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TekSavvy responds to CRTC decision on Internet user fees

January 25th, 2011. Chatham, Ontario.

TekSavvy Solutions Inc., one of Canada’s leading independent Internet service providers, reacted with disappointment to the decision handed down by the Canadian Radio-Television and Telecommunications Commission (CRTC) today on usage based billing (UBB) of Internet services. The result of the decision imposes limits on the ability to best serve its customers and provide an effective competitive alternative to the telecos like Bell which dominate the Internet service market.

“We are discouraged by the decision by the CRTC to force us to charge virtually the same amount to our customers for the bandwidth they use that Bell does,” said Rocky Gaudrault, TekSavvy CEO. “This essentially gives the opportunity for incumbents like Bell, at zero cost, to increase their margins and stifle competition. If Bell wants to charge an economically unjustifiable amount for downloading to its customers, that is their business. However, we should not be forced to do the same. In the decision we asked for a discount of 50% to give us flexibility in serving our customers, but the CRTC limited the discount to 15%, so we are essentially stuck with pricing that serves Bell’s interests, but no one else’s.”

UBB is an increasingly controversial “tax” on downloading virtually unique to Canada, which makes consumers pay artificially high amounts for downloading to discourage bandwidth usage. TekSavvy and businesses like it buy their bandwidth from telecos and cable companies at wholesale rates stipulated by the CRTC, which are supposed to allow TekSavvy and others to compete, and at the same time compensate the suppliers like Bell fairly.

“We would understand the sensitivity to the discount if Bell had a significant cost for each incremental gigabyte that users download, but they don’t,” said Mr. Gaudrault.  “The ostensible, theoretical reason behind UBB is to conserve capacity, but that issue is very questionable. One certain result though, that Bell will make much more profit on its Internet service, and discourage Canadians from watching TV and movies on the Internet instead of CTV, which Bell now owns.”

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