Yesterday, Canadian regulators shocked independent carriers by ruling that Bell Canada's decision to throttle wholesale competitors without telling them was neither discriminatory or anti-competitive. One of the most impacted carriers will be Canada's TekSavvy, an independent operator that have built somewhat of a cult following in Canada due to actually giving customers personal attention in a sea of outsourced incumbent support. We spoke briefly with TekSavvy CEO Rocky Gaudrault about how yesterday's decision will impact his business.

Gaudrault says he's "extremely disappointed" in the CRTC's decision, and notes that in addition to the obvious anti-competitive ramifications of the ruling, there's some "collateral damage the CRTC had no interest in," such as the added costs of having to support Bell Canada's throttling hardware. "Going forward we are going to have to consider the multiple hundreds of hours that will be spent in troubleshooting internet DSL problems either caused by -- or as a result of -- deep packet inspection (DPI)," he says.

Something is very wrong with how the decision went down, and I really hope those responsible for causing this have their day on owning up to what they've done to Internet in Canada. -TekSavvy CEO

"One good thing, should there be one identified, is public awareness on the issue of DPI," says the CEO, somewhat optimistically in the face of fairly dismal news. "Throttling & corporate greed has been elevated to a point of possible action by the population and who knows, this may have been one of those 'lose the battle today to win the war tomorrow' kind of events," says Gaudrault.

Most Canadians look to the FCC's recent sanction against Comcast lustfully, hoping their own CRTC will someday become a more Internet-centric agency. Still, many Canadians don't understand that the FCC's sanction was largely decorative for political effect, given it did not create new rules, came with no fine, and may not even hold up to Comcast legal assault in court.

That said, the FCC/Comcast and CAIP/Bell Canada fights helped make network neutrality a front-page issue across North America, while providing very concrete abuse examples of a nebulous concept to a confused public. Until this year, the network neutrality debate was largely absent in both Canadian politics and mainstream technology news coverage. Given the growing awareness, Gaudrault says he "can't see the CRTC sitting idly by on this matter."

The CRTC's belief that Bell wasn't acting anti-competitively didn't entirely surprise Gaudrault or CAIP. While Bell Canada had close counsel with the regulatory agency, CAIP (Canadian Association of Internet Providers) says they weren't kept abreast by the CRTC when it came to the agency's continued delays in issuing a verdict. Earlier CRTC rulings seemed apathetic to the concerns of small ISPs across Canada.

So where's the disconnect? The CRTC's vice-chairman, Leonard Katz, spent 17 years working for Rogers and 11 for Bell. Canada's Telecom Telecommunications Policy Review Panel, tasked with determining regulatory framework, was led by the ex-owner of Inukshuk (sold to Bell/Rogers), an exec that played a huge role in the Bell & Microsoft alliance and a lawyer whose firm represents incumbent operators.

There simply isn't much room for either consumer advocate or small business input.

As in the United States, the revolving door between regulators, incumbent lobbyists and incumbent executives make regulatory objectivity almost impossible, and incumbent favoritism almost guaranteed. As also in the United States, the result is that smaller businesses have a much harder time succeeding in the market, and, in most cases, wind up being systematically eradicated "for the good of the market."

The expected dysfunction didn't make the CRTC's decision any less stunning. Particularly given that Bell Canada did not publicly prove that network congestion made the decision necessary. It's clear to everyone but the CRTC that the move was aimed at stopping competitors from offering superior, un-throttled alternatives to Bell's throttled Sympatico DSL offering, while giving Bell Canada's video store a leg up against independent P2P video delivery operations.

TekSavvy worries that their troubles with Bell may only just be beginning. In addition to throttling wholesale traffic before it reaches TekSavvy's network, Bell has shown interest in double dipping -- charging wholesalers for bandwidth up front, but then applying usage-based charges on the other end. "I fear we're nowhere near done with that one," says Gaudrault.

TekSavvy and CAIP's only hope now is that public annoyance results in the CRTC being forced to listen to the under-represented when they pick the issue back up again next summer. "Something is very wrong with how the decision went down and I really hope those responsible for causing this have their day on owning up to what they've done to Internet in Canada," says Gaudrault.