First, you could not possibly have picked a worse analogy than a supermarket. The grocery business in Canada is one of the most brutally competitive anywhere, with low margins and a large number of players.

But back to the issue at hand: it should not be allowed because it's anticompetitive and flies in the face of the entire idea of net neutrality. Can Netflix get around the caps? iTunes? No. But because Bell is both in the business of content and in the business of infrastructure, they are in a unique position to abuse their power. And they are doing so.

Further to that is the example of third-parties being forced to pass on Bell's usage-based-billing. They make use of the last mile infrastructure, graciously provided to Bell courtesy of the Canadian taxpayer, but are responsible for providing their own DSLAMs and peering arrangements. Why should Bell be able to dictate terms to third-party ISPs? How does that promote competition?

A lot of public money went into building out the infrastructure that Bell apparently believes it owns. Internet infrastructure, especially the last mile, greatly lends itself to a monopoly or at most duopoly. This is bad for Canada in a mindboggling number of ways - the internet is an economic necessity, and our digital economy is just barely starting to turn into something with real legs. Just like we regulate electricity, water, oil/natural gas, and food, we should be regulating this.

Anti-competitive, agreed, mostly (see next point). Net Neutrality, whole other debate. Should Bell be forced to allow equivalent pricing to a competitor to operate the same level of service? Maybe (probably).

The pivotal argument in terms of anti-competition, to my view, is: Could someone else build out the infrastructure to allow them to compete? Yes, they could install a CDN close to the DSLAMs, and create their own backhaul. Are Bell making the cost of doing this prohibitively expensive? I don't know the answer to that.

EDIT: OK, it appears they are, by not allowing 3rd parties to their fibre backhaul. That really stinks.

Bell being allowed to set it's own pricing on the backhaul - exchange to ISP PoP? It's reasonable, the way the regulator let it be implemented? Despicable.

I would take a broader view of it like so: would not having access to the internet be seriously crippling economically? Are market mechanisms providing service to all Canadians at a reasonable price?

I'm going to argue yes to the first point and no to the second. The internet is absolutely necessary to be competitive. As prices continue to ratchet upwards, even as the number of legitimate uses for large amounts of bandwidth rise, it is fast becoming increasingly more unaffordable.

With those two criteria met, I would say it's time to regulate access to the internet. In particular, I would like to see the last mile and backhaul infrastructure owned independently of any content business and available to any reseller at the same wholesale rates. Content and infrastructure MUST be separated if we are to effectively create fair pricing conditions and net neutrality.

"Content and infrastructure MUST be separated if we are to effectively create fair pricing conditions and net neutrality."

Or at least strongly regulated. The more I read about the situation there, the more it sucks.

Especially because I remember 10 years ago I was boggling at guys in Canada with 10mbit cable connections (getting 4mbps), whilst 512/128 (getting 200mbps down) ADSL or cable was just becoming a reality here.

There are a number of issues here:

1) Does Bell really pay money for their peering arrangements? Is Bell paying for all of the bandwidth between their network and the rest of the Internet? Or are their peering arrangements much like other backbone providers' peering arrangements where it's a handshake and no money changes hands? Is the 'cost' that Bell says that it pays for outside internet access really the cost of maintaining their links to other peers/networks (and not payments made directly to those peers/networks)? If so, then the difference between the outside internet and their internal networks should be minimal. The only real difference would be the most of the bandwidth is leaving the network vs staying inside of the network just due to most of the content that people want being on the wider internet (not because it's somehow 'cheaper' to use the internal network b/c they are paying for bandwidth that leaves the network).

2) As cal5k states, the third-party internet providers that are using Bell's last mile lines are also being forced to pay these usage-based charges, even though they are not using Bell's connections to the internet. These providers have their own peering arrangements to the internet and are just hooking into Bell's last mile infrastructure. So if the real reason for usage-based billing is because Bell needs to recover the costs that it pays for bandwidth that leaves it's network through it's own peering arrangements, then there should be no reason to force third-party providers to be on a usage-based billing model as well.

1) Does it matter if they pay for their peering arrangements? (See who they peer with here: http://www.datacentermap.com/as/577_upstreams.html ). They still need to carry this traffic to a peering location. That's not free. They still need to support their peering agreements with staff & seriously expensive routers. Not free. They need to support the ISP's whose traffic they are carrying - arguably they ISP's have paid for this, but per GB pricing is fair. It is cheaper to run the content over their own network. They will run over an internal CDN, reducing transit costs to a fraction of say Netflix.

2) I think there is some misunderstanding. The way I read all these articles, the problem is the link from the exchange to the provider PoP, and not in the local loop.

Bell got the nod from the regulator 3 months ago to do capacity based charging on links from the exchange to the ISP PoP. If it follows the same model as elsewhere in the world, this is usually on a wholesale, per customer basis. If the ISP in question used a 3rd party supplier then they bypass this cost. Unfortunately it appears that Bell can say no to the ISP leasing fiber capacity from exchange to PoP, which IS abusing their monopoly position.

The point is they are establishing a precedent. Even if their network is not overloaded at the moment (I suspect it's getting there) it will be soon. If a web company has to pay per GB of transit from Amazon EC2, but not within the AWS network, why should charging at a communications provider be different?

I think the issue with respect to Bell providing IPTV should be framed around whether they should be allowed to enter that market at all seeing as they have an unfair advantage over competitors. If ISPs can enter any market and just under-cut the existing players, then it we're basically stating that any content-provider on the internet needs to also be an ISP just in order to compete with the players that are just waiting to enter the market (as soon as someone else proves that there is a market).

I don't follow your logic.

Bell cannot enter the TV market (one it's already in, albeit Satellite TV), because Netflix can't enter the ISP market?

I'll think you'll find that Netflix can enter that market if they so desire.

Bell are abusing a monopoly position? No, they are exploiting efficiencies of scale. Surely Rogers and Shaw, who provide cable TV and Internet are stiff competition in this area?!?

The idea is that Bell is the 'gatekeeper' to the internet for their customers. By hiking up their internet rates to make it more expensive to do something like stream NetFlix while at the same time introducing their own competing product that is exempt from those charges it comes close to (and probably is) using their position in one market to leverage another. My contention is that ISPs and content-providers should be required to be separate because there are multiple conflicts of interest there.