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Usage-Based Billing

Software glitch triggers inflated data usage for some Bell customers Add to ...

Talk about bad timing.

The Bell Canada software that helps customers calculate how much bandwidth they've used each month has gone offline in the middle of a national debate over Internet pricing.

As the furor grows over so-called usage-based billing -- a regulatory change by the CRTC that would allow larger providers to charge per-byte prices to small Internet providers that lease space on their networks -- the tool that allows Bell's own customers to calculate their usage has been taken down.

The Canadian Radio-television and Telecommunications Commission, the federal regulator, has been at the centre of a controversy over Internet billing. Federal politicians, from Industry Minister Tony Clement and the Prime Minister to opposition politicians, have condemned a recent ruling that was leading smaller providers to phase out their "unlimited" download plans. The CRTC has promised a review, but Mr. Clement has said he will overturn any ruling that comes back in a similar form.

A Bell spokesperson confirmed the company's software, which was provided by an outside vendor, has been pulled offline because of glitches. As they test the fix, the service remains offline but could be operational by as early as this week, the spokesperson said. Although Bell is not the only company that leases its networks to smaller Internet service providers (ISPs), as it is mandated to do by the regulator, it has found itself central to the debate since so many companies offer service over its vast network.

Some users have reported to media that Bell's usage calculator, which allows Internet customers to ensure they don't go over their monthly download limits and trigger charges that can be as high as $2.50 per gigabyte, was registering faulty numbers -- pushing them over the limit when they hadn't downloaded much.

The original notification on Bell's website informed customers the tool had been disabled because of "an issue that may cause internet usage shown on this site to be overstated in some cases." However, by Tuesday night, Bell changed the message slightly, replacing the word "overstated" with "incorrect."

The Bell spokesperson said the glitch did not apply to Bell's large contingent of DSL (digital subscriber line) Internet customers, only to their Fibe and broadband services; only customers in Ontario and Quebec were affected. Bell will be contacting those who have been affected, but the spokesperson said anyone with concerns should contact the company.

On Thursday, Bell CEO George Cope said the software glitch had affected around 2,700 Internet customers. He mentioned the number on a company earnings call with financial analysts on Thursday morning, when a couple of analysts asked questions about whether the usage-based billing debate could have a financial impact on the company.

At the same time, Shaw Communications, a cable provider based in Calgary, announced on Tuesday that it would hold public consultations on usage-based billing for its own providers, even though the regulatory shift wouldn't affect how they sell Internet access. Shaw's customers have monthly download limits, but are not charged so-called "overage" charges for exceeding their set amounts -- relying instead on a tactic used in the United States, where heavy users who go over are contacted about their contract terms. In the U.S., after being notified, customers who exceed the limit again in less than six months can be booted off.

Dvai Ghose, an analyst with Canaccord Genuity, said on Wednesday that Shaw's move to get ahead of the usage-based billing debate could have wider implications for the removal of "bandwidth caps" in the Canadian telecommunications sector, where monthly download limits have been common since late 2006. In a note to his research clients, Mr. Ghose wrote that such a move could be positive for online video services such as Netflix -- which offer cheaper TV service but use up a lot of data that could trigger extra charges.

"ISP resellers only account for a very small portion of ISP customers in Canada as most consumers get their Internet connectivity directly from their cableco or telco. Consequently, in itself, the issue of wholesale usage-based billing is not particularly material for equity investors in the sector," Mr. Ghose writes. "However, we wondered and continue to wonder whether the outcry on wholesale usage-based billing would lead to consumer demands for the removal of usage based billing for retail customers as well, especially as the vast majority of U.S. cablecos and telcos offer unlimited Internet usage at a fixed monthly price. Shaw's announcement (on Tuesday) suggests that this may be the case."

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