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Phone Companies Like Bell Fear Disadvantage

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Commission To Decide How Voip Can Be Sold
Telephone Watchdog CRTC Begins Hearing Next Week
Established Phone Companies Like Bell Fear Disadvantage

September 15, 2004

By Tyler Hamilton

Is it possible to change a regulator's mind in 30 minutes?
That's roughly how long Bell Canada will have next week to convince the nation's telephone watchdog that the emerging world of "VoIP" — that is, phone service based on Internet protocol — is so disruptive and fast-moving that it wouldn't be fair to slap regulatory shackles on Ma Bell.

Next Tuesday, the Canadian Radio-television and Telecommunications Commission will begin a three-day hearing in Ottawa to determine how such an industry-transforming technology can and can't be sold to Canadians.
Another 32 parties will present their views and, after final comments are filed in October, the commission is expected to make a decision sometime this winter.

The CRTC's bias was exposed in April when, in a controversial preliminary view meant to kick-start public consultation, the regulator said Voip should be treated like any other local phone service.

In other words, Bell, Telus Corp. and other established phone carriers would still have to comply with the same price and product bundling rules associated with regulated local calling.

New Voip entrants such as Vonage, Primus and eventually Rogers Cable wouldn't face such restrictions.
Bell considers the preliminary view "flawed" because it fails to recognize how Voip is poised to alter the industry landscape.

Dvai Ghose, an analyst with CIBC World Markets, said the phone giant has a lot to lose, and the cable companies just as much to gain, if it can't persuade the regulator to take a different approach.

That doesn't appear likely to some. "They seem pretty set in their ways," said one analyst, referring to CRTC chairman Charles Dalfen and vice-chairman of telecom David Colville.

Voip technology breaks voices into packets of data and can transmit our voices the same way we send email. A form of Voip service, sometimes referred to as a "broadband telephony," lets us make phone calls through our high-speed Internet connections.

This makes it possible for foreign companies to offer local service by piggybacking on the phone company's broadband infrastructure, using relatively few resources of their own.

Likewise, it makes it easier for the cable companies, such as Rogers, to enter the local telephone business by using their existing high-speed cable services as an on-ramp.
Rogers Cable has already indicated it plans to introduce a residential Voip service by mid-2005. Vonage, Primus, and Yak are among those service providers already offering a consumer Voip service.

Imposing regulation would hurt Bell, argued Mirko Bibic, chief of regulatory affairs at Bell. The company would be required to file a tariff to the CRTC, and wait an average of 63 days for approval, every time it wanted to change the price or structure of a Voip offering. The lag time would make it difficult for Bell to respond competitively to rival offers, Bibic said.

Ted Rogers, founder and chief executive of Rogers Communications Inc., disagrees. His long-standing concern is Bell has an unmatched ability to discount and bundle products, making it difficult for newcomers to make a dent in the market.

If the CRTC doesn't remain firm with Bell, Rogers could roll back its plans. "We simply will not go into it unless there are changes to the regulatory system," Rogers told the Star this year.

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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

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