GATINEAU – Canada’s major cable companies and telcos are squaring off against MTS Allstream and the Public Interest Advocacy Centre over the CRTC’s authority to mandate broadband as an essential service in the so-called “Obligation to Serve” CRTC proceeding beginning Tuesday in Timmins, Ont.
Comments filed with the CRTC in late August show that Bell Canada, Telus and all of the large cablecos are, not surprisingly, opposed to any Commission intervention on this matter, while PIAC and MTS firmly believe that the CRTC can make broadband essential.
The issue has become a central theme in the proceeding which will cover a broad variety of telecom matters, generally referred to as the obligation to serve. The Commission has asked as part of the proceeding whether broadband should be made an essential service. The incumbents, say no. PIAC says yes.
As part of its evidence to the proceeding, Bell filed a legal brief from Michael Ryan of Arnold & Porter LLP, evaluating the CRTC’s authority in this matter. He argues in his 13-page paper that since the obligation to serve doesn’t require a carrier to introduce new services or to build new facilities outside of its serving territory, then the Regulator doesn’t have the authority to mandate broadband as an essential service.
As well, the obligation to serve is a questionable concept in markets that have been forborne from regulation. “Imposing a general obligation to serve on a carrier or carriers would be inconsistent with the rationale for forbearance,” Ryan writes.
The cable companies (Cogeco Cable, Rogers Communications, Shaw Communications and Videotron) agree that the matter is rooted in the obligation to serve.
They say the obligation to serve is the “regulatory bargain” that gave telcos the exclusive or monopoly right to provide telecommunications in return for providing a quality service at rates that would ensure a fair return on investment. This concept “has no application to the modern telecommunications environment in which competitive markets predominate, except perhaps where small pockets of monopoly power might still remain,” the cable companies argue in their comments.
MTS counters arguments from the cablecos and big telcos, saying the CRTC does, in fact, have the authority under the Telecommunications Act to mandate broadband as an essential service. The telco says section 27(2) of the Act gives the Commission the power to order ILECs to upgrade or build out their networks to provide a service that is already being provided.
It concludes that since broadband is being provided in nearly all parts of the ILECs’ networks, then the Commission has the authority to order them to make broadband available to all customers in a serving territory.
The cable companies disagree with MTS’ assessment, noting the powers under section 27(2) only apply if a carrier offers a service to the public. “They do not give the Commission the authority to mandate the provision of a service that is not being offered to the public by a carrier. Nor do they authorize the Commission to impose a general obligation on a carrier to provide the service to all customers or to construct facilities,” they state.
The CRTC also asked whether competitive local phone companies (CLECs) should have an obligation to make broadband available if the ILECs are required to do so. MTS says this isn’t practical.
“The only carriers with near ubiquitous networks and, therefore, built-in economies of scale are the ILECs. Therefore, it serves no practical purpose to impose a duplicative obligation to serve on competitors,” states the Manitoba ILEC.
A version of this story first appeared on Cartt.ca back in September. We’re re-running it today as a bit of a primer for the hearing beginning Tuesday morning. It will then shift to Gatineau on November 1. Cartt.ca will be there, of course.
