‘Facilities-based competition has failed’: Blouin

If Canada’s telecom regulators really want to foster industry-wide competition, they have to drop this notion that facilities-based competition is the only way forward, according to the CEO of MTS Allstream Inc. "Facilities-based competition has failed," Pierre Blouin declared in a keynote speech at the 2006 Canadian Telecom Summit on June 13. Blouin said competitive local exchange carriers (CLECs) like Allstream, the national, business-focused arm of MTS Allstream, pay too much money to access incumbent links the public network infrastructure – something CLECs generally require to provide services across the country. He pointed out that his firm pays mark-ups as high as 300% on services. "We’re not asking for a free ride," he said, but notes that many incumbent networks were built over many years with a guaranteed rate of return. He added that the 300% mark-up CLECs must pay is "plainly excessive." The former head of Bell Mobility said this issue has not made the industry’s radar screen because "the incumbents have dominated the airwaves." As well, few CLECs survived the industry shake-up earlier this decade. "There are very few of us left" to raise the point, Blouin said. Blouin also stated it’s time for the CRTC to start slapping incumbents that fail to meet basic quality-of-service (QoS) requirements on products for CLECs with something more than fines. "We believe they treat these fines as a cost of business," he said of the incumbents. But Blouin didn’t outline just what sort of punitive measures he had in mind. Blouin was pleased with recommendations from the Telecommunications Policy Review Panel (TPRP) that the industry should rely on regulation only if necessary, instead of the regulate-first regime in which it currently operates. He also expressed some satisfaction that the TPRP suggested a lower foreign-ownership threshold for carriers could attract more funds from investors outside of Canada. As well, Blouin said he’s pleased that the CRTC’s recent forbearance decision, which outlines the requirements that incumbents must meet before acquiring forbearance from local telecom regulations, included a QoS measurement: incumbents must prove that their services to CLECs are on the up-and-up. But unless prices for CLEC access to the public network infrastructure come down, "there is a massive roadblock in the way" of national, sustainable telecom competition, he said. MTS Allstream operates as incumbent in the province of Manitoba and a CLEC in the rest of the country. It’s no secret that the Allstream division has not performed as well as MTS might have hoped since it acquired Allstream in 2004. The company began taking steps to improve the performance of the national division by integrating it more tightly with the provincial ILEC operations and streamlining overall operations. Blouin’s admonishment of the current regulatory regime that allows ILECs to mark up CLEC service prices suggests that Allstream is looking for some regulatory relief from its poor fiscal situation. It’s interesting, however, that he would advocate this price change for all incumbent services to CLECs, including those that MTS offers. It seems MTS is willing to take its own medicine. As Blouin said, his suggestion "is not a matter of giving anything away for free," and that means the incumbent part of his organization would lose some revenue if the CRTC were to mandate lower wholesale prices.

‘Facilities-based competition has failed’: Blouin

News | June 22, 2006

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