Local winback rules in Calgary under fire from western ILEC TELUS

TELUS Corp. is telling the CRTC that it should be treated on equal footing with the cable companies in the local telephony market when it comes to competing for customers. The western-based incumbent telephone company filed an application with the commission asking it to repeal the local residential winback restrictions preventing it from contacting customers who switch to an alternative provider for 12 months in areas where Shaw Communications has introduced Voice over IP services. Janet Yale, executive VP of government and regulatory affairs at TELUS, tells Network Letter that the winback rules no longer apply in an environment where cable companies offer voice services. This is not at all similar to Call-Net Enterprises’ rollout of local telephone services – a labour and capital intensive undertaking that was done on an exchange by exchange basis, she adds. Referring to Shaw Communications, which recently launched VoIP service in Calgary, Yale says, "Here, they start operating and they instantly can serve all of Calgary and for a much smaller investment than would have been the case with the old circuit-switched sort of entry. Is this the kind of company that needs a helping hand so that the winback restrictions should apply? I don’t think so. Cable companies are large, well-financed (operations); they’re sophisticated marketers; they already have a (large installed) base. It’s not like Call-Net that didn’t have any customers, they have a huge installed base of customers for cable television service, many of already have cable modem service." In its March 24 Part VII application, TELUS writes that entry by cablecos into the voice services market changes the competitive landscape and the commission needs to recognize this new reality. The western incumbent telephone company notes in its application that the current model of local competition, one the company describes as that of loop resellers, did require restrictions for competitors to gain a toehold in the market. But when the cable companies entered the market, this reality changed because cable operators such as Shaw are facilities-based carriers and do not need to lease lines from the incumbent telephone companies. TELUS notes in its application that it doesn’t know a customer has switched until they have already done so. "The rationale for winback rules is to give the entrant time to grow a sufficient scale, and perhaps, to construct its own loops. While such winback rules may result in customers missing out on offers of lower prices, better service, or the general benefits of competition, a policy commitment to winback rules implies a belief that the ultimate benefits of a more competitive market will outweigh any short-term costs to consumers," reads TELUS’ application. This situation no longer exists when cable companies begin offering voice services, the company states. "With their entry, cable companies immediately provide vastly more competition for local exchange service than do the loop resellers. Any concerns about the slow pace of entry and the lack of local exchange competition evaporate. The presence of a second, fully facilities-based network providing service on a ubiquitous basis eliminates each and every rationale for the local winback rules that the commission has ever recognized…" Yale says, "Our view is let’s get rid of the winback rules where Shaw has entered the market because effectively what the winback rules do is prevent consumers from getting the benefits of competition because we can’t fight to keep them; we’re powerless to respond and offer customers competitive benefits in response to Shaw’s entry. "Their entry is different. It does change things significantly and we think we should be free to compete," she concludes.

Local winback rules in Calgary under fire from western ILEC TELUS

News | 04/13/2005 4:00 am EDT

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