The Ottawa Sun
Friday, December 12, 1997

CAIP stays out of ADSL fight

by Rob Hall, rob@echelon.ca

On Nov. 24, a large group of ISPs met in Ottawa to discuss the emerging ADSL controversy.

On July 31, Bell Canada applied for an tariff with the CRTC for their new ADSL service. The tariff was set at $75 per customer, but did not include key components such as the ADSL modem required for the home.

The tariff also was only available for the home, not business. AT&T objected, saying it wanted public hearings and the costing information Bell provided reviewed.

On October 9, the CRTC approved the tariff, dismissing AT&T because "they were not an ISP, and this is an issue for ISPs". A few days later, on Oct. 22, Bell announced their new service to the world. On the same day, Sympatico announced their offering to homes.

Now the problems started. Bell had offered to ISPs, a bundle that included the tariffed portion, as well as some of the other required equipment, such as the modem. Bell's pricing started at $260 per client, and went as low as $150 if you bought 10,000 of them. Sympatico was selling it to the public at $65. ISPs were outraged. They could purchase it for $260, but a wholly-owned subsidiary of Bell was selling it for $65 to the public and not ISPs.

Sympatico claimed they too were losing money, but needed to gain market share. Bell continually proclaimed they had packaged this service for ISPs, and that was their intended client base.

However, they now will have only one ISP as a client -- effectively themselves in whast amounts to one giant shell game.

"Bell" actually owns "Bell Sygma", which in turn, owns "Bell Global Solutions (BGS)" who sells the Sympatico service. They can talk about separate profit and loss centers, but what it really boils down to is BGS is paying their parent company, Bell the money it claims to be losing.

The problem here is two-fold. First, Bell must make up this loss somehow. The most obvious is through higher local and long distance phone rates.

After all, the more people they sell ADSL to, the more money they lose. An interesting business case to say the least. Perhaps the bigger problem, is that by taking this step, they will drive ISPs out of business. This could lead to a monopoly type situation, where Bell and the cable companies own the entire market.

At the Nov. 24 meeting the ISPs agreed to form a group and pursue Bell. I was tasked with taking this to the Canadian Association of Internet Providers (CAIP)'s board and ask for an official "committee" to be formed to pursue this.

Yesterday, the CAIP board met and voted not to get involved in pricing issues between its members.

So now an independent committee, led by Lorien Gabel of Interlog in Toronto will pursue Bell.

Lorien is also leading the charge against the cable companies for equal access to their network.

Possible legal and regulatory avenues include complaints to the CRTC and the Competition Bureau.

It should be an interesting fight by Bell and all its subsidiaries, against small and nimble ISPs. My money is on the ISPs. It's the best thing for the public.

Copyright © 1997 by The Ottawa Sun. All Rights Reserved. Reprinted with permission.