Proposal would give Bell ‘significant and asymmetric powers’: small ISPs

The CRTC should deny a proposal by BCE Inc. for a new regime governing traffic pumping that would allow telecoms to unilaterally put in place penalties that “inflict substantial harm” on other telecom providers, the Canadian Network Operators’ Consortium (CNOC) said. “These powers would permit Bell and other to implement penalties against another LEC when any increase in bill-and-keep traffic that is unilaterally deemed disproportionate occurs,” the organization representing small Internet service providers (ISPs) said in an intervention. Such a regime would grant them “significant and asymmetric powers,” CNOC argued. A month ago, Bell asked the CRTC to implement new rules governing traffic pumping, which would put the onus on any telecom accused of artificially inflating traffic to prove they’re not engaged in the practice. Bell said such a regime would be a more “holistic” model as opposed to having to deal with accusations of traffic pumping, also called traffic stimulation, on a case-by-case basis. In that application, Bell failed to provide “any evidence that there is a broad issue to be addressed by the commission in this regard,” producing only one allegation “that an increase in traffic between Northwestel and is the result of traffic pumping,” CNOC responded in the March 2 filing. Under CRTC rules, telecoms are required to compensate each other if incoming phone traffic to one company from a second company is higher than its outgoing traffic to the second company. The commission is currently considering a traffic-pumping dispute between Rogers Communications Inc. and Iristel in which Rogers accused Iristel of attempting to profit from deliberately driving up the volume of phone calls to the Northwest Territories, which Iristel has denied. “Notably, unlike Rogers, Bell has chosen not to request relief from the Commission with respect to its allegations,” CNOC said. “Instead, Bell has seemingly decided to ask the Commission to effectively grant it powers that would permit it to implement penalties against Iristel based on its allegations in a manner that would not require a Commission determination on the veracity of Bell’s allegations.” A telecom “should not be required to provide Bell or any other LEC with the identity of its customers or details of its confidential contractual arrangements for any reason, let alone to dispel a suspicion that an increase in bill-and-keep traffic is not legitimate,” CNOC argued. Both CNOC and Iristel pointed out that traffic increases can occur for a number of legitimate reasons, such as gaining a new customer that provides call centre services. In its intervention, Iristel said that companies “should not be put on the defensive every time they make such business gains.” It also argued that Bell “has not demonstrated evidence of a problem that warrants regulatory intervention” and that the CRTC should not introduce new regulations “in the absence of any clear evidence that the gaming ‘risks’ that are described in the Application have manifested.” Bell’s proposal would put the onus on the party accused of traffic stimulation to prove that it is innocent, which would consist of “a violation of procedural and substantive rights,” it said. In order to dispute such an allegation, the telecom would have to disclose confidential customer information, such as the identity of a customer and their agreement with the company, or “sensitive commercial data” like network traffic volumes or the location of facilities, it noted. “Thus, to defend its position and overcome the reverse onus, a will be forced to compromise its commercial standing,” Iristel said, adding that even if that company does put forth a “fulsome defence demonstrating that the traffic does not constitute traffic stimulation, the party claiming traffic stimulation would be within its rights to arbitrarily conclude that such a defence is nonetheless ‘not to its satisfaction.’” Bell’s proposal will instead lead to irreconcilable disputes that will inevitably end up in front of the CRTC, it added. Companies that are facing an increase in traffic imbalance payments will have “strong incentives to allege traffic stimulation,” while companies accused of the practice “will not disclose sensitive commercial information to their competitors simply for the sake of disproving a frivolous claim of traffic stimulation,” Iristel argued. Distributel Communications Ltd. said in its intervention that Bell’s proposal is “vague, puts too much power in the hands of the incumbents, and could easily be leveraged by those incumbents for competitive advantage.” It would give companies the ability to abuse the system by rejecting legitimate balance payments, it said. “Bell is not a neutral party in questions of artificial traffic stimulation, and it is therefore not appropriate to give it the role of adjudicator in these situations,” Distributel said. Bell’s proposal also received some support from larger companies. Telus Corp. said it agreed with the idea that the onus should be put on the party responsible for traffic increases to explain why they are occurring, but that should happen within the existing dispute resolution process. Shaw Communications Inc., on the other hand, backed Bell’s approach, telling the CRTC that unless it “establishes rules, applicable nationally, to discourage this type of behaviour, there is a real risk that other service providers will engage in this practice of inflating profits through regulatory arbitrage.” It argued that Bell’s approach “appropriately shifts the burden of demonstrating that spikes in traffic flows are bona fide to the party with the information required to do so,” and noted that Bell’s proposal is based on the approach taken by the Federal Communications Commission (FCC) in the U.S. “The Commission should take action to discourage this type of business practice based on regulatory arbitrage now, before a cottage industry that could cost the industry and consumers hundreds of millions of dollars crops up, as we witnessed in the U.S.,” Shaw said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Proposal would give Bell ‘significant and asymmetric powers’: small ISPs

News | March 6, 2017

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Proposal would give Bell ‘significant and asymmetric powers’: small ISPs

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