Bronson Riley realized not long ago that he and his wife were paying way more for cable television than they were getting out of it. They watched only a few shows each week.

At the time, he was reading a book on personal finance. It mentioned purchasing services “a la carte” rather than as a package.

The Lincoln, Nebraska resident knew that wasn’t an option for cable TV. So he cut the cord about two months ago, canceling his cable subscription. Now the couple watch what they want, when they want — online.

The mainstream press has started devoting more attention to the plight of cable television executives pondering what to do about “parasites” like Bronson Riley, who they see as poaching their programming and watching it online… for free.

One of the unintended consequences of the unveiling of TV Everywhere, the Comcast/Time Warner Cable concept of permitting “authenticated” viewers to watch cable programming online, (as long as they already subscribe to a standard “cable package”) is an exploration of the phenomenon of  consumers cutting cable’s cord and doing without.

Riley touches on an issue that has bugged cable consumers for decades now — paying for channels they didn’t ask for and don’t want.  In the 1980s and early 1990s, talk about 500 channels of cable programming was dismissed as fanciful, but has since become reality when one includes on demand and music channels.  What has also become an increasing reality for cash-strapped consumers is the bill at the end of the month, which has grown annually faster than the rate of inflation.

A-la-carte, simply defined as paying only for those channels you watch, is an alarming concept for the nation’s cable television operators.  They have resisted the concept for more than 20 years, when it was first seriously raised in congressional hearings to deal with runaway cable bills.

Unfortunately for the industry, most consumers have suggested they have no need for most of the channels they receive today, and are tired of paying for them.  Many consumers would be happy with just six channels they routinely watch,  eager to pay only for them and nothing else.

With this in mind, some customers who also have broadband service from their cable provider have begun to discover many of their favorite shows are available, on demand, for free.  With more and more shows becoming available, a small, but growing minority of cable subscribers have decided to drop cable TV and watch video online instead, an issue the Omaha World-Herald explored:

Andrea Riley watches “Desperate Housewives” at ABC.com, which streams free full episodes of that and other popular shows such as “Lost” and “Grey’s Anatomy,” often the day after they air. The couple buy episodes of another favorite, “The Soup,” a revamp of “Talk Soup” on E! Entertainment Television, on Apple’s iTunes for $1.99 each with only a day’s wait.

Even paying for the handful of shows they can’t get free legally, Riley figures watching TV online saves money. The only thing they miss is flipping on CNN Headline News and the Weather Channel in the morning.

“It’s all getting to watch the TV shows you want to watch at a cheaper price, at your convenience,” he said.

In making the switch, the Rileys have joined a small but growing number of people who are tuning in online rather than over traditional network, cable or satellite pipelines. Some watch online occasionally to catch up on an episode they’ve missed or to track down old or obscure shows. Others, like the Rileys, watch online routinely.

For now, only a minority of web-aware consumers understand how to watch television online, but that’s changing.

“People are just figuring this out,” Jeremy Lipschulz, director of the University of Nebraska at Omaha School of Communication said. “Once people figure out that all this content is out there, you’ll see a more dramatic shift.”

Bobby Tulsiani, a senior analyst with the market research firm Forrester Research, agreed it’s still tech types who are making the change. Two years from now, more people will be doing it, he told the World-Herald.

Ann Shrewsbury, public affairs director for Time Warner Cable Nebraska, said their business trends nationwide show the same thing.

That leaves cable operators like Time Warner Cable in a quandary, and they’ve thus far responded with a trial to stream cable shows online, on demand, for their customers.  But the catch is one must remain a cable TV subscriber to access it.

Across many parts of Nebraska, served by Cox Cable, they’ll be left out of the online video revolution on offer from Time Warner Cable and Comcast, at least until Cox Cable can negotiate its way into the project being run by its larger brethren.

Riley said he generally doesn’t miss cable, having spent more of his time online or watching movies on demand, except for local weather from The Weather Channel and catching up with news on Headline News.  He doesn’t regret the savings either.  Most standard cable tiers are priced higher than his broadband service.

But Riley does recognize there is one way to put a stop to the revolution and end the parade to true, on-demand television viewing on a “pay per view” or free basis: limits on his Internet service.

With Internet overcharging schemes like usage limits, or charging overlimit fees for “excessive consumption,” cable operators might hope to stop the threat before it gets out of hand.

The Internet Innovation Alliance claims to advocate for consumer interests, but has telecom backing.

The Internet Innovation Alliance released a report Tuesday telling you what you already know (thanks to Stop the Cap! reader ‘Bones’ for sending the link):

(1) Consumers receive more than $30 billion of net benefits from the use of fixed line broadband at home, with broadband increasingly being perceived as a necessity;
(2) With even higher speed, broadband would provide consumers even greater benefits – at minimum an additional $6 billion per year;
(3) Significant broadband adoption gaps exist between various groups of households;
(4) Among those who are connected to broadband at home, there is no significant valuation gap based on race, although there are valuation gaps along other lines;
(5) The total economic benefits of broadband are significantly larger than our estimates of the consumer benefits from home broadband.

Astroturf Thursday

In simpler terms, the IIA did a study that discovered consumers value broadband in dollar amounts higher than they currently pay for it.  To the general media, it will be interpreted as evidence that broadband is wonderful in the United States and may be underpriced.  That’s music to the ears of providers, who also study the gap between what a consumer would be willing to pay for a product versus what they actually pay.  That gap represents the wiggle room for providers to raise prices and safely predict consumers will not be outraged about it.

The IIA also trumpets the value of broadband in their study, entitled The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, for the benefit of their benefactors, who stand to gain substantially from broadband stimulus funding.  The IIA, one of the many astroturf organizations out there supported by the telecommunications industry, advocates for a “partnership” between private providers and government to deploy broadband.  In other words, they want the government to hand over tax dollars to private providers to construct broadband networks while preserving the completely deregulated “free market” broadband marketplace.  The “free market” concept now seems to include public taxpayer dollars subsidizing private business, all while providers demand no oversight or regulation to “hamper their innovation.”

Public money funneled to private business with no regulation or oversight = broadband goodness.

Still, it’s not all bad.  Even the IIA understands the obvious — providing faster broadband speeds not only enhances the perceived value of the product, consumers are also willing to happily pay higher prices to obtain it.  They didn’t study Internet Overcharging schemes like usage caps, consumption-based pricing, and other similar pricing schemes, presumably because the results would have shown dramatically dampened consumer enthusiasm.

What Is The Internet Innovation Alliance?

Who They Say They Are: “[A] broad-based coalition …committed to more widespread usage and availability of broadband through wise policy decisions.”
Who They Really Represent: Members include telecom business such as AT&T, and telecom trade associations such as the Information Technology Association of America.
What They Say They Do: “[A]ssist public policy makers to better understand new technologies and to promulgate smart policies that facilitate their growth.”
What They Really Want: To create a tiered Internet and allow broadband providers to charge web sites like Google and Yahoo! for the ability to reach their subscribers.
On the Web: http://www.internetinnovation.org/

The Internet Innovation Alliance runs a slick website dedicated to promoting broadband Internet policies that “will improve Americans’ lives.” While the Alliance claims to include “consumer advocates” in its coalition, no true consumer groups can be found anywhere in its membership list. But AT&T, one of the largest telephone companies in the country, is on the list. As recently as late 2004, the Internet Innovation Alliance (IIA) did seem to be on consumers’ side on the issue of network neutrality – the principle that your Internet service provider shouldn’t be able to block or interfere with your ability to access any content or use any services on the web.

Take a look at IIA’s scathing statement after SBC Communications revealed plans to charge fees to web-based telephone providers (also called Voice-over-Internet-Protocol, or VoIP): “SBC’s charging of higher fees to VoIP providers …is discriminatory in nature and is a dangerous first step toward eradicating the vast array of benefits services like VoIP will provide to consumers. VoIP promises great consumer benefits provided it remains unburdened by regulations and access fees…. SBC apparently missed the memo or chose to ignore it in the face of larger profits.”

So where was the outrage a year later when SBC head Ed Whitacre told Business Week magazine that broadband Internet providers should be allowed to charge fees not only to VoIP companies, but to any web-based company or service? “Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. …We [the telephone companies] and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!,” argued Whitacre.

This time, the Internet Innovation Alliance was nowhere to be found. Why? Maybe because SBC Communications was in the final stages of a merger with AT&T—one of IIA’s “member” groups. IIA does not disclose how much its “members” contribute to the organization, but in the case of AT&T, it appears to be enough to have bought IIA’s silence. — Common Cause

Stop the Cap! reader Lance wrote this afternoon letting us know Google has a project running for the next few weeks to ask ordinary Americans, you know, the ones who don’t have their own astroturf groups, slick lobbyists, and Re-Education literature, what you and I want from broadband stimulus funding and a national broadband plan.

Submit your ideas for a National Broadband Plan
Google and the New America Foundation have teamed up to launch this Google Moderator page, where you can submit and vote on ideas for what you think the Federal Communications Commission should include in its National Broadband Plan. Two weeks from now we’ll take the most popular and most innovative ideas and submit them to the official record at the FCC on your behalf.

So do you have any good ideas? Submit them today — and you just might help change the face of broadband in the United States.

The operative word there is “might.” Without a massive deluge from angry consumers, the killer bee swarm of lobbyists and other special interests will surround and fly away with the honey pot of federal broadband stimulus funding. But you can’t win if you don’t play, so let’s get busy.

Here was my submission, which you can choose to give a thumbs-up to if you support it:

“A clear prohibition on Internet overcharging schemes! No usage caps, speed throttles, and consumption-based tiered pricing. Net neutrality enshrined into law, open competition, even if it comes from municipalities, and the more fiber, the better!”

Finding submitted ideas is best achieved by using the Search box at the top of the Google Moderator page. You can find mine with a search for “net neutrality.”

Some of the ideas from ordinary consumers that are already getting plenty of support are excellent, common sense winners in our humble opinion, so be sure to vote “thumbs-up” for these as well:

• “Install broadband fiber as part of every federally-funded infrastructure project. Most of the cost of deployment is due to tearing up/repaving roads. Laying fiber during public works projects already underway would dramatically reduce costs.”
• “Force real competition in any given market for broadband services from the same types of provider to eliminate monopolies (i.e. multiple cable providers competing in the same market).”
• “Charging per-data-rate (EG: per gb) is a bad idea. You don’t get charged per hour you watch cable on top of your monthly subscription and additional channels, why should you pay per hour or per gb for access to the Internet?”
• “Stop the ability of private companies to block local governments from trying to deploy their own broadband solutions. There have been numerous examples of this, and it really stifles broadband expansion.”
• “Place residential broadband under the same regulations as other utilities. Require companies to publish their tariffs, and forbid hard caps. Require a portion of the proceeds to be invested into improving the infrastructure.”
• “Recognize that high-speed, reliable and unfiltered Internet access in the 21st century is a civil right on par with free speech and a right to an education and not a simple luxury for those who can afford it. More federal funding, fewer monopolies.”
• “Get ConnectedNation out of the loop. Funded by telecos and cablecos and are lobbying congress using false and misleading data.”

How to participate:

1. You need to have a registered Google account. You have one already if you use Gmail or other Google services.
2. Visit this page to find the question.
3. You will find a login link at the bottom. Click it and you can login or get a new Google account.
4. You will be shown a list of ideas submitted by others. They often appear randomly.
5. On the right side of your screen, you will see a place to approve (checkbox) or disapprove (an “x” in a box) of various ideas.
6. Vote for as many or as few as you like.

You can also submit your own idea.

The most popular ideas will be part of Google’s submission to the FCC.

Let us know what idea you are voting for and if you submitted any of your own in the Comments section.

Click on the "Comments" link shown circled to go directly to reader comments, and share your own views!

For new readers, you can get involved in the conversation by clicking the comments link found as part of the heading of every article here, or just click the headline and scroll down the bottom of your screen where you can find a place to share your thoughts!

Schoharie County, New York

Schoharie County has the dubious distinction of being one of the New York counties least well-served with high speed broadband service.  In fact, according to the Schoharie County Telecommunications Task Force, our county is ranked last in the Capital Region, located in and around the state’s capital city Albany.

Last fall the Task Force concluded that almost half of the county’s residents had no access to broadband service at all, a point since disputed by one of the local telephone companies providing service to parts of the county, but regardless of who has access, residents are accustomed to taking whatever broadband service they can get.

Schoharie County has just over 31,000 residents across its 622 square miles.  It’s a beautiful place to live, especially along the southern parts of the county which lie within the Catskill Mountains.  Several small towns, villages and hamlets dot the county, providing a rural lifestyle but within easy reach of Schenectady and Albany.  Unfortunately, part of living in rural upstate New York is recognizing the reality of the digital divide.

The rural setting of Schoharie, NY

To our east, our bigger city neighbors enjoy access to Verizon fiber-based networks and Time Warner Cable’s Road Runner broadband service.  Broadband is fast, plentiful and relatively inexpensive.  But once pastures replace strip malls, it’s an entirely different story.

In much of Schoharie County, broadband service is provided by locally owned Middleburgh Telephone Company, which has been serving most of our area for over 100 years.  A few dozen employees cover everything from billing to repair and installation, and not just for telephone and broadband service, but also for cable television.  Midtel Cable TV, owned by the telephone company, serves many areas the bigger cable companies forgot.

Unfortunately, Middleburgh Telephone controls broadband, which means instead of providing cable broadband over Midtel, customers in much of Schoharie County are stuck with old-fashioned DSL service delivered by telephone lines.

While the hometown feel of the local phone company makes you feel like a valued customer when you deal with them, the broadband products they offer leave a bitter taste in your mouth.  MIDTEL.NET customers can look forward to an either/or proposition.  Either endure painfully slow DSL service or pay an exorbitant amount of money for the kind of broadband service speeds commonly available in larger communities.

MIDTEL.NET Price Chart
DSL – mSPEED Lite: $29.95/month — 384kbps download, 128kbps upload
DSL – mSPEED: $43.95/month — 3Mbps download, 500kbps upload (Prepay discount: 6 months – $250.00 or 12 months – $495.00)
DSL – mSPEED Plus: $59.95/month — 5Mbps download, 1Mbps upload (Prepay discount: 6 months – $340.00 or 12 months – $670.00)
DSL – mSPEED Premium: $164.95/month — 10Mbps download, 1.5Mbps upload (Prepay discount: 6 months – $940.00 or 12 months – $1,850.00)

While most residents are grateful for the optional higher speed services our friends and neighbors in other rural communities simply don’t have, the pricing makes it unaffordable for the vast majority of residents, who typically make due with the mSPEED $43.95/month service.

Of course, those speeds are not guaranteed.  Because I reside more than 10,000 feet from the local telephone company central office, I cannot really access any service plan above 3Mbps.  The higher speeds simply would not work.

You're in slow broadband country, too.

To our north, Frontier Communications provides telephone and broadband service to residents in Fulton, Herkimer, Clinton and Essex counties, as well as the western part of Montgomery County and parts of northern Saratoga County.  Frontier has taken ownership of several formerly independent telephone companies in eastern New York, as well as a few formerly owned by Rochester Telephone.  Frontier actually does a better job than Verizon in rural parts of upstate New York in providing at least some type of broadband service.  Large sections of the state still served by Verizon have no DSL or any other kind of broadband service.  Frontier does seem to pride itself with providing residents with broadband service, but not always consistently.

Stratford, Lassellsville, and Oppenheim, all within Fulton County are three communities with significant gaps.  All are within or adjacent to the Adirondack Park, which covers a section of the Adirondack Mountains.  At one point, several bypassed residents in Fulton County signed a petition and presented it to local Frontier officials, convincing them enough customers were willing to purchase the service to make it available to that neighborhood.

Frontier and Middleburgh Telephone both share an attitude of  requiring a “critical mass” of potential customers to make it worth their while to provide DSL service. Unfortunately, that cannot come fast enough for many underserved communities, whose local governments receive a steady stream of calls from residents wondering when broadband service will become available in their area.

Where Frontier does provide DSL service in rural upstate communities, it’s slow and expensive.

Frontier’s website for most of Fulton County shows two service plans available:

Frontier Communications DSL Price Chart
Frontier High-Speed Internet Lite – 768kbps  $39.99 per month
Frontier High-Speed Internet Max — up to 3Mbps  $49.99 per month

That pricing is before a $5 a month “modem rental fee,” and as least as much for taxes and surcharges.  Add at least $10 to the quoted price to cover all of these fees.  Frontier also likes to commit its customers to term commitments.  My friends in Frontier service areas are strongly pushed towards one, two, or even three year “price protection plans”, as well as a backup and support service called “Peace of Mind” which can add another $13 a month to your bill. Certain promotional bundle pricing can lower some of these costs, but not enough to erase the disparity in pricing between rural broadband service, and that provided in larger cities within easy driving distance.

The impact of unavailable or unaffordable broadband service can be severe, subjecting rural communities to economic disadvantages including:

• an inability for local small businesses to operate and/or maintain online websites to market products and services to customers;
• educational institutions are unable to effectively teach our children how to navigate the critically important online world;
• the impossibility of attracting high technology business and industry into underserved communities;
• a reduction in the quality of information and service available in rural public libraries;
• making life difficult for home-based teleworkers or telecommuters who conduct some/all of their employer’s work from home;
• a reduction in property values by reducing competition for available properties rejected by potential buyers because of lack of broadband access;
• a loss of potential innovation and online business start-ups because of lack of access;
• information disparity for residents unable to access online information the rest of the wired nation takes for granted.

So why do providers not provide universal access?  It’s a good question for some opinion leaders in this part of the state.

Gilboa, NY is just one of hundreds of small New York towns with "take it or leave it" broadband.

Anne Myers, the provost at SUNY Cobleskill, a state university, told the local newspaper that “Broadband is like rural electrification — it’s necessary for areas to move forward. There are things you can’t do if you don’t have broadband.”

Myers advocates for the same guarantee of access to broadband that Americans were given for electricity from the Roosevelt Administration’s electrification programs of the Tennessee Valley Authority and the Rural Electric Administration.  Indeed, she could benefit from it, because her home in Summit, in Schoharie County, has no access to broadband either.

Unfortunately, the New York State Public Service Commission (NY PSC) has been less than aggressive in advocating for such an approach.  In fact, it has adopted a “free market” strategy and has become complacent and tolerant of the results: slow and expensive rural broadband, if it’s available at all.

The Public Utility Law Project of New York, a group advocating for universal access, has heavily criticized the NY PSC for what it calls, “in essence [arguments] for continued reliance on failing market-based policies, policies which exacerbate the digital divide and have left millions of households without broadband. A review of other comments filed with the FCC reveals that New York is behind the times and out of step with every other state that submitted comments [to the Federal Communications Commission].”

Lou Manuta, who writes for the PULP Blog, went much further:

Essentially, the PSC seems to be saying that policy makers elected by the people who see the importance of universal affordable broadband to the future of the economy and society should not disturb the results of the broadband “market” – which in most localities is a duopoly of landline and cable providers. Such blind faith in the market, however, has already left New York far behind countries that have been proactive with policies to lower the cost of broadband, increase speed and bandwidth, and increase its deployment and actual use by citizens. The PSC even questioned the need to bring broadband to every citizen today:

A broadband plan seeking to bring broadband immediately to 100 percent of the country may be ill-advised. A goal of 100 percent broadband deployment may not be economically rational with traditional, wired service. However, the evolution of technology, like third generation wireless, could provide more efficient and cost effective alternatives for ubiquitous broadband.

This is a familiar refrain to defend market power of existing providers: someday the market will bring providers with a new technology that magically would bring affordable service to unserved or underserved areas, so therefore regulators and government should do nothing.

Groups that provided comments similar to those of the PSC were free-market think tanks, such as Americans for Prosperity, FreedomWorks Foundation, and Americans for Tax Reform (ATR). ATR, founded by anti-tax radical Grover Norquist. The PSC’s positions closely resonate with the comments of ATR, which glossed over the market failure and reduced competitive position of the United States in comparison to other countries, and wrote:

We are on the right track; the free market is working. Consumers are enjoying an ever-expanding array of choices and performance. . . . In order for free-market models to provide for the further development of broadband access, however, it is absolutely critical that government intrusion not prevent private capital from recouping its investment. If private capital becomes convinced that its ability to recoup its investments is less likely, it will be less likely to make the significant investments in broadband that is the very goal of this FCC inquiry.”

Both the PSC and ATR take these “hands off” positions when it comes to the price and deployment decisions of the cable and phone company duopoly, even though

• millions of people who in theory have “access” to broadband cannot afford it,
• the U.S. has some of the world’s slowest, most costly broadband (per megabit per second),
• the U.S. subscribership rate has sunk from 4th to 15th in the world in recent years, even as other countries with more affirmative broadband policies surge ahead.

So what precisely keeps broadband providers from providing universal access and wiring all of their customers?  Profit and return.  The costs to construct extensions of their networks to reach even the most isolated customers isn’t worth the potential return, say most providers.

Could communities like Seward benefit from broadband stimulus funding?

Before the Obama Administration turns on the broadband stimulus faucet, the emergency federal economic stimulus package provided more than seven billion dollars for “shovel-ready” construction projects across the nation.  More than $175 million is targeted for New York state.  Despite Albany’s usual circus-like chaos, dysfunction, and a recent state Senate coup d’etat, Governor Paterson, the Senate and Assembly managed to identify 32 broadband projects that could be eligible for grants from the federal fund.  Competition for “free money” from everyone from educational groups to telephone companies to local municipalities is fierce, and will only grow more so when the federal broadband stimulus money begins to flow.

Both Frontier and Middleburgh Telephone believe federal stimulus funding may help improve the viability of reaching their most rural communities.

Middleburgh Telephone is even willing to partner with municipalities to provide service to areas it does not reach today, such as in Carlisle and Esperance.

But just as important as availability, according to Lou Manuta with PULP, is affordability.  Even where broadband is plentiful and less expensive than in rural areas, it’s still out of reach for many of New York’s poorest residents.  Manuta advocates providing special “Lifeline”-type broadband packages to disadvantaged state residents, which offer very basic broadband service for a very low price.

For residents in rural New York, change cannot come soon enough.  Without it, even big states like New York will leave hundreds of thousands of residents behind, stuck with slow broadband at unaffordable prices.

Jenny Pirro comes to Stop the Cap! as a consumer concerned about broadband service in rural communities.  She is a lifelong resident of upstate New York, recently retired from a career in banking.   She has been a customer of both Middleburgh Telephone and Frontier Communications.  For privacy, Jenny chooses to write under her maiden name.

The Bell Beavers have been lying to Canadians for at least a year about the speed of their broadband connections through Bell.  Despite assertions in advertising that Bell Internet does not experience “slowdowns,” the company admitted Tuesday it intentionally does slow down certain broadband applications by up to 98.5% for 9.5  hours a day.

Appearing before commissioners of the Canadian Radio-television Telecommunications Commission hearing on bandwidth management, Jonathan Daniels, Bell’s vice-president of regulatory law, told commissioners peer-to-peer file transfers are “throttled,” or reduced in speed, for up to 10 hours daily.

In Ontario and Quebec, speeds are reduced to 256kbps (kilobits per second) between 6pm-1am, representing a 98.5% reduction in the maximum speed of 16Mbps offered as part of Bell’s Internet Max 16 service.  During dinner time, starting at 4:30pm-6pm, speeds are reduced to 512kbps.  Even those up late to avoid the throttle will still encounter it between 1am-2am, when speeds are also reduced to 512kbps.

Although Bell has never denied throttling users’ speeds, the company clarified the extent of the throttling and its specifics for the CRTC yesterday.  Daniels promised the company would post this information on its website soon, so customers are fully informed about the practice before signing up for service.

Bell defended the practice, extending not only to its own customers but also to customers of independent Canadian ISPs who obtain their broadband access from Bell’s wholesale bandwidth division.  Bell claims it was not satisfied with simply raising prices or placing usage limits on its service — the company also felt it necessary to start reducing the speeds of “problem applications” on its network.  Bell lobbied the CRTC to endorse Bell’s bandwidth management plan and also called on the commission to apply any regulatory changes not only to its own DSL service, but also for competing technologies like cable, fiber, and even wireless broadband.  Inclusion of the latter technology would establish a “lowest common denominator” broadband standard for Canada, where all players would be permitted to limit and throttle usage based on the least capable competing technology.

Independent Internet providers across Canada complain their wholesale access from Bell not only faces speed throttles, but also usage based pricing, which effectively could render most uncompetitive.  They have asked the commission to force Bell to stop throttling their wholesale accounts and permit them to establish whatever bandwidth management technologies are appropriate.  Bell dismissed that notion, claiming that unless independent providers use the same policies Bell does, demand on its network from its wholesale accounts would create congestion problems for Bell’s own retail customers.

CRTC Chair Konrad von Finckenstein asked why Bell is the only ISP in Canada that throttles peer-to-peer downloads, while most other ISPs only throttle uploads.  Daniels claimed that downloads are a bigger problem for the Bell network, and that most cable ISPs engaged in throttling are dealing with a network much more sensitive to upload activity.

The issue is hotly debated across Canada because much of the network that Bell and other providers utilize for Internet connectivity was built with Canadian taxpayer dollars.  Because the network was built with public funds, Bell cannot refuse requests from competitors to purchase access to their network at wholesale prices, which are set by Canadian regulators.

The wholesale price for Canadian residential customers with a 5Mbps connection starts at $19.50 per month.  An additional charge for connecting an independent network to Bell’s network is levied, along with a specified amount of bandwidth consumption.  A wholesale account on Bell’s “High Speed Access” network, which doesn’t engage in traffic throttling, is not regulated and is currently priced at $40 a month for a 6Mbps connection.  ISPs are required to install more of their own network management equipment, making access to this higher level of service an expensive proposition for both the ISP and the residential customer.  Few ISPs choose the “High Speed Access” network because of the cost.

The CRTC became involved after getting complaints from Bell’s wholesale customers who suddenly discovered their own customers were being speed throttled.  Last November, the commission found such throttling by Bell was permitted, primarily because they throttled every customer’s speeds — retail and wholesale.  But a decision to hold hearings into bandwidth management was deemed necessary, and the result was a week of hearings that wrapped up Tuesday.