By Ahmad Hathout
Telus’s proposal to ride on its competitors’ internet networks outside of its home territory would be destructive to facilities-based competition and would create an existential crisis for regional wholesalers, two prominent cable companies told the CRTC on Thursday.
Representatives from Telus said Wednesday that the Vancouver-based telecom should be able to wholesale internet capacity from competitor networks to drive diversity of choice and competition, or the regime would be “useless.” The telco also pushed back against claims that it is a national incumbent, instead saying that its preferred status would be a regional player that’s a new entrant in certain markets, including Ontario and the majority of Quebec.
In between moments of disbelief at the claim Telus is a regional provider, Rogers and Cogeco implored commissioners not to give into the large telco’s proposal because it would allegedly cause far more harm than good.
“There is a real threat that, not only would smaller independent ISPs try to access these more rural and remote fibre deployments, but the largest players would do so, as well, and this would be extremely detrimental to a player like us, because it would completely change our business case,” Paul Beaudry, Cogeco’s vice president or regulatory and government affairs, said Thursday, adding the business case to build in these areas is already poor – even with government subsidies.
“Needless to say, if we turned the lights on a new deployment and the next one of the big marketing machines of a big three players comes in asking for regulated access — potentially at rates that are under our costs — we could be decimated,” he said, adding the long-term impact would be harder justification for investment and greater taxpayer dollars for difficult builds.
Cogeco has requested that the CRTC shield players like itself from that kind of encroachment by disallowing the big three from accessing the wholesale regime.
Frederic Perron, president of Cogeco Connexion, added that the company is already seeing the negative effects of both the wholesale internet regime and the recent acquisitions of wholesale players by the big three.
“Already half of third-party users on our network are from the big three,” Perron said. “So we’re already in some situations today where we need to make investments in certain parts of our network to enable the big three to make profit that we’re not profiting [from].”
Commissioners of the CRTC have made it a point to ask about whether the recent spate of acquisition activity in the market is a sign of a healthy or unhealthy market.
Cogeco’s answer was that it has put the large players in a position to dip into its home territory and take customers away, putting it in an existential crisis.
Perron said the CRTC can create a sufficient “negative incentive” on large player acquisition activity by banning them from the wholesale access market.
Rogers representatives perhaps had more choice words for Telus’s proposal, calling it “self-serving,” “hypocritical” and based on a “misleading premise” that it is a “plucky regional carrier that’s going to provide competition.”
The country’s largest telecom made the overarching point that the CRTC must focus its efforts on avoiding a distortion in the facilities-based competitive dynamic in the market and avoiding harming investment in networks.
As such, accepting Telus’s proposal for it to roam on everyone’s network outside of its operating territory would be “the worst thing you could do,” Rogers’s Dean Shaikh, senior vice-president of regulatory affairs, said Thursday.
Under Telus’s proposal, Shaikh claimed, Rogers would be competing against a telco with facilities – in eastern Canada, that would be Bell, and in western Canada, that would be Telus – as well as competing against a telco reseller or wholesaler, which would be Telus in the east and Bell in the west. He also noted that Bell and Telus have a network sharing agreement and claimed that Cogeco’s big three encroachment problem is mainly from what he called “Belus,” with Rogers only making up a small part of that.
Rogers, he said of Telus’s proposal, would not have the ability to resell on its networks, as Rogers has a sprawling internet network in western Canada after the acquisition of Telus’s major west coast rival of yesteryear, Shaw. Telus representatives said Wednesday that it does not expect the commission to protect it from competition and said competitors would be allowed to ride on its networks — so long as it’s not in areas where they have facilities.
“So what Telus is asking you to do, quite frankly, is to position them to severely undermine our ability to invest by reselling on our networks when we have no ability to respond as a reseller on any ILEC network,” Shaikh said. “That would be incredibly harmful to competition, to investment and ultimately to consumers because it would devastate the facilities-based competition between cable and ILECs that we fundamentally rely upon.”
Shaikh even gave a head nod to Bell’s chief legal and regulatory guy Robert Malcolmson, who said Wednesday that allowing the incumbents to ride on regional competitor networks would destroy wholesale players because they are simply richer and have far more brand power than the smaller players.
Rogers added that the cable networks have carried the brunt of the wholesale network, with about 75 per cent of that traffic coming on those networks. Shaikh noted that there must be regulatory symmetry.
That said, Rogers recommends that the CRTC phase-out the wholesale internet access regime and let the market figure itself out. Shaikh noted that these types of wholesale agreements can still be hashed out under commercial deals and that the preferred regime is one in which competitors invest in their own facilities, such as the disaggregated regime.
If the regular wants to maintain the regime, Rogers said it should be symmetrical and technology neutral. Shaikh recommended one regime for telco last mile fibre and one for cable hybrid networks, which are expecting the latest DOCSIS technology to bring consumers up to 10 Gbps speeds.
Screenshot of Dean Shaikh, Rogers’s senior vice president of regulatory affairs.
