Utelcos to be treated like dominant carriers; result is greater competition

Utility telecom companies say a decision by the CRTC granting them the same rights to inside wiring as dominant carriers will result in greater competition in the multiple dwelling unit (MDU) market. They are also praising the ruling as a step forward in facilities-based competition, though difficulties remain convincing building owners and ILECs to disclose the terms of existing service agreements. To the surprise of no one, a coalition of utelcos has won its case in Telecom Decision 2005-33 as the commission extended the provisions of the 2003 inside wiring decision to them (Decision 2003-45). The utelcos were supported in their efforts by MTS Allstream and Microcell, both of which often lease on a wholesale basis dark fibre owned by the hydro companies to access MDU customers, and which suffer indirectly when building owners don’t extend equal treatment to them as they do to dominant carriers. No appeal is expected of the decision, but the book isn’t entirely closed on the issue. An Allstream executive tells Network Letter that the utelcos and their wholesale customers must still come to grips with the secrecy of existing contracts between incumbent telcos and building owners, something that will likely have to be done on a case-by-case basis. "The commission orders that the dominant providers, who are already in the buildings, disclose the terms of their agreements with the buildings," says Chris Peirce, senior VP of regulatory affairs at MTS Allstream. "That hasn’t really happened to the extent that it should happen and, we have instances in front of the commission now where the commission is again having to order specific ILECs to disclose what their terms are because they have not, yet. So, it’s not the end of the story. But, it’s a good decision in terms of continuing to recognize the need for this type of access." Peirce notes that the transparency of access agreements continues to plague competitors, and cites a recent Allstream Part VII application as an example of the challenges facing CLECs on the issue of MDU access. (On June 3, the company sought an order from the commission to Bank Street Investments to stop it from re-possessing its equipment at 360 Laurier Avenue W. in Ottawa, and to provide it with access to serve clients on the premises. Bell Canada noted in reply to the application on June 7 that it does not object to the relief requested.) "It’s a very real problem on the street," Peirce says. "The logic of (2003-45) is you should have the same terms. It’s just like municipal access. We shouldn’t have to be paying more for access on the streets than the dominant providers are paying. They’ve all been there, probably since the building was constructed. So, if they are able to keep secret or confidential what the terms of their deals are, you never know. There’s not been some sort of wholesale disclosure by the local exchange carriers of what their terms are with the thousands of buildings that are across the country." For their part, utelcos are pleased with 2005-33. Dave Dobbin, COO of Telecom Ottawa, says the ruling is an important one to furthering the utility telecom business."The direct implications on our business are faster installation, lower cost base, and more equitable access. And, at the end of the day, what does that mean for business consumers? That means better service available in more places at better prices. It’s a great decision. (The CRTC has) truly stood up for the mandate or the idea of facilities-based competition in Canada." He adds: "Right now when you look out in the Canadian industry, at who are the real competitive access providers out there, if you look at, say, a city like Ottawa, outside of the downtown core, are there any? Other than us? No. So, the CRTC has made a huge step in promoting facilities based competition with this decision." Dobbin says previous hurdles have included exorbitant charges for access on the basis of every square foot of real estate owned by a landlord in a city – even for access to just one building – and the refusal by some landlords to accept insurance coverage that covers the hydro companies’ power lines as adequate for the telecommunications pipe. "That’s why we took it to the CRTC. We thought it was a little unreasonable. When 2003-45 came down, when the original decision came down, we thought it was great news for us. The CLECs are getting access, this is really good. But then what happened was that the position (landlords) took was, ‘you’re not a CLEC. You’re just a non-dominant carrier, so clearly the rules don’t apply to you. And, by the way, we’re angry with everybody else, we’re going to punish you more.’ It really had gotten to the point of just being silly." He adds: "It’s been very, very difficult to put fibre into a lot of buildings – the big tall shiny buildings. In fact, we’ve actually had to walk away from business in a lot of cases. We had one where a landlord was asking for a monthly fee based upon a charge for every square foot. They wanted us to pay three cents a square foot for every square foot of real estate they had in all of Ottawa to get into one building." He says the disclosure of agreements will continue to be a hurdle, but says there’s likely nothing the CRTC can do in a comprehensive way to remove that hurdle. "The simple fact of the matter is that in the majority of the cases, the incumbent doesn’t have an agreement. The incumbent’s just there. They’re providing phone service and they don’t pay for it. They don’t pay for the right of access. That’s just a simple fact of the matter. And, all we want is the same rates the incumbent has." Michael Brooks, executive director of the Real Property Association of Canada (RealPac, formerly CIPPREC – the Canadian Institute of Public and Private Real Estate Companies), says the decision came as no surprise to building owners, and there will be no appeal of the decision. "To me, it’s as expected…It makes policy sense to me. We obviously have conceded the fact that a cost-plus approach to access is fair for everybody, and we agreed to it when 2003-45 came along."Brooks adds that, "we probably would have consented to this application if they hadn’t treated us so badly…The remarks in their application were quite inflammatory about our business practices." With the decision out of the way, one of the last regulatory hurdles has been cleared to what until now has represented a minor piece of the services pie. The commission indicates in 2005-33 that utelcos represent about 2% of sales to date, but also highlights a 26% jump in business in 2004. Brooks notes that the use of dark fibre into MDUs will probably rise as utelcos and their wholesale customers race to provide VoIP services. Dobbin says the sector continues to tout its several advantages as it joins the fray. "It’s three things. Number one, we represent the next generation network. If you look here in Ottawa, we own and operate the largest 10 Gb Ethernet network in North America….If you need bandwidth and lots of it…the majority of our ports on our network are Gigabit Ethernet…Number two, the utelcos represent that there’s a real viable alternative. We’re not a small startup CLEC that’s going to go out of business two years from now. We’re here; we’re here to stay…And, the third thing that’s really, really important about utelcos is that the really attractive thing for a lot of our customers is we’re locally based."

Utelcos to be treated like dominant carriers; result is greater competition

News | 06/23/2005 4:00 am EDT

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