GATINEAU – The small incumbent telcos in Ontario lashed out at the cable companies during the rebuttal phase of the obligation to serve hearing Wednesday, telling the CRTC that it has no business taking any advice from them because they have never had an obligation to serve any community.
Tracy Cant, director of finance and regulatory matters at Ontera, told commissioners that the small incumbent local exchange carriers (SILECs) have respected the regulatory bargain that their costs would be covered for serving their communities. The cable companies, he noted, have not had an obligation to serve for “one single day of their existence.”
“First, why would the Commission give serious credence to this issue to a group of companies that have no idea what it means to operate under an obligation to serve?” he asked. “Second, and conversely, why wouldn’t the Commission give the benefit of the doubt that may exist on the obligation to serve to companies like the SILECs that have honoured that obligation for a century?”
Cant acknowledged that Commission hearings are often a “pulpit” for companies to criticize other companies’ businesses, but the CRTC should give appropriate weight to those types of arguments.
“With respect, the Commission should give the cablecos’ evidence on matters relating to the obligation to serve – how easy is it to honour, how expensive it is to meet, how simple it would be eliminate – the weight that their evidence frankly deserves: none", he argued.
Under questioning from CRTC chair Konrad von Finckenstein, Keith Stevens, chair of ExecuLink Telecom, noted that the cable companies left the Commission with the impression that the network has already been paid for and that all they have to do is collect money and perhaps do some minor maintenance every now and again.
“That can be nothing further from the truth,” he said. The network has to be upgraded continuously, it has to be expanded, and the old plant has to be replaced, he added, noting that in some cases new network has to be built to accommodate new businesses.
“Regularly we find things like a farmer will rent his driving shed and somebody will put a small business in it. It’s a very natural inexpensive building to start a business and we will get a request for five lines in a place where we have two pair cable being fed down there, or not enough pairs. So we have to reinforce our plant all the way back. So we’re constantly spending money on both upgrading and maintenance.”
The cable companies, not surprisingly, took issue with the characterization of their previous comments and the notion that they have no understanding of an obligation to service. Speaking for the cablecos, Ken Engelhart, senior VP of regulatory affairs at Rogers Communications, explained that it’s factually incorrect to suggest that the cable companies don’t know about the obligation to serve.
“Cable not only had an obligation to serve, but an obligation to build,” he told commissioners. “All of our licences said that within our licence territory we had to provide cable TV service to any home with either water or sewer service. So we had an actual obligation to build and an obligation to serve.”
That obligation to build was removed when the cable industry was deregulated about 10 years ago.
Broadband to all was again raised at the hearing with SaskTel arguing the commission needs to include high speed Internet as part of the basic service objective (BSO). The provincial Crown Corp said the time for monitoring and assessing what should happen has passed and that the time for action is now.
Commissioner Candice Molnar (who spent 20 years at that company) pressed SaskTel on why it believes the time for action is now. “Do we truly have all the information in order to set up an effective broadband program?” she asked.
Robert Hersche, from SaskTel’s regulatory department, said that it’s clear that demand for bandwidth is going to continue to grow and while market forces will take care of that demand in many places, some high-cost serving areas may be left out in the cold. The U.S. Federal Communications Commission didn’t have all the information required to move forward with its broadband plan but they knew they needed to act and they did. That’s what the CRTC needs to do, he said.
Earlier in the hearing, MTS Allstream Inc. proposed a broadband plan that could cost approximately $7 billion over team years and during the rebuttal phase, the company defended its plan as affordable.
Teresa Griffin-Muir noted that the plan would not cost Canadians that much on their monthly communications bill.
“The proposal we presented in Timmins – increasing the revenue pool by 30% and increasing the current contribution rate by 2% – would result in a 2% increase in a customer’s bill,” she said. “That’s $1 a month on a $50 bill or $2 a month on a $100 bill, less than the increase in local service rates if Bell’s Group proposal is accepted.”
