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Tories side with consumers in clash over Internet billing

The Harper government is killing an independent federal regulator's decision on Internet billing, a populist move allowing the Conservatives to cast themselves as a champions of consumers.

The Canadian Radio-television and Telecommunications Commission ruling - which had sparked a major consumer backlash - would have spelled an end to unlimited Web access packages offered by smaller Internet providers.

The controversial verdict would only have affected a minor percentage of Internet users, but was nevertheless poised to become a bigger issue as increasing number of Canadians begin to download or stream ever-larger files from entertainment businesses such as Netflix.

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But a powerful grassroots campaign against the ruling was so fierce it threatened to become a major political controversy on the eve of a possible federal election this spring.

Dumping the CRTC ruling allows the Tories to neutralize the issue politically and score points with voters for acting even before the regulator could rethink the matter.

It's the second time in 14 months that the Harper government has moved to undo CRTC decisions in a manner that hurts big incumbents but is sold as helping consumers. In December, 2009, the Tories reversed a ruling blocking Globalive and its Wireless cellphone brand from offering service because, the CRTC had decided, it violated foreign-ownership rules.

The Harper government's willingness to wade into the telecom market is raising questions about whether Ottawa's interventions are healthy for the business sector and how officials should regulate behaviour in a fast-changing landscape.

In recent days the Conservatives had publicly advertised they had deep concerns about the CRTC decision, which would allow large Internet providers such as Bell Canada to charge smaller providers who lease space on their networks on a per-byte, or usage, basis.

But on Thursday the head of the CRTC, still trying to retain a semblance of independence, told a Commons committee the regulator would review the Jan. 25 decision of its own volition and delay implementing it by 60 days.

Konrad von Finckenstein, chair of the Canadian Radio-television and Telecommunications Commission, was being grilled by MPs after being summoned from important hearings on BCE to explain the Internet billing ruling. He denied he was acting because the Harper government had threatened the night before to undo the ruling if he didn't reverse it. He said he was acting based on "evident concerns expressed by Canadians."

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Mr. von Finckenstein said he still thinks that the minority of consumers are not heavy downloaders and should not have to pay for those who are.

"We are convinced that Internet services are no different than other public utilities and the vast majority of Internet users should not be asked to subsidize a small minority of heavy users," he told the committee.

"For us, it is a question of fundamental fairness."

Industry Minister Tony Clement was unmoved. He had warned the night before - via Twitter- that the government would reverse the CRTC decision if the regulator didn't.

Immediately after Mr. von Finckenstein's appearance on Thursday, he met with reporters to announce that CRTC could review its decision if it liked but said the ruling was effectively dead.

"I'd like to be clear ... regardless of the outcome of the CRTC review, under a Conservative government, this ruling will not be implemented," Mr. Clement told reporters.

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The Conservative move fits into a larger strategy to retain power and fight the next election.

Conservative strategists say the Harper government must do everything it can to appear consumer-friendly at a time when it's also shouldering a difficult task of defending billions of dollars in corporate tax cuts in the face of opposition accusations.

A former senior Tory official said the Conservatives were also acting defensively to distance themselves from a controversial regulatory ruling that they had played no part in delivering but would have to justify to constituents. "They saw political risk in it or they wouldn't be acting. Otherwise the impression left is the Conservatives are okay with an unpopular decision."

While the Conservatives are a right-leaning government considered inherently friendly to business, they retain populist tendencies inherited from the brand of politics practised by their Reform Party predecessors.

Finance Minister Jim Flaherty in years past has chastised retailers for not passing on to consumers the benefits of a strengthened Canadian dollar, and has taken big banks to task for the fees they charge consumers for using automated banking machines.

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