Copyright 2005 Toronto Star Newspapers, Ltd.

The Toronto Star

May 13, 2005 Friday

Consumers can expect greater choice and more feature-rich offerings when it comes to selecting local phone services in the aftermath of a CRTC ruling yesterday.

The federal telecom watchdog made it easier for competitors to offer affordable telephone services over the Internet without the fear of being stomped out of the market by the big phone companies.

In a landmark ruling, the Canadian Radio-television and Telecommunications Commission said Internet-based phone service won't flourish unless phone giants such as Bell Canada are kept in regulatory shackles.

So-called Voice-over-Internet Protocol service, a technology that can route our telephone calls through the Internet as streams of data, makes it easier for companies to offer phone service and ultimately makes it cheaper for customers to use.

The technology, which basically turns high-speed Internet connections into phone lines, also has many advantages over traditional phone service. Call forwarding, screening and voice-mail services are far more advanced, and customers can manage their phone messages and accounts over the Web.

The services are also portable. For example, customers who have a VoIP service with a 416 area code can plug their phone equipment into any high-speed Internet connection in any city and receive and make local calls as if they're still in Toronto. Geography and boundaries are essentially erased, and the cost of long-distance calls is reduced to pennies per minute.

But Charles Dalfen, chairman of the CRTC, said such services still risk being cut out by predatory pricing and must be protected - like competitors that offer traditional local telephone service - until an adequate level of competition has entered the market.

"Canada has the opportunity to experience real competition in local telephone service," Dalfen said.

The cable companies celebrated the decision.

Rogers Cable, which plans to offer phone-over-cable service this July, said the ruling was expected and reduces Rogers' risk of making huge investments in its new service.

The decision means Bell and other phone giants have to get CRTC approval before offering or changing the price of a VoIP service. The company has vowed to appeal the decision to federal cabinet.

Bill Rainey, president of Toronto-based VoIP provider Vonage Canada, said the ruling is balanced and fair, and over the long term will provide for more variety of service providers and better prices for local phone service.

Experts say predatory pricing tactics, while they do lower prices for consumers in the short-term, eventually lead to higher prices later on as competition is driven out of the market.