Bell says tariff rules will put its VoIP plans in jeopardy

Next week Bell Canada plans to counter the view by the Canadian Radio-television and Telecommunications Commission that Internet protocol technology be regulated in the same

way as regular telephone services.

“”What the preliminary view does is it seeks to regulate the incumbent telephone companies like us for the wrong reasons,”” said Mirko Bibic, chief of regulatory affairs for Bell Canada.

“”In our view, when the commission looks at this, it has to look at the conditions of the market,”” including a fundamental shift in the industry and the fact there’s no longer an incumbency advantage, Bibic explained.

Bell argued VoIP, which allows customers to gain access to their home or office phone from any high-speed Internet connection in the world, also offers consumers personalized, Web-based functions and customized features, such as sharing files and speaking via video on a PC.

The CRTC needs to look at “”the structure of the market and (needs) to ask themselves, ‘Is regulation necessary?'”” said Bibic.

The CRTC apparently thinks so. It spelled out its preliminary views on voice over Internet Protocol services in last April’s Public Notice 2004-2. It said VoIP services use telephone numbers that conform to North American numbering plan protocols and allow subscribers to call and/or receive calls from any telephone with access to the public switched telephone network anywhere in the world. Therefore, it said, VoIP services are functionally the same as those of circuit-switched voice telecommunications services.

Under the CRTC’s initial ruling, incumbent local exchange carriers (ILECs) providing VoIP services in their incumbent territories need to respect existing tariffs or file proposed tariffs whenever asked.

These added costs and corresponding delays are at the heart of Bell’s concern about the treatment of VoIP services. Bibic said every time the company wants to launch a VoIP product, change its pricing, change or remove a feature, or include VoIP as part of a consumer bundle, it has to file a tariff and gain approval.

“”On average, for us at Bell, it takes the commission 63 days to review a tariff application,”” said Bibic, and added this period excludes Bell’s preparation to file the tariff and readying the product for the market following the CRTC’s blessing.

The tariff rules put Bell at a disadvantage relative to its VoIP rivals, Bibic said, referring to two competitor announcements last week that caused the price of VoIP consumer services to drop to $25.

Had Bell filed an application at the time related to its still-unapproved consumer VoIP service, “”we’d be sitting here this week scrambling back in Gatineau to get a new filing in. So it’s a neverending cycle, and it’s going to be a big problem.””

It’s especially troubling to the incumbent crowd because low entry barriers to the VoIP market are ushering in newcomers, explained Lawson Hunter, executive vice-president of BCE. He said there’s no need to build or maintain transport infrastructure in certain cases, and the system saves bandwidth because it works only when someone speaks.

According to Nortel’s submission to the CRTC, in fact, VoIP saves 50 per cent in capital costs and 30 per cent in operating costs, Hunter explained.

As competition heats up, new players may have a weak brand or, like retailers, lack a track record in telecom services; other service providers may choose to partner, he said, refusing to say whether Bell may go this route. “”Who knows where this will all end? It may be a free-for-all.””

As it stands, the first two telecom firms offering VoIP to Canadian consumers were American: Primus and Vonage, said Hunter. They were joined by Telus last October; Navigata in April; babyTEL in May; Comwave and Wood Lake Cable in June; Allstream and Sprint Canada in July; and Yak in September. Rogers intends to launch a version in mid-2005 and Shaw in late 2004. Companies like BCE, Cogeco and Vidéotron are yet to debut their services.

Lawson, meanwhile, said the the regulatory environment needs to keep pace with a technology that’s advancing quickly. Yet, among the technology’s limitations is the possibility 911 services may not be offered; it may not work during a power failure or when an Internet connection is down; and it may not be secure.

The CRTC’s three-day hearing beginning Sept. 21, in which 33 groups will present their cases, will culminate in a decision expected early next year.

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