Cabinet misses “obvious opportunity” to fix competition in business market: MTS

MTS Allstream Inc. says businesses, both large and small, are the big losers after the federal government denied its appeal to overturn a CRTC decision limiting access to incumbent telcos’ advanced telecommunications infrastructure. “We think that it’s a big blow to competition. It’s a lost opportunity and really consigns large swaths, especially small businesses in Canada, to little choice and rising prices,” MTS’ chief corporate officer Chris Peirce tells Network Letter. “This government had a clear path forward and they didn’t take it. And it’s the economy and the competitiveness of Canadian business that’s going to suffer as a result.” The order-in-council, which was quietly released on December 11, maintains the status quo. This means that the large incumbent telephone companies, Bell Canada and Telus Corp., don’t have to give access to their Ethernet facilities at cost-based rates. Both Bell and Telus lauded Cabinet’s decision. The two companies told Network Letter they were pleased the federal government recognized that investment in networks was key to innovation and would lead to further broadband investments. Mark Goldberg, of Mark H. Goldberg & Associates, also noted on his blog that the order-in-council supports private sector investment in advanced telecommunications infrastructure. To Peirce, however, it’s unclear how Cabinet could come to the conclusion it did when the government’s own telecom forbearance framework defined a competitor in the business market as one that uses its own facilities in combination with network elements from alternative sources, including the large incumbents. This means the government has very little expectation that there will be multiple end-to-end networks with the reach of the large ILECs infrastructure deployed across Canada, he adds. “We remain significant customers of the large incumbents and we need the regulator and the government to understand, it’s not an either or proposition, it’s not some sort of transitory state. There’s no public policy purpose to thinking you’re going to have more than one high-speed pipe into business markets in Canada,” Peirce says. “The only rationale that would pertain to not mandating access is if you had the idea that there was going to be another access pipe built. And there’s no evidence for that, there’s no reasoned way to form that conclusion either from the Canadian experience or any other experience.” Peirce is optimistic though that the CRTC is coming around to some of the issues MTS has raised. “I think that there may be some emergent understanding over there of the problems of dominance in that upstream supply on the part of the large incumbents,” he says. While there appears to be no silver lining in the MTS order-in-council as there was in the speed matching decision from the same day (read more on speed matching here), there is talk that the CRTC is going to launch a proceeding on next generation facilities. The issue has been on the commission’s agenda for some time, but to date has not signaled any plans to move forward. But given Cabinet’s order forcing the CRTC to reconsider speed matching, there is a good chance a new proceeding will be announced and it could include a broader look at next-generation facilities. The Manitoba ILEC launched the Cabinet appeal in March after the CRTC determined that certain broadband infrastructure from Bell and Telus wouldn’t be made available to competitors at cost-based rates. This determination was made in the essential service decision (Telecom Decision 2008-17). In its petition to the Governor-in-Council on essential services, MTS argued that the CRTC was misguided in its belief that forcing competitors to pay retail rates for access to ILECs’ advanced telecommunications infrastructure would lead to greater competition. “The CRTC has lost its way,” MTS wrote in its March 2009 appeal to Cabinet. “At a time when public policy should support and encourage competition, innovation and productivity, the CRTC has refused to remove the roadblocks to full and fair competition in the provision of broadband services.” MTS also argued in its appeal that the CRTC used a flawed analytical method to determine the extent to which Ethernet facilities were deployed by competitors and how much they leased Ethernet from the ILECs. “In essence, the commission relied on the logical fallacy that being able to duplicate one means being able to duplicate all,” the company told Cabinet. The issue of access to ILECs’ Ethernet facilities goes back more than seven years when the commission first started deliberating the matter. Access to Ethernet was thought to be settled in January 2007 when the CRTC mandated access to ILECs’ Ethernet services at cost-based rates. But appeals by Bell and Telus led to a stay in the implementation of the Ethernet ruling until the essential services decision was delivered. MTS launched its appeal in the wake of the essential services decision. Perry Hoffman is an Ottawa-based freelance writer. He can be reached at perry@messagingmechanics.com.

Cabinet misses “obvious opportunity” to fix competition in business market: MTS

News | December 15, 2009

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