Montreal – November 23, 2005 –The Coalition of Quebec Internet Service Providers, comprised of 15 independent companies¹, today lodged its complaint under Part VII of the Telecommunications Rules of Procedures with the Canadian Radio-Television and Telecommunications Commission (CRTC).

The document ultimately strives to end what the Coalition calls the “unfair conduct of Bell Canada with regards to the provision of High Speed Internet Services.”

The Coalition’s two main complaints relate to Bell Canada’s “taking advantage of its dominant position” regarding ‘High Speed Basic’ Internet access and its long-term, so-called promotional rates that are unfair.

“Bell Canada gives with one hand and takes with the other,” said Sophie Léger, spokesperson for the Coalition of Quebec ISPs and President of Inter.net Canada. “On one hand, the company fulfills its obligation to ensure a competitive landscape by providing wholesale services to its competitors. On the other hand, however, Bell stifles that same competition through a dangerous retail strategy. This strategy offers consumers services such as 256K ‘High Speed Basic’ on a promotional basis at rates substantially below our costs, an unfair technique commonly known as margin squeeze.”

“Smaller ISPs simply cannot compete with Bell’s retail rates for its flagship Sympatico Basic ADSL services, offered at $19.95 per month. We believe this rate is in clear violation of CRTC directives because it is below the wholesale tariff, therefore we cannot afford to offer this product to our customers,” added Léger.

First introduced by independent ISPs over 10 years ago, Internet access has steadily been shifting from dial-up to high-speed over the last five years, and Bell Canada is the main beneficiary. Bell Canada’s Lite ADSL, introduced in 2002, is no longer a bait-and-switch product but a mainstream product, and its Sympatico Basic service is touted in ads as, “faster than dial-up at lower than dial-up prices.”

Smaller ISPs, unable to effectively sell ‘High Speed Basic’ service because of Bell’s unfair retail price policy, are seeing their subscriber base and revenues decline at an alarming rate.

“The CRTC is failing to administer a regulatory framework that will ensure sustainable competition in the Internet services market,” Léger said. “And if local ISPs are not given a legitimate opportunity to survive against Incumbents—who own 90 % of the market already— consumers become dangerously close to losing all other viable choices of Internet service providers. Consumers are the ones, ultimately, who will suffer.”

The Coalition’s complaint under Part VII of the Telecommunications Rules of Procedures also takes issue with several of Bell Canada’s other unfair practices including below-cost pricing of services to consumers, unfair use of promotional rates, harsh penalty charges for early contract termination to discourage consumers from switching back to independent ISPs, and margin squeezing of ISPs who resell Bell Canada’s services.

“Our goal is to solve this problem now so that consumers will continue to have a choice of Internet service providers in the years to come, when a vast array of emerging and future technologies will affect our everyday lives. With Voice over IP on the rise and IPTV on the way, we want to ensure that our current services remain competitive so that we may lay the groundwork for a successful future,” Léger explained.

After Bell Canada refused to settle these disputes through bilateral negotiations, the Coalition determined the necessity of filing a complaint under Part VII of the Telecommunications Rules of Procedures with the CRTC, invoking their rights under the Telecommunications Act and the Competition Act.

The Coalition’s requested remedies to the situation are several-fold and include:

- Invalidating Bell Canada’s $100 charge levied on consumers for early contract termination when switching to a Bell Canada wholesale customer such as a member of the Coalition.
- Declaring that Bell Canada’s renewal of 12-month promotions at the same rate will result in CRTC reevaluation of the mark-up on competitors’ rates, to avoid any margin squeeze.
- Limit the mark-up which Bell Canada charges for its wholesale service to the same which Bell Canada satisfies itself with for its own retail operations.
- Request Bell Canada to submit to the CRTC new rates based on up-to-date costs, as their ADSL equipment cost has plummeted by over 50% over the last three years.
- Declare that the Bell Canada ADSL service is a near-essential service when obtained directly from the central office.

The Coalition’s complaint under Part VII of the Telecommunications Rules of Procedures comes on the heels of the CRTC’s 2005 Telecommunications Monitoring Report, released October 31, 2005. The report, which provides an up-to-date analysis of the industry over the past five years, shows that the market is undoubtedly becoming increasingly less competitive.

The report states that while dial-up revenues sharply decreased overall in 2003-2004, incumbent telephone companies across Canada actually increased their dial-up revenues during this time by $12.8 million or some 500,000 customers. This gain came directly at the expense of the smaller ISPs.

“Thus far, the CRTC has not fully settled the dispute between smaller ISPs and the larger telecommunications companies,” Léger said. “In fact, the CRTC made a decision regarding ‘High Speed Basic’ in May 2004. More than 18 months later, however, the CRTC has yet to mandate anything.”

“The inaction on the part of the CRTC is in fact action in favor of Bell Canada, and every day that goes by in which a decision is not made increases the difficulties faced by smaller ISPs,” Léger added.

About the Coalition of Quebec ISPs

The Coalition of Quebec Internet Service Providers, a group formed of 15 Quebec ISPs, has come together to defend the best interests of consumers and smaller Internet service providers.

The Coalition believes consumers are better served in a market promoting fair competition. The Coalition’s mandate, therefore, is to advocate for CRTC regulations to end the problems encountered by unsustainable competition in the Internet and telecommunications market today, as well as to raise public awareness on issues ultimately affecting us all.

For more information about the Coalition of Quebec Internet Service Providers, please visit www.quebecispcoalition.ca.

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¹ For a listing of Coalition members, to find their complete list of requests or to read the official transcript of the Coalition’s Part VII complaint, please visit www.quebecispcoalition.ca

For more information or to coordinate an interview with the Coalition representative, please contact:

Communications MECA
David Levy
(514) 288-8500 x228 / (514) 402-8518 (cell)
dlevy@meca.ca

OR

Esther Buchsbaum
(514) 288-8500 x225 / (514) 703-0257 (cell)
ebuch@meca.ca