GATINEAU – Without provisions explicitly requiring investment in transport facilities, independent ISPs simply won’t spend the money, contends Bell Canada in reply comments to its appeal of Telecom Regulatory Policy 2015-326.
The company’s December 14 intervention maintains its original position that ISPs must bring their own transport facilities to central offices (COs) and cable head-ends and provide service to retail customers before being allowed to use disaggregated wholesale high speed access (HSA).
The vertically integrated communications and broadcasting company argues that because transport is already highly competitive – 84 of the 100 Bell major COs in Ontario in Quebec already have multiple providers connected to them – the mere fact of mandating disaggregated HSA (Bell refers to it as disaggregated broadband service or DBS) won’t trigger “meaningful ISP investment” in transport unless additional conditions are adopted. Bell argues that the Commission committed an error in fact on this point.
“As such, it stands to reason that ISPs are likely to continue to lease transport to deliver DBS (from us or from these pre-existing alternative providers) rather than build their own unless they are required to so build. Additional investment in transport is thus unlikely to be associated with the introduction of DBS,” the company states.
Bell points to the Canadian Network Operator’s Consortium’s submission as one that agrees building transport is better for independent ISPs in the long run because they can then better control their costs. But one needs to question this concept since these smaller ISPs have deployed little to none of their own transport facilities.
“Many ISPs have been providing retail broadband services for a decade and have yet to build meaningful transport (or any at all) even though transport has been found duplicable as far back as 2007,” says Bell. “Moreover, assuming that CNOC's arguments are correct and that DBS nevertheless triggers, absent our proposed remedies, robust incentives for ISP transport investment, then ISPs should not be concerned with an obligation to self-supply transport, as such self-supply is arguably then in their own interest.”
Concerns from some interveners that independent ISPs would be left without a mandated wholesale access service after the three-year phase out of aggregated HSA and that retail competition would suffer as a result should be disregarded, argues Bell. First this assumes that aggregated HSA wouldn’t be provided on economic terms after the phase out. And secondly, there will still be multiple full or hybrid facilities-based providers in the market.
As well, the transition period ensures that retail customers won’t lose access to competitive broadband services, but it doesn’t “confer an entitlement to continued mandated wholesale services,” it adds.
With respect to the $500 million threshold Bell has proposed, the company says this is only a logical measure since providers with this type of financial wherewithal have the ability to duplicate access facilities whereas smaller ISPs may not. By opening up access to all providers regardless of revenue levels constitutes an error in law.
“Without tailoring DBS eligibility to only those providers who genuinely need mandated access to inject retail competition, TRP 2015-326 is too broad a regulatory measure and contravenes the Policy Direction,” says Bell.
As well, companies with the resources to build their own access facilities should be incented to deploy them.
“Should providers otherwise able to deploy their own access facilities turn to DBS, then TRP 2015-326 will have deterred economically efficient competitive entry, in clear contravention of the Policy Direction. Facilities-based competition, which is widely recognized as the superior means to achieve sustainable competition and innovation, will have been replaced by a form of resale over leased access facilities,” argues Bell.
Some interveners suggested that Bell’s $500 million threshold is hypothetical. The company says this is far from the truth because in fact there are out of territory providers connecting to COs in Ontario and Quebec to use aggregated HSA.
“Yet, such large providers (with revenues in excess of $500M) have the necessary brand, knowhow and resources to self‑supply. They should be encouraged to deploy their own access facilities in order to further promote Canada’s longstanding facilities-based competition policy,” contends Bell.
The company has also appealed TRP 2015-326 to the federal Cabinet. Comments on the appeal are due Monday, December 21.
