Small providers push back on proposed revision to wholesale access regime

Small, independent communications service providers are telling Industry Canada Minister Maxime Bernier that proposed revisions to the wholesale access regime as laid out in the June Policy Direction to the CRTC will only thwart the development of competition. The message comes as comments on the proposed Policy Direction are filed with the government. While MTS Allstream Inc. is leading the charge to change this aspect of the Policy Direction, a number of small providers have joined the Manitoba incumbent telephone company to fight the provision which would narrow the definition of what is an essential service. A more limited definition of essential services would, according to these providers, make it more difficult for them to offer high-speed Internet services. These providers note in their comments that while the Policy Direction has good intentions, the proposal to revise the wholesale market is flawed and, if not addressed, will undermine competition in Canadian telecommunications. "We believe that this step has been taken under the mistaken belief that deregulation of the wholesale market for these underlying wires, cable and interconnection services will somehow result in greater competition in the retail market. In actual fact, however, the opposite is true: if the major incumbent telephone companies are not required to provide new entrants with access to their networks on rates, terms and conditions that reflect their monopoly or near-monopoly control over the supply of these facilities, no new competitors will enter the market. In fact, the market will contract in terms of the number of competitors and suppliers," state a number of companies pushing for this change. One such company is Execulink Telecom – an incumbent telephone company and cable TV provider based in Burgessville, a small community in southwestern Ontario. The company is also a reseller of services of Bell and others. Execulink believes the removal of mandatory access to wholesale product could be disastrous for small, independent providers. Keith Stevens, CEO of Execulink, says that if mandatory wholesale access is eliminated competition will be non-existent in some small communities. "The concern is that if you do that there may not be any form of competition for alternative sources of high-speed," he tells Network Letter. There may also be cases where Bell is the only provider in a particular community, and if wholesale access is removed, "you could never economically justify collocating in office," Stevens adds. He has met with the CRTC to explain the consequences of removing mandatory wholesale access. Stevens says, "I think in this day and age, high-speed is becoming an essential service for customers or very soon will be.…We want to make sure that it’s mandatory to get the wholesale version of that." Stevens also notes that the measurement for forbearance – 25% market share loss on the part of the incumbent – may not actually be a good yard stick for determining whether a particular local market is competitive. "Even if the dominant player had lost 25% market share, it may mean that its next largest competitor has 2%," he says. "If you take the gloves off at that point, it still may not be a fair of competition." The Execulink CEO suggests that this type of scenario may not be appropriate if it is found that smaller competitors are suffering badly in a market to the incumbent after the 25% market share loss threshold has been met. "My concern is that it may take two years…for the CRTC to then deal with that complaint and by that time, may win the battle, but the war is already over," Stevens says. He says he isn’t singling any company out, but believes safeguards are still required to ensure that competition develops. "If they really want competition, they’re going to have to foster it longer than just staying at 25% and now their jobs are done," says Stevens. "I think they’re going to have to keep fostering it longer than that to " Grassroots campaign underway to educate MPsExeculink is one of a dozen or so companies that have thrown their support behind the True Voice of Competition campaign – an effort to convince members of Parliament that what Minister Bernier has proposed in the Policy Direction will have a negative impact on the competitive landscape in these lesser-populated regions. "Are we to believe that the level of competition for high-speed Internet will improve if the phone and cable companies are allowed to offer less access to their networks? The government seems to think so," reads a section of the True Voice’s website. Network Letter will have more information on the True Voice of Competition in an upcoming issue.

Small providers push back on proposed revision to wholesale access regime

News | September 1, 2006

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