No surprises in the documents
By Denis Carmel
GATINEAU – As expected, Rogers, Shaw, Vidéotron, Cogeco and Eastlink have filed an official Review & Vary application with the CRTC, requesting changes to Telecom decision 2019-288—the final rates for aggregated wholesale high-speed access services (HSA).
The themes are similar to what was filed with their appeals to the courts and to federal cabinet.
The cable carriers focused on “new facts and circumstances and on errors of fact and principle” that questions how the Commission arrived at its much-delayed decision.
“The Commission has announced an imminent review of its approach to setting wholesale rates to ‘ensure that the rates the CRTC sets for wholesale services continue to be just and reasonable.’ The approval of dramatically reduced wholesale HSA rates on the eve of such a hearing, in and of itself, raises substantial doubt as to the correctness of the Methodology,” the cablecos further argued.
They also complain the methodology contravenes important rate setting principles and “is not competitively neutral: the methodology ignores the asymmetry and anti-competitive impact created by determining rates for comparable wholesale services at different times and in different processes and requiring the Cable Carriers to provide resellers with wholesale access to their highest speed services at deeply discounted rates while not requiring the same of the Cable Carriers’ major facilities-based competitors, the ILECs,” reads its R&V.
Of course, they strongly oppose the fact that the rate reductions are retroactive.
Finally, the cablecos offered up a study from The Brattle Group, a consulting firm offering services in economics, finance, and regulation to corporations, law firms, and public agencies.
Its conclusion is “the final wholesale access rates set out in Telecom Order CRTC 2019-288 will result in lost operating margins for the Cablecos (relative to the prevailing interim rates), on a net present value basis over the coming five-year period, ranging from $2.6 billion to $3.7 billion. These impacts translate to a range of 38% to 54% of planned broadband capital expenditures over this same five-year time horizon.”
For its part, Bell Canada argued in its own R&V application “the Commission failed to follow proper costing principles or prior Commission directives in developing the costs the rates are based on and made a number of unjustified adjustments to the costs we filed,” it reads.
“More telling however is the fact that between 2013 and 2017 Resellers have accounted for 41% of all net subscriber additions, on average. If this pace continues (and it will only accelerate if the rates set by the Order are maintained) resale-based competition will supplant facilities-based competition and network investment will be significantly curtailed, especially in rural and remote areas.
“The reward for investing in facilities capable of achieving a nearly 200-fold speed improvement has been completely negated by the Commission’s rate-setting process and Order.” – Bell
“An example of the Order’s absurdity is that Resellers essentially get the same wholesale rate for access to legacy copper infrastructure capable of achieving all of 6 Mbps (i.e., $14.11) as they do for gigabit tiers achievable over cable coax networks (i.e., $14.30 for Videotron’s gigabit tier and $13.44 for Rogers’ gigabit tier). The reward for investing in facilities capable of achieving a nearly 200-fold speed improvement has been completely negated by the Commission’s rate-setting process and Order. In what may be just the first of several steps backwards that the industry must take, we note that Videotron has recently chosen to withdraw its fastest speed tier, 940 Mbps, both at retail and at wholesale,” they continue.
(Ed note: Is Bell supporting Videotron here? Some might find that absurd…)
Bell also makes a long argument noting “Our analysis shows that the approved rate for our GAS-FTTN access services of $14.78 per access per month is significantly below our actual cost associated with our FTTN investments that is reflected in our financial records, including a 30% mark-up.”
Conclusion
Telus had filed its R&V application on November 13th, even though they could have delayed their submission to December 13th.
Commission staff sent a letter to the parties interested in responding to the distribution list indicating that because intervenors might want to discuss issues raised in all applications, the Telus deadlines would be on the same track. Considering the holidays, the intervention deadline should be January 18 with a reply from the applicants unless the Commission sets different timelines.
The applicants have 10 days to reply.
Because parties that felt harmed by this decision have three avenues to seek remedies, the lines are blurred and because each look at it from a different lens, it can be pretty confusing.
For example, we can assume that the Commission discussed whether to use the methodology while having indicated that it would be reviewed and decided to go ahead with the existing one. This would be more an issue of the Federal Court, possibly.
We can also assume that they have closely considered whether to make the rates retroactive and for how long.
So, it seems unlikely the Commission would significantly change its own decision so look for a fast decision from the Regulator, so that parties can focus on where the debate will turn: The Courts and Cabinet.
