission's wholesale high-speed access services proceeding, which the commission completed in August 2010. “If the commission were to accede to CNOC's request, it would be embarking on a path already addressed over the past almost two years by initiating a proceeding that could drag on for years without coming close to addressing the more immediate issues raised in its notice of consultation,” the carriers wrote. Bell said CNOC's request had “little to do” with usage-based billing. SaskTel also opposed CNOC's and PIAC's requests. MTS Allstream Inc. wrote that it agrees with CNOC that a review of the regulatory framework for wholesale services ultimately will be required, but said the proceeding should focus on previous arguments presented by Bell to the commission. MTS took issue with Bell's assertion that its network is congested by the customers of small, competitor ISPs, as well as arguments the company made about the configuration of its network, the nature of its wholesale services, and the relationship between increasing demand and network costs. Parties have until March 28 to submit comments for the review and members of the public have until April 29. Reply comments are due April 29. As of Wednesday afternoon the commission had received 1,842 comments. kfournier@thewirereport.ca

CRTC’s usage-based billing proceeding already getting stormy

News | February 23, 2011

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