MTS appealing “wrong-headed” decision to deregulate Centrex

MTS Allstream Inc.'s chief regulatory officer says a CRTC decision deregulating Centrex is "absurd" and "wrong headed", and that MTS will soon launch an appeal. "We don't think a good decision for competition in general and certainly not for competitors delivering competitive alternatives to customers. It's really wrong headed and is so at a few levels. We'll be appealing it soon," Chris Peirce, tells Network Letter. The Manitoba-based company will appeal back to the commission its recent Centrex deregulation decision as well as a 2007 ruling that denied a previous application from MTS requesting a change to Centrex that would have made it easier for enterprise customers to switch service providers. In last month's decision on Centrex - a telephony service usually offered to large enterprises with multiple offices in multiple cities and even provinces - the CRTC determined that Centrex fell in the same product and geographic markets as conventional single-line or multi-line business local telephony and therefore could be deregulated on a retroactive basis. For exchanges that have already seen deregulation of local business voice services, this means Centrex will now immediately be included. The commission gave ILECs 30 days to remove Centrex tariffs - one of the last steps in the deregulation of a service. Peirce says the commission has displayed a complete lack of understanding of what Centrex is and how it is offered, calling it "absurd" that the CRTC could determine Centrex is "in the same product market as local business voice." First, he explains, there aren't competitive alternatives to Centrex available to enterprise customers, despite what others have told the commission. Second, and perhaps more importantly, Centrex can't be treated the same as any conventional local business service because of wide geographic scope. The service is usually offered to large enterprises with multiple offices in multiple cities and potentially provinces. " opens the door directly to the possibility of undue preference being exerted by the incumbents because of the ability to have within one product offering regulated and unregulated pricing," says Peirce. Dennis Henry, CP of regulatory affairs at Bell Aliant Regional Communications, disagrees, saying this argument had already been dealt with. "That's an old battle," he says, referring to the definition of an appropriate product and geographic markets. "The commission looked at this back in 2006, and then the government varied their decision and said it's the exchange. So those are the rules and I don't think the commission was going to revisit that one." MTS is also critical of the "guilty before innocent" approach the commission seemed to take in its decision. "If you are regulated for a service and you are seeking to be forborne then the path is you demonstrate why the product you're bringing forward in subject to competitive supply sufficient to justify your forbearance," Peirce explains. But in this case, the CRTC seemed to use the opposite approach in that forbearance was granted by fiat and those who oppose it would have to prove that the commission shouldn't approve deregulation. "This is certainly a reversal of what the onus of proof should be," Peirce says. While MTS opposes Centrex deregulation, Bell Aliant sees it as a potential boon to the enterprise market in its operating territory. "When you are trying to respond to bids or even in the small and medium business market to your customers' needs, if Centrex is regulated and other local servicers are not, it really removes a lot of flexibility that you have for customers," Henry explains. "By putting this product in there, it really does give you in those exchanges that are forborne, true flexibility to respond to customers' needs - something that wasn't there before. In that sense, it's a big obstacle removed."

MTS appealing “wrong-headed” decision to deregulate Centrex

News | February 22, 2008

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