GATINEAU – “Contrary to the assertions of some parties, there is simply no problem to solve when it comes to Canadian broadband.” Those comments from Ted Woodhead, senior VP of federal government and regulatory affairs at Telus Communications, during the company’s reply on Wednesday pretty much sum up the views of all the major incumbent ISPs when it comes to wholesale broadband access regulations which the CRTC has under review.
The big players have argued throughout the hearing that competition is alive and well in retail Internet access markets between the cable and telephone companies, and any decision that grants competitors greater access to incumbent facilities will stymie further investments in networks. Bell Canada argued the Commission already has evidence that mandating access to incumbent wholesale fibre facilities will slow future investments.
The company noted in the reply phase on Wednesday that the CRTC’s decision in 2010 to mandate competitor access to fibre to the node (FTTN) resulted in an FTTN and FTTP deployment to a combined 400,000 fewer homes than previously planned.
“Clearly regulatory decisions matter when we consider investments,” said Dan McKeen, vice-chair and senior VP of residential services at Bell Aliant. “We urge the commission not to base its policy on a false expectation that we will still invest in FTTP in areas where the business case is no longer viable.”
“We urge the commission not to base its policy on a false expectation that we will still invest in FTTP in areas where the business case is no longer viable.” – Dan McKeen, Bell Aliant
Not only is there intense rivalry between the cablecos and the telcos but alternatives such as fixed wireless, satellite and even mobile technologies are alternatives to fixed line Internet access. Therefore regulation of wholesale services is no longer needed.
“Whether or not you consider the broadband services currently provided over [mobile] networks to be in the same product market as those provided over wireline networks, a forward looking regulatory framework in our view should recognize the trend already observed in voice and observable in data in countries like Japan and many others towards exclusive use of mobile broadband as many consumers only broadband subscription,” said Woodhead.
While the cablecos and the telcos dominate the retail Internet market, the smaller independent ISPs are making headway. According to the CRTC’s 2014 Communications Monitoring report, national share for competitors is now at 8%. Bell said it’s more than double that in Ontario and Quebec.
Independent provider Distributel Communications acknowledged in its reply that it’s gaining market share and is actually seeing increases in average revenue per user (ARPU), but the company said it’s also important to consider that costs are also increasing for competitors. The higher ARPU “does not translate to increased profitability or growth as it does the fact that increases in price per user are barely keeping pace with the increases in costs per user,” said Matt Stein, the company’s CEO.
“In other words, as we are forced to increase retail rates to recover increasing costs, the ability to offer a competitive service dwindles,” he added.
During the first phase of the hearing some of the independent ISPs called for greater transparency in the costing of capacity-based billing (CBB) services. They argued that because CBB rates vary widely among the various incumbents, there needs to be a clearer picture at how the network owners arrive at their rates. The Commission picked up on this during the reply stage and questioned the big players on whether their costing data should be verified by an independent third-party auditor.
“It’s all there and what is not there is the manufacturer’s name and the part number. But people can certainly go and get costs associated with that.” – Dave Watt, Rogers
Dave Watt, VP of regulatory telecom at Rogers Communications, noted that there is already a tremendous amount of transparency in the CBB costing process. A new costing template released in July 2013 requires providers to submit details on upwards of 80 different pieces of equipment “right down to the asphalt that’s used to fill in the road,” he said. “It’s all there and what is not there is the manufacturer’s name and the part number. But people can certainly go and get costs associated with that.”
So suggestions that the company isn‘t providing real costs aren‘t true, Watt added.
Adding another layer of administration burden to the costing process just isn’t compelling, said Shaw Communications VP of regulatory affairs Paul Cowling because this is what the CRTC is there for. But if it’s determined that this would add transparency, then the company isn’t opposed.
“We’re not going to object to something that would bolster what we think is already the case which is that the costs are legitimate,” said Cowling.
The hearing concludes on Thursday with reply comments from CNOC, Primus Telecommunications Canada and the Competition Bureau.
