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Small-business owners speak out against usage-based Internet billing

Wires connecting servers installed by telecommunications and IT companies in the building located on 151Front Street. Owned by Allied Properties REIT, the place is dedicated to rent space to companies in need of high volumes data storage and traffic. Toronto September 08, 2010. (Fernando Morales/The Globe and Mail)

Fernando Morales/Fernando Morales/The Globe and M

Norm Tomlins's six-person company in Oshawa, Ont., is like many small businesses: Its disparate parts operate via an Internet connection.

His company, Voice Network Inc., installs VoIP (voice over Internet protocol) phone lines and custom designs business software, and has employees scattered across Ontario's Durham Region and as far away as Montreal.

Mr. Tomlins has been swept up in a national debate about Internet usage prices. If a federal regulator has its way, he fears he might have to start dragging his employees into the office, and hiring locally as opposed to seeking the best talent that telecommuting can buy.

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The Canadian Radio-television and Telecommunications Commission issued its decision on usage-based billing on Jan. 25, which allowed large Internet service providers (ISPs) such as BCE Inc. to charge by-the-byte prices to smaller providers who lease space on their networks. Industry Minister Tony Clement, along with the Prime Minister and opposition politicians, have spoken out against the ruling. Amid the furor, the regulator's chairman has said he will review the decision.

Even though Mr. Clement has promised to overturn the ruling, CRTC chairman Konrad von Finckenstein says he stands by the principle of billing Internet customers by use.

For many small Internet providers, that would mean an end to popular unlimited plans that allowed them to differentiate their service from Bell's - and pull in customers intent on making their businesses more productive. Now, the price of their Internet service could go up. And those businesses using up a lot of bandwidth by transferring large files and telecommuting, such as Mr. Tomlins's Voice Networks, could be in for a harsh, new reality.

"Do we pay extra, or do we have people come to the office like the good old days?" Mr. Tomlins said, noting that the monthly Internet bill for each of his separate employees could jump by about $70 based on price adjustments his small ISP has made to prepare for the ruling coming into effect. "It will make us less productive."

The federal regulator made the change to give large ISPs another way to manage increasing broadband traffic from online video, which major providers argue could strain their networks. However, experts contend that such arguments are "specious," as IDC Canada's lead telecom analyst Lawrence Surtees says, because of the increase in network capacity brought on by advances in technology.

Anger with the CRTC's decision eventually spilled from the online world, where a petition against the move now counts more than 400,000 signatures, onto the front pages of newspapers and national radio and television broadcasts. But it wasn't until businesses started speaking up that the debate shifted from being about unusually heavy downloaders to companies trying to harness innovative technologies, and regular users trying new, bandwidth-intensive services such as video-streaming site Netflix.

Shortly before Mr. Clement used Twitter to say he would overturn the usage-based billing decision if the CRTC did not, the Canadian Federation of Independent Business sent him a formal letter saying Internet service metered by use represented a serious setback for entrepreneurs.

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"On the whole, small firms would be directly harmed in their ability to compete both in Canada and on the world stage," the CFIB said in the letter.

In recent weeks, the Bank of Canada has increasingly urged companies to improve productivity partly by investing in information and communications technology, while earmarking more money for research and development and innovation.

John Lawford, a counsel with the Public Interest Advocacy Centre, said the CRTC ruling could hurt a variety of entrepreneurs who use large amounts of data, such as application developers, independent film producers and scientific researchers. "Those folks might have challenges where they don't want to do their research in Canada," Mr. Lawford said.

Some of those entrepreneurs may find it too expensive to pay for the data, he said, adding their customers, in turn, may find it too costly to buy their products.

Colleen Tatum, owner of MXC Off-Road in Fort McMurray, Alta., and her employees order parts, obtain product updates and submit warranty claims for customers online. The company sells rims and tires for trucks, among other accessories, while also providing specialized fleet services for trucks that operate in the oil sands.

Her business currently subscribes to a $65-a-month package offered by Shaw Communications, which said this week that it would hold public consultations before it starts charging its customers on volume basis, despite the company already having monthly caps in place for most of its customers.

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For Ms. Tatum, however, any increase in those costs would be too much for businesses owners in Fort McMurray to absorb, she said

"Everybody thinks the roads are paved with gold here but the fact is that businesses are facing huge hurdles right now," Ms. Tatum said

"Our labour costs are higher. Our cost per square footage is higher ... It is super expensive to do business here... Every single dollar means so much."

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