Canada's most innovative companies and entrepreneurs could be hurt if a CRTC decision to cap bandwidth for small providers stands, Industry Minister Tony Clement said Tuesday.

"We need to make sure government telecommunications policies encourage investment and competition, increase consumer choice, minimize regulation and allow market forces to prevail. These are our policies and this is our focus," Clement told the House of Commons Industry committee Tuesday afternoon.

The committee's looking at the CRTC's usage-based billing ruling, which would have allowed large telecommunications companies to cap the bandwidth smaller internet service providers could use without paying extra.

The regulator's move would have made it difficult for smaller ISPs to offer unlimited plans to their customers, some of whom are heavy uploaders and downloaders.

CRTC chairman Konrad Von Finckenstein announced the commission would take another look at the issue, but after public backlash Clement said flat-out the government would not accept usage-based billing.

Clement said the CRTC decision "is quite simply the wrong way to proceed, and inconsistent with good public policy."

He said the smaller ISPs must not be required to have the same pricing as the incumbent providers.

"If such a decision were allowed to stand, the effects are far-reaching, not only for consumers, but for entrepreneurs, creators, innovators and small businesses throughout the country," Clement said, adding usage-based billing threatens to choke off creative and innovative businesses.

Bell Canada, which has been fighting the independent ISPs, argues heavy users cause congestion at peak periods and should pay for the extra bandwidth they use.

But Clement says he's not convinced there is congestion caused by the six per cent of internet users who are heavy downloaders, or that charging for that use would ease congestion.

Jean-Francois Mezei, a heavy internet user who's closely following the issue, went to the meeting and approached Clement on his way out. He said he wants the government to issue an order-in-council rather than wait for the CRTC to come back with more recommendations.

"There's no legal document that says they've actually removed those decisions ... What if there's an election?" Mezei said.

Clement says it would take six to eight months to do what Mezei is suggesting, and that it's "more streamlined" to have the CRTC review their decision.

Last year, Clement also overturned a decision by the CRTC that barred Globalive from entering the cellphone market. The Federal Court overturned that decision. An appeal is scheduled for May 18.

As part of the review, the commission will seek public comments until April 29.