Deferral account debate closes with renewed call for independent management

A CRTC inquiry into how to handle hundreds of millions of dollars in funds accumulated in ILEC deferral accounts came to a close last month with Microcell Telecommunications Inc. again calling on the regulator to ensure the money is administered by an independent body in a competitively neutral manner. The Montreal-based wireless provider presented its case for an independent, technologically neutral program in response to Telecom Public Notice 2004-1. (See the June 1, 2004 issue Network Letter affiliate publication Report on Wireless for more on the company’s initial position.) The commission is currently studying how to use hundreds of millions of dollars built up in arms-length accounts by the ILECs over the course of two years under the price cap regime (Telecom Decision 2002-34). The funds represent money overpaid by subscribers as a result of price floors implemented by the regulator to boost local rates in an effort to spur facilities-based competition. Bell Canada and TELUS Communications in their respective comments proposed to use the money to upgrade or expand their respective infrastructures. The two proposals were opposed by a number of parties throughout the proceeding. Microcell, which now forms part of the Rogers Communications Inc. media and communications empire, isn’t the only company backing independent management of the cash pools. As Microcell noted in its October 29 reply comments, several companies during the consultation process threw their support behind its proposal including Barrett Xplore Inc., RipNet Ltd., Xit Telecom and others. RipNet, in its comments to the commission this summer, stated that the deferral account monies should be administered by an independent agency. While agreeing with Microcell on most issues, its opinion diverged when discussion turned to which parties should be able to access the money. The Brockville ON-based ISP believes the money should only be made available to non-incumbent telephone companies. Barrett Xplore, a broadband services provider focusing on the unserved and under-served regions of the country, notes in its comments that at least a portion of the deferral account monies should be directed to existing government programs such as the Broadband for Rural and Northern Development Pilot Program (BRAND) and the National Satellite Initiative (NSI). The company questions the logic behind proposals to use the funds to expand DSL footprints when wireless network expansion requires a much less significant investment. "Indeed, employing the deferral funds to defray the cost of building out the DSL infrastructure is probably the least efficient means of reaching the Commission’s goals in terms of return on capital," Barrett wrote in its comments. David Lewis, VP of business development at Barrett, also debates whether using the money to expand DSL footprints is the best option when wireless and satellite technologies can be deployed much less expensively than wireline Internet access. "The people that have got the deferral accounts, they would like to get their money back that they put into that and their primary means of reaching people today is DSL, even though, particularly in Bell’s case, they coincidently own Telesat (Canada), (which) could use some of those funds to extend the reach of their satellite offerings, broadband satellite offerings, out to the masses," he tells Network Letter in an interview. Leonard Eichel, director of regulations and policy at Microcell, says the commission should be looking to support a mix of wireline and wireless platforms rather than focus on a single technology "I would suggest that it’s probably hard to convince the commission to go one way versus another and that’s probably why we’re suggesting to them that they should consider a neutral approach – a neutral approach both from the point of view of dispersing the money and also a neutral approach in terms of the technology deployed," he tells NL. The task at hand for the commission is straightforward, says Eichel, adding that there are few complicating issues and it’s up to the CRTC to decide which proposal best allows it to achieve its five objectives. "I think that the proposal that we’ve got (for independent administration) is fairly simple from that perspective and provides the commission with a very easy way of dispersing the funds rapidly and in the most beneficial manner. "I think that we’ve got a proposal that sings pretty well, and we’ve got a lot of experience behind us through our Inukshuk (Internet Inc.) venture in terms of how we’ve been able to do this quickly, rapidly and cost-effectively in some very remote and difficult places," says Eichel. Lewis says that Microcell’s proposal allows the government to get the most out of its funding dollars, noting the BRAND and NSI programs have had considerable success in the past. "(The two programs) have expert committees that evaluate proposals that come in. Proposals are picked by the non-profit community champions most often and they’ve decided what they feel is the best alternative for them technically to do what reaches most of their population and gets the most bang for their dollar. Those types of programs, BRAND and NSI in particular, seem to be good working models for what this money should be put towards," he explains to NL.

Deferral account debate closes with renewed call for independent management

News | November 25, 2004

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