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Vonage Canada Asks CRTC to Investigate Shaw's VoIP Tax
[March 08, 2006]

Vonage Canada Asks CRTC to Investigate Shaw's VoIP Tax

TMCnet Contributing Editor
 
Vonage Canada asked the Canadian Radio-television and Telecommunications Commission (CRTC) to investigate why cable operator Shaw Communications is currently charging Vonage subscribers a $10 "quality of service enhancement" fee, or hidden VoIP tax. Shaw's actions could cause that Vonage subscribers opt to switch to the operator's own VoIP offering. The switch would eliminate the fee.
 
"Shaw's VoIP tax is an unfair attempt to drive up the price of competing VoIP services to protect its own high-priced service," said Joe Parent, vice president of marketing, Vonage Canada in a statement released this week. "Shaw's actions are also part of a bigger issue of network neutrality and who controls how Canadians use their Internet service. Vonage Canada wants to ensure that the monopoly telephone and cable Internet service providers don't restrict what services, applications or content Canadians can access. Canadians demand and deserve freedom of choice."

 
In its CRTC submission, Vonage Canada said: "Because Vonage competes directly with the telephone services of the network operators that also provide the high-speed Internet access, the incentives to discriminate against us are clear.  This will result in less innovation, less choice and higher prices for Canadian consumers in the long run."
 
"If the type of action represented by Shaw's (enhancement) service is not seriously investigated and addressed by the Commission, there will be a heightened risk of a duopoly in local voice (phone) services," that will unduly favor the phone and cable companies who provide the Internet access.
 
"In the absence of credible, complete information, there is good reason to believe (Shaw's) service offering is not an enhancement to Shaw's high-speed Internet service but rather is an anti-competitive measure aimed at either increasing the perceived cost, or damaging the perceived reliability, of the services of independent Internet telephone service providers when compared to Shaw's higher-priced phone service."
 
New Issues Hop on Regulation Bandwagon
 
We thought we had filled our regulation truck already in the VoIP industry. For quite some time now, industry leaders have been fighting for service neutrality. These issues heated up in February 2005 when Vonage Holdings Corp. claimed to have discovered that some of its phone calls were being blocked by an undisclosed major telecom, causing a reported disruption of service for over two hundred customers. The VoIP provider reportedly filed a complaint with the Federal Communications Commission (FCC) about this issue.
 
According to a Reuters news report, Vonage told FCC officials that it had evidence an Internet service provider owned by a telephone company had been blocking its service. "We have seen an instance of port blocking that was of grave concern to us," Vonage’s spokeswoman Brooke Schulz said. "We have sought the FCC's council to remedy the situation."
 
Justice was served a month later when the FCC demanded Madison River Communication, a Mebane, North Carolina-based telecom, to halt deliberate blockage of VoIP-based calling traffic, and imposed a $15,000 fine to be paid to the government. The telecom runs a number of phone companies in rural areas in the southeastern and Midwestern United States.
 
Other VoIP Providers Contest Cable Operators
 
Back in September 2004, Kansas City, MO-based Nuvio Corporation, a VoIP services provider, filed an ex-parte letter with the Commission to address and combat potential discriminatory practices by broadband providers. Nuvio claimed that broadband Internet access providers, who also offer VoIP services, have economic incentives to discriminate against unaffiliated VoIP providers in favor of affiliated providers. The startup claimed that its customers' calls have been affected by at least one cable operator that features VoIP-based services as part of its offering.
 
"Broadband providers have nothing to lose and everything to gain from degrading the connection quality of their customers who are using unaffiliated VoIP providers," said Jason Talley, president and CEO of Nuvio Corporation back then. "The few customers they lose from discrimination is drastically offset by the substantial increase in its VoIP subscribers, market share and revenues from the practice,” he added.
 
The FCC later released an official statement with former Chairman Michael Powell saying: "We saw a problem, and we acted swiftly to ensure that Internet voice service remains a viable option for consumers." FCC’s ruling will keep the telecom from practicing blockage of VoIP-based calling traffic at least until late 2007.
 
I had a feeling that sole VoIP providers would feel threatened by a situation like this ever since telecoms and cable operators started to make VoIP-based calling services part of their offering. Many of us know that in fact, Internet service providers (ISP)s are more than capable of blocking VoIP-based calls of VoIP providers just by refusing data from certain ports, just as simple as how software programs block spam e-mails.
 
Vonage Canada
Shaw Communications
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Johanne Torres is contributing editor for TMCnet and Internet Telephony magazine. To see more articles by Johanne Torres, please visit Johanne Torres' columnist page
 
 
 
 
 

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