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Shaw Sued by U.S. VoIP Provider
[March 23, 2006]

Shaw Sued by U.S. VoIP Provider

TMCnet Contributing Editor
It seems like Shaw Communications' shady consumer acquisition practices keep getting the company in serious trouble. The company was just slammed with a $1.2 million lawsuit from U.S.-based VoIP provider ZingoTel. ZingoTel claims that the Canadian cable operator refused to air a ZingoTel television ad because it promoted a competing VoIP-based calling service.

According to an article published in the Calgary Herald, ZingoTel had agreed to pay Corus Entertainment, Shaw's media buyer, a total of $36,000 to air the ad in one of the cable operator's channels. "The ad was later vetoed by Shaw chief executive Jim Shaw, according to ZingoTel's statement of claim. It alleges Corus was informed by e-mail that 'Shaw will not accept any VoIP advertising business on cable.'"

The Herald reported that in the suit ZingoTel is also seeking damages from Corus and that it also filed a complaint with the Canadian Radio-television and Telecommunications Commission (CRTC).
Shaw's troubles began two weeks ago when Vonage Canada also filed a complaint with the CRTC about the cable operator's practices. Vonage (News - Alert) asked the Commission to investigate why Shaw is currently charging Vonage subscribers a $10 "quality of service enhancement" fee, or hidden VoIP tax. Vonage expressed it was worried that Shaw's actions could cause that Vonage subscribers could opt to switch to Shaw's own VoIP offering. The switch would eliminate the fee.
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."
"Vonage's news release concerning Shaw's quality of service enhancement is both wrong and misleading," declared Jim Shaw, CEO, Shaw, in response to Vonage Canada's action of seeking help from the CRTC.
Shaw claims that its digital phone service offering does not directly compete with Vonage's VoIP-based calling service.
According to the Shaw's news release, "Shaw's Digital Phone service is a carrier-grade, primary line, local and long distance residential telephone service that uses a managed IP network. Shaw Digital phone calls travel directly from Shaw's secure private network to the tried-and-true public telephone system. They do not travel over the Internet. The result is a more reliable and higher quality phone service."
Shaw's president, Peter Bissonnette claimed that Vonage's dispute is a publicity stunt because the company is very close to filing for an IPO.
Shaw Communications
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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