Bell Canada goes for big splash: Huge DSL rollout faces objections from ISPs

In one of the world's biggest deployments ever for asymmetrical digital subscriber line, Bell Canada has launched Sympatico High Speed Edition service in 108 central offices covering Toronto, Ottawa/Hull, Montreal and Quebec City.

About 70% of the 3.5 million homes in Bell Canada's service area can obtain the service, said Glenn Ward, vice president of broadband development.

Unlike other DSL initiatives, marked by phased deployment, Bell Canada opted for a full-scale rollout, partially to fend off competition from cable modems, said Ward. "They have a fair degree of momentum, and we're not going to let this market be taken away from us."

The carrier is using Nortel Networks' 1-Meg Modem, which fits in its DMS-laden network. The challenge was getting all COs up within a seven-week time frame, said Stephen Edwards, vice president of data access solutions in Nortel's carrier packet networks division. "At one point, we had 49 installation teams working in parallel in the two provinces," he said.

But the launch has caused a stir in the Internet service provider community. The same day customer activation began, the Canadian Association of Internet Providers filed an application with the Canadian Radio-Television and Telecommunications Commission to prohibit Bell Canada from offering the service, citing unfair competition. The CAIP proposed that Bell Canada be mandated to raise its retail pricing or discount its wholesale offering to support competition.

The CAIP's beef is Bell Canada's offer of ADSL service for $25.95 a month, well below cost. ISPs planning competitive service must wholesale connectivity from Bell Canada and add in other costs, including Internet service, bringing their monthly retail offering to the $100 to $165 range.

"Our concern is that they're not letting the other players play," said Ron Kawchuk, CAIP president. "They still control the copper in this country. Basically, they are taking that monopoly power of theirs and extending it to DSL service." According to CAIP statistics, its 125 members provide about 80% of Canada's Internet connections.

Kawchuk charges that Bell Canada, using a combination of regulated and unregulated Bell Canada-owned companies, ultimately can offer services that are below cost and thus engage in anti-competitive behavior.

To sell the ADSL service above the accepted market price of about $40 is inane, said Bernard Coutois, regulatory group vice president at Bell Canada. "They want us to sell it above the cost of the product, which will price it out of the market, or on a wholesale basis, guarantee them a 25% margin. I don't think either request makes much sense," he said. "We're offering [DSL service] to our affiliated ISPs at the same price we're offering it to them."

Still, Bell Canada knows its low retail price won't sustain the DSL service. "The long-term viability requires additional revenue streams over the C$40 a month [about $26] we're charging to consumers," Ward said. Future plans include the ability to use DSL to access multiple networks, such as an ISP, corporate LAN or university networks.