Bell’s big
digital win

>> Fend for yourselves, CRTC tells independent ISPs

by PATRICK LEJTENYI

Last Thursday, June 27, won’t be fondly remembered by Rudy Komsic, president and founder of Cyberglobe Communications, a Montreal-based Internet Service Provider (ISP). That was the day the 29 year old read the ruling by the Canadian Radio-Television and Telecommunications Commission (CRTC) stating that it had turned down a request by the Independent Members of the Canadian Association of Internet Providers (IMCAIP) to review the guidelines, especially pricing, of Internet services offered by Bell Canada. The application to the CRTC requested that the federal regulatory body order Bell, and its subsidiaries Bell Nexxia and Bell ActiMedia (more popularly known as Bell Sympatico), to cease and desist its alleged unfair price fixing of its digital subscriber line (DSL) service, which IMCAIP says undercuts the independents and will eventually put them out of business.

The application, submitted last August 15, stems from Bell’s high-speed digital services, which it offers at bargain-basement prices (currently $44.95+tax). Because of Bell’s monolithic size and diversity, it can offer DSL services far below the going wholesale rate of about $288 per residential line per month. Bell controls the copper wiring, phone lines and switches needed for DSL service, and, critics charge, because it’s so massive, it can offer it for as long as need be for the independents to go under.

In its ruling, the CRTC "found, among other things, that low-speed and high-speed [Internet service] share sufficient service attributes to be considered as reasonable substitutes, and thus should be considered part of the same relevant product market ... The Commission remains of the view … that the service attributes, rather than the particular technology used to deliver the service, define the relevant product market for the purposes of assessing competition ... The Commission finds that IMCAIP did not provide adequate evidence to establish that the provision of retail residential DSL Internet service constitutes a separate, relevant market." Meaning that basically, since both the independents and Bell offer the same service-Internet access-delivery capabilities and pricing should remain unregulated.

Bell PR rep Andrew Cole, however, says that Bell has done more than any of the cable companies, Vidéotron, Rogers and Cogeco, in opening up their networks for wholesale reselling. He points out that the cable companies have not been nearly as forthcoming, despite being mandated to do so in 1996. He also describes IMCAIP’s price-fixing charges as "entirely inaccurate."

CRTC disconnected
Komsic says he was "disgusted" with the CRTC ruling. "The CRTC has decided that the dial-up industry is the same thing as high-speed, and it’s not." Komsic compares dial-up to a cassette and high-speed to a compact disc. Both deliver the same product, but because of technological differences, one industry is thriving while the other is going the way of the Commodore 64.

"Looking at the ruling," Komsic says, "it seems that the CRTC doesn’t really care about promoting competition, and it doesn’t really care about the nitty-gritty of survival in the Internet world."

Jay Thomson, president of the Ottawa-based CAIP (the Association includes Bell-the application was brought forward by the independent members), says the ruling represents "a great disappointment" for the independents.

"It’s very difficult to comprehend," he says. "Increasingly, we’re recognizing that the CRTC is not going to help them out. There are avenues for appeal, but these cost a lot of money and we’ve already invested a lot. The independents don’t have the disposable income to fight regulatory battles to try to convince the CRTC how the Internet world really works." Thomson says that for smaller ISPs to survive, they are going to have to cooperate more and share resources, something that may prove difficult for former competitors. They may also move into exploring other technological options, such as wireless.

The wireless solution, however, may not be the most practical for small ISPs. "The service, when it works, is good, but there are a number of issues that have to be resolved," says Mark Quigley, research director at the Yankee Group Canada, a technology consulting firm. "It’s line of sight, so you’d have to stick an antenna on your house, which some people may have difficulty with. Also, it requires a decent amount of capital investment up front. It’s a costly service to roll out initially."
Quigley has noticed more and more small, independent providers getting out of the business. "A lot of the people who founded [the independent providers] five or six years ago were hobbyists who didn’t realize how expensive and time consuming this business would become. They’re looking at the opportunity to get out of the game because it’s gone beyond their capabilities," he says. "And I suspect it’s going to continue." :