07/11/2011 10:45 EDT | Updated 01/24/2012 01:03 EST

CRTC Hearings: Usage-Based Billing Hot Topic For Latest Talks

THE CANADIAN PRESS -- MONTREAL - Independent Internet service providers contribute significantly to network congestion, and the price they pay to large telecom companies should reflect that, BCE Inc. told a regulatory hearing on Monday.

Bell executive Mirko Bibic said wholesale independent service providers make up 17 per cent of users in Ontario and Quebec and drive 29 per cent of total traffic on Bell's network in those provinces.

"No single user or wholesale customer is the cause of congestion," Bibic told the Canadian Radio-television and Telecommunications Commission.

"But clearly, wholesale users contribute a disproportionate share of total traffic, and by extension, congestion," said Bibic, senior vice-president of regulatory and government affairs at BCE.

The federal regulator is reviewing how BCE's Bell Canada (TSX:BCE) and others charge independent Internet providers for the use of their networks.

CRTC chairman Konrad von Finckenstein told the hearing that the commission is only looking at the wholesale prices that independent Internet providers pay for network use and not the retail rates that are charged to their consumers.

"We believe that retail rates (i.e. the prices charged by ISPs to consumers) are best set by the market," he said via webcast. "The issue has not and will not be part of the commission's considerations."

Animator and cinematographer Grayden Laing said usage-based billing will result in Canadians watching fewer online videos of all types and returning to more standard TV viewing.

"The Internet, the way it's set up right now where it's affordable, allows people to produce original content and distribute to an audience that's interested in watching it," Laing told the CRTC.

"If these prices go up, people are going to be less likely to watch original content and they will return to the things that they know."

Mark Coatsworth, who runs a small tech firm that provides online-based software and web services, said usage-based billing "cripples" Canadian businesses in the digital economy.

"It makes us as businesses unable to compete in a rapidly expanding online services market," he said, of Toronto-based Built by Giants.

"As a result consumers and businesses are turning to the U.S.A. for their online services. Canadian businesses in the technology services market are already not competitive due to high operating costs."

The CRTC launched the review after a social media campaign against a CRTC ruling, which independent ISPs said would force them to charge their retail customers for usage above a certain level -- as many large providers do.

The smaller ISPs, known for their unlimited plans, argued they would be driven out of business if they had to use the same pricing model employed by the large players.

Bell withdrew its usage-based billing plan earlier this year and is proposing wholesale pricing for ISPs that reflects a flat-rate access fee based on speed plus $200 per terabyte. If an ISP uses more data than it has bought for the month, under the Bell plan, it would be charged 29.5 cents per gigabyte for any extra data.

Von Finckenstein asked Bell how its new proposal would help consumers.

Bibic said independent service providers would have "total flexibility" to design their pricing packages as they see fit to accommodate network usage.

He said larger independent service providers will be able to financially manage Bell's pricing proposal, while smaller providers may have to pay more when there are major news events that cause traffic spikes.

Telus Corp. (TSX:T) said it's not proposing usage-based billing for its wholesale Internet customers and offers a flat-rate service.

"Telus is acting under the assumption that, should the CRTC approve a specific usage-based tariff for Bell or any other carrier, Telus will still have the right to continue to offer service on a flat rate basis if that is what the market it operates in demands," Telus said in a prepared brief.