By Ahmad Hathout
LARGE TELCOS ARE recommending the CRTC avoid subsidizing next-generation 9-1-1 (NG9-1-1) networks through a large fund subsidized by the carriers and dedicated to basic telecommunications services, with one large telco fearing such a move would increase the cost of operation with less oversight.
The Commission is currently putting in place the funding mechanism to allow for the installation and upkeep of networks that will drive NG9-1-1 service, which will allow distressed callers to submit texts, photos and videos to first responders. The Commission expects the cost of funding the networks will be $55 million annually over five years.
But in a proceeding that requested cost proposals to operate the network, there was a large disparity between small and large telephone companies – the larger players submitted proposed monthly costs passed onto customers that were much lower than the smaller providers, including members of the Independent Telecommunications Providers Association (ITPA). Part of the discrepancy between costs was attributed to smaller telephone companies having to service a smaller number of customers as NG9-1-1 providers.
In response, the regulator opened a public proceeding asking for comments on its proposal to dip into the National Contribution Fund (NCF) to pay, in whole or in part, for the cost of the service to alleviate any disproportionate costs on customers using it.
The NCF, whose money is levied from the service providers, currently funds video relay services for people with speech and hearing disabilities and one-time payments to expand basic telecommunications to areas that cannot get funding from other sources.
While the ITPA recommended the Commission adopt its own position that the networks be subsidized by the fund to ensure it is “consistently reliable,” the large telephone companies disagree.
Telus, one of the large NG9-1-1 providers, said in a submission to the regulator last week the CRTC should not dip into the NCF and should continue with a proceeding to use tariff applications to fund the networks.
The Vancouver-based telco, however, also submitted a separate Part 1 application with the Commission that week, asking it to consider reclassifying those smaller telephone players in the NG9-1-1 system as “originating network providers (ONPs),” which it said would effectively eliminate the problem it is facing. It is asking for a pause on the current proceeding until the CRTC addresses that reclassification request.
“If the Commission transfers the funding mechanism to the NCF, while leaving open the question of how much funding and what functionality could eventually be incorporated into that mechanism, this cost element could grow substantially without clear guidelines and oversight” – SaskTel
Under the current proposed system, the small operators are considered NG9-1-1 network providers, which are entities responsible for handling 9-1-1 calls from other providers and delivering them to the nearest Public Safety Answering Point (PSAP), the call centre where 9-1-1 calls are picked up.
But Telus suggests there is no “technical reasons or economic rationale” for that kind of structure.
“TELUS has demonstrated that [small operators] in their current role as NG9-1-1 service providers will neither handle directly or indirectly any NG9-1-1 traffic of ONPs that operate within their operating territory, they will not incur costs for transiting that traffic, and they will not be responsible for routing the calls of their customers to PSAPs served by large…NG9-1-1 service providers.
“As such, with respect to the delivery of 9-1-1 services, [small operators] are playing an entirely different role than the large ILECs. However, because the Commission has designated [small operators] as NG9-1-1 service providers, [small operators] need to procure access to a NG9-1-1 network, which comes at a cost.
“In turn, [small operators] have sought to pass those costs through to their customers and the customers of [wireless service providers] who may be assigned residency within a [small operators] exchange.”
For the smallest of the large NG9-1-1 providers, SaskTel, the monthly access charges proposed by the bigger guys “are not excessive and should not contribute to bill shock or excessive customer concerns,” it said in its submission.
“If the Commission transfers the funding mechanism to the NCF, while leaving open the question of how much funding and what functionality could eventually be incorporated into that mechanism, this cost element could grow substantially without clear guidelines and oversight,” SaskTel said in its submission.
“An explicit 9-1-1 charge, on the other hand, would make it clear to customers that additional functionality has been added, and the additional costs they are paying to receive that additional functionality. In SaskTel’s experience retail customers understand the importance of 9-1-1 services, and are not averse to fees being recovered through specific 9-1-1 charges.”
The crown corporation, however, said if it wants to dip into the NCF, it should consider using the fund to address the “specific problem of large costs per subscriber experienced by very small providers.
“If only the very small subscribers are funded in such a way, then the overall increase in the national revenue percent charge would be much less and most of our concerns would be allayed,” SaskTel said, adding it believes that all customers should “pay at least some amount for the benefit they receive from the service.”
“… subsidies should not be implemented absent clear and compelling evidence of a well-defined affordability issue, and must be precisely targeted to that issue to mitigate anti-competitive effects” – Rogers
Bell, the other large telco responsible for building the NG9-1-1 network, proposed a sort-of hybrid solution similar to the fallback suggested by SaskTel: that only parts of the small operator costs to manage the emergency calls should come from the NCF, while the remainder should be from reasonable costs imposed on customers.
“As the Commission has previously determined, the use of tariffs is the most efficient means of recovering NG9-1-1 costs because tariffs will ensure that those entities that use NG9-1-1 networks contribute to its costs,” Bell said in its submission. “However, given the concerns related to the ITPA [providers]…if the Commission deems it necessary to fund a portion of the cost of NG9-1-1 networks through the NCF then only the ITPA [providers’] NG9-1-1 costs should qualify for funding from the NCF.”
Shaw Communications, a cable company, recommended the Commission avoid having parts of the network funded by the NCF to avoid complicating the process. “Expanding the NCF and requiring service providers to contribute additional funds would be an inefficient and asymmetrical approach that would impose significant financial and administrative burdens on certain service providers,” it said in its submission. “Instead, the Commission should correct the foundational issue that led many [smaller operators] to propose such high monthly access rates in the first place.”
For the other major cable company, Rogers, subsidizing the networks from the fund would “undermine competitive discipline and transparency.
“Subsidies that treat telecommunications service providers (“TSPs”) asymmetrically – including by requiring some TSPs to subsidize other TSPs and their customers while also bearing all of their own NG9-1-1 costs – are anti-competitive and inefficient,” Rogers added. “Accordingly, subsidies should not be implemented absent clear and compelling evidence of a well-defined affordability issue, and must be precisely targeted to that issue to mitigate anti-competitive effects.”
Meanwhile, Rogers said it is also skeptical of the high costs proposed by the smaller providers. These smaller providers “are not deploying NG9-1-1 networks. There are no PSAPs in their serving areas, and no NG9-1-1 calls made by customers of other carriers will transit over their facilities,” its submission reads. Their NG9-1-1 costs “are confined to NG9-1-1 interconnection costs and applicable wholesale charges. These are the same types of costs as all ONPs are incurring (regardless of their customer base).”
Quebecor also said in its own submission that the networks should not be funded by the NCF and that the regulator should closely scrutinize the proposed rates.
On the other hand, the Public Interest Advocacy Center (PIAC) said the entirety of the NG9-1-1 networks should be funded by the NCF and the CRTC should avoid, as Sasktel suggests, using the fund to subsidize only parts of the networks as that would risk “complicating the overall funding process but could also lead to significant cost disparities with respect to the remaining costs in different regions, resulting in end-users residing in remote and/or rural regions paying much more for the same service.”
PIAC also said the NCF-funding networks could have greater transparency and accountability through the use of an independent national administrator who can report on the funding process regularly.
