BY PETER NOWAK — Bell Canada Inc. is calling on the courts to scrap mandated access by competitors to its network, a move that could jeopardize some smaller companies that sell phone and internet services.

The Montreal-based company on Wednesday filed a leave to appeal with the Federal Court of Canada to overturn a decision made by the Canadian Radio-television and Telecommunications Commission in early March on what the regulator considers essential services.

The CRTC on March 3 reiterated that third-party companies should continue to be able to rent telephone companies' networks in order to provide their own customers with phone and internet services. The regulator considered this network access as essential for smaller companies to offer their services, and for some of them to survive.

In its appeal, Bell said such regulation is no longer necessary now that there is enough competition in phone and internet markets. In home phones, Bell is competing with a number of major cable companies, not to mention Voice over Internet Protocol providers and cellphone carriers. On the internet side, Bell faces competition from cable companies.

Scrapping the access regulations would also bring the CRTC in line with the government's stated policy direction, Bell's chief of regulatory affairs Mirko Bibic told CBCNews.ca. The government in 2006 told the CRTC that it should adopt a more hands-off approach and let market forces determine the telecommunications landscape as much as possible.

"We don't think in the long run it's going to lead to alternative network construction by competitors, which is not good for the telecom industry in Canada and consumers," he said. "We certainly don't think it's in keeping with the policy direction."

Bibic said the decision to open Bell's infrastructure 10 years ago was made in hopes that it would give smaller companies a base from which to build their own networks, but that has not happened. Many of the firms that use Bell's network have instead become dependent on it and have not invested in their own equipment.

"They haven't built much," he said. "The problem is, there's no weaning off. There's an underlying and ongoing and indefinite reliance on access to incumbent networks."

Getting rid of the regulations would not mean smaller players would cease getting access to Bell's network, Bibic said. Rather, that access could be commercially negotiated.

Bell's move comes a week after it faced heavy criticism for extending its traffic-shaping policies to the companies that use its network. Bell has for some time been slowing down the internet speeds of customers using certain applications, such as the file-sharing technology BitTorrent, and last week admitted to extending the practice to the smaller companies.

The move kicked into high gear the debate over whether regulation of the internet is needed in Canada, with an NDP MP and a labour union both calling for CRTC intervention.

Critics said Bell's appeal of the essential services decision, if overturned, could dramatically lessen both phone and internet competition.

"This suggests it's an all-out battle between Bell and a lot of the smaller players seeking to provide competition," University of Ottawa law professor Michael Geist told CBCNews.ca. "This is a real cause for concern for consumers as well as the competitive environment in Canada."

Geist and others have criticized Minister of Industry Jim Prentice for his silence on the issue. Prentice was "disinterested" in the issue when it arose in question period in the House of Commons on Wednesday, he said.