WHILE THE SENIOR REGULATORY EXECUTIVES of all the nation’s telcos, cablecos and other parties met with federal MPs Thursday in Ottawa to plead their cases on telecom regulation, across the river in Gatineau, the CRTC was receiving its newest application for local forbearance – in Fort McMurray, Alberta.
Saying it has already passed the threshold of local line customer losses (25%) in the Alberta oil-boom-town about 450 kms north of Edmonton – thanks to rigorous competition from Shaw Cable – Telus wants the CRTC to deregulate the market, as outlined in its April 2006 local forbearance decision.
Shaw has done a heckuva job in Fort McMurray. I’d bet even Telus would admit that. Internet penetration of Shaw Cable customers in the town is north of 80% and with Shaw having launched voice over IP telephony there in March of this year, you could say it’s on its way to becoming a lost market for Telus if the company doesn’t respond strongly.
Despite the large and growing Shaw footprint in the emerging town, the Fort McMurray market alone cannot be de-regulated, as the current rules stand. The town is a part of LFR (local forbearance region) 48-04, a 100,000 sq-km piece of mostly rural Alberta, whose population core is Fort McMurray.
The Telus application not only asks for local telecom deregulation in the town, but also requires that LFR 48-04 and the whole system be re-examined. If the company has to wait for the entire population of that huge Alberta land mass to be competitive (i.e.: lose 25% of market share across the whole region, most of which has no facilities-based or any other kind of telephony competition), Fort McMurray would end up a total loss for Telus.
"As of 30 September 2006, the aggregate market share of Telus’ residential competitors in the Fort McMurray exchange was at least 25%, and may have been # or more," says the Telus application to the CRTC (the "#" sign was included in the public application to protect confidential information, says Telus).
"Telus’ primary residential competitor, Shaw Communications, has made rapid gains since it began offering its Shaw Digital Phone service on its Fort McMurray cable system on 21 March 2006," adds the Telus application.
"In proposing forbearance in the Fort McMurray exchange, Telus is identifying a different relevant geographic market than the local forbearance region (LFR) created by the Commission in Decision 2006-15… Telus demonstrates that the Fort McMurray exchange better meets the Commission’s requirements for forbearance areas, and better serves the interests of area residents," says Telus.
With only 87 LFRs spread across the country, there are bound to be duplicates of this problem in other areas of the country.
Assuming that Shaw continues to be the only significant residential CLEC in the LFR, and continues to serve only in the Fort McMurray exchange (where it has a network), Telus estimates that it would have to lose a total of # or #% of its residential NAS in the Fort McMurray exchange… in order to meet the 25% market share loss threshold across the LFR. This kind of result would be repeated in many LFRs, particularly in Western Canada, if the designated LFRs were employed," says Telus.
With the CRTC already re-examining the 25% threshold idea, with the thinking that it should be smaller, the Commission should also look at re-defining market boundaries and definitions as well, since forcing Telus to wait on freely competing in bustling Fort McMurray (65,000 people) until there’s better competition in Cold Lake (pop. 4,600) is unfair.
"The facts in Fort McMurray demonstrate beyond a doubt that the interests of consumers would be better served by full competition rather than continued economic regulation by the Commission," says the Telus letter.
"(LFR 48-04) is far too large an area to use for the purposes of local forbearance for a number of reasons… to use it would be to deny the citizens of Fort McMurray the benefits of full competition – potentially forever.
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