Regulation and Policy: Business service to get subsidized by residential overpayments

Broadband for businesses located in rural and remote areas appears set to get a helping hand from residential subscribers in urban areas. A CRTC proceeding is considering the ILECs' specific broadband deployment plans for these unserved areas of the country, but an appeal by Barrett Xplore Inc. is attempting to halt the process. Barrett Xplore, in a Part VII filed earlier this summer appealing Telecom Decision 2007-50, contended that business services shouldn't benefit from the ILECs' deferral accounts because it was residential customers who paid into it. In its comments to Barrett's Part VII, Bell Canada pointed out that nowhere in the decision (Telecom Decision 2006-9) did the commission specifically say that deferral account monies were to be used exclusively or solely for residential services. "In fact, the commission directed ILECs to make available the retail and wholesale broadband services that they offer in urban areas, including their business broadband services, in the areas that will be included in their respective deferral account-funded programs," Bell wrote.Canada's largest telephone company went on to say that restricting the deferral account funds to residential services contradicts the intent of extending the benefits to as many end users as possible. "In addition, there is no such restriction placed on either who will be able to get access to the backbone facilities that have been augmented using deferral account funds or on Internet Service Providers who will be able to make use of the companies' wholesale broadband services to offer their own retail services to end-users," Bell stated. Despite the jockeying taking place in this appeal, there is still a fundamental question that remains unanswered: did the CRTC have the right to allocate funds charged to a certain group of subscribers for another and unrelated service? Ultimately, it will be the courts that decide whether rural businesses get broadband on the backs of urban residential subscribers.Stay tuned. CRTC budget proposal met with mixed reactionIn response to delivering decisions quicker, the CRTC has asked its fee-paying stakeholders to ante up more money to pay for increased resource requirements. This information and a summary of three-one day discussions on the commission's proposed budget increase were released in a report last month. The commission wants an increase of $18 million over the next two years with a permanent increase of $9 million going forward. Telecommunications companies generally supported the proposed fee increases, but some believed that they should only be temporary because local telephony deregulation will actually decrease the burden on the CRTC in the long run. The National Do-Not-Call list was one of the sticking points for the carriers. They expressed their willingness to pay their share of the costs, but said telemarketing companies should have to pay as well. The carriers said they would help the commission convince government to change the fee regulations so that telemarketers would be levied fees. In response, the CRTC noted it was open to discussing new ways to fund the National DNCL, "but until such a time the only way for them to pay for this new legislated responsibility is through the existing cost recovery mechanism."Bundling proceeding heating upCompetitors such as MTS Allstream and Primus Telecommunications Canada Inc. sparred with Bell Canada, Bell Aliant and Telus Corp. last month over the appropriateness of maintaining or eliminating the general tariff bundling rules and those governing market trials. While there wasn't too much opposition to eliminating the market trials rules, bundling remains a contentious issue. Competitors believe that ILECs, with the exception of MTS Allstream, will use more flexible bundling rules to engage in anti-competitive behaviour such as tying, predatory pricing and unjust discrimination to squeeze competitors out of the market. Bell, Bell Aliant and Telus state that activities such as predatory pricing are unlikely to take place."Should ILECs engage in predatory pricing, they have no opportunity to successfully sustain price increases after the fact in order to recoup their losses," reads a joint filing from Bell, Bell Aliant, SaskTel and Télébec. "Tariffs prevent any unapproved price increase for tariffed services, while forborne and non-telecom services would remain, in the presence of low barriers to entry, competitive enough to defeat any recoupment strategy."Centrex and EEWD proceeding beginsFirst-round comments in a CRTC proceeding looking at deregulating Centrex and Enhanced Exchange Wide Dial (EEWD) (Telecom Public Notice 2007-14) were due October 1. Reply comments are due two weeks later. The proceeding is looking at a number of aspects of the two services when considering forbearance applications. Should they be considered local service for the purposes of assessing forbearance applications? "If not, what should the relevant geographic market for Centrex and EEWD services be and how should the competitor presence criteria established for business local exchange services be applied for Centrex and EEWD services," reads the public notice. Ethernet and ADSL decisions overturnedEarlier this year, a number of CRTC decisions sparked an outcry of unfairness from the ILECs regarding their Ethernet and ADSL services. The decisions released on January 25 required the ILECs to make available a number of services to competitors. Bell, Bell Aliant, Telus and SaskTel appealed the decisions. After months of deliberations, the commission overturned its previous ruling on August 31. Telecom Decision 2007-77 states there is regulatory uncertainty regarding competitor services because of the ongoing proceeding on essential services. The commission concluded that its previous determinations ran counter to the Policy Direction.

Regulation and Policy: Business service to get subsidized by residential overpayments

News | September 28, 2007

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