Almost a year ago Shaw started offering its customers a $10 QoS fee to provide quality of service assurance on third party VoIP services, such as Vonage. As I wrote in an article on net neutrality in the January issue of Butterworth’s Internet and E-Commerce Law in Canada, the price seemed designed to neutralize the price advantage that Vonage offered its customers over the Shaw VoIP offering, and I’ve always been dubious that there was anything to it other than a duopolist’s opportunistic exploitation of its market power.

Vonage has now disclosed that it is protesting the charge - which it describes as a “thinly-veiled [Ed: thinly?] VoIP tax” to the CRTC. From the Vonage press release:

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 marketing, 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.

One of the best discussions of the issue is over at IP Democracy, which as usual gives the topic the treatment. I was struck in particular by two passages in a discussion comparing the duopolistic structure of the US and Canadian broadband access markets:

My guess is that the justification [for a recurring QoS charge] reflects the thinking of Shaw’s marketers and competitive strategists, not the actual cost of providing the QoS service. That’s not inherently an “evil” thing to do, but it can be competitively lethal in situations like this, where independent service providers’ business models and customer service are fundamentally dependent on the actions of competitors that control access networks as vertically integrated duopolists.

…

But, in the broadband space, the U.S. has a pretty solidified duopoly market structure. Unfortunately, as the Shaw surcharge suggests, the fundamental economic dynamics and incentives of an unregulated, vertically integrated, duopolistic access market may be fundamentally incompatible with the operating principles and goals of an open Internet.

Incompatible indeed.