CRTC’s fast, flexible response on Bell tariff shows VoIP framework workable: CCTA

The recent quick approval of Bell Canda’s proposed tariff for its Digital Voice service bodes well for the incumbent telcos’ ability to compete flexibly for local telephone service, says the Canadian Cable Telecommunications Association (CCTA). On June 29, the commission approved Bell’s June 16 proposed tariff for the Voice over IP service now being offered in Quebec, including with an unprecedented range of confidential pricing options. The speed with which the commission acted, along with the confidentiality and flexibility afforded the ILEC, has led CCTA president Michael Hennessy to question whether price deregulation in the local market is as urgent as the incumbent telco has publicly stated. Readers should note, however, that the commission’s approval of the tariff was on an interim basis only. On July 7, as this story goes to press, the CRTC has initiated a public process in PN 2005-9 inviting comments regarding any aspect of the tariff application. Notice of intention to participate in the process is due July 15. Nonetheless, key to Hennessy’s thesis is a provision of the approved tariff that gives Bell the option to price its Digital Voice service within a specified range. In its ex parte application, Bell had written: "In light of the dynamic nature of the marketplace for VoIP services, the company needs to be able to respond quickly to changes in the prices charged for VoIP services by competitors such as Vonage, Primus, BabyTel and the many others whose services are not price regulated. The company notes that on a number of occasions in recent months VoIP service price changes have been made by multiple service providers within days of a price change by another provider. The commission has previously recognized that re-pricing initiatives are the type of filing most easily pre-empted or responded to by competitors." Hennessy says approval of that provision, along with the speedy approval the tariff received overall, raises questions about the ILECs’ vow to fight the CRTC’s decision on its VoIP framework on the grounds that it is anti-competitive. "So, here’s our question: Two weeks to get approval. As far as anybody can tell in Ottawa, there’s about to be a huge lobby campaign launched to overturn the CRTC’s (VoIP) decision, which I think could be a fatal blow to the CRTC, itself, in terms of people having any more faith in the public process. You have to ask yourself at this point, what exactly is the problem, here? The ILECs are clearly allowed in the market; the ILECs are marketing the service as a telephone service, and the commission is regulating it as such. But, they’re giving them expedited approval for their tariffs. They’re giving them quite an unheard of rate band flexibility and confidentiality for the service. All the commission seems to have said to the ILECs is you can’t target just as competitors are rolling out their business, and you can’t price below cost because of your market power. We think that would be predatory. So, in effect, is it really the case that the ILECs want to go and ask Cabinet to overturn the CRTC’s decision because they want to target and predatory price? Because, that seems to be the only constraint on them.""This is going to be a major, major fight over the summer in terms of political pressure. We’re having great difficulty at this point trying to figure out anymore what the telephone companies are really complaining about. They can bundle. They can promote. They can offer lower prices. They can have speedy tariff approval. They just can’t predatory price." He and VP of regulatory affairs Suzanne Blackwell point out that it’s likely the price currently being charged is in the middle of the range approved by the CRTC, and that Bell will be able to respond to price pressure by dropping its pricing quickly without the need to re-file. Digital Voice is currently being offered at prices roughly equivalent to its competitors. "Certainly, the commission appears to have gone to a great length to demonstrate that it is prepared to give Bell a lot of flexibility in order to, as Bell would say, meet the competition," says Blackwell. "If you were applying for a range," asks Hennessy, "would you start at the bottom? No. So, I think they’ve got lots of latitude in their range…Given that we’re only starting to see competition emerge, and hopefully it’s going to be successful, then what the commission’s doing is not a bizarre response. The market overnight didn’t become immediately competitive. This is, I think, from the perspective of this whole digital voice versus Internet service debate, probably a very, very pivotal decision that’s gone mostly unnoticed to this point." The tariff approval will likely be a centrepiece of the CCTA’s lobbying efforts this summer as the date for a Cabinet appeal draws near. "I think that a lot of politicians are under the impression somehow that Bell and the other telephone companies were restricted from entering the market, weren’t allowed to drop their prices. And, now, not only can they drop their prices, but they have flexibility to adjust them as well." A Bell Canada spokesperson would only confirm that Bell has received tariff approval when asked for reaction to the CCTA position.

CRTC’s fast, flexible response on Bell tariff shows VoIP framework workable: CCTA

News | 07/09/2005 4:00 am EDT

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