Canadas Cogeco Fights Access Directive

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Ottawa -- Systems operator Cogeco Cable Canada Inc. has
launched a two-pronged counterattack against government-ordered third-party Internet
access to its high-speed networks.

One salvo was aimed directly at the Canadian
Radio-television and Telecommunications Commission. The other was fired indirectly,
through the courts.

Cogeco is responding to a Sept. 14 CRTC directive that
ordered Canadian cable TV companies to resell their high-speed Internet services to
third-party Internet-service providers at a 25 percent discount to retail.

The order, which kicks in Dec.13, is a stopgap while ISPs
and Canadian cable operators work out interconnection issues. It's meant to help ISPs
compete with cable-provided Internet services, which are far more potent than anything the
ISPs can provide themselves.

In order to do so, ISPs currently have the right to rebrand
services like Rogers Cablesystems Ltd.'s "Rogers@Home" under their own
names and sell them directly to the public.

By challenging the CRTC, Cogeco is carrying the banner for
the entire Canadian cable-TV industry. Having spent a fortune to build high-speed two-way
networks, Canadian MSOs understandably have no desire to share them with their competition
-- an attitude that resonates in the United States.

Cogeco's fundamental objection is that the CRTC's
decision is legally flawed, according to Yves Mayrand, the company's secretary and
vice president of legal affairs. Not only does the decision not mirror the CRTC's
policy toward telephone companies -- which don't have to resell their own high-speed
services to ISPs -- but the 25 percent discount rate is "unfair," he said.

Mayrand contended that cable companies are being forced to
subsidize their competitors, including "large Internet providers such as [America
Online Inc.], which, we think, is fundamentally wrong."

Cogeco has appealed to overturn the CRTC's directive
under the commission's own "review and vary" process.

The Quebec-based MSO has also applied to Canada's
Federal Court of Appeal for leave to appeal the CRTC decision in court.

According to Mayrand, his company expects victory one way
or another. "Either the commission will agree with what we have asked them to do with
regard to the review and vary," he added, "or we get a similar result in the
answer [from] the judicial appeal process."

Whatever happens, Cogeco's counterattack should
effectively delay forced third-party resale. At least that's the fear of Jay Thomson,
president of the Canadian Association of Internet Providers. "It's obviously a
stall tactic," Thomson said. "They're doing whatever they can to delay
implementation of the commission's decision."

However, CRTC spokesman Denis Carmel said Cogeco's
appeals will not delay the Dec.13 deadline.

The CRTC likely views Cogeco's counterattack as the
latest in a long line of stalling tactics. In fact, the commission imposed the Dec. 13
deadline specifically because it thought the cable-TV industry was stalling on third-party
ISP access.

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