As is often the case with House of Commons committee hearings, yesterday’s Industry Committee hearing on usage based billing saved the best for last. Addressing a specific question from the chair about the separation of IPTV and Internet services on Bell’s network, Bell’s Mirko Bibic responded:

There is a copper loop that goes from our Central Office to the home and all data travels on that pipe so it’s Internet traffic, it’s television traffic, it’s actually voice traffic, long distance traffic, but that’s not where there are general congestion issues. The real issue is when you get to the Central Office and you go behind that to the general Internet, FIBE TV is completely different.

Bell’s comments are noteworthy since they confirm that there is no congestion in the “last mile” – the connection between the user and the so-called Central Office. At the moment, Bell aggregates the data from both its own retail customers and independent ISPs at this stage (which it says causes the congestion necessitating traffic shaping and UBB), though the independent ISP subscriber traffic later goes to the independent ISP before heading to the Internet. The “congestion problem” is therefore not at the last mile nor at the Internet – it is in the intermediate stage between the two.

This raises the question of why not offer the independent ISPs access to the network at the Central Office or at other earlier points in the network so that their users’ traffic never causes congestion for Bell? If the congestion problem occurs during the brief period when wholesale and retail traffic is aggregated (Bell said the same during the Internet traffic management hearings in 2009), why not avoid it by mandating that Bell allow independent ISPs to access their subscribers’ traffic earlier?

The answer appears to be that Bell vehemently opposed just such a solution, telling the CRTC in June 2010 that the approach would mean that it would not invest in its own network. When asked about one such proposal – known as ADSL-CO – Bibic told CRTC Chair Konrad von Finckenstein that (para 7806):

with ADSL-CO, once the independent ISP gets subsidized access to the full speed and capacity over that fibre, and the ability to fully differentiate their service from ours — and there goes usage-based billing — there is nothing more for the ISP to build. If they get a customer, they pay us. If they don’t get a customer, they don’t pay us. Their cost structure is success-based, as I mentioned yesterday, with no upfront risk capital required.

In other words, Bell recognized that ADSL-CO would mean that independent ISPs would be able to better differentiate their services (including the prospect of no traffic shaping) and eliminate Bell’s ability to implement wholesale usage based billing. The entire exchange is worth reading because it plainly recognizes the consequences of allowing independent ISPs to fully compete with speed matching and ADSL-CO. Bell describes it as “damaging” since it “undermines the ability to win the broadband home.”

Of course, the whole point is to foster competition so that Bell competes for the broadband home, rather than winning it by default since their are few other viable alternatives. Yet despite Bell making it very clear that ADSL-CO would make the market more competitive with more differentiated offerings and despite the fact that companies like Primus and TekSavvy indicated that they would invest to use such a service, the CRTC denied the application to declare it an essential service.