GATINEAU – As the large telephone and cable companies continue to push fibre deeper into their old copper networks to offer increasing broadband speeds and new services to their customers, the CRTC affirmed Monday the incumbents must continue to rent space to third party ISPs under its mandated access policy and the Commission’s speed matching rules.
These regs must be set aside, though, Bell Canada’s regulatory chief, Mirko Bibic, told Cartt.ca late on Monday. “We need to figure out how do we get to a situation where this should not be done at all?” he said in reacting to Monday’s decision stemming from the wholesale high-speed access services proceeding.
Held back in late May and early June, the Commission examined central office-based ADSL (CO-ADSL) and cable head-end network access while also re-considering a previous ruling on speed matching, which was returned to the Commission by Cabinet for reconsideration in late 2009. Small ISPs say they need access to these new fibre to the node facilities at cost-based rates or they risk exiting the market and curbing competition.
The incumbents say that mandating access is mandating a disincentive to invest for the big telco and cable companies. “On the one hand you have (Industry) Minister (Tony) Clement publicly chastising network providers two weeks ago in the press saying we have catching up to do and that incumbents should invest more. And on the other hand, we have a Regulator which isn’t putting the conditions in place to allow us to maximize the returns on our investments so that we’re incented to do even more.”
The problem, for Bell and the other telcos in particular, is that they say the economics of their investment in deep fibre (FTTN or further) depends on selling three services to customers (phone, high speed internet and TV) – a difficult thing to do if third party ISPs are claiming Internet customers for themselves using the telcos’ own networks.
“Cabinet should be looking at this very closely,” added Bibic. “We will definitely be discussing with Industry Canada the implications of this decision.” (Since the speed matching decision has already been appealed and sent back to the Regulator, Cabinet now has 90 days to respond to the new Commission determination, if it wishes.)
Bell noted during the hearing that should this decision go the way it has, the company many reconsider its billion-dollar-plus investment in bringing deep fibre (and IPTV service) across its lucrative Southern Ontario and Quebec territories.
“It’s disappointing to find ourselves in this position now when we are the largest capex spender in the country in the communications industry,” added Bibic.
For the CRTC, the decision is a necessary one in order to shepherd competition in the high speed internet market.
"Access to broadband Internet services is a key foundation for the digital economy," said Konrad von Finckenstein, chairman of the CRTC, in a statement. "The large telephone and cable companies are bringing their fibre networks closer to Canadian homes and businesses, which allows for faster Internet connections. Requiring these companies to provide access to their networks will lead to more opportunities for competition in retail Internet services and better serve consumers."
What’s new with this decision is the Commission has said because of the investments by the incumbents, it will allow the telcos to charge competitors an additional 10% mark-up over their costs for the use of their wholesale Internet services’ higher-speed options.
As for cable, while they must modify their existing Internet access services so that alternate ISPs can connect to their networks at as few points as possible, they will not be able to charge any more than the mandated rates already paid to them.
This isn’t quite fair, said Rogers Communications SVP regulatory Ken Engelhart. “The phone companies can charge an extra 10% but cable can’t. How does that fit in with Bell’s request for regulatory symmetry?” he asked.
Responded Bibic: “There’s no way that access should be mandated, neither on us nor on cable. That’s as symmetrical as you can get.”
Commissioner Tim Denton dissented, in part, with the decision, saying it didn’t go far enough. He believes the alternate ISPs should be allowed to build to and interconnect with the big telcos at the central office. “The result is that the possibility for service innovation was turned down, without sufficient consideration, in my estimation. The current ambivalence about the role and legitimacy of smaller carriers continues. They are allowed to exist but denied the means to innovate. In a business with as much uncertainty as this, turning down the possibility for technical and business innovation seems a riskier move than letting it go ahead,” he wrote.
The feedback on the decision from those alternate service providers has been somewhat positive.
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“Canadian consumers and businesses have won a victory today,” added TekSavvy president and CEO Rocky Gaudrault.
However, “(t)he Commission’s refusal to mandate the provision of new central office-based telephone company and local head-end-based cable company wholesale services severely limits other competitors’ ability to provide new differentiated service offerings,” said Marc Gaudrault, the company’s CTO. “To that extent the CRTC’s approach will entrench the duopolistic nature of the communications wireline services industry in many important markets and stifle the ability of competitors to provide new and innovative services. In this environment, it will be very difficult for competitors to attract the capital necessary to innovate, grow and contribute to the greatest extent possible to the competitive landscape and increase consumer choice.”
