The Canadian Radio-television and Telecommunications Commission late Tuesday ruled against a revised proposal from Bell that could have effectively ended flat rate Internet service across the country, but also allows the phone company to raise wholesale prices for independent Internet Service Providers (ISPs).

The Commission ruled Bell and cable companies like Rogers must sell access to third party providers at a flat rate or priced on speed and the number of users sharing the connection.  The CRTC rejected a Bell-proposed usage-based pricing scheme that would have charged independent ISPs $0.178/GB.

Ultimately, the CRTC came down closest to adopting a proposal from Manitoba-based MTS Allstream, which suggested a variant on speed-based pricing, steering clear of charging based on usage.  Under the CRTC ruling, independent ISPs can purchase unlimited wholesale access based on different speed tiers.  The new pricing formula requires independent providers to carefully gauge their usage when choosing an appropriate amount of bandwidth.  If an independent ISP misjudges how much usage their collective customer base consumes during the month, they could overpay for unused capacity or underestimate usage, leaving customers with congested-related slowdowns.  ISPs will be able to purchase regular capacity upgrades in 100Mbps increments to keep up with demand.  They can also implement network management techniques which may discourage heavy use during peak usage.

The CRTC decision underscores that Internet pricing should be based on speed, not on the volume of data consumed by customers.  That’s a model Stop the Cap! strongly approves because it does not allow providers to monetize broadband usage.

Finkenstein

But that is where the good news ends.  Nothing in the CRTC ruling changes the Internet Overcharging regime already in place at the country’s leading service providers.  Companies like Bell and Rogers are free to continue setting arbitrary limits on usage and charging overlimit fees for those who exceed them.

Konrad von Finckenstein, chair of the CRTC, says the regulator made a mistake in deciding last year to allow Bell to raise its prices for independent service providers.

“Our original decision was clearly not the best one. It was wrong and it was pointed out by a lot of people, including Minister Clement. He was right. We have today fixed it, we have made this new decision,” von Finckenstein said. “The bottom line is that you as a consumer will not face a cap or limitation of use because of anything mandated by the CRTC. Any kind of cap or limit, payment per use, that you will have to pay is because your ISP decides to charge you, not because we mandate it.”

But many independent providers are unhappy with the CRTC ruling because it also allows wholesale providers like Bell to raise prices, sometimes substantially, on the bandwidth they sell.

One independent ISP — TekSavvy, said it faced increased connectivity costs in eastern Canada.

“The CRTC decision is a step back for consumers. The rates approved by the Commission today will make it much harder for independent ISPs to compete”, said TekSavvy CEO Marc Gaudrault. “This is an unfortunate development for telecommunications competition in Canada,” he added.

“Rates are going up,” added Bill Sandiford, president of Telnet Communications and of the Canadian Network Operators Consortium, an independent ISP association.

In addition to whatever rate increases eventually make their way to consumers, some independent providers may end up adopting network management and usage cap policies that attempt to slow down the rate at which they are forced to commit to bandwidth upgrades.  That’s because providers purchase capacity based on what they believe their peak usage rate is likely to be.  Providers will be free to upgrade service in 100Mbps increments.  But with the new, higher prices, providers could overspend on capacity that goes unused or find themselves underestimating usage, creating congestion-related slowdowns for all of their customers.

Angus

Some network management techniques that could reduce peak usage — and the need for upgrades — include speed throttles for heavy users during peak usage times or usage caps that fall away during off-peak hours when network traffic is lower.

Yesterday’s decision will provide some small relief to wholesale buyers of bandwidth in Quebec, where’s Videotron’s sky-high wholesale prices are set to be reduced.  But the unusual divide in Internet pricing between eastern and western Canada will remain.  Western Canadians will continue to enjoy much larger usage allowances, and lower wholesale pricing, than their eastern neighbors in Ontario and Quebec.

The CRTC’s ruling did not go far enough for NDP Digital Issues critic Charlie Angus. Angus notes only 6 percent of Canadians purchase Internet service from independent providers.  The rest will still be stuck with what he calls “unfair billing practices and bandwidth caps.”

Angus is convinced the CRTC just gave the green light to force rate hikes for the minority of consumers who found a way around companies like Bell, Shaw, Videotron, and Rogers.

“Allowing big telecom companies to reach into the pockets of struggling families and ask for even more money is just plain wrong,” Angus said.

Bell’s senior vice-president for regulatory and government affairs, Mirko Bibic, still believes the company’s proposal to charge just under 20c per gigabyte to wholesale users was appropriate, but the CRTC’s permission to allow Bell to increase wholesale rates was a nice consolation prize.  Bibic tried to frame the decision as forcing ‘independent ISPs to pay their fair share.’

Independent ISPs “are going to have to lease more traffic lanes,” he told CTV News. “I think the philosophy is [to] put the independent ISP in a position of responsibility. If usage goes up, you’re going to have to buy more lanes – it’s the same decision that we have to make.”

Canadians will learn at 4PM whether their Internet future will be unlimited or rationed with usage-based-billing (UBB) plans that could potentially charge consumers for every website they visit.

The much-anticipated decision from the Canadian Radio-television and Telecommunications Commission (CRTC) comes months after last winter’s hearings on how Internet service is priced in Canada.  It pits the largest phone company in the country — Bell — against small independent providers that are fighting to stay in business offering customers unlimited usage plans.

Most independent Internet Service Providers in Canada ironically buy wholesale access directly from Bell.  These upstart competitors like Primus and TekSavvy deliver unlimited DSL service at attractive prices.  In fact, some Bell customers have found them attractive enough to switch providers.  Bell’s wholesale division indirectly competing with its own retail business has proved unsatisfactory to Bell management, who proposed repricing wholesale access to resemble what Bell charges its retail customers.  But more importantly, Bell would demand that their competitors impose usage-based billing themselves, which would make unlimited Internet service in Canada a thing of the past.  The CRTC initially agreed with Bell, which sparked outrage among independent providers and consumers who faced the prospect of paying inflated prices for Internet service with no unlimited usage options in sight.

The backlash brought a half-million Canadians together to demand an end to unfair Internet pricing through a petition from Openmedia.ca.  That in turn attracted the attention of Canadian politicians, including Prime Minister Stephen Harper and his government’s Industry Minister Tony Clement.  Clement told reporters on Feb. 3 if the CRTC didn’t reverse its approval, and fast, the government would probably overrule the commission.

A day later, outgoing CRTC chairman Konrad von Finckenstein said the commission would review its decision, the first in a series of backpedals in response to government pressure.

Even Bell, accustomed to having its way with the CRTC, has backtracked, now offering a compromise proposal that would charge independent ISPs 17.8c per gigabyte.  Many providers consider that excessive, too.

The CBC explains how Internet access is sold by independent providers in Canada.

Since the hearings, several marketplace changes have deflated some of Bell’s arguments that UBB was necessary to control over-eager users congesting their network.  Providers in western Canada — Shaw Cable and Telus, have dramatically boosted their respective usage caps, which call into question just how much of a congestion problem exists on Canada’s Internet networks.  The Canadian Network Operators Consortium, the voice of independent service providers, has offered its own proposal to charge wholesale customers based on peak network traffic.  MTS Allstream, itself a smaller player in Canadian telecom, proposed wholesale service be sold much like retail Internet in the United States — based on the speed/capacity of the service level selected.  If an ISP underpredicted usage, traffic would slow for everyone until the line was upgraded.

What ultimately gets approved by the CRTC may still be subject to government review, especially if the decision proves unpopular with consumers.  In a CBC online poll being conducted this afternoon, consumer sentiment is clear.  More than 91 percent of voters want the option of unlimited Internet access.

Whatever the CRTC decides will be reviewed by new Industry Minister Christian Paradis, who has managed to keep his head down and views to himself since he replaced Clement.  He may be hoping more than most that the CRTC will ultimately placate everyone, just so he doesn’t have to weigh in on the thorny issue.  But the CRTC’s track record representing consumers has been pretty dismal over the last few years, so we will not be surprised if the commission ultimately acquiesces to Bell’s substitute plan unaffectionately dubbed ‘GougeLite’ by Bell critics.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC Internet pricing ruling expected from CRTC 11-14-11.flv[/flv]

The CBC reports on today’s expected ruling from the CRTC and what it means for Canadian Internet consumers.  (3 minutes)

After nearly a half-million Canadians expressed outrage about Bell’s Internet Overcharging practices, the company is responding.  This week, Bell sent a letter to their wholesale customers announcing it plans to end the practice of speed throttling peer-to-peer file traffic (at least for them):

Effective November 2011, new links implemented by Bell to augment our DSL network may not be subject to Technical Internet Traffic Management Practices (ITMP).  ITMPs were introduced in March, 2008 to address congestion on the network due to the increased use of Peer-to-Peer file sharing applications during peak periods. While congestion still exists, the impact of Peer-to-Peer file sharing applications on congestion has reduced. Furthermore, as we continue to groom and build out our network, customers may be migrated to network facilities where Technical Internet Traffic Management Practices (ITMPs) will not be applied.

Peer-to-peer traffic, once all the rage for swapping music, movies, and software (legally or otherwise), has been declining as a percentage of Internet traffic and legal online entertainment services (Netflix, et al.) have become available.  Copyright crackdowns and usage caps manage to further restrict customers from leaving P2P software running continuously as it can rapidly eat into usage allowances.

With increased capacity of Bell’s networks and decreased interest in file swapping software among customers, the practice of throttling such traffic (along with the unintended collateral damage to online gaming), means such network management practices have outlived their usefulness.

Providers these days are far more likely to blame online video for congested networks.  But once providers attach a speed throttle to an application, it can be difficult to remove.  Even as Bell announced it would no longer throttle their wholesale clients, retail customers will still suffer with reduced speeds during “peak usage times” — 4:30pm-2am local time.

Michael Geist, who covers Canadian broadband issues, wonders if Bell’s throttles are actually in violation of the Canadian Radio-television and Telecommunications Commission’s traffic management guidelines:

While Bell says its congestion has been reduced, its retail throttling practices have remained unchanged, throttling P2P applications from 4:30 pm to 2:00 am.  Given the decline in congestion, a CRTC complaint might ask whether the current throttling policy “results in discrimination or preference as little as reasonably possible” and ask for explanation why its data cap policies “would not reasonably address the need and effectively achieve the same purpose as the ITMP.”  In fact, the same can now be said for many other ISPs who deploy broad based throttling practices (Rogers, Cogeco), which may not be reasonable under the CRTC policy.

A joint venture between Rogers, Videotron, Bell and Telus will bring major improvements in cell phone service in Montréal’s métro by the end of 2013.

Isabelle Tremblay, a spokesperson for the Société de transport de Montréal, which manages the métro system, told the Montréal Gazette there has been a plan in place for several years to have a cellular network in the subway tunnels, which are often cell-phone-free zones because of reception problems.

Montreal métro provides coverage in these areas of Montreal.

None of the carriers involved would confirm the report, originally published in La Presse, but subway cell phone networks are not unprecedented.  Both New York and Washington, D.C. have cell service provided by underground antennas.  Many trains now also provide Wi-Fi service, and Montréal is expected to be no different.

Tremblay said Wi-Fi would come after cell phone service is established.  In most cases, carriers use third party contractors to construct and manage the networks on their behalf.  Only existing customers get to access the respective networks.

Bell’s Fibe customers in Ontario noticed something unusual in the company’s latest newspaper ads luring potential new signups for the company’s fiber-to-the-neighborhood service.

Subscribe to Bell Fibe™ Internet and get way more than the cable company for a lot less.

Get super-fast download speeds of up to 25 Mbps – more than double the 12 Mbps on cable.
Watch way more stuff online with 125 GB of usage – more than double the 60 GB on cable.
Plus, share pics and videos more than 12x faster than cable, with upload speeds of up to 7 Mbps.
All this for less than the regular rate you’re paying with cable’s 12 Mbps service.¹

See full offer details.¹²

Offer ends October 31, 2011. Available to residential customers in select areas of Rogers’ footprint in Ontario where technology permits. Modem rental required; one-time modem rental fee waived for new customers. Usage 125 GB/month; $1.00/additional GB. Subject to change without notice and not combinable with any other offers. Taxes extra. Other conditions apply.

¹Current as of Sept 29, 2011. Based on customer’s subscription to Rogers’ Express Internet package at the regular rate of $46.99/mo., prior to August 4, 2011.

²Available to new customers who subscribe to Fibe 25 Internet and at least one other select service in the Bundle; see bell.ca/bellbundle. Promotional $33.48 monthly price: $76.95 monthly price, less the $5 Bundle discount, less the monthly credit of $38.47 applicable for months 1-12. Total monthly price after 12 months is $71.95 in the Bundle.

75GB for existing customers, 125GB for new ones.

Setting aside the fact Bell’s package costs $71.95 a month after the first year, compared with Rogers’ regular everyday price of $46.99, existing customers were surprised to learn Bell’s usage cap for new customers (located in select areas of Rogers’ competing footprint in Ontario) was 125GB per month.  That stood out, because existing customers currently live with a monthly cap of just 75GB per month.

That means new Bell customers, who happen to also have the choice of being served by Rogers Cable, evidently have a considerably less “congested” network that allows a more generous 125GB usage cap over nearby neighborhoods not served by Rogers, where things must be “much worse” to justify the current usage limit of 75GB per month.

Customers call it another example of providers subjectively setting usage limits not according to technical need, but competitive reality.

“If having separate rates by province wasn’t enough, now we have different rates based on the neighborhood,” shared one Toronto Bell customer. “I will need to call them to adjust this.”

Bell’s website provides conflicting information to existing customers over exactly what their usage cap is.  Despite the advertised 125GB cap promoted online, many existing customers are still finding 75GB to be their monthly limit.  Customers are getting some satisfaction calling Bell and threatening to cancel service over the discrepancy.  Don’t bother with the regular customer service representatives — readers report they can do nothing for you.  Instead, tell Bell you are canceling service, get transferred to the Customer Retentions Department, and then tell them you will stay if you get the new customer promotion that comes with the 125GB usage cap.  If you ask, Bell will often configure your account with the promotion noted above, which comes with the automatically more generous usage cap.

Stop the Cap! has always believed usage caps have nothing to do with the network congestion and “fair use” excuses providers like Bell have repeatedly argued.  They exist because market forces allow them to, and when competitors arrive with more generous allowances (or none at all), incumbent providers suddenly find enough capacity to be more generous with their customers.  At least some of them.