Bell Canada Launches VoIP without Reg Approval

In a move that could put it head to head with Canadian regulator CRTC (Canadian Radio-television and Telecommunications Council), Bell Canada (BCE Inc.) has launched its consumer voice-over-IP service, Bell Digital Voice, in one of its local service areas without waiting for approval by the regulatory authority.

The CRTC has been in the process of developing explicit policies for VoIP services, but is not expected to issue formal regulations until later this year. In the meantime, Bell Canada has launched the service in three locations in Quebec province: Sherbrooke, Quebec City and Trois-Rivieres, after a trial of several months in Sherbrooke.

Bell Canada is throwing down the gauntlet, says Jon Arnold, principal of J. Arnold Associates, a VoIP consulting firm. They are saying, Youre taking too long to make a decision on VoIP.

Bell Canada is using the carefully chosen term retail Internet applications to describe its new service. The reason for the wording is the only explicit CRTC regulation on Internet services is a 1998 ruling that exempts retail Internet applications from pricing regulations.

Incumbent services providers in Canada such as Bell Canada and its western counterpart Telus must follow tightly controlled tariffs for their voice services. Basic home service is priced at about CAN$30 with features such as voice mail charged extra.

Bell Canada is offering Bell Digital Voice for CAN$38 for unlimited calling within the province, $40 for Canada-wide and $45 for unlimited calling to Canada and the United States. The pricing includes many standard features, plus voice mail to e-mail, service portability, find-me with the ability to ring up to three phones and a Web interface. The pricing is clearly far below similar packages for the TDM service.

Bell Canada is making this move shortly after Vidéotron Ltée a wholly owned subsidiary of Quebecor Media Inc. and a cable operator serving Quebec province and surrounding areas launched its own VoIP service. In addition, Vonage Holdings Corp. just celebrated a year of offering service in Canada.

They are saying Videotron launched VoIP in our home market, and they compete with our business, and you [CRTC] are taking forever to make up your minds about our VoIP, and we cant sit by and let these guys take our market without a fair shot at it, says Arnold, who is based in Toronto.

It is not clear how the CRTC will react to the challenge, Arnold says. That is everyones question right now. They are being pushed into a corner and Im sure they are not very happy about it. Perhaps they are going to see it as another case of the big bad Bell coming to bully us.

There are ways for competitors, such as Vonage, to offer services in Canada because there is widespread high-speed cable data service and the incumbents sell so-called naked DSL that is, consumers can get DSL without also paying for a phone line, Arnold says. VoIP providers have been able to get local phone numbers in most metropolitan areas. However, in more remote areas, such as Saskatchewan, VoIP providers have not been able to obtain local phone numbers.

Canada also has one of the highest rates of adoption of broadband in the world, more than 30 percent by most estimates.

Another competitive tussle is going on is western Canada, where Telus, the western incumbent, is asking the CRTC to prevent Shaw Communications Inc., the second-largest cable operator in Canada, from offering VoIP. Telus says Shaw has not obtained required CLEC status. Canadian cable companies have some limits on bundling services.

Also, all of the VoIP offerings are very local, small-scale launches, Arnold points out. Shaw is offering service only in Calgary, while Videotrons services are only in South Montreal (Bell Canadas heartland), and Bell Canada is offering service only in three Quebec cities.

Service providers likely have limited offerings because there still is no clear mandate from the CRTC on VoIP. Yes they are limited, but I like that they are forcing the issue, says Arnold. The CRTC needs to be shaken up. It is taking too long, and the market is moving forward. They are not doing the market any favors by just sitting. Meanwhile Vonage does not care, because the regulations do not affect them.