OTTAWA – Bell Canada threw a new wrinkle into the CRTC proceeding on wholesale access to certain next-generation high-speed services by proposing a solution that it says will encourage investment in networks, while also giving competitors access to incumbent facilities.
Testifying before the CRTC on Monday as part of Telecom Notice of Consultation 2009-261, the company said that it would give competitors access to sub-loops (smaller versions unbundled local loops) that would enable those competitors to offer high-speed services, but also encourage investment in network facilities by both incumbent telcos and competitors.
“Imposing access to sub-loops would rely on market forces to the maximum extent feasible and is efficient and proportionate to its purpose as required by the Policy Direction,” Mirko Bibic, senior vice-president of regulatory affairs at Bell Canada, said during his opening remarks. “Competitors will still have the incentive to invest – not only for transport facilities but also for new fibre access elements, while telcos would not be discouraged from making their own investments.”
In an interview with Cartt.ca after Bell’s appearance, Bibic explained the sub-loop concept further. “Today we have a regulatory regime which says competitors can pick up copper at the central office. On a fibre to the node deployment, copper doesn’t get picked up at the central office, copper gets picked up at the node. So let the competitor build to the node and let them pick up the copper there,” he said.
Jonathan Daniels, VP of regulatory law at Bell, tells Cartt.ca that the idea for the sub-loop proposal was borne when the company was looking at how to balance the need to incent investment in facilities with the access issues the Commission was studying in the proceeding.
Many of the competitors appearing on the first day of the hearing were caught off guard by the proposal. TekSavvy Solutions Inc. wasn’t at all happy with Bell’s new plan, with lawyer Chris Tacit panning the proposal. Competitors will have an opportunity to offer their detailed opinions on the plan later this week when they get a chance to rebut previous testimony.
Bell’s proposal comes as small ISPs seek access to the incumbent phone companies’ and cable operators’ next-generation networks. Services under consideration in the proceeding are central office-based ADSL (CO-ADSL) and cable head-end network access. The hearing is also re-considering a previous ruling on speed matching, returned to the Commission by Cabinet late last year. They say they need access to these facilities at cost-based rates or they risk exiting the market.
Primus Telecommunications Canada Inc. was the most blunt in its assessment of the impact of not having access to these facilities. Andrew Day, Primus Canada COO, said that while speed matching will work in the short term, CO-based ADSL is the end game and if the company doesn’t get access, it may well have to exit the residential market.
“If you do not mandate an ADSL-CO service, Primus will be effectively forced out of the residential high-speed Internet business in five years,” he said. “Speed matching is necessary while an ADSL-CO solution is being built out, but it will not let us offer any real differentiated choice to customers over the long run, so it is not enough on its own.”
Future investments and IPTV threatened by mandated access
BELL WARNED THE Commission that if it were to mandate access to next-generation network facilities, it would have to re-visit its investment strategy again and this would affect the rollout of its IPTV service to many regions in Ontario and Quebec. George Cope, president and CEO, said under questioning that the planned fibre to the node investment in London, Ontario might get reconsidered if next-gen access is required.
Heather Tulk, senior VP of residential products at Bell, said fibre networks and IPTV go hand-in-hand and that any decision the Commission makes with respect to competitor access to the company’s next-generation networks will affect its Internet TV services.
“IPTV requires a fibre network to operate,” she said. “And fibre network investments cannot be justified unless we are able to offer IPTV, together with Internet and phone service, to each broadband home. These decisions are completely co-dependent.”
SaskTel took its approach on access to next generation networks in a slightly different direction. The provincial Crown corp argued that the best way to provide clarity for fibre to the premise (FTTP) investments would be for the Commission to give ILECs time to recoup their investment before mandating access. It said 10 years would be suitable.
“For us, it takes a 10 year period for our business case for fibre to the prem to turn positive,” SaskTel’s VP corporate counsel and regulatory affairs John Meldrum said.
Under questioning, Meldrum reiterated this point, noting that internal analyses showed that even a five-year holiday from mandated access wouldn’t produce positive results and that it was after a decade that investments were recouped.
While much of the first day of the hearing focused on incentives to invest and competitor access to next-generation networks, all presenting parties pretty much agreed that whatever the Commission decides to do it has to adopt the same rules for telcos and cable companies. Regulatory symmetry was a matter that all parties argued was critical going forward.
