Some Web watchers fear higher fees for Canadian Internet services may follow if a proposal to impose new fees on Internet service providers succeeds in the United States.
The Federal Communications Commission in the U.S. is reviewing a proposal by telephone companies to re-classify ISPs as "telecommunications services" -- the same classification as long distance carriers such as Sprint and MCI.
In both the United States and Canada, long distance carriers must pay "contribution fees" to local telephone companies. The fees are a subsidy to compensate for the lower-than-market prices phone companies charge for local calls.
"If the FCC were to permit that in the States, that's going to make the telcos up here sit back and say, 'Gee, maybe we should try again in Canada'", said Canadian Internet analyst Jim Carroll.
In May, the Canadian Radio and Telecommunications Commission turned down a similar request from Canada's telephone companies and chose to exempt ISPs from contribution fees.
The FCC had made the same determination to exempt ISPs in 1996 but a group of American telcos recently convinced the regulator to reconsider.
The CRTC might choose to reconsider as well, a Toronto lawyer familiar with CRTC rulings said.
"The bottom line is that on some of these issues the CRTC does things that are similar to the FCC", said Peter Grant, senior partner with McCarthy Tétrault.
But Grant also said the CRTC could very well make its own decision on this particular issue.
"There are a number of well-known cases where the CRTC has done a different maneuver." Grant cites a recent case where the FCC allowed Sprint to access local telephone lines at a discount rate. The CRTC chose not to allow Sprint the same privilege in Canada.
"The CRTC is not bound by anything the FCC does", Grant said.
Carroll is especially worried that the FCC case comes when the CRTC is deciding whether ISPs should register with the federal regulator.
"They're two separate issues but they're essentially about the same thing", Carroll said.
"There has always been a desire by the telcos to charge ISPs more and I think that desire is still there."
One ISP executive is a little more circumspect about registration than Carroll. "It's not a burning issue in my mind at the moment", said Lorien Gabel, vice-president of operations at Toronto-based Interlog Internet Services.
Interlog has already registered voluntarily with the CRTC and Gabel thinks the issue will end there.
But he's quick to point out that contribution fees would make Web surfing a little more expensive in Canada.
"To some extent the ISP eats the cost, but at a certain point the cost is passed on to the customer", Gabel said.
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