CRTC sets rates for cable Internet access; competitors prepare for 2001 launch

Internet service providers (ISPs) can start selling cable Internet service early next year, assuming negotiations go smoothly with cablecos on the remaining technical and contractual agreements. The arrival of a competitive retail market for high-speed cable access has been a long time coming, but with the CRTC’s release of Order 2000-789 on August 21, it appears the biggest regulatory hurdle has now been cleared. The 47-page document sets out the terms and rates for third party access to cable modem service offered by Canada’s four largest cablecos, Rogers Communications Inc, Shaw Communications Inc, Cogeco Cable Canada inc and Vidéotron ltée. Of greatest interest to ISPs is the wholesale rate they must pay for access. The new rates range from $19 to $21.50/end-user/month, excluding point of interconnection costs, which will be decided in a separate proceeding. The access rate is far lower than what cablecos had hoped for, although ISPs seem happy with the decision. "(Our members) will be able to offer our services at a profitable retail rate," says Jay Thomson, president of the Canadian Association of Internet Providers (CAIP). "There are still aspects that need to be worked out. All the terms and conditions need to be finalized. But the finishing up should not impact on the decisions regarding the rates." Janet Yale, president/CEO of the Canadian Cable Television Association, said her members can live with the terms and conditions established by the commission, but they worry the rates are too high. "When you get to the rates, it’s like they rushed to get a ruling... There were two adjustments that took us by surprise: the cost reductions to all our capital costs, and the productivity increase. Our understanding of Phase 2 (costing) is that the first service that causes the capital costs to be incurred, you can allocate all the capital costs to that service. And the first service that required those capital costs to be incurred is high-speed Internet. The fact that things may come along later (i.e. digital video) that use that same infrastructure, so be it." Yale also objects to the CRTC’s decision to shave an additional 15 per cent off costs for future efficiencies. "If they hadn’t made those two adjustments, the rates would have been in the neighbourhood of $25, which are more in line with the price points that are out there in the marketplace." Still, she says cablecos won’t try to slow down third-party access. "The field trial is going to end in October (between AOL, Unionnet and Videotron). There will be reports filed publicly in mid to late October. The tariffs will be in place, (and) we’ll be working through the different terms and conditions. The commission has announced two separate follow-up programs to work on the remaining terms and conditions. Assuming that’s done in late fall, we’ll be able to announce commercial availability by the end of the year… (with) customers online for these ISPs by the end of the first quarter of next year." This proceeding was the latest test of the CRTC’s ability to balance its differing objectives under both the Telecommunications Act and Broadcasting Act. Establishing rates and conditions for access to bottleneck facilities is familiar ground at the commission, but weighing those decisions with the public policy objectives of the Broadcasting Act made this tariff proceeding all the more complicated. For example, ensuring that the integrity of the cable network is not jeopardized is of paramount concern, when you consider that cable networks are still primarily used for the distribution of broadcast signals. The commission was also careful to keep the tariff narrowly defined. CAIP had hoped that ISPs could use their broadband cable capacity for other services, in addition to high-speed Internet. It’s not a view that was shared by the commission. The decision specifically excludes IP-based voice telephony, multi-casting, virtual private networks or local area networks from the definition of "higher-speed retail Internet service".

CRTC sets rates for cable Internet access; competitors prepare for 2001 launch

Broadcast | August 31, 2000

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