GATINEAU – With a cost profile four times higher, an unclear applications future and potentially new access technologies, fibre to the premise (FTTP) carries far too high a risk profile to allow competitors to ride on the networks at low mandated rates, Telus told the CRTC on Monday.
The communications giant kicked off the second week of a hearing into wholesale wireline services by arguing the question about mandating access to competitors isn’t about whether such a decision will cause Telus and others to stop investing, it’s about how and where that capital would be deployed.
“These networks require care and watering every month of every year,” said Ted Woodhead, Telus’ senior VP of federal government and regulatory affairs. “We’re making investments here without really having a clear view out the windshield at what applications and what other innovations are going to occur. We think they’re going to occur but we don’t know they’re going to occur… That’s the risk – and without the safety net of construction program reviews, of guaranteed rate of return, that’s the issue.”
And just because the Commission may choose to forbear from regulating high-speed access services means that competitors would never get access. Telus noted that it has inked 53 agreements for Ethernet access and just recently concluded another one with Allstream.
“The Allstream agreement is a rather singular piece of evidence that we can do this and we do this all the time. We enter into these agreements all the time,” said Woodhead.
Commissioners have heard on several occasions during the hearing that mandating access to these high speed fibre optic access facilities would see rural communities end up getting the short end of the fibre stick. But Telus also raised the prospect that even certain parts of larger centres could see reduced fibre rollouts.
Eros Spadotto, executive VP of technology strategy, noted that disincentives to investment such as mandated competitor access to fibre facilities will cause Telus to narrow is rollout schedule to areas with greater density. That means not only would rural communities be left out of the fibre game, but so would some urban areas.
“Whether it’s an independent ISP or whether it’s us, we will all seek density, and so the have and have-nots will not be rural versus urban. The have and have-nots will be neighbourhood to neighbourhood.” – Eros Spadotto, Telus
“I think the bigger danger … is actually the neighbourhood level. We can start looking at communities and cities and look at where there’s density on a city basis. Whether it’s an independent ISP or whether it’s us, we will all seek density, and so the have and have-nots will not be rural versus urban. The have and have-nots will be neighbourhood to neighbourhood.”
The CRTC has also heard at a number of points in the hearing that there must be a more effective dispute resolution process, such as arbitration, if it’s not going to mandate access to fibre access infrastructure. Tom Pentefountas, vice-chair of broadcasting, wondered whether this should serve as a backstop to commercial negotiations.
“Frankly I think it’s a bit of a red herring because people always have the opportunity to bring an application to the commission [arguing] an unjust discrimination or an undue preference,“ said Woodhead. “People think it’s the panacea of all evils. I’m not sure that it is.”
“It seems clear that assertions that mobile wireless is currently an alternative to wireline Internet access convey a misleading picture of the retail marketplace.” – Alysia Lau, PIAC
During Monday’s discussion, Telus said it isn’t an incumbent in the FTTP area. Bell made the same claim last week. This, however, didn’t sit well with the Consumers Association of Canada and the Public Interest Advocacy Centre. Not only do the incumbents have established customer bases but they can leverage their vast media assets to recoup investments in fibre facilities.
“The vertical integration which incumbent carriers have achieved provides these firms the ability to benefit from the deployment of fibre in the access network not just from the margins available from their Internet access services but from margins available from a variety of BDU offerings as well as the video content these companies and their affiliates generate,” said Jean-François Léger, counsel to CAC/PIAC.
Incumbent Internet access providers have argued that established and emerging technologies such as fixed wireless, mobile and satellite can, and will, act as substitutes for fixed broadband facilities. Even Telus pointed to Xplornet’s new satellite service that may carry speeds greater than 25 Mbps. The consumers’ groups said mobile wireless certainly is no substitute for fixed broadband.
To download 50.8 GB of data on Rogers largest mobile Internet hub package would cost a consumer $398 while a Bell customer could expect to pay $463.
“It seems clear that assertions that mobile wireless is currently an alternative to wireline Internet access convey a misleading picture of the retail marketplace,” argued Alysia Lau, legal counsel to PIAC.
Rogers Communications, Fiber to the Home Council Americas and CANARIE Inc. round out Phase I of the hearing on Tuesday. Oral replies begin Wednesday.
