Telus asks for more subsidies
By Ahmad Hathout
GATINEAU – If the CRTC wants to encourage more investment in rural broadband and not have to shell out more subsidies, it should not impose additional regulatory obligations, such as open access to their networks, the big telecoms are arguing.
In final submissions to the CRTC’s consultation on barriers to deploying broadband in rural Canada, launched in late 2019, the big telecoms took the opportunity to reemphasize fewer regulations will mean more private investment in their networks – and then the government can save money on programs, too.
Should “the investment climate worsen due to short-sighted regulatory interventions, we may have to reduce both our privately funded deployment plans as well as our participation in programs such as the Universal Broadband Fund or the Commission’s own Broadband Fund,” Bell said in its submission, “forcing government at all levels to increase its share of funding.
“Should additional public funds be required to address the digital divide, it will be at the expense of other public priorities such as health or education,” the company added. “In certain areas, private funds alone will be enough to expand networks and serve rural and remote communities,” Bell’s submission continued. “In other areas, public contributions will be required to supplement private funds.”
Rogers added in its own submission that a barrier “to deployment involves the requirement in some broadband funding programs for successful applicants to provide open access to publicly-funded transport and/or access facilities,” sharing a similar view with cable peer Eastlink.
“Rogers submits that broadband funding programs should prioritize investment in networks over the number of competitors in areas that require public funding for broadband.”
“Rogers submits that broadband funding programs should prioritize investment in networks over the number of competitors in areas that require public funding for broadband.”
The Connect to Innovate program, the $585-million fund launched in 2016, included a provision that required recipients of public funds to open the networks that the funds helped build. The Universal Broadband Fund of November 2020 went further, preferring applicants who opened their existing facilities – not necessarily just those paid for with public money – to competitors.
Telus took issue with that specific expansion of the open access rules. “Where the [open access] mandate is applied to facilities constructed with private funds, those facilities may simply not be built,” it said in its final submission. “If they are already built, they may not be maintained or expanded and will, over time, reach capacity or fall into disrepair.”
The Vancouver-based company recommended “re-examining mandatory wholesale access policies rather than expanding them, and rolling back mandates that impede deployment of networks in underserved areas.” Telus said, due to the regulatory uncertainty, it had to diversify its investment opportunities outside of telecommunications – see Telus Health – and outside the country – see IT solutions firm Telus International, which recently sold shares to the public.
Shaw Communications noted in its filing that it’s not just “unreasonable rates” which hang over wireline, but the uncertainty surrounding the CRTC’s impending decision on the wireless policy front, which could still see the regulator open up the industry to forced negotiations with facilities-less virtual mobile operators.
Cartt.ca learned last week that the federal government has asked for specific “commitment letters” from UBF applicants about what measures they were taking to open access to their infrastructure for consideration.
The CRTC is currently deliberating again over final wholesale access rates for third party internet access (TPIA) providers. It had already put forward lower final rates in an August 2019 decision, but Cartt.ca readers will recall that decision was challenged and appealed three ways by the big telecoms as tariffs that, if implemented, would cause them to reduce investments in their networks.
That was the overarching point of these submissions: Regulations, either for open access to networks as a condition of funding or re-regulating transport infrastructure, are the antithesis of the Canadian broadband success story.
On the latter point, the big telecoms said the CRTC should maintain its position that transport infrastructure, which they argue is in abundance, be deregulated. Transport was a sticking point in submissions highlighting key rural broadband barriers because of how expensive it is.
In fact, the last two CRTC Broadband Fund award announcements have gone exclusively to transport projects, including Friday’s $57-million handout.
But the tension between parties seems to be about new and existing facilities. Telus says the problem doesn’t lie in access to transport infrastructure, but in new transport in rural areas, which is expensive. Bell says re-regulation of transport should only be reserved as a last resort for “competitiveness problems.”
“Mandating wholesale transport services on regulated terms and conditions, including rates, is the only regulatory measure that is capable of meaningfully mitigating this high barrier.” – TekSavvy
TekSavvy, on the other hand, said the “most daunting barrier to extending broadband networks to underserved communities” is the “lack of competitive or regulated transport services. The Independent Telecommunications Providers Association, and the First Mile Connectivity Consortium shared similar concerns with TekSavvy.
“Mandating wholesale transport services on regulated terms and conditions, including rates, is the only regulatory measure that is capable of meaningfully mitigating this high barrier,” TekSavvy said, adding the CRTC sets rates to ensure incumbents get their money back and a “reasonable return” to incent investments.
But it added the issue isn’t access to urban transport, but it’s rural delivery because there’s “no business case” for it.
And therein lies a question about funding options for the regulator. Should it focus its monies on unique and innovative technologies, like Telus and SSi Micro suggest, or should it use the money to fund operating costs of the transport facilities, as the Public Interest Advocacy Centre (PIAC) has said in its own final submission. PIAC argues it’s one thing to build it and another to light it up and maintain it.
But Telus said funding operating costs will only stretch the dollars so far, thus leaving the funds to dry up and, by extension, the maintenance of the infrastructure itself. It said high cost of transport generally correlates to facilities that are already at capacity and require additional builds.
In any case, Telus, which again argued for the elimination of spectrum set-asides for regional wireless players, said more public money is required to help build Canada’s broadband future – broadband to every Canadian.
That buildout will cost at least $8 billion, it said, citing the regulator. “This gap will need to be made up by more funding from the general revenues of federal, provincial, territorial, and municipal governments and other organizations.”
