As the dust begins to settle after Tuesday’s deferral accounts decision, opinions from industry stakeholders run the gamut from “disappointing” to "harmful" to “reasonable”.
Barrett Xplore Inc., Canada’s largest provider of rural broadband services, described the decision as anti-competitive and an ineffective use of monies.
“We’re obviously disappointed that the CRTC chose to proceed as they did, using technology that is not the least-cost solution for rural Canada”, its chief legal officer, C.J. Prudham, told Cartt.ca. “We’re also disappointed that they did not take in to consideration the expansion by other companies, including us, into those areas. Essentially they’re allowing Bell Canada to overbuild us.”
The CCSA, which represents over 100 independent cable operators, many of them in rural communities, echoed the gist of Barrett Xplore’s frustrations.
“Our members view the application of deferral account funds to broadband build-out in areas adjacent to the communities they serve and, in some cases, actually in the communities they serve, as a direct, unnecessary and harmful subsidy to their much larger ILEC (incumbent local exchange companies) competitors”, wrote Chris Edwards, VP of corporate and regulatory, in an email to Cartt.ca. “That subsidy flies in the face of the Government’s efforts to increase competition (e.g. the 2006 forbearance policy with its small systems carve-out) in the communications industry, particularly with respect to the existing small operators that serve the smaller rural markets.”
But Edwards also noted that, considering that the incumbent telcos could have been awarded more than $700 million from their deferral accounts, in some ways the decision to approve a draw down of $421.9 million was in a small way “a win for our members: it could have been much worse”.
The Public Interest Advocacy Centre (PIAC) called deferral accounts decision “a reasonable conclusion to a flawed regulatory adventure”.
“We are pleased that the CRTC has shut the door on the blank check (sic) approach of Bell Canada and Telus to expanding their broadband networks”, said Michael Janigan, the group’s executive director and general counsel, in a statement.
The CCSA’s Edwards also cheered the customer rebate portion of the decision.
“Fundamentally, we agree with the consumer groups that the proper, logical outcome should have been the return of all funds in the deferral accounts to the low-cost serving area customers from whom the funds were taken in the first place”, he continued. “The fact that the CRTC has mandated that a portion of the funds will be refunded demonstrates that such an application of the funds, though complex, is nonetheless possible.”
In 2002, the CRTC required established telcos, including Bell, MTS and Telus, to create deferral accounts that would hold surplus funds collected from urban home phone customers for an unspecified later purpose. The CRTC believed that new competition in telecom would be hampered if the telcos simply reduced prices for urban customers instead of building up a deferral account.
The disposition of these funds was the subject of appeals to the Federal Court of Appeal and the Supreme Court of Canada in 2008 and 2009.
