UPDATE 1-Canada allows Internet 'throttling' as last resort
* Economic measures to be used whenever possible - CRTC
* "Throttling" of traffic only allowed as last resort
* ISPs must give notice to retail, wholesale users (Adds company comments)
TORONTO, Oct 21 (Reuters) - Canada's main telecom regulator said on Wednesday it will let Internet service providers slow or "throttle" traffic such as file-sharing that the companies say threatens to overwhelm their networks -- but only as a last resort.
Providers such as BCE (BCE.TO) and others should first rely on "economic measures," such as limits on how much bandwidth a subscriber can use per month depending on how much they pay, the Canadian Radio-television and Telecommunications Commission said.
That approach to managing online traffic is the most transparent because its impact turns up on monthly bills paid by customers, the CRTC said in a long-awaited ruling on the issue, which has angered many Internet users.
"Technical means to manage traffic, such as traffic shaping, should only be employed as a last resort," the CRTC said in a statement.
The common practice of "traffic shaping" is also known as "throttling." It basically involves a service provider slowing down some Web activity on its network. File swappers, for instance, often exchange large, bandwidth-intensive music or movie files.
Internet service providers have argued this chokes their networks to the detriment of other users.
BCE said in a statement that it thinks the decision is a good one and that its "existing Internet traffic management practices are already compliant with it."
Michael Hennessy, senior vice-president of regulatory and government affairs at Telus Corp (T.TO), said the communications company doe not currently throttle traffic. However, it does employ some general caps on bandwidth usage.
"There are growing concerns about congestion," he said, adding the CRTC's decision is "very good and very fair", and that continued network investments and consumption-based pricing are among ways to address heavy traffic volumes.
The CRTC also said Internet service providers will have to give retail consumers at least 30 days' notice and wholesale consumers at least 60 days' notice before a change in traffic management takes effect. (Reporting by Wojtek Dabrowski; editing by Frank McGurty and Rob Wilson)