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ISPs argue CRTC decision kills competition

A group of Internet service providers has banded together to fight against regulatory changes they say threaten their survival and the competitiveness of Canada's telecom industry.

Recent moves by the Canadian Radio-television and Telecommunications Commission have allowed BCE Inc. to increase the amount it charges to smaller ISPs, which lease space on the national incumbent's networks. Bell is mandated by the CRTC to share its networks to ensure choice for consumers. On Tuesday, the ISP group sent a letter to the regulator arguing this will crush innovation and lead to huge price increases for more than two million customers.

With Canadians downloading more data and beginning to stream online video in large amounts, Bell argues that network bandwidth is becoming strained, and more valuable. The CRTC recently allowed Bell to begin charging ISPs by how much their own customers download. In general, the smaller ISPs differentiate their services by offering unlimited packages with no download caps. The companies say the change means that they can no longer do that and that they will have to make expensive changes to the way they monitor customers.

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"Essentially, [Bell]expects us to become their collection agencies for this money, and lose money in the process, or we have to price ourselves out of the market," said Bill Sandiford, president of the small ISPs group and chief executive officer of TelNet Communications in Oshawa, Ont.

Mirko Bibic, Bell's senior vice-president for regulatory affairs, said that smaller ISPs can still be competitive because the CRTC also lowered the monthly fee they are charged to access Bell's network, and that bandwidth is becoming too strained to allow so-called wholesale reseller ISPs to provide unlimited packages.

"It's our investments that make [the small ISP's]existence possible," Mr. Bibic said. "We have to manage pricing in a way that allows us to generate a return."

Several executives of small ISPs argued that Bell's price increases, which vary by province, are not about recovering costs from increased bandwidth use, but are purely about profit and putting competitors at a disadvantage. The group's letter points out that Bell is not charging its own customers for the vast amounts of bandwidth chewed up by its own Internet protocol-based TV service, which travels over the same wires, but would charge ISPs that want to offer such a service - making the effort economically unfeasible.

"Innovation and price discipline will only occur with competition, so these events will only serve to further entrench monopolies," said Rocky Gaudrault, chief executive officer of Teksavvy Solutions in Chatham, Ont. "If this keeps on, goodbye competition. Hello price hikes."

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