Mark Goldberg


www.mhgoldberg.com





The Canadian Telecom Summit

Fox Group Dispatch

Dissension in the ranks

The Executive summary of yesterday’s CRTC’s decision [2010-255] on wholesale usage based billing (UBB) was almost Orwellian in its doublespeak:

The Commission approves, with changes, applications by Bell Aliant and Bell Canada to introduce an economic Internet traffic management practice for their wholesale Residence Gateway Access Services (GAS).

Right. I remember some of the parenting books trying to teach us how to always answer our kids with a yes, such as: yes, you can have that cookie, just as soon as you finish eating your chicken and salad. Yes, of course you can watch more TV, when your homework is finished.

So, a number of people fell for the CRTC’s positive approach to executive summary writing. A tweet read:

Bell’s government arm, the #CRTC has approved usage based billing on resellers. Double dipping on bandwidth chargers. http://bit.ly/cxAJtD

In reality, Bell and Bell Aliant have been told that they have to eat their dinner first. In fact, they have to do all their homework, eat a good dinner, wash the cars, take out the garbage and play nice with their little sisters for the next few years before they can have that cookie. And they got their allowance cut.

Was this decision really an approval of usage based billing? It certainly was not the decision that Bell wanted.

Here is how the CRTC phrased the precondition:

the Commission concludes that each Bell company may implement its economic ITMP only once it charges UBB rates to all its retail Internet service customers.

Which customers don’t have UBB? The customers who have been around the longest. The most stable, least likely to churn customers are precisely the ones that are standing in the way of wholesale UBB.

In other words – there will be no usage based billing for wholesalers in the near future. If you are a Bell retail internet subscriber with a legacy unlimited data plan, why would you voluntarily get rid of it? Maybe some people could be bought out, but all it will take is a single hold out. If I was working for an independent ISP, I would find a Bell customer with such a plan and pay them to make sure they never voluntarily give up their unlimited service.

On top of this, the CRTC adjusted [downward] the pricing for the wholesale service – the cut in allowance. The lower rates are coming into effect virtually immediately [the tariffs are to be filed within 15 days], improving competitor margins by about 10 percentage points. Given the reductions, it appears highly unlikely that the CRTC will permit the $2.00 price increase that Bell proposed in mid February. So that is a double win for the competitors.

When you read the dissent by Commissioner Molnar, you can get a sense of where this could be heading. She writes that there are three ways that the majority may have contravened the Policy Direction in three ways:

  • the requirement to use measures that are “efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives.”
  • the requirement that regulatory measures “neither deter economically efficient competitive entry into the market nor promote economically inefficient entry.”
  • the requirement measures be “implemented in a symmetrical and competitively neutral manner.”

The bottom line: usage based billing for wholesale will not be seen in 2010. The decision appears to have been a victory for independent ISPs.

The issue of UBB for wholesale internet customers is certain to be raised during the regulatory blockbuster at The 2010 Canadian Telecom Summit taking place next month on June 7-9.

Have you registered yet?

Download the complete conference brochure here [pdf, 1.2MB].

9 comments to Dissension in the ranks

  • So seeing as my Tweet was the quote above, I think I will respond.

    I was under the belief that in essence, with Bell’s overage charges they were in fact already charging UBB in a bulk sort of way. So adjusting this to be per GB as apposed to a lump sum the moment you cross 60GB was a matter of a notice to users that their bills might go down (only being charged for what they use instead of a one time overage charge to the max of UBB under 300GB).

    If what you say is true, that since there are still a number of legacy customers on unlimited plans with Sympatico, then yes I can see this as a win for independent ISPs.

    One thing I am not clear on however, is how many are still on unlimited, and what speeds do they have? An incentive to move out of unlimited could be a huge bump in speed.

  • Josh

    Bell worried about losing a small percentage of users with unlimited accounts because they’ve been around the longest? Puh-leease. Bell doesn’t care about them.

    It’s very simple. With UBB now approved, Bell will be cracking down on Wholesale clients who are p2p’ing like crazy, running high bandwidth servers and bonding multiple DSL connections (their usage is in the *terabytes* per month).

  • Jean-Francois Mezei

    Bell is on record in the 7181 proceeding as stating that it is slowly increasing the monthly cost for those still un unmetered plans. Bell simply needs to accelerate this price increase and start to offer attractive plans at lower prices to shift them off “unlimited”.

    While Bell cannot offer free usage and must now stay within the published rates, Bell is still free to play with the base internet access rates since those are totally detached from regulatory regime. So Bell can offer someone $0 internet access, and charge $50 for usage which would give the user the same amount of usage he consumes now at the same price he pays.

    BTW, The CRTC did NOT lower the base rates for GAS service. The monthly rate remains at $20.50 with 3 year contract. They adjustest some one time service fee. And for the same reason UBB was approved, that $2 increase will also be approved: GAS is no longer an “essential” service and Bell can do as it wishes.

    GAS is no longer wholesale, it is resale of a servuce whose every terms of service is dictated by Bell. The TN7181 includes the application of Bell Canada retail terms of service to the customers of Bell Canada’s fomer competitors.

  • I stand by my statement that GAS prices have dropped. Refer to the appropriate tariff pages.

  • adsf

    bell is just trying to kill off smaller isps so they can buy them out
    and only bell and rogers can offer limited internet for everybody in the country.

    does bell management know how much they are going to hurt average people who use
    the internet and like the service they get from small isps ?

    i also want google to come in and crush rogers/bell

  • Jeff M

    Bell got exactly what they want they made it harder for smaller ISPs to differentiate themselves from Bell’s retail services and Bell doesn’t have to worry about losing TV subscriptions to Internet based services. Lets not forget thats the real reason bell throttles traffic and introduced UBB in the first place. GAS might be cheaper now but 60 gigabytes a month and Internet throttled to 25kb/s between 4:30PM and 2:30AM is a hell of a price to pay. I know that my bill is going up and its been a stable price for over 2-years. While other countries are declaring the Internet a fundamental human right we deal with restrictions on Internet almost no other western nations have to deal with.

  • adsf

    there are a lots of fancy execs at the internet telecom conference .. the cable / phone / government guys
    can you ask these folks if they will also be limited to 60 gigs ? when ubb comes…do they
    have to pay bell extra money if they go over ?

    once UBB comes around – i figure bell will be #1 most hated company among internet users
    and they will have a hard time selling any sort of product / service to them

  • Jean-François Mezei

    I stand corrected. The 255 decision had a few statements where the CRTC revised downwards certain cost estimates that had been furnished in confidence by Bell (and therefore not part of the public record and thus not debated) they didn’t provide much explanation on the reduction of the per-ADSL line costs. But at the end, they did provide a new GAS base fee table with a $1.30 reduction on all variations at the 5mbps level. (didn’t check the other levels).

    Bear in mind that Bell already has a $2.00 tariff increase request at the CRTC and when that is granted, it will have given Bell a net $0.70 increase on the fixed per-line GAS fee. (This $2.00 icrease has been requested for Ontario only ( TN 7239 )

    The number of GAS end users who exceed 60 gigs per month will generate far more revenue for Bell than the money lost from the base fee.

    Bell Canada has long ago stopped offering unmetered packages, and it grandfathered its remaining customers to prevent too much churn towards ISPs that still offered unlimited. But with unlimited now totally gone from Ontario/Québec residential market, Bell won’t have any problem, retaining those customers as they are transitioned to metered plans since they have nowhere to go. This is not a big burden on Bell, especially since they can now blame the CRTC for this when they explain to their customers that the CRTC has mandated that Bell stop offering unmetered plans.

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