By Ahmad Hathout
OTTAWA – The large telecommunications companies are telling the CRTC that it’s a bad idea to temporarily mandate access to last mile fibre under the current regime because there isn’t evidence of a need for it, it doesn’t take into consideration areas that still don’t have completed fibre infrastructure, and the process will preempt the review of the wholesale internet framework.
The CRTC said in March it is of the preliminary view that fibre-to-the-premises access under the aggregated regime should be mandated, and launched an expedited proceeding for interim access until it completes its review of the wholesale internet framework. The aggregated regime historically has allowed third parties to bundle the transport mile with last mile coaxial facilities, but not the faster last mile fibre infrastructure.
Rogers, Bell, Telus, SaskTel, Cogeco and Eastlink, however, all opposed the preliminary view in submissions and replies this month.
The opposing telecoms said there’s simply no evidence that such a regime is required.
Rogers said such a regime would stunt investment, and in any case, wholesalers already have access to gigabit speeds from the cable carriers’ hybrid networks, yet their uptake “has been limited.”
“As a general matter, resellers typically have minimal impact on premium market segments,” Rogers said. “It cannot simply be presumed, therefore, that reseller customer losses are due to lack of access to aggregated wholesale access to FTTP facilities.”
TekSavvy and Quebecor – which has said last mile fibre is essential to solidify its fourth-player status – have asked for the CRTC to launch mandated access to fiber-to-the-premises facilities within two or three months.
Rogers has already said it would take longer – a full year – before it could provide service on its newer fibre infrastructure because its systems need to be changed.
Bell and other providers, including Cogeco, provided corroboration on that point in their submissions. The telco said it will take 10 months from the date of such an order to build such a solution in Ontario and Quebec and 12 months in Atlantic provinces and Manitoba.
Bell CEO Mirko Bibic has already taken issue with what he said is the CRTC’s lean that fibre deployments are largely complete. He emphasized during a TD Securities event last month that the company still has five million households to hook up with fibre, which he said is still a substantial chunk of investment still left over.
Bell and Telus said in their submissions that applying a blanket wholesale access regime in all areas would capture areas that still require fibre investments, which would eat away at their ability to recover money spent on building the infrastructure that will be leased out.
“The Commission is wrong to assert that fibre deployments are complete and that there would be little harm from mandating wholesale access,” Telus said. “TELUS has by no means completed its fibre deployment: we continue to deploy fibre today, including in major cities such as Calgary. There are many communities throughout TELUS’ wireline footprint that do not yet have access to FTTP networks.
“In any event, even when TELUS has finished constructing facilities in a given area, it is improper for the Commission to consider that build ‘complete’ until TELUS has recouped the costs of that build,” Telus added.
The Vancouver-based telecom added that the CRTC cannot justify such a regime in the wake of Rogers buying Shaw because of the perceived increased competitive effects of that combination.
“The Commission should instead use this period to determine whether the transaction produces the competitive effects that the Competition Tribunal found it would,” Telus said.
If it must move forward with such a regime, Telus said the CRTC should cherry pick which areas can tolerate it – namely, areas where the telecom has recoup its investment in the network. As such, it said the CRTC must roll out such access on a “rolling basis, community-by-community.” Telus said for this purpose, “none of the communities in which TELUS rolled out fibre would qualify for wholesale access.”
“Accordingly, if the Commission mandates interim aggregated wholesale access to FTTP networks, it should limit that mandate to Ontario and Quebec,” Telus said.
Ontario and Quebec were the only provinces with areas that had implemented last mile fibre access under the disaggregated regime, which was supposed to be the future wholesale internet framework but was deemed unworkable by the commission. Under that regime, renters had to figure their own transport network in exchange for FTTP access. This was supposed to encourage investment in their own networks.
“In British Columbia and Alberta, TELUS and Shaw in particular vigorously compete across all important metrics, including network quality, customer service and price,” Telus added. “As such, resellers have chosen to concentrate their marketing efforts on certain areas of Ontario and Quebec and, as a result, have low market share outside those areas. Therefore resellers are unlikely to benefit significantly from an interim mandate in TELUS’ serving territories in Alberta and British Columbia.”
While Bell agreed that the CRTC must analyze each region for competitiveness, it said the commission should not isolate any such temporary regime in Ontario and Quebec precisely because it already provides such services under the disaggregated regime.
“These two provinces already have access to disaggregated HSA services and mandated wholesale providers should not be required to concurrently provide two types of access,” Bell said.
“We do not believe there is a sufficient record or reason to mandate wholesale aggregated FTTP anywhere in Canada,” Bell added.
Cogeco requested that if the temporary regime were to be imposed, it should not be required of smaller providers.
“We pointed out that Cogeco’s own FTTP facilities represent a small percentage of its overall footprint and, contrary to those of the incumbent local exchange carriers (“ILECs”), are concentrated in rural areas where the costs of deployment are significant,” Cogeco said in its submission.
“We also noted that operationalizing aggregated FTTP access on Cogeco’s network would likely take more time than the Commission is expected to require to make its determinations in the broader HSA review proceeding.”
Eastlink also warned that such a framework would harm investments and that, if the CRTC moves forward with it, it should exclude smaller providers or those whose last mile fibre networks are “in the very early stages of deployment.
“Failure to exclude these carriers will harm the future expansion of new high-quality services for Canadians, particularly in rural areas, and hinders facilities-based competition,” it added.
SaskTel suggested that, if such a regime must be mandated, the CRTC exclude areas with only one or fewer fibre or coaxial-based service provider. “It is suggested that an application of the interim mandated FTTP to these areas is unnecessary as there are no facilities to provide mandated access to and that such policy would be harmful in that it would tend to have a dampening effect on any investment decisions.”
The opponents also argued that implementing an interim regime would preempt its review wholesale internet framework, as they said it would create realities on the ground that it would likely be reluctant to stop by the end of its review.
They also warned that the CRTC is on the cusp of making a decision on interim access based on policy, rather than the standard three-part legal test called RJR-MacDonald. That test would require the commission to show that this is a serious issue, there would be irreparable harm (to the wholesalers) if the regime weren’t instituted, and the balance of convenience weighs in favour of the public interest to impose the regime.
The providers allege this presumes that the regulator could not meet that legal test and so sought other ways to reach that conclusion.
If implemented on the existing basis, this would presumably leave the CRTC open to a challenge in federal court.
TekSavvy and the Public Interest Advocacy Centre, however, disagreed and said the commission has legal authority to make such interim decisions.
On the broader access question, TekSavvy argued that there is a lack of choice for consumers for direct fibre services. It said the fact incumbents are marketing their pure fibre products “clearly demonstrates that access to the FTTP technology confers a competitive advantage not just in terms of faster speeds it enables, but the quality of service.”
The independent telecom also said Bell and Telus have “benefited from over seven years of monopoly profits on their FTTP facilities” and that access on an expedited basis “is needed urgently in order for competitors to be able to compete.”
On the time to implement the regime, TekSavvy argued there have been examples where the incumbents have been able to turn on aggregated wholesale access to FTTP to TekSavvy in an area in “short order,” challenging their claim it would take as long as a year to do implement it.
PIAC said without interim access, competitors will “continue to lose market share, risking shutdown or forced acquisition.”
Despite Rogers saying there has been limited uptake on gigabit from wholesalers, PIAC said the current speeds available “are not enough for competitors to meaningfully compete in the retail Internet market.”
The advocacy group also said excluding certain areas for interim access, as some of the incumbents have suggested, would “defeat the purpose” of it.
“The point of interim access is not to preserve the status quo, but to open the retail Internet market up to more competitors while the Commission conducts the broader review,” PIAC said.
