Enterprise competition to diminish without access to essential facilities: MTS

MTS Allstream Inc. is warning the CRTC that taking the easy way out in the essential facilities proceeding - opting for a simple, and seemingly reasonable, approach advocated by the big ILECs - could have unintended negative consequences on competition in the business market. "I think at the end of the day this is a very, very complex system that we have and I worry that looking for very simple approaches and making a bunch of decisions that on the surface may seem reasonable...can lead to unanticipated results," said John MacDonald, president of MTS Allstream's enterprise division, under cross examination.The Manitoba ILEC and national competitor in the business space argues that it is unrealistic to expect competitors to duplicate ILEC facilities. The company wants the commission to expand the number of essential facilities, not decrease them. MacDonald countered suggestions that a reduction in the number of wholesale facilities currently mandated for access to competitors will lead to greater investment by competitors in their own networks. Referring to the argument as theoretical, he said the practical reality is that suggesting competing or alternative sources of supply in the enterprise market will be built is "ludicrous." MacDonald highlighted the cost to build 1,050 branches of a bank would be $2.3 billion with a payback period of 236 years. The incumbent telephone companies have suggested that a transition period will allow for competitors to build their own networks or allow for alternative sources of supply to be built. They also say that during this period, competitors can negotiate wholesale agreements if they choose not to build their own facilities. It's misguided "to suggest that we are going to be able to duplicate in any sort of reasonable time frame," MacDonald said. "I think a diminishment of competition from an enterprise perspective is a distinct possibility unless we continue with a regime...where we have cost‑effective access to reach our customers."With respect to negotiating with ILECs MacDonald is equally worried that this process won't lead to more competition in the business market. He argued that the incumbents know duplicating their networks isn't viable, and therefore competitors don't have any leverage in negotiating acceptable supply agreements. "At the end of the day, it is not going to be a good day in terms of competitive alternatives in the enterprise space specifically," MacDonald said with respect to a narrowing of the definition of essential facilities and the requirement to either deploy new facilities or ink supply agreements with ILECs to use their networks. Giving competitors additional time to build out more facilities won't fix the problem either, according to MTS Allstream's expert witness Lee Selwyn. He admitted that there will be network construction and more office towers will get competitive supply, but "we are talking about a process that simply has no realistic expectation of ever happening... the disease is not going to be cured simply if you wait long enough."

Enterprise competition to diminish without access to essential facilities: MTS

News | October 31, 2007

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