OTTAWA – There’s not yet a cabinet and he’s not even sworn in as Prime Minister, but Bell Canada is putting Justin Trudeau’s federal government to work, quickly.
Cartt.ca has learned the company filed an appeal to cabinet late Tuesday to overturn the July CRTC decision which grants third party broadband resellers access to newly built fibre to the home or premises (FTTH/FTTP) infrastructure (CRTC 2015-326). Tuesday, October 20th (90 days after the decision) was the final day Bell was eligible to file the appeal, under CRTC rules. A well-placed Bell source with direct knowledge of the petition who asked to remain anonymous said the company did not want to file something like this during an election campaign, so it waited until the last minute.
Bell has also submitted a Part 1 application to the CRTC to review and vary the decision that states incumbent telecom providers must introduce a “disaggregated wholesale broadband access service” (DBS) so that independent ISPs gain access to FTTH facilities.
In its petition to cabinet, Bell is likely going to remind the new government that Canada’s long-standing policy has been to insist on facilities-based competition, something its executives and regulatory filings repeated often during the public process held last year. Its petition to the Governor-in-Council (which is the official name of an appeal to cabinet) will say, according to our source, that the CRTC’s decision has unfairly changed the rules governing fibre-to-the-home broadband networks by mandating reseller access while it is all still under construction – and if other ISPs want FTTH networks, they should build those facilities. Our source says Bell executives see the CRTC decision as one which essentially expropriates Bell’s FTTH/FTTN network.
The fact that Bell began announced a huge FTTH build in June, committing $1.4 billion in Toronto alone prior to the decision’s release, shows the company did not expect the CRTC to mandate DBS and its regulatory fight on two fronts will play out into 2016.
If left to stand, the decision will see Bell deploy far less capital towards such new FTTH infrastructure, push into fewer communities (and perhaps not at all to rural centres), cause a loss of jobs and hurt the overall competitiveness of the Canadian economy, according to the company. All of this was well-said by Bell during the hearing and in its filings leading to it.
While the CRTC envisions resellers using the incumbent infrastructure to build a stronger business, increase competition and then build out their own new networks, Bell said during the hearing the opposite is true: that resellers riding on state-of-the-art networks which are already built out by others will never have any incentive to build their own – and so won’t build anything at all.
Bell has rolled out FTTH in a number of centres, including Halifax, Quebec City and Toronto, and has committed to spending billions of dollars. But without a change in the CRTC’s directive, future FTTH penetration is in serious jeopardy, according to our source, as investments and jobs that go with them will dry up. Bell’s new fibre network essentially replaces all of its old copper and is a very expensive undertaking, investments upon which the company deserves to make a return.
While a new Liberal government cabinet has yet to be formed (which means the document filed today may not be officially Gazetted for a while), cabinet has until a year after the initial CRTC policy announcement to make a decision on this petition.
“The mandated introduction of DBS will trigger virtually no investment in additional transport facilities,” – Bell Canada
Bell also today filed a Review and Vary application to the Commission itself, asking not for the decision to be overturned (which is what it is hoping cabinet will do) but for two modifications: that DBS only be made available to companies which have constructed their own transport network to the incumbent’s central offices (COs); and that companies with more than $500 million in annual revenues not be allowed to take advantage of DBS.
Without forcing independent ISPs to build networks to the COs, they can simply lease space on networks from the likes of Telus or Allstream, for example, to get to the CO and then use Bell’s fibre to get to end users, with only a small investment to co-locate some gear in the CO. Without the changes demanded by Bell, “the mandated introduction of DBS will trigger virtually no investment in additional transport facilities,” reads the company’s application to the CRTC. “The Commission has thus committed an error in fact by mistakenly linking the introduction of DBS with additional investment in transport but without establishing sufficient parameters… to ensure that this transport investment objective is actually met.”
As well, by not stating in the decision that only smaller independent ISPs can take advantage of DBS and making no distinction between residential and business markets Telus, for example, could ride on Bell’s network to poach lucrative business customers away from Bell in Ontario and Quebec while Bell has no opportunity to do the same in Alberta or B.C. because CRTC 2015-326 has DBS coming on stream in Ontario and Quebec first with other regions following later on.
The R&V application, “does not seek to overturn the Commission's more general conclusion that DBS, even on fibre-to-the-premises (FTTP) facilities, should be mandated. Our position is that the mandated introduction of DBS over FTTP, with or without the restrictions we are proposing in this Application, will reduce the incentives of both incumbents and new entrants to invest in FTTP. This Application thus does not correct the fact that mandated wholesale access over FTTP is a disincentive to investing in these facilities,” writes Bell.
“We continue to believe that the Commission was mistaken when it expressed that, despite the introduction of DBS, ‘negative impact on investment is not likely to happen to any significant degree’. Even if all our proposals are adopted, the Commission's decision to mandate DBS, including over FTTP facilities, will continue to be inconsistent with the approach being taken in the rest of the world.”
Which means that the R&V application, if adopted, is the most Bell can stomach. It’s petition to cabinet is its home run swing.
