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CRTC rejects Bell plan for wholesale Internet billing

GATINEAU, Que. — The federal telecommunications regulator has rejected a controversial plan that would have allowed the big phone and cable companies to impose a usage-based billing model on Internet service resellers, a system that the Conservative government and many consumers had opposed.

GATINEAU, Que. — The federal telecommunications regulator has rejected a controversial plan that would have allowed the big phone and cable companies to impose a usage-based billing model on Internet service resellers, a system that the Conservative government and many consumers had opposed.

The Canadian Radio-television and Telecommunications Commission’s (CRTC) decision on Tuesday instead gives the companies a choice of either charging the smaller Internet providers a flat rate per user or selling the ISPs a specific amount of capacity on their networks.

Bell (TSX:BCE) had wanted to charge their wholesale customers by the volume of data they used, and the telecom regulator had essentially agreed in 2010. But after a social media campaign launched by the ISPs and an ensuing public backlash, the Conservative government urged the commission to review its decision.

“The commission considers that each of these proposed models would provide greater flexibility to the independent service providers than a per-customer wholesale UBB model,” the regulator said in the decision.

During the public hearings, Bell Aliant, SaskTel, Shaw Communications Inc. (TSX:SJR.B) and Telus Communications (TSX:T) had supported the flat rate model, while MTS Allstream (TSX:MBT) had proposed the capacity-based model.

The commission also set rates for what each company may charge under its proposed options.

Independent ISPs had argued that big telecom companies could force them to charge their retail customers for usage above a certain level — as many large providers do. The independents had often sold flat-rate, unlimited service to their customers in order to compete with the big players.

Critics had said that Bell’s plan would have put small ISPs at a competitive disadvantage.

Under the new capacity-model for billing, a small ISP buys a certain amount of network capacity from one of the big providers and if its customers unexpectedly increase their usage, their service could slow.