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Who Controls How You Use Your Internet Access? Vonage Canada Challenges Shaw “VoIP tax”

Internet phone service company Vonage Canada warns that cable and phone companies could restrict “network neutrality” by limiting Canadians' freedom of choice on the Internet, requests CRTC investigate “anti-competitive” action by Shaw

MISSISSAUGA, ON, March 7, 2006 – Vonage Canada today stepped up its efforts to ensure fair and competitive telephone service for Canadians, by disclosing its request to the Canadian Radio-Television & Telecommunications Commission (CRTC) to investigate Shaw Communications’ “thinly veiled VoIP tax” to determine if Shaw is unfairly driving up competitor’s prices and forcing Western Canadians to pay more for phone service.

Shaw recommends to its high-speed Internet customers that they pay an additional $10 charge if they use a Voice over Internet Protocol (VoIP) phone service provider such as Vonage Canada. Shaw claims its “quality of service enhancement” fee, which it does not charge to its own Internet phone customers, is necessary to ensure independent VoIP service is not disrupted or degraded.

“Shaw’s VoIP tax is an unfair attempt to drive up the price of competing VoIP services to protect its own high-priced service,” said Joe Parent, vice president of business development, Vonage Canada. “Shaw’s actions are also part of a bigger issue of network neutrality and who controls how Canadians use their Internet service. Vonage Canada wants to ensure that the monopoly telephone and cable Internet service providers don’t restrict what services, applications or content Canadians can access. Canadians demand and deserve freedom of choice.”

In its submission to the CRTC, Vonage described the VoIP tax as a possible “red herring” because Shaw had refused to provide a technical explanation for how its enhancement works or why it is necessary.

“Shaw has built a world-class network which Vonage customers use everyday with confidence and satisfaction,” said Parent. “Recommending that its customers pay extra if they don’t use Shaw’s Internet phone service is unfair. Vonage Canada had little choice but to request that the CRTC determine the validity and fairness of Shaw’s fee structure.”

In its CRTC submission, Vonage Canada said: “Because Vonage competes directly with the telephone services of the network operators that also provide the high-speed Internet access, the incentives to discriminate against us are clear. This will result in less innovation, less choice and higher prices for Canadian consumers in the long run.”

“If the type of action represented by Shaw’s (enhancement) service is not seriously investigated and addressed by the Commission, there will be a heightened risk of a duopoly in local voice (phone) services,” that will unduly favour the phone and cable companies who provide the Internet access.

“In the absence of credible, complete information, there is good reason to believe (Shaw’s) service offering is not an enhancement to Shaw’s high-speed Internet service but rather is an anti-competitive measure aimed at either increasing the perceived cost, or damaging the perceived reliability, of the services of independent Internet telephone service providers when compared to Shaw's higher-priced phone service.”

Among the questions Vonage Canada has requested the CRTC address:

  • What does Shaw’s so-called ‘enhancement’ service consist of, from both a technological and service implementation perspective?

  • What evidence does Shaw have to prove its ‘enhancement’ service actually delivers on the promise of enhancing a customer’s use of a non-Shaw phone service provider and to what extent?

  • What is the justification for a recurring charge to the customer for a service that it appears may consist of a one-time configuration of the Shaw-approved cable modem used by Shaw’s high-speed Internet customers?

  • What is the take-up rate – past, present and likely future – of Shaw’s enhancement service, and what is the likely effect of the service on competition in local VoIP services?

  • “Vonage believes the Internet could not exist without network neutrality,” said Parent. “Canadians shouldn’t be asked to pay twice to use their Internet connection for whatever they want, including VoIP service,” said Parent. “Imagine if the power company could dictate the brand of appliance you can plug into your wall? It’s the same principle with Internet service.”

    About Vonage® Canada

    Vonage Canada is an early pioneer of the Canadian Internet phone industry, setting the standard for pricing, features, call quality and reliability for the entire VoIP category. Vonage's award winning service is sold on the web at www.vonage.ca and through national retailers like Best Buy, Future Shop, London Drugs, The Source by Circuit City, Staples Business Depot/ BUREAU EN GROS, Office Depot, CompuSmart and Visions Electronics. Vonage Canada is headquartered in Mississauga, ON. For more information about Vonage's products and services, please visit http://www.vonage.ca or call 1-877-272-0528. Vonage Canada is a subsidiary of Vonage Holdings Corp. Vonage is a registered trademark of Vonage Marketing. VoIP 9-1-1 service has certain limitations versus traditional 9-1-1. See vonage.ca for details.

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