ISPs debating pricing models at CRTC

As the Canadian Radio-television and Telecommunications Commission considers Bell Canada’s proposal for aggregated volume pricing for its wholesale customers, the regulator is also planning on a new interim cost structure that some critics fear will lead to bill increases in the meantime.

The interim solution, which would apply while the CRTC considers the broader issue of how the big telecommunications companies bill their wholesale customers, would set network access rates based on the provider’s lowest retail prices for the corresponding speed options minus $7.50. There would be no usage-based fee.

“No inferences of any kind should be drawn from the fact that this interim tariff, given its short transitory nature, contains no separate usage component,” the CRTC said in announcing the interim rates.

The regulator says the change would allow the wholesalers access to new speeds to offer to their customers, but groups like the British Columbia Broadband Association said they were concerned about possible price increases for some users. At the same time, the Public Interest Advocacy Centre warned about the effects of any proposal to apply the interim rates retroactively, something it said “could have a disastrous effect upon competition and customer choice in the retail high-speed Internet services marketplace.”

In the meantime, Bell has been arguing in favour of its proposed aggregated volume pricing model after cancelling plans for usage-based billing following a public outcry. Under Bell’s proposal, wholesalers would pay for its services according to two components: a flat-rate access fee and one based on their customers’ total usage. Wholesalers could buy bandwidth in one-terabyte blocks in advance from Bell. In its submissions, it argues aggregated pricing doesn’t prevent high bandwidth usage, allows wholesalers to devise their own business models, and ensures that those who use the least bandwidth aren’t subsidizing people who use the most.

The CRTC hearings began yesterday and are expected to continue at least through this week. Already, CRTC chairman Konrad von Finckenstein has rejected calls to broaden the scope of the hearings by considering the prices Canadians, including those who are direct customers of the big telecommunications companies, pay in general for Internet services.

“We believe that retail rates . . . are best set by the market,” he said as the hearings began.

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