Canadian Independent Internet Service Providers (ISP) are preparing for our most important battle against the four providers who dominate the Canadian market. These four, Telus and Shaw primarily in the West and Bell Canada and Rogers in the East are at the same time our reluctant suppliers and fiercest competitors.
July 11 marks the beginning of the CRTC’s “Review of billing practices for wholesale residential high-speed access services”, (Telecom Notice of Consultation CRTC 2011-77). The resulting decision will set how the cost of residential wholesale services to independent ISPs is determined and influence the residential and business markets for years to come.
2011-77 was initiated in response to overwhelming public opposition against Bell Canada adding Usage Based Billing (UBB) to what they charged Independent ISPs. The CRTC initially approved Bell to charge for each gigabyte (GB) exchanged between an individual wholesale customer and their ISP. Responding to the public outcry, the calculation of the wholesale charge was opposed by the Conservative government because it was based on Bell’s retail pricing which is contrary to fostering a competitive market.
Our position is that:
1. wholesale pricing should be based on the cost of the underlying service plus a margin. This is a requirement if government and policy makers truly want Independent ISP’s to increase their market share.
2. the wholesale cost of the underlying service should be calculated as the cost of the equipment providing service to an individual customer plus usage between our customer and our network. The equipment providing the service is known as the “port”.
2a. the cost of a port should be identical regardless of its speed. The cost of ports are steadily declining and hence faster ports cost little or no more than older generation ports.
2b. the cost for usage between our customer and our network should be determined by:
– adding all customers together instead of treating each individually
– how fast the service is going, not by how many GB is passing through. The industry standard for measuring speed is Megabit per second (Mbps) and industry practice is for ISP’s to charge each other in Mbps.
– multiplying the per Mbps charge times our highest level of Mbps in a month, i.e., peak usage. We believe peak usage is the appropriate measure because the justification for UBB from our suppliers’ point of view is to contribute towards network upgrades and peak usage is the only measure of Independent ISPs contribution to network congestion, if any.
The people of Canada have spoken in favour of competition and now wait for the CRTC and the Government of Canada to redefine the wholesale pricing model for Independent ISPs.