OTTAWA – Usage-based billing (UBB) threatens to limit the benefits that innovative and creative businesses such as those involved in cloud computing could bring to the Canadian economy, Industry Minister Tony Clement told a Parliamentary committee Tuesday.
Speaking to the House of Commons Standing Committee on Industry, Science and Technology on Tuesday, Clement argued that the CRTC’s UBB decision is not consistent with good public policy and “is quite simply the wrong way to proceed.”
“Independent ISPs must not be forced to adopt the same retail pricing strategy as the incumbents. To do so is to limit consumer choice and remove meaningful competition from the market,” he said during his opening remarks. “The cutting edge of cloud computing services relies on customers and clients, many using residential lines, having fair and affordable Internet access. So without the right competitive pressures, usage-based billing threatens to choke off these types of innovative businesses and the benefits they can bring to Canadian consumers and Canada’s digital economy.”
Clement acknowledged that the large carriers should be compensated by small ISPs for use of their network, but UBB is not the right mechanism. It “must be done in a way that does not limit consumer choice,” he said.
The Industry Minister also questioned the incumbent carriers’ use of UBB to combat network congestion, noting that the CRTC allows for transparent measures. But UBB is not transparent, Clement argued.
“What is clear, however, is that there is nothing transparent about applying or imposing usage-based billing on independent ISPs. There’s nothing transparent about how the imposition of this business model has any direct correlation to the real costs of provision of wholesale services,” he said.
In fact, Clement hinted that he didn’t believe congestion existed to the level that the large ISPs claim, saying “The question of network congestion, whether it in fact exists, and if it exists at a level incumbent ISPs claim, is a subject of some debate.”
The first step to fighting network congestion, he said, “must be investment in newer and better networks. Clearly it’s in the best interests of all ISPs to continually work to provide better network access and speeds as part of a competitive business mode.”
After significant public outcry and pressure from the federal government, the CRTC last month decided to review its own decision.
Clement insisted that if a second decision on UBB remains largely the same the federal government won’t hesitate to use its powers to intervene.
“If the CRTC’s decision does not adequately address the needs of Canadian consumers, small businesses, and innovators and creators, the government has powers under the Telecommunications Act to intervene,” he said. Under questioning, Clement added that the government has “the obligation under the Telecommunications Act to vary or refer back a decision that cabinet feels is contrary to the public policy.”
Opposition MPs on the committee raised the 2006 Policy Direction in questions and wondered why the government is so steadfastly against UBB when the CRTC has to justify the compliance of its decisions with the Policy Direction.
“There was a series of decisions made regarding UBB that are consistent with what I believe was given in 2006. Are you saying that these guidelines have been changed or the CRTC didn’t follow them? If they didn’t follow them, what is it that didn’t quite match up with the original policies?” asked Liberal MP Anthony Rota.
“On the UBB decision I have been very clear,” Clement said. “If you want choice in competition you can’t force down the throats of the independent ISPs a business model that means that they can’t compete with their own business model. That’s not choice in competition.”
A Clement appearance at an Industry Committee meeting wouldn’t be complete without a least a few questions on the Globalive Wireless, the 2008 Advanced Wireless Services spectrum auction, and the upcoming 700 MHz spectrum auction and his appearance Tuesday didn’t disappoint.
NDP MP Brian Masse suggested the government can’t be trusted to establish a proper spectrum auction framework because it will simply end up in court. He was referring the ongoing saga of Globalive’s (now Wind Mobile) ownership structure. Globalive and the federal government both appealed a Federal Court ruling and hearing at the Federal Court of Appeal has been set for May 18.
“You talk about the fact that you really want to improve competition, and then you talk about the spectrum auction that we had, but you screwed up the last one. We have now a court case and greater uncertainty. What makes you think that Canadians can trust you with this important asset for the next round?” Masse asked.
Clement responded that the government’s policies have been crystal clear.
“We favour policies that give more competition and choice to consumers either in wireless or Internet or other aspects of the sector. If we feel that something might be threatening that, that is a huge threat to the future of our economy,” he said. Canada should be a leader in cloud computing, but “if we have the wrong structure in place then that will not occur in this society so the stakes are very high.”
Masse pressed Clement on the level of uncertainty the Conservatives have created in first overturning the CRTC’s decision on Globalive’s ownership and then appealing a Federal Court ruling upholding the Commission’s original decision.
“How is that good for consumers? How is that good for a company looking to invest in Canada?” he asked.
Clement stuck to his key messages.
“We made as a department a factual decision that Globalive in that case was as Canadian as it needs to be pursuant to the Telecommunications Act,” he said. “We have legal reasons why we think we’re right on the court case. I won’t bore you with those details. But I will tell you that behind the legal reasons why we’re right, there’s also the public policy that is right – more competition, new entrants, the idea that people have choices in their wireless, that they’re not just beholden to a duopoly or an oligopoly in that regard.”
