AbridgedEXECUTIVE SUMMARY This is solely about fair wholesale pricing and ensuring there continues to be incentivesto invest in next generation networks
At issue in this proceeding is whether wholesale Internet Service Providers(ISPs) that purchase Gateway Access Service (GAS) (i.e. access, at regulated rates, toend-users served by the network built out by the Companies) should pay in proportion totheir usage of the network. Usage-based billing (UBB) is not new. Cable carriers havehad the flexibility to implement both retail and wholesale UBB for over a decade and themajority of Canadians have been subscribers of Internet services with a form of UBB for several years now. Despite the gloomy hyperbole that has been used in the publiccampaign against UBB and proceedings leading to the present proceeding, UBB has notresulted in "the end of the Internet" or a gross reduction of video (or other traffic)consumption by Canadians. As recently noted by the Globe and Mail, Canadians spendmore time online than users in any of the countries tracked by comScore and, as noted byGoogle, per capita consumption of YouTube video in Canada is number 1 in the world.
The Companies invested $3 Billion between 2006 and 2010 to deliver additionalcapacity and faster speeds for residential wireline Internet services. In fact, Bell Canada'sresidential Internet revenues have been completely overtaken by expenditures in at leasteach of the last five years. In 2010, Bell Canada's capital expenditures with regard to itsInternet services actually exceeded the Company's Internet revenues, and this is beforeeven taking into account the Company's operating expenses. In other words, BellCanada's residential Internet revenues do not even cover Internet-related investments.This is not a sustainable business model and ISPs that currently invest in next generationnetworks must not, as a result of this proceeding, be locked into business models thatremove any incentives to invest. Regulatory regimes that do not properly concernthemselves with investment incentives will quite obviously undermine, rather thanencourage, investments in network augmentation, upgrades and expansion.
Wholesale and retail services share the same network: End-user traffic from one serviceprovider affects the user experience of all other service providers' end-users on the sameshared network.
Retail Internet and GAS services are not offered over separate and distinctnetworks. The GAS service offered to wholesale ISPs and the Companies' retail Internet