ILECs advise Call-Net Enterprises to roll out its own high-speed Internet service

Three of Canada’s major incumbent local telephone service providers scoff at the idea that they are refusing to provide DSL access to people who subscribe to a competitor’s rival telephony service. The incumbents’ advice to their new entrant competitors is, "Build it and they will come." The matter came to a head earlier this year when Call-Net Enterprises Inc. filed a Part VII application with the CRTC, accusing the ILECs of denying high-speed Internet service to people who use a CLEC for local service (NL, Jan. 28/03). The January 17 filing accused the companies of suspending ADSL service to customers who drop ILEC local service in favour of a CLEC offering. Call-Net offers business and residential local and LD, but does not provide residential high-speed Internet. Bell Canada, Aliant Telecom Inc. and SaskTel, which all offer DSL services, maintain the competitor is using the regulatory process to disguise its own shortcomings as a marketer. Nothing prevents the CLEC’s move into the DSL sector, they state. "If Call-Net’s local exchange customers want Call-Net to provide them high-speed Internet services, Call-Net can provide such services," Bell chief regulatory officer Sheridan Scott writes in a February 17 intervention to the CRTC on behalf of the firms. "The companies note that Call-Net has never approached any of the companies to discuss the possibility of developing serving arrangements to provide the companies’ DSL-based Internet services to Call-Net’s residential PES customers," the submission continues. "Clearly, Call-Net is merely seeking an alternative to developing and rolling out its own residential Internet services. In the companies’ view, reliance on a Part VII application is not the appropriate process to address what are essentially business issues." Her counterpart at Telus Communications Inc. echoes those sentiments. Willie Grieve, VP public policy & regulatory affairs, says the Sprint Canada parent cannot claim discrimination when CLEC clients have alternatives for high-speed service. "If Call-Net chooses not to provide high-speed Internet to some of its customers, it cannot then argue that the ILEC is being discriminatory and creating a barrier to its entry into the local exchange market," Grieve’s February 17 submission states. "Call-Net cannot argue that the only alternative for its customers is to give up high-speed access." In its February 27 reply, the CLEC dismisses the suggestions as immaterial. "It is worth reiterating that the potential ability, if any, of competitors to build their own DSL network is irrelevant to the issue of whether or not the current ILEC practice violates section 27(2) of the Act and the commission’s bundling rules," Jean Brazeau, senior VP regulatory and strategic partnerships for the telco, writes. "In any event, the ILECs’ treatment of this issue constitutes the greatest oversimplification of the financial and market challenges that new entrants face in seeking to use the ILECs’ wire centers and loop plants to build a competitive DSL network." (Manitoba Telecom Services Inc. was not named in the original Call-Net application. Accordingly, it did not feel it appropriate to sign on to the Bell response.) Call-Net wants the incumbents’ DSL service made available to the customers of CLECs that use the local loops of the ILECs. Brazeau asserts that this change "is very simple to implement technically." The established telcos vehemently disagree. Telus says technicians would need to install splitters in all COs where Telus provides ADSL service. Modifications would have to be made to verify the quality and capabilities of unbundled loops to determine whether they meet the necessary technical specifications. Grieve also raises the possibility that inter-carrier agreements and processes for repairing ADSL service would have to be changed. Bell, Aliant and SaskTel make similar arguments. An ILEC leasing loop to a CLEC would have to know what equipment and features the competitor is providing to ensure the incumbent can still provide Internet service, the telcos say. Bell and its allies have designed their trouble-shooting procedures based on the assumption that DSL customers would also receive PES from them. The same constraint applies to the billing service, they claim. Despite the technical, operational and financial restrictions that supposedly exist, Bell, Aliant and SaskTel say they are prepared to sit down with Call-Net to discuss if and how the issues may be resolved. The competitor denounces that move as a stalling tactic. "The history of the ILECs’ ADSL access service has shown that such bilateral negotiations would only drag on fruitlessly for years," Brazeau counters in the CLEC’s February 27 reply comments. "The issue of unbundling retail ADSL from local voice services have been raised by competitors to Bell Canada on several previous occasions and Bell Canada has been adamant that it would not change its business practice. While Bell Canada’s sudden change of heart in the face of potential penalty for regulatory non-compliance is understandable, it offers no hope whatsoever that any workable serving arrangements will in fact be agreed to by Bell Canada that will enable CLECs to compete effectively against Bell Canada in the local exchange market." Filing responses in support of Call-Net are Competition Bureau commissioner Konrad von Finckenstein, the Independent Members of the Canadian Association of Internet Providers (IMCAIP), EastLink, and the Public Interest Advocacy Centre (acting on behalf of l’Union des Consommateurs). Von Finckenstein is quick to dismiss the suggestion that all Call-Net has to do is roll out its own DSL backbone. "The bureau has serious concerns with the ILEC position," he writes in the bureau’s February 26 intervention. "First, this would force CLECs to enter into two stages of the telecommunications industry – local residential telephone service and ADSL. Imposing this burden on CLECs discriminates against stand alone CLECs, frustrates entry into a market that already exhibits substantial entry barriers, and denies competitive choices to consumers." A few paragraphs later, the commissioner discusses whether or not Call-Net has costed out its proposals. He concedes that the incumbents and the CLEC present vastly different pictures of how difficult it would be to split costs. It is up to the CRTC to resolve that dispute, the bureau says, and it makes no secret of where it stands. "Should the commission decide that the ILEC policies represent a barrier to entry to local residential competition, it will need to bridge this chasm between the parties. The bureau recommends that the CRTC examine the cost of implementing Call-Net’s proposal in order to determine the feasibility of de-linking the ILECs’ ADSL and local residential telephone services." The ISPs’ lobby group submitted a two-page letter backing Call-Net. It spurns the foundation of the Bell and Telus filings. "IMCAIP wishes to be clear that it categorically rejects any and all of the ILECs’ arguments which are based on an assertion that the high-speed Internet access market is competitive or that dial-up and high-speed Internet services are substitutable," states the association’s February 28 intervention. "IMCAIP currently has a Part VII application before the commission which specifically addressees these unsupportable claims." (NL, Nov. 19/02).

ILECs advise Call-Net Enterprises to roll out its own high-speed Internet service

News | 03/11/2003 5:00 am EST

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