Look to UK for evidence of effective wholesale regime: MTS Allstream

MTS Allstream is warning the federal government that if it adopts the proposed policy direction issued and tabled in Parliament by Industry Minister Maxime Bernier on June 13 as it is currently written, telecom competition in the country will wane. The telephone company says that the government needs to adopt a technologically and competitively neutral definition of essential services or risk experiencing erosion of competition much like that which took place in the United States after 2004. This section of the policy direction must also strive to address significant market power (SMP) in network infrastructure where it exists. A narrow definition of essential services will lead to higher payments for access and won’t spur deployment of more competitive bandwidth in the country. The telco’s comments form part of its submission in response to the policy direction, announced earlier this summer at the 2006 Canadian Telecom Summit (NL, June 22/06). They also constitute a reaffirmation of a call from MTS Allstream’s president and CEO Pierre Blouin at the same conference for the creation of a more effective wholesale access regime (NL, June 22/06). The Manitoba-based telephone company says that government shouldn’t look south of the border for advice on how to regulate wholesale services, but to the United Kingdom as proof of an effective and successful wholesale access model. MTS Allstream points to a report from Lee Selwyn and Helen Golding, Avoiding The Missteps Made South of the Border: Learning from the US Experience in Competitive Telecom Policy, which outlines the failure of US telecom policy to maintain a competitive environment following key changes to its wholesale access environment in 2004. The report notes that competition was flourishing in the United States at the time. Meanwhile, the incumbent telephone companies were pushing for a change to the wholesale access regime. "By 2001, CLECs had invested some $64 billion in their own networks. Using a combination of their own facilities and network elements obtained from the ILECs, by 2003 CLECs were serving some 13.6% of residential customers and 24.3% of business access lines," reads the report. But following a US court ruling in 2004 stating that competitive providers wouldn’t be harmed without access to certain network elements, the country’s two largest CLECs – AT&T and MCI – announced they were either scaling back local telephone service activities or abandoning them altogether. MTS Allstream suggests that using a narrow definition of essential bottleneck facilities, as was done in the US, won’t lead to more competition, and in fact will deter competition. The notion that access to a more limited set of essential services by competitive providers would lead to "greater and more rapid investment in competing network infrastructure is false and simplistic," the company writes in its August 16 submission. The incumbent telephone company says the government should look to the efforts of Ofcom, the UK telecom regulator, to promote competition by regulating the wholesale activities of British Telecom (BT). The British incumbent operator began offering essential facilities to competitors on the same terms and conditions it offered the same services to its retail division. "Not only did this increase transparency and lessen the advantage previously held by BT, but it ensured that competitors would receive the same quality of service from the wholesale operator as BT’s retail division itself," writes MTS Allstream. Today, BT provides wholesale services to about 60 competitors. Network Letter will have more on Policy Direction in an upcoming issue.

Look to UK for evidence of effective wholesale regime: MTS Allstream

News | 08/17/2006 4:00 am EDT

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