Regulation & Policy: Ottawa asked to wade into telecommunications

Last month saw a flurry of activity by the telcos in launching appeals to Cabinet on access to incumbent telecommunications facilities with Bell Canada, Telus Corp. and MTS Allstream Inc. all asking for federal government intervention. Bell and Telus are trying to convince federal politicians that competition at all levels – retail and wholesale, residential and enterprise – is alive and well in Canada. Granting competitors access to their networks at cost-based rates will only hurt competition and the Canadian economy, they say. They are threatening to scale back investments in next-generation facilities, such as fibre to the node (FTTN), if they don’t get their way. “When you’re talking about having to wholesale at rock bottom rates because of some regulatory scripture you have to start wondering what it does to the business case and re-evaluate what it does to the net present value of the investment,” Bell’s senior VP of government and regulatory affairs told Telemanagement last month. MTS, however, tells Cabinet that it needs to look no further than to our neighbour south of the border to see that mandated access to ILEC local broadband facilities is an absolute necessity, particularly for the enterprise market, but also in the residential space. The Manitoba incumbent provides evidence that investment by the US ILECs dropped considerably. After the US Federal Communications Commission (FCC) removed the requirement for mandated wholesale access to ILEC facilities, the investment in network builds by the US incumbents dropped dramatically, according to MTS’s evidence. If Canada pursues the same approach as the US did, the hit to the Canadian economy would be 21,000 jobs and a loss of $6-billion in GDP growth, MTS contends. The company also suggests that the new Obama administration is actually considering revisiting the FCC’s previous decision to deregulate wholesale access. So who’s right? Well, neither is and both are. The problem is that the two sides have diametrically opposed visions for how competition is supposed to develop. Bell and Telus believe that competition is already here and that additional competitive network facilities will only be constructed if they charge high rates to access ILEC facilities. The incentive to build being: it’s cheaper to build and own your own network than it is to lease capacity from someone else. MTS counters that argument with an approach that dictates fair and reasonable access at cost-based rates is the only viable solution, because competitors will then be able to use money normally charged at higher rates to build their own networks in areas where it makes financial sense. What’s the solution? Well, there isn’t one that’s going to please everybody. Regardless of how Cabinet decides, there will be losers.MTS could for example decide that it can no longer serve large enterprise customers with national footprints because leasing facilities from Bell or Telus is cost prohibitive. That leaves enterprise customers with less choice. As well, Bell and Telus could stop investing in higher-speed local access networks such as FTTN in areas where it might not make sense financially. The result would be that the incumbent cable company becomes the sole provider of services at very high speeds, and residential and small business customers have less choice.In both cases, the customer loses. Telus takes CRTC to court over DND dispute Less than a month after the CRTC ruled on a contract dispute between Public Works and Government Services Canada (PWGSC), on behalf of the Department of National Defence (DND), and Bell Canada, Telus has appealed the decision to the Federal Court of Appeal. The commission determined in early February that Bell’s final offer was more realistic in being able to address the network transition needs of DND. At the time, Bell said it was satisfied with the decision. Public Works declined to comment on the CRTC’s decision. MTS Allstream gets access to Vancouver streets The CRTC settled a four-year-old dispute between MTS Allstream and the City of Vancouver last month, granting the telecom carrier access to the city’s rights-of-way – streets, highways and other public places – to install new fibre facilities. The city had argued that the Telecommunications Act only gives the commission the authority to resolve specific disputes and not set the terms and conditions for a city-wide municipal access arrangement (MAA). The CRTC disagreed with Vancouver’s argument noting that if the Act were interpreted in such a narrow manner, telecom carriers would have no choice but to accept a city’s terms and conditions of access. “Thus, if the commission lacks the jurisdiction to resolve disputes regarding the MAA, the result could be that the city would in effect have the power to impose the terms and conditions of access on MTS Allstream in a unilateral fashion. At the very least, MTS Allstream’s negotiating power would be severely restricted,” reads the decision.

Regulation & Policy: Ottawa asked to wade into telecommunications

News | March 29, 2009

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