Status quo approach to VoIP hurts small cablecos, says CCTA head Hennessy

The cable industry says the status quo approach taken by the CRTC in its preliminary views on a regulatory framework for Voice over Internet Protocol (VoIP) telephony services will prevent small cablecos from entering the market. The CRTC’s approach, according to the Canadian Cable Television Association, will inhibit small cablecos from entering the VoIP market, and thus will make them uncompetitive with Bell Canada’s satellite TV distribution arm Bell ExpressVu LP. The cable industry argues that it must be able to bundle telephony with its TV service to remain competitive with Bell’s bundles. CCTA acting president Michael Hennessy says more should have been done to ease the way for cablecos to enter the telephony market. The CRTC states in Telecom Public Notice 2004-2 that VoIP services should be subject to the existing regulatory framework governing switched telephone networks, in keeping with its principle of a technologically neutral regime, including forbearance. Hennessy says the current rules are not conducive to VoIP services developing in small centres. "I know for sure our small members will not be able to enter the market directly as a CLEC and I’m not sure…what the resale model is going to be and whether that will work," he says. "In the current CLEC arrangements the way they exist, you have to interconnect at separate points of interconnection at each exchange. You also require different trunk groups for different types of traffic. The smaller the market you’re in, the more these become barriers to entry because it is much harder to achieve a level of scale that will give you a return on your business," he notes. "The way the rules ...were developed seven or eight years ago, we were really thinking about competition in large centres, like Toronto, Montreal and Vancouver and not focusing a lot on what was going to happen in the rest of the cities across of the country. So those kinds of things as well as the issue of how do you get low-cost access to the Internet backbone are really significant issues for all but the very largest of systems. And unless those are addressed I don’t see competition rolling out in a significant fashion across the country." In order to remain competitive with the telecommunications companies, many of which are offering TV services, cablecos say they must be able to add telephony services to their bundles. During CRTC hearings - including during the licence renewal of Bell ExpressVu LP - Cogeco Inc., Rogers Cable Inc. and Quebecor Media Inc. argued that Bell’s primary motive for aggressive bundling of telephony with TV services is to block the cable industry from being able to provide VoIP telephony services. The CRTC appears prepared to refrain from initially mandating the provision of 911 services, an approach that would appear to help small players enter the telephony market. Instead, the CRTC states in its preliminary framework that subscribers to local VoIP services must be specifically and clearly advised of any limitations to the provider’s emergency telephone services. Hennessy praises the CRTC for not moving toward deregulation of the telephone market, as called for by Bell Canada (CCR, Feb. 27/04). "I think that is probably an excellent thing they have done because the worst thing that could happen in this process is for the whole debate about future competition to be hijacked by the ILEC deregulation agenda. So the commission sent out a strong message that they will continue to regulate the telephone companies as telephone companies." Ken Engelhart, VP regulatory at Rogers Communications Inc., calls the approach "an absence of a negative. If the CRTC had let Bell be deregulated for their VoIP service I think that would have given Bell a weapon to crush competition before it even got started," he notes. "But if you recall when satellite got into competition with cable, they were able to do a lot of things that cable wasn’t able to do…so they got a leg up in the market because the CRTC gave them a much more favourable regulatory regime. I think in telephony, we need to see the CRTC take the same type of attitude." Comments on the CRTC’s preliminary framework for regulating VoIP are due April 28. The CRTC also announced that it will hold a public hearing on the matter May 19-20. For a detailed analysis of the development, see the upcoming issue of Canadian Communications Reports affiliate publication Network Letter.

Status quo approach to VoIP hurts small cablecos, says CCTA head Hennessy

Broadcast | April 8, 2004

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