CRTC's ruling on VoIP

[Rehan]

From http://www.theglobeandmail.com/servl...ry/Technology/ :

CRTC reins in major carriers on VoIP

By SIMON TUCK
Thursday, May 12, 2005 Updated at 10:10 PM EDT
From Friday's Globe and Mail


Canada's telecommunications regulator ruled Thursday that the country's dominant phone companies will not be able to set their own prices for on-line telephone services, part of its effort to create more competition and lower prices in the budding market.

The Canadian Radio-television and Telecommunications Commission rejected the arguments of the country's largest telephone companies — Bell Canada and Telus Corp. — who had argued that voice over Internet protocol (VoIP) should be left unregulated like other Internet applications.

Instead, the commission decided that it would regulate the large phone companies' prices in the VoIP market, preventing them from cutting rates to keep out rivals — at least until there is legitimate competition in local phone services. The large phone companies' challengers, however, such as upstarts and cable companies, will not have their VoIP prices regulated, as The Globe and Mail reported last week.

CRTC chairman Charles Dalfen said the market could reach an acceptable level of competition within the next two years. “This is precisely the moment when Canada needs a regulatory framework that will provide the quickest road to competition,� Mr. Dalfen said.

Bell and Telus reacted harshly to the ruling, and they plan to appeal the decision to the federal cabinet and may launch legal challenges.

Lawson Hunter, executive vice-president of regulatory affairs for BCE Inc., which owns Bell Canada, called the decision “a historic mistake for Canada and for our consumers.� He also said the commission was “retarding investment and choice,� and said the CRTC “doesn't understand where technology is heading.�

Janet Yale, executive vice-president of government and regulatory affairs at Telus, called the ruling a “missed opportunity,� and added that Internet applications should not be regulated.

The country's largest cable companies had told the CRTC last fall during VoIP hearings that prices had to be regulated, or the big phone companies would temporarily lower prices in the budding market in a bid to thwart competitors.

Peter Bissonnette of Shaw Communications Inc. said the decision will allow his company's recently announced telephone service to prosper.

He added that it would have been “very, very, very difficult� for Shaw and “virtually impossible� for smaller firms to enter the sector if the CRTC had not imposed price regulations on the incumbents. “They clearly would be pricing in a Machiavellian way to make it economically unviable for us to get into that business.�

VoIP is a technology that allows for telephone services over the Internet and the ruling is expected to be a key in determining which industry — and which companies — gain the early edge. It is estimated that about 25,000 Canadians use VoIP services, although some analysts expect that number to increase dramatically in the coming years.

Analysts also say the battle over VoIP is part of a larger conflict between two converging sectors: cable and telephone. Technological change is creating a collision between the two industries, allowing them to roll out similar products using different methods.

Mr. Dalfen said the ruling is part of a broader attempt to make the local phone market more competitive. Seven years after the market was technically opened for competition, the large incumbents still control 97 per cent of the market.

The decision opens the VoIP market — and therefore the core of the large phone companies' businesses — to smaller players such as Primus Telecommunications Canada Inc. and Vonage Holdings Corp. and to cable companies such as Shaw, Rogers Communications Inc. and Vidéotron Ltée.

Bill Rainey from Vonage said the ruling will be good for consumers. “The customer now has real, real choice because the decision ultimately has supported real pro-competition,� he said. “This decision is kind of like a dawn of real competition for local services. It opens up that door.�

The cable industry, which is making massive investments in VoIP products, sees a big opportunity.

Ken Engelhart, vice-president of regulatory affairs for Rogers, said the ruling was in line with what the company expected, given that VoIP services are bought and sold as phone services. “It's something we were counting on.� Rogers plans to begin offering its VoIP services this summer, part of a wave of cable offerings in the market.

The phone companies are also in the early states of entering the VoIP market. Telus and Bell have both unveiled VoIP products in the corporate market, and Bell also launched VoIP services for consumers in three Quebec markets earlier this year.

The CRTC's effort to increase competition in local phone services has also included recent announcements to:

--Respond more quickly to phone companies' applications for changes to the prices they can charge customers.

--Set new rules in about a year that would outline at what point the CRTC won't regulate the local phone services market.

--Allow regulated phone companies to offer promotions to customers in local markets.

The local phone services market remains the final piece of the telecommunications services market where the CRTC still regulates price.

Two commissioners, including vice-chair of broadcasting Andrée Wylie, issued dissenting views, saying they thought VoIP should have been treated as an Internet service. Ms. Wylie said the commission should have allowed market forces to rule, instead of issuing “static� restraints on some VoIP providers and not on others.

Commissioner Andrée Noël said VoIP is “still an Internet service.�

With files from reporters Catherine McLean and Patrick Brethour

[Kwirky]

Well, that sucks... just when VoIP could've gotten a big boost from the big telcos, the CRTC smacks them down, damnit.

[Gee]

That is a mistake from the CRTC.

So, the big telcos play with a different set of rules?

What happened to a level playing field?

[NG]

So......I'm on the fence. To be honest I don't care about Bell one way or the other however will this decision increase or decrease the price of VOIP service/hardware?

[Madcatmk2]

Well, Bell is extremely abusive with their phones lines and their 50$(+25 to keep phone number) installation and 4$ dial tone fees. Remember not so long ago when they charged 40$ or more each month from long distance calls on your bills? Then the CRTC has ruled against Bell and that let sprint Canada flourish our rights to have cheaper long distance rates. Remember, those people are working hard and they do it for us.

[Rehan]

So......I'm on the fence. To be honest I don't care about Bell one way or the other however will this decision increase or decrease the price of VOIP service/hardware?

The goal of the decision is to keep prices competitive.

From another article:
Commission chairman Charles Dalfen, citing the established phone companies' 98-per-cent grip on the residential telephone market, said without price regulation it would be too tempting for carriers such as Bell and Telus to engage in predatory pricing tactics aimed at killing new VoIP services before they take root. The whole goal is to prevent the dominant phone providers, in the words of Dalfen, "from nipping competition in the bud."

"The major risk to that new competition is the power of the incumbents to price VoIP below their cost of providing it. That would make it impossible for new competitors to make the investments they need and to gain a foothold in the market."

[Gee]

So......I'm on the fence. To be honest I don't care about Bell one way or the other however will this decision increase or decrease the price of VOIP service/hardware?

The CRTC is worried that Bell would drop the price to $5 per month just to scare away the compeition. Once the competition is gone, then Bell can raise their price to $40. So the CRTC is going to regulate the price for Bell and Telus. The other VoIP operators don't have the regulation. So they can charge what ever they want.

In other words, Bell and Telus will have the highest price, because the CRTC will set the price for them and everyone one else will be a few dollars cheaper.

Overall I think it is bad.

Well, Bell is extremely abusive with their phones lines and their 50$(+25 to keep phone number) installation and 4$ dial tone fees. Remember not so long ago when they charged 40$ or more each month from long distance calls on your bills? Then the CRTC has ruled against Bell and that let sprint Canada flourish our rights to have cheaper long distance rates. Remember, those people are working hard and they do it for us.

I have used Sprint and Allstream. I must say, nothing beats the reliability you get from Bell. As much as we all hate them. You have to consider that even though we pay a hefty amount, we get great service and it is a lot cheaper than that States where it is a long distance to call your neighbour.

I am sure the VoIP service will be top notch. They already have agreements with other cities with local phone switching and it is not a stretch to extend that to IP.

[mlc2000]

I remember those $40 phone bills. Guess what? I still get 'em.
While long distance rates have dropped substantially, local service has risen substantially at the same time.
Bell had no choice on telephone rates, prior to the new competition.
The CRTC dictated the rates to Bell.

I think its high time they started charging $4/mth to people WITHOUT touchtone service - do u think its possible that BELL has paid for the touchtone technology yet?
How about all the money they saved by having you press 1 for this and 4 for that,etc. or all the revenue they now collect with their touch tone add-on services?

Well, Bell is extremely abusive with their phones lines and their 50$(+25 to keep phone number) installation and 4$ dial tone fees. Remember not so long ago when they charged 40$ or more each month from long distance calls on your bills? Then the CRTC has ruled against Bell and that let sprint Canada flourish our rights to have cheaper long distance rates. Remember, those people are working hard and they do it for us.

[luthair]

It could be worse, there are some areas that have a forced monopoly. Offhand I'm not sure of the exact cost but we pay more montly for services than Bell etc. On the plus side their DSL service is nice, fast and no caps

[synaptech]

How does this affect Rogers (Cogeco, any cable)? Are thay classed the same as Bell or does this provide them an advantage?

[Rehan]

How does this affect Rogers (Cogeco, any cable)? Are thay classed the same as Bell or does this provide them an advantage?

Cable providers will be treated like Primus and Vonage rather than like the big telcos. One of the smaller VoIP providers, Babytel, is not happy with the ruling because they wanted the cable providers to be regulated also.

[Gee]

It could be worse, there are some areas that have a forced monopoly. Offhand I'm not sure of the exact cost but we pay more montly for services than Bell etc. On the plus side their DSL service is nice, fast and no caps

City Place is like that. It is a group of Condos near the CN Tower. The entire building is running on Telus. You are not allowed to order services unless it is from Telus. The prices are outrageous.

$60 - Telephone
$60 - Internet

Even the cable service has to come from them. There is nothing special about their telephone service except the building is completely wired. The internet is really fast.

It is like 8 Megs down and 3 Megs up and it is unlimted.

How does this affect Rogers (Cogeco, any cable)? Are thay classed the same as Bell or does this provide them an advantage?

They have an advantage because they can charge whatever they want. Bell has to charge a minimum. So who would you buy from?

Bell at $40
Rogers at $29

[[H]ackerK]

City Place is like that. It is a group of Condos near the CN Tower. The entire building is running on Telus. You are not allowed to order services unless it is from Telus. The prices are outrageous.

$60 - Telephone
$60 - Internet

Even the cable service has to come from them. There is nothing special about their telephone service except the building is completely wired. The internet is really fast.

It is like 8 Megs down and 3 Megs up and it is unlimted.

Yea, I have a friend who lives there... But he said the contract is only applied to FIRST 2 Yr. after that you can switch to whatever provider as you like. but he said most peopl are just too lazy to switch. And yup, he said the internet speed there really kick @ss! As for phone, he said most people just use cell or VoIP...

But yup, I don't mind to pay $60 for the same kind of internet service if I can get it in my area....

[temporalillusion]

The concern I guess would be that Telus or whoever uses profits from their other business to subsidize their VoIP unit to stifle competition...

My concern is more about service.. if there's 20 different little VoIP companies each run out of some guy's basement, what about 911 access? What about service level agreements? Telephone service is pretty necessary; if there's an emergency in my house I don't want to have to worry that my phone provider's servers are down... Is that something that's regulated for current land line providers like Bell and Telus? And is that something that will be regulated for any new VoIP startups?

[NG]

The concern I guess would be that Telus or whoever uses profits from their other business to subsidize their VoIP unit to stifle competition...

My concern is more about service.. if there's 20 different little VoIP companies each run out of some guy's basement, what about 911 access? What about service level agreements? Telephone service is pretty necessary; if there's an emergency in my house I don't want to have to worry that my phone provider's servers are down... Is that something that's regulated for current land line providers like Bell and Telus? And is that something that will be regulated for any new VoIP startups?

The CRTC has mandated they all have 911 access - However if the power goes out so does your phone and 911. Even a charged cell with no time on it would fix that since you can use those to call 911.

The only real concern, imho, is something like another blackout. If the quality was there, the price was much cheaper than I'm paying now and the hardware cost outlay was non-existent/miminal then I'd hop the fence.