Fort McMurray is a competitive market and warrants forbearance: Telus

Telus Corp. has asked the CRTC to forbear from regulating its local services in the exchange of Fort McMurray, noting that competitors have captured at least 25% market share. "This application demonstrates that the provision of residential local exchange services in Fort McMurray is subject to competition sufficient to protect the interests of users, and further that for the commission to forbear would not be likely to impair the continuance of the competitive market for residential local exchange services in Fort McMurray," says Telus in its application. "Fort McMurray has achieved the market share loss threshold set by the CRTC and that’s why we decided to go ahead with the application for that city at this time," Telus spokesperson Jim Johannsson says in explaining why similar applications haven’t been filed for Calgary or Edmonton. Telus is one of the first carriers in Canada to file a local forbearance application using the template developed by the CRTC in Telecom Decision 2006-15 despite the fact that the status of this decision is uncertain due to a proceeding currently underway to re-consider the appropriate market share loss threshold. In doing so, however, Telus has chosen to make two significant departures from the CRTC’s pre-conditions. First, Telus has taken the liberty of redefining the relevant market to focus on Fort McMurray only, as it feels that the commission-defined local forbearance region, or LFR – which includes 19 other communities including Cold Lake – is ‘too large.’ As such it would take considerable time for Telus to achieve a 25% market share loss across the entire LFR. "The CRTC has defined the LFRs in such a way that...the one that includes Fort McMurray...is a huge area, largely rural, with Fort McMurray being the primary population centre. It is unlikely that there would be any market share loss outside of Fort McMurray. If we waited for the 25% threshold to apply across the entire LFR, Fort McMurray could be forever without any forbearance," says Johannsson. Telus notes in its application that the commission expressly stated it would entertain applications for local service forbearance in relevant markets which were different from those defined in Telecom Decision 2006-15. Second, Telus is also asking the commission to either set aside the competitor quality of service provisions in Decision 2006-15 because the competing CLEC (in this case, Shaw Communications) is operationally independent of the incumbent, or to vary the quality of service provisions to include only those services actually used by the competing carrier responsible for Telus’ market share loss. The company has appealed this particular section of the forbearance ruling. To support its application, Telus has filed evidence on a number of issues such as its market share loss in Fort McMurray and how competitive this particular market is. In addition, the company has provided a draft communications plan to inform the residents of Fort McMurray that it has been deregulated should the commission decide in favour of its application. Telus states in its application that competitors’ market share is at least 25%, but admits, however, that it can’t provide an exact figure. "We don’t have all the market share data in our possession," says Johannsson. "The commission does, and they could become more important over time in determining these types of applications as it is the only depository of accurate market share data. Are they ready to assume that role? We hope so." Shaw Communications and Vonage Canada are the only competitors of note mentioned in the Telus application. In the case of Shaw, Telus notes that it has only been offering local telephony services in Fort McMurray since the end of March 2006. Telus claims that Shaw has been successful in taking a considerable amount of market share in a relatively short amount of time. On the issue of rivalrous behaviour, Telus has provided evidence of the lower prices offered by Shaw in the market, reproduced a number of print ads placed by Shaw in the local newspaper, where the company has provided information about its competitive local services offering and associated features and provided details of the market activities of Shaw in the Fort McMurray exchange. Telus continues in its application by stating that, unless it is unshackled from CRTC regulation it " will continue to be unable to respond fully to the needs of existing local telephone customers, or to compete effectively for the business of new customers. In any telecommunications service market, so long as one firm is prevented from competing fully, its competitors are not forced to make their best offers to consumers, thereby denying consumers the full benefits of competition." Johannsson elaborated on this point by stating that "the primary impediments for us are the inability to offer our best price, the operational impediments imposed on us and the winback rules. We can’t offer discounted pricing to long-established customers, for example, because our prices are tariffed. If a customer wants to switch back to us, the LNP processing delay is ten days versus two days for the competitors. And the winback rules – even at three months – are still unacceptable for a competitive market."

Fort McMurray is a competitive market and warrants forbearance: Telus

News | 10/27/2006 4:00 am EDT

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