GATINEAU – The MTS Allstream proposal to give wholesale ISPs access to bandwidth for a fixed price was given a thorough examination Tuesday on the last day of the usage-based billing hearing.
During its appearance, the Winnipeg-based company insisted that its approach is the most “appropriate” because it allows independent ISPs to package services and speeds with significant flexibility.
“Our tariff allows competitors to fully manage their leased capacity in the transport network, and therefore, allows efficient competitors to build scale and bring choice to Canadians,” said Teresa Griffin-Muir, VP of regulatory affairs at MTS. “It strikes an appropriate balance between the twin objectives of ensuring that the ILEC recovers all its costs of provisioning the network, as it does for itself, and giving to competitors a price and structure that enables them to provide choice in the downstream retail market.”
Speaking to the panel of Commissioners, Muir argued that the ‘Main Street, Elm Street and Maple Street’ analogy elicited by Rogers Communications’ SVP of regulatory affairs Ken Engelhart on Monday isn’t completely accurate.
“For MTS Allstream, there is a single AHSSPI charge set on the basis of the overall forward-looking costs of provisioning the shared network, including augmentation of all nodes and links over a 10-year period,” she said.
In response to questioning by CRTC chair Konrad von Finckenstein, Muir noted that the costs of all ‘streets’ are covered by the rate, again referencing Rogers’ street model.
“Actually, when all the incumbents do the Phase II costing, we start with the aggregate cost of the whole service which would include the Main and Elm”, she added. “And then in this case, we take all the usage sensitive (elements) – where we measure capacity – and we place the costs there. So we would capture the cost of Main and Elm, etc.”
During Vaxination Informatique’s rebuttal, von Finckenstein said that Bell Canada has made a pretty compelling case that independent ISPs are only paying for access to Main Street but will then use Elm and Maple at no charge. Jean-François Mezei disagreed with the CRTC chair.
“When you go capacity-based you don’t pay just for the highway, you pay for the whole deal,” Mezei said, before introducing his own road analogy.
“Imagine if the Ministry of Transport in Ontario had toll booths on the highway that collected enough money to cover all of its expenses to pave all the roads in Ontario. So highway users would pay for rural roads basically through their tolls,” he explained. “What is done elsewhere is, that when you get on the highway, which is the MTS model, you pay for the whole deal. So the small streets are covered as part of the cost that you pay to get on the highway.”
According to Bell, adopting the MTS proposal would lead to significantly higher wholesale rates, said both Jonathan Daniels, VP of regulatory law, and Mirko Bibic, SVP of regulatory and government affairs.
Daniels argued that applying MTS’ model would be a useless endeavour.
“Fundamentally when we’re talking about costing here, for MTS, they don’t have any customers so this is an artificial exercise. If they get it, they get it wrong, it doesn’t matter,” he said, adding “where for us it’s real. It has a real impact on our network.”
Bell’s Bibic stressed that applying the alternate models suggested during the proceeding would almost certainly mean higher wholesale rates, as the models will lead to higher usage from the indie ISPs.
“If we change our costing assumptions to reflect what we really do think is going to happen under the MTS model, Primus model, 95th percentile model, you will see the wholesale rates get to a level that’s going to make the Commission uncomfortable”, he argued. “They will either be higher than retail, or shave those margins. That’s the essential point that we’re making. Of course, MTS’ costing is based on historical and expected growth, we’re costing…on historical and what the projections are, but if we change those projections to accommodate what would happen, then there is going to be a costing dilemma.”
The last day of the UBB hearing also saw some threats come from the Bell camp. The company has insisted from the outset that imposing the MTS model on all incumbent telcos would run counter to the Commission’s speed matching decision.
“It’s pretty evident to me that if you’re an ISP and you get access to a 32 meg service, regardless of what that incumbent who is giving you access has in the retail market in terms of speed tiers, that the ISP will now do whatever it wishes up to 32 megabits per second creating far larger arbitrage in the retail market,” Bibic said bluntly. “It would be a perverse outcome…that we can’t offer a speed at retail unless we make it available at wholesale, but now suddenly the wholesale ISP can offer a speed that we don’t offer and create more arbitrage than is currently the case.”
Vice-chair of telecommunications Len Katz responded in a seemingly incredulous manner.
“You’re saying that the folks coming into this market should be selling the same services that you’re selling at the same speeds you’re selling, which is just a ‘me-too’ service”, he replied. “It doesn’t change the dynamics that we’re facing in this country that we’re all looking to get out of.”
“With all due respect, that was last year’s hearing”, Bibic rejoined. “The Commission did find last year that there needed to be wholesale access to FTTN network in order to continue to foster competition. With that I agree with you. But the Commission said the way it would be done is through speed matching. This hearing is not to inquire about changing the speed matching decision and if the Commission does that, that’s out of scope and we all know where we’re going to end up,” he said to a chorus of groans from the area where the Canadian Network Operators Consortium (CNOC), and other small ISPs and consumer representatives were sitting. “Well, we will. We will have to end up in court…”
That drama was short lived once Bell realized that MTS, the Commission and others were not, in fact, suggesting that the MTS model be evaluated against Bell’s situation.
