GATINEAU – A number of Canada’s Internet service providers are telling the CRTC that Bell Canada’s appeal for more restricted access to disaggregated wholesale fibre Internet access services is self-serving and in fact would lead to less competition in the market.
Bell is asking the Commission to review and vary certain provisions related to disaggregated broadband service (DBS) in Telecom Regulatory Policy 2015-326. The company has also filed an appeal of the decision to cabinet, as Cartt.ca first reported in October.
In its R&V, Bell argues that the Commission needs to add three conditions for granting access to DBS. To get access, competitors must build their own transport facilities to each and every central office (CO) or cable head-end and they must provide services to retail customers. As well, entities with revenue excess of $500 million would be barred from accessing DBS altogether.
While Shaw Communications was disappointed with some elements TPR 2015-326 particularly as it related to the provision of mandated wholesale internet services at next generation speeds, it acknowledged that the decision struck a balance between a number of competing interests and leveled the playing field, both competitively and technologically, between incumbent cablecos and telcos.
“The conditions proposed by Bell would undermine the policy intent of TRP 2015-326 by limiting the competitors that can access mandated DBS and, by extension, compete with Bell in downstream retail markets,” says Shaw. “These modifications effectively allow Bell to determine who it will compete with, and who the winners and losers will be, in the retail marketplace. In effect, the Application is asking the Commission to alter its policy determinations and reverse course on DBS, but without actually saying so and without appropriate justification.”
“The conditions proposed by Bell would undermine the policy intent of TRP 2015-326 by limiting the competitors that can access mandated DBS and, by extension, compete with Bell in downstream retail markets.” – Shaw Communications
The contention that the CRTC erred by not encouraging small ISPs to invest in their own transport facilities also shows Bell misunderstands the TPR 2015-326, says Shaw. It notes that the decision says DBS could facilitate competitor investment in alternative transport facility.
The Public Interest Advocacy Centre and the Consumers’ Association of Canada (PIAC/CAC) pick up on this point in countering Bell’s assertions. They note that the Commission wasn’t forcing competitors to self-supply transport facilities. Its “objective was not about encouraging investment in transport as an end in and of itself, but rather, encouraging competitive alternatives to incumbents’ transport facilities.”
The Commission’s goal, the groups argue, was to provide competitors with more cost certainty and sustainable business models for their high speed offerings. Therefore, the specific method of transport was subordinate the Commission’s policy considerations of a more competitive and innovative telecoms market.
Primus Telecommunications Canada Inc. agrees with PIAC/CAC that the disaggregated model was designed to give competitive ISPs the choice of building or leasing transport facilities. Mandating ISPs to deploy their own transport networks “will reinstate the chief defect of the aggregated model” and simply render DBS “uneconomical for most ISPs and needlessly expensive for all.”
“The result will be less overall investment than if ISPs were permitted to build their own transport facilities in response to market forces as the Commission correctly determined should be the case in TRP 2015-326,” adds Primus.
Bell isn’t alone though in thinking the Commission made some errors in the wholesale wireline decision. Telus Corp. notes in its intervention that the wholesale wireline decision represents a departure from a pure facilities-based regime. As has been argued many times in the past, the company says network sharing will only lead to less investment and innovation.
This isn’t hypothetical either. The number of fibre to the premise (FTTP) connections is higher in the U.S., Korea and Japan – jurisdictions without mandated sharing – than there is in European countries where network sharing is mandated.
“Thus, when there is no wholesale regulation, competitors will build their own infrastructure so they can provide better and faster services than existing providers. There is no reason to think that the results in Canada will be any different from those experienced in the rest of the world,” argues Telus.
Eastlink also agrees that the CRTC made errors in TPR 2015-326. But the company says where the CRTC erred was in not providing concrete incentives for competitors to transition to DBS. Without a clear directive to get competitors off aggregated service and onto DBS, the industry is left with a regime where non-essential aggregated services are still regulated. The company doesn’t, however, believe that mandating competitors to build transport to each CO or cable head-end is the right approach.
“The failure to establish definitive requirements for competitors to transition to DBS perpetuates inefficient regulation which is not suited to the objective of facilities-based competition, raising substantial doubt as the correctness of the Decision.” – Eastlink
“The failure to establish definitive requirements for competitors to transition to DBS perpetuates inefficient regulation which is not suited to the objective of facilities-based competition, raising substantial doubt as the correctness of the Decision,” says Eastlink. “Mandating an implementation process for other regions in parallel to Ontario and Quebec and mandating that all competitors transition to a DBS service would address this deficiency.”
Bell’s call for a $500 million cap on companies that can avail themselves of DBS saw its supporters and detractors. Videotron and Telus are behind Bell. Shaw and Rogers Communications were against it. The latter notes that that the commission didn’t do a competition analysis on the size of a company but on market dynamics and that is competitors can’t feasibly or practically duplicate incumbent carrier facilities.
“It would be poor public policy to have one set of rules for small companies and another for large companies when both types of companies face the same challenges in regard to constructing last-mile facilities. The Policy Direction recognizes that such asymmetrical regulation would be poor public policy,” argues Rogers.
