GATINEAU – Bell Aliant Regional Communications says that if the obligation to serve subsidy regime isn’t fixed, it may have no choice but to cut off certain services to some of its most costly markets.
The revelation came under questioning from CRTC chair Konrad von Finckenstein when he asked Bell Aliant executives what the company would do if the Commission didn’t accede to its wishes and change the local subsidy regime.
Dennis Henry, VP of regulatory affairs for Bell Aliant was blunt in his response that some of the more expensive regions to serve may lose some telephony services. He said regions where Bell Aliant is facing competition can no longer subsidize these very high cost areas and “increasingly they have to stand on their own.”
“If we look at our band G (very remote areas, generally with no roads in), the interexchange facility problem, the long haul facility, we’re losing $10 million a year on that. We just cannot do that anymore,” Henry told commissioners. “What might have to happen if we can’t address that problem is we might have to come to you and say we’re going to have to abandon long distance service in that area.”
Bell Aliant explained that aging plant and a discontinued product will mean significant network upgrade and those are costs the company can’t justify. Some of the equipment is 30 years old – refurbished Cold War era military equipment.
“Sure it’s easy for people to say the last couple of years your costs have been low. It’s a bow wave that’s building out in front of us, it will need replacing,” Henry stated.
Is this a worst case scenario, von Finckenstein pressed Bell Aliant?
“One of the options would conceivably be to discontinue service. We don’t think that’s the right option. We don’t think you would think that’s the right option. Let’s get at the cost and see if we can get it fixed through contribution,” Henry responded. “We’re in this together. We think we need to look for a solution together.”
Before cutting off long distance services, the company would first have to seek Commission approval. As Henry explained, Bell Aliant has some tariffs that it would have to get CRTC approval to remove.
Bell strikes back at broadband proposals
Bell Canada used part of its rebuttal time on Thursday to discount proposals to increase the contribution subsidy for a broadband basic service objective. Inefficient subsidies shouldn’t be adopted to allow the overbuilding or enhancements to competitors networks, telco, cableco, wireless and satellite, alike, the company argued.
With respect to MTS’ broadband plan, Bell said that it would only serve to perpetuate the problem of urban Ontario and Quebec funding network enhancements in Manitoba and Saskatchewan. Describing this issue as distributional inequities, Mirko Bibic, senior VP of regulatory affairs at Bell, addressed it earlier in the week, noting that SaskTel and MTS would be among the largest beneficiaries on a contribution levy for broadband.
“If that rate were to go up to 2.7%, as suggested by MTS, Bell customers would suddenly be paying $214 million and would be drawing a pittance out of that in order to enhance broadband networks in Ontario and Quebec in our area,” he said. “All that money would be going – well, most of it – to fund the deployment of broadband in Manitoba and Saskatchewan. And that, in my view, is a huge distributional inequity.”
Bragg proposal for competition in SILEC territory gains traction
A “flexible approach” from Bragg Communications (EastLink’s parent) to support competitive entry in territories of small ILECs with fewer than 2,500 customers gained traction on Thursday. The company proposed that the current regime apply to the vast majority of SILECs, which would allow for competitive entry in their territories. For exchanges with fewer than 2,500 customers, the Commission could establish eight conditions on which a SILEC territory would be judged capable of accepting competition.
The criteria are: a SILEC has a switch capable of supporting local number portability; it operates a CLEC in another market; offers high speed Internet; offers IPTV; offers mobile services; deployed fibre to the home; has sharing agreements that would facilitate competitive entry; or the SILEC has a customer base of at least 2,500.
“If a SILEC has less than 2,500 NAS (network access service) and does not meet at least two of these conditions, then we would be open to the commission considering alternate solutions regarding entry,” said Natalie MacDonald, VP of regulatory at Bragg.
