CRTC’s new usage-based wholesale ISP billing model is based on capacity not volume

16 Nov 2011

The Canadian Radio-television and Telecommunications Commission (CRTC) has reached a decision to impose a new wholesale internet access billing model, referred to as the ‘approved capacity model’, applicable where a network provider proposes to charge independent internet service providers (ISPs) separately for usage. In the residential broadband service segment, the approved capacity model incorporates the following components: a monthly access rate for each of the wholesale ISP customer’s retail subscribers; a monthly capacity charge, offered in increments of 100Mbps; and ancillary charges, including a monthly interface charge (where required) and associated service charges (as applicable). Facilities-based broadband network operators Bell Canada and MTS Allstream are now expected to alter their wholesale billing models to the new framework, whereas other major fixed network operators including Telus Communications, Shaw Communications, Bell Aliant and SaskTel, will be permitted by the CRTC to continue to charge their wholesale residential ISP customers using their existing flat rate models, which provide for unlimited internet bandwidth usage. The components of the existing flat rate model are as follows: a monthly access rate for each of the independent service provider’s retail customers; and ancillary charges including a monthly interface charge (where required) and associated service charges (as applicable).

The regulator concluded that both the approved capacity model and the flat rate model ‘allow for the setting of just and reasonable rates, and fulfil policy objectives by fostering innovative and healthy competition while ensuring regulatory efficiency and symmetry.’ The watchdog added that ISPs subscribing as wholesale customers under the approved capacity model will be required to carefully plan their monthly data allowance needs.

The decision is a partial victory for Bell Canada in that it allows a form of usage-based wholesale billing, but is altered from the volume-based model that the country’s largest fixed line telco had pushed for – which was retracted within days of being approved in January 2011 by the CRTC, under orders from the government and amidst an organised consumer backlash. The volume-based model would have rendered it impossible for ISPs to offer unlimited usage packages to their retail subscribers, and appeared to seriously limit the prospects for independent developers of bandwidth-hungry ‘over the top’ services such as online TV and films on-demand.

In a simultaneous decision, the Commission approved revised rates for the wholesale business high speed access services of Bell Aliant in its Atlantic Canada territory, Bell Canada and Telus Communications. It decided that the flat rate tariff structure for wholesale business broadband services remains ‘appropriate’. The decision added that rates for these services should be based on the incumbent local exchange carriers’ (ILECs) incremental costs of providing the services plus an ‘appropriate markup’.

See the CRTC’s decision on residential high speed access at this address:

http://www.crtc.gc.ca/eng/archive/2011/2011-703.htm

See the CRTC’s decision on business high speed access at this address:

http://www.crtc.gc.ca/eng/archive/2011/2011-704.htm

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