GATINEAU – Rather than picking one system over another, the CRTC has chosen to give the large Internet providers the choice in how they charge small competitors who use their networks. The commission has, however, rejected Bell’s bid to charge on an aggregated volume basis, instead opting for a capacity-based approach.
In its much-anticipated usage based billing decision, the Commission chose capacity as the proxy over an aggregated volume method. Bell Canada and Rogers Communications Inc. advocated for the latter approach.
Bell suggested during the hearing that a capacity-based approach would result in independent ISPs keeping traffic volumes high resulting in significant congestion. The company originally wanted indie ISPs to pay for bandwidth upfront, but backtracked during the rebuttal phase, lowering its proposed rates and agreeing to allow small ISPs to pay after the bandwidth was used.
(All of our hearing coverage can be found here.)
The CRTC noted that a volume-based approach could result in independent ISPs either over or under-compensating the network operators. A capacity method relates better to peak traffic and is also better aligned with actual network investments, the Commission added.
“Therefore, the Commission considers that a capacity-based model is more consistent than a volume-based model with respect to how the network providers plan and build their own networks and estimate their usage costs,” reads Telecom Regulatory Policy 2011-703.
The CRTC acknowledged Bell’s and the cable carriers’ concerns that a capacity-based approach might incent independent ISPs to maintain high traffic levels, but that still didn’t deter the commission from going with a capacity approach. “The Bell companies and the cable carriers have not filed company-specific empirical evidence to support this argument,” the Commission writes.
ISPs that had proposed a flat rate wholesale billing method will be allowed to do so under the decision. Those companies are: Bell Aliant (in Atlantic Canada only), SaskTel, Shaw Communications and Telus Corp.
“The Commission considers that both the approved capacity model and the flat rate model are acceptable,” reads the decision. “The Commission finds that both models allow for the setting of just and reasonable rates, and fulfill the policy objectives of the [Telecommunications] Act and the Policy Direction by fostering innovative and healthy competition while ensuring regulatory efficiency and symmetry.”
While advocates for a volume-based approach are likely to be disappointed with the decision, the indie ISPs will equally be dissatisfied with the decision as it failed to recognize the 95th percentile approach as an acceptable method of usage-based billing.
According to the decision, the time and costs required to implement this approach would be considerable. “Therefore, the Commission considers that the billing and system changes required for the network providers to implement the 95th percentile capacity model would lead to significant implementation delays and uncertainty,” states the decision.
With respect to rates for independent ISPs’ use of the incumbents’ networks, the CRTC has adopted symmetrical approach in that costs, plus a reasonable markup should be comparable for all cable and telephone companies (and it has set rates for each company at each speed). But while the Commission chose to give ILECs with fibre to the node facilities an additional markup, the cable companies were left out in the cold on this.
“The Commission decides that markups for wholesale residential high-speed access services should be comparable for all network providers and the same for all rate elements within one network provider’s tariff, expect that the access and usage rate elements of the ILECs’ FTTN-based service3s are allowed a supplementary markup of 10%,” states the decision.
Cartt.ca will have more reaction later as the companies digest the decision.
