Aliant wants CRTC to lift restrictions on prices, terms, local residential services

More Part VII applications over bundling are bound to find their way onto the CRTC’s desk as cable companies begin to get into the telephony business. Already the CRTC ruled in April on two bundling-related applications filed by cable companies against telcos, and telco Aliant Telecom Inc. countered with a Part VII filing that partly seeks to give it more flexibility on how it can bundle its services. Ken Engelhart, VP of regulatory at Rogers Communications Inc., tells Network Letter that bundling and bundling rules are going to be integral going forward. "You just have to look at Aliant, and the only place in Canada where local telephone competition is really getting started and that’s with EastLink (Cable Systems) in Halifax and Charlottetown," he notes. "There’s also only one place where the incumbent phone company is being very aggressive about its bundling, and that’s Aliant in Nova Scotia and Prince Edward Island, so I think bundling is going to be very important." In what it calls the first filing of its kind in Canada, Aliant calls on the CRTC to lift regulatory restrictions on the prices, terms and conditions of local residential services in 32 of its exchanges in Prince Edward Island and Nova Scotia where there is competition from another service provider. Aliant is not asking for forbearance in two areas served by EastLink - Great Village NS and Sackville NB. Aliant notes in its application that EastLink’s phone service has not had a major impact in Sackville, and that it offers telephony options in Sackville only to the student residences on the campus of Mount Allison University. Aliant is also asking the CRTC for the ability to file special promotional offer requests immediately with the CRTC in a confidential manner so the company can launch these offers to customers without competitors having advance notice. Aliant argues that it needs the flexibility since it is facing competition from cableco EastLink, which offers local telephone service as part of bundles that include TV and/or high-speed Internet that are not subject to any CRTC limitation or regulation. Aliant does not offer traditional broadcast distribution services. "Currently, the CRTC regulates Aliant’s prices, terms and conditions associated with providing local residential service, which is not the case with other local service providers. By lifting regulatory restrictions on Aliant in competitive areas of Nova Scotia and Prince Edward Island, the CRTC would foster a competitive marketplace that truly is customer-focused," Heather Tulk, VP of broadband and marketing at Aliant, stated in an April 7 media release. "Aliant faces sufficient competition in the residential local communications services market to merit forbearance for its residential wireline local services in the specified exchanges. In fact…it is shown that Aliant faces a degree of competition that merits forbearance even when competition is examined more narrowly from the perspective of the wireline segment of the market only," writes Aliant in its application. According to its filing, Aliant estimates that EastLink has an estimated 51,000 residential phone lines in the areas it is seeking forbearance, growing its market share to 21% at the end of last year from 3% in 2000 as it expanded its telephony offering to more areas. Aliant has broken down specific numbers for the loss in telephony customers for each of the markets but they are not on the public record for competitive reasons. Quoting an issue of Progress magazine, Aliant tells the CRTC that in metro Halifax, its largest exchange, EastLink has gobbled up an estimated 30% to 35% of Aliant’s traditional wireline business. Aliant’s Part VII application is currently being considered by the CRTC.While Aliant wants to loosen up bundling rules, cable companies are going after telcos for non-compliance with bundling rules. Rogers Communications and Call-Net Enterprises Inc. took Bell Canada to task last year, filing a Part VII application alleging that it was offering four separate bundles comprised of forborne services contingent on customers having their local telephone service with Bell. Rogers and Call-Net asked the CRTC to direct Bell to cease providing the bundles until such time as the commission had approved a tariff and costing study for each bundle. They also wanted Bell to file any internal or external material with the commission for review before it launched any more bundles. The CRTC ruled this month that "Bell Canada failed to comply with the bundling rules in those instances where its CSR (customer service representatives) required customers to subscribe to local service in order to receive the bundles" (Telecom Decision 2004-22). In order to minimize the risk of future regulatory non-compliance, the commission directed Bell Canada in the future to expressly state, both in its internal and external material, including its training material, brochures and promotional material that customers who do not subscribe to Bell Canada’s local service or other tariffed services are eligible for Bell Canada’s bundles. To ensure compliance, the CRTC asked Bell to file on a quarterly basis until further notice a third-party report detailing the ongoing results of the testing of the information provided to CSRs. Shaw Communications G.P. was less successful in its Part VII application against TELUS Communications, which it said violated CRTC bundling rules by offering several services, including local exchange and forborne services in a "student bundle" without an approved tariff. TELUS, however, countered that no tariff was required for its student bundle since the services included in it were each available on a standalone basis and had no financial benefit to the subscriber other than the discount obtained for subscribing to its residential value bundle. TELUS has an approved tariff for the residential value bundle. In an April 2 ruling, the CRTC concluded that "although the student bundle contained both regulated and non-regulated services, it did not offend the commission’s bundling rules, as subscribers to the student bundle did not obtain any lower rate or other benefit in addition to that already provided pursuant to the tariff for the residence value bundle (Telecom Decision 2004-23)." Therefore, the CRTC found that the student bundle technically wasn’t a bundle and denied Shaw’s request that TELUS be directed to cease offering it. But the CRTC also noted that the dispute could have been avoided had TELUS been more careful in describing the student bundle in its marketing campaign.Bundling has become so important to the cable industry that it is bound to bring the issue up in the Voice over Internet Protocol (VoIP) proceeding (read more here). As well, large cable players hammered home their point about bundling during last year’s licence renewal proceedings for direct-to-home (DTH) satellite TV distributor Bell Express Vu LP. During those hearings, Cogeco Inc., Rogers Cable Inc. and Quebecor Media Inc. argued that the commission should impose restrictions on promotions under which Bell ExpressVu includes its broadcasting services in combinations, or bundles, with telecommunications services provided by BCE Inc. and affiliated companies for a single, discounted price. Cogeco argued that BCE, as a monopoly provider of local telephone services, was able to offer bundles that other broadcast distributors could not match. Cogeco went as far as to allege that the primary motive for the aggressive bundling was to inhibit the cable industry from providing VoIP services. The commission, however, decreed that "rules related to bundling have been established under the Telecommunications Act, and considers that concerns related to bundling should be addressed in an application under that Act." "I can’t speak for Bell on that topic. But as you know, the bundles are a way of life in the business right now for cable companies and for ourselves," Bell Express Vu president Tim McGee tells Network Letter. "And I think that the commission is dealing with the appropriate issues around the players, whether it’s cable or a TV distribution company."

Aliant wants CRTC to lift restrictions on prices, terms, local residential services

News | April 14, 2004

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