GATINEAU – Cogeco Cable says it doesn’t need to be all or nothing when it comes to regulating wholesale access to incumbent broadband facilities. The company told the CRTC Thursday morning that establishing a framework which encourages negotiation while providing a reference rate as a backstop could help stimulate more wholesale competition.
“We’re proposing something that will actually help the markets move from a current situation with regulation to a completely deregulated market. We think we need some steps along the way so that’s why we’re proposing this approach,“ said Philippe Jetté, senior VP of technology and strategy at Cogeco, during the company’s testimony to the CRTC‘s Fibre Hearing on Thursday.
For the cableco, it’s all about providing more flexibility for the wholesale network provider and the prospective purchaser of that facility so they get around the same table and come to an agreement. Current processes don’t offer that give and take, it added.
“This regulatory process does not promote constructive business relationships. Rather, it perpetuates adversarial relationships.” – Nathalie Dorval, Cogeco
“The approval process for tariff modifications does not allow for the implementation of rate reductions, or the introduction of new terms of service in a timely manner. Furthermore, this regulatory process does not promote constructive business relationships. Rather, it perpetuates adversarial relationships,” said Nathalie Dorval, Cogeco’s’ VP of regulatory affairs and copyright.
She acknowledged that off-tariff arrangements are possible, but added that a regulatory approach that favoured commercial negotiations “would certainly be more appropriate at this stage of competition” in the wholesale broadband market.
The idea is to negotiate, Dorval explained in response to a question from CRTC chair Jean-Pierre Blais, so that Cogeco can offer personalized services that are better suited for each Third Party Internet Access (TPIA) customer. The concept is about providing more transparency and the opportunity for a prospective customer who doesn’t want to negotiate to see a rate.
Cogeco sees considerable growth opportunities in providing wholesale services to independent ISPs: there are more than 10 times as many TPIA end users connected to its network now when compared to 2008 levels. In addition, the company voluntarily dropped capacity-based billing (CBB) rates by more than 30% earlier this year and has stepped up efforts to ink off-tariff deals.
Leonard Eichel, senior manager of wholesale services and TPIA at Cogeco Cable, noted the 30%-plus CBB rate reduction tariff was filed in July and has still yet to be approved. This shows, he added, that current processes aren’t well suited to new competitive realities.
The company believes this type of framework would be beneficial for wholesale infrastructure providers as well as the independent ISPs.
“It’s really about trying to find a solution that would move the parties away from regulation and incent them to move into a negotiation dynamic, a true negotiation dynamic,” said Dorval.
However, independent carrier Distributel Communications, which appeared right after Cogeco, wasn’t too keen on the prior proposal. Matt Stein, Distributel’s company’s CEO, suggested it was unclear how rates would be determined to be reasonable or cost-based.
“We’ve not had the kind of success negotiating those kinds of things that would make us feel that it’s likely … something that we could really leverage.” – Matt Stein, Distributel
“We’ve not had the kind of success negotiating those kinds of things that would make us feel that it’s likely … something that we could really leverage.” he said.
The smaller communications provider was put to the test under questioning from vice-chair of broadcasting Tom Pentefountas regarding Broadband Access Service (BAS). Distributel noted that suggestions that BAS is inefficient, too expensive and wouldn’t work for anyone are not true.
Stein argued that since a major portion of the network is moving to the capacity side, it’s erroneous to suggest BAS is inefficient or too expensive. “It simply doesn’t make sense that it would be more expensive to offer it that way. As somebody who’s built networks for coming up on 20 years, that just doesn’t hold water,” he said.
Equality of inputs (EoI) regulation was also raised during Distributel’s testimony. The company noted that this could be a good way to ensure that its customers are treated in the way as the incumbent telcos treat their own customers. Mel Cohen, chair of the Distributel group of companies (other brands include Acanac, Thinktel and others), said this is particularly important when it comes to the time it takes to connect a customer. Whereas the company may have to wait 10 days to get a wholesale connection from the incumbent just so it can connect its new retail customer, that same incumbent can simply win back the customer with next day service connection.
Asked by Ontario commissioner Raj Shoan who would bear the costs of EoI, Stein noted that Distributel isn’t looking for a free ride.
“We’re just looking to make sure that our customers are treated the same way that theirs are treated. As well, if I understand it correctly, the EoI framework isn’t about making sure that one ILEC and another ILEC are both doing it the same, it’s that one ILEC is treating their customers and treating competitors’ customers the same.”
Friday sees the CRTC cross examine a variety of organizations including Shaw Communications, VMedia, MTS and Allstream, as well as the City of Calgary, the Okanagan Skaha school district.
