Bell using ‘public money’ to roll out HSPA mobile network in rural Ontario and Quebec, competitors say

Bell Canada and Bell Aliant are taking heat from competitors for proposing to use “public money” held in deferral accounts to roll out a high speed packet access (HSPA) mobile network in rural and remote areas. Incumbent phone companies such as Bell and Telus operate “deferral accounts” containing funds collected from urban telephone customers during the previous price cap period (2002-2006). The accounts are funded by local telephone services in urban areas, where higher charges are used to subsidize the cost of providing telephone services in rural and remote areas. CRTC regulations stipulate that incumbent phone companies use deferral account funds to expand the reach of their broadband networks into rural and remote areas—where broadband is not available and would not be without these funds. According to the CRTC, incumbent phone companies cannot not use the deferral funds to expand into a region where another company is either providing or planning to provide service. Rogers Communications Inc. told The Wire Report that Bell is trying to use subsidized deferral account money to pay for more than the incremental costs of expanding their broadband services. “This money will be subsidizing the whole network: voice, data, everything else,” Ken Engelhart, Rogers’ senior vice president of regulatory affairs, said in an interview. “ a subsidy for something they really shouldn’t be getting subsidy for.” Wind Mobile—a new entrant in Canada’s wireless market—has also raised objections to Bell’s proposal to use its deferral account broadband expansion program for HSPA services. In an appeal filed with the CRTC, Wind argues that Bell’s proposal is flawed and uses consumer money. “The Bell companies’ proposal to use money belonging to telephone subscribers in non-high-cost serving areas to provide broadband services in high-cost serving areas fails to meet the established commission criteria for the use of such funds,” Wind says in its appeal. “It would appear that the Bell companies are seeking to appropriate consumer funds for their own business purposes, namely to fund a build-out of their HSPA mobile network, in a manner that not only fails to provide substantially similar broadband services to underserved areas, it virtually guarantees that no such build-out will ever occur.” In a proposal filed with the CRTC last week, Bell Canada and Bell Aliant said they would deploy an HSPA network in the communities identified in its deferral account broadband expansion plan and use it to provide high-speed Internet service similar to its DSL-based “Bell Internet Essentials Plus” plan. The mobile wireless network will offer broadband to consumers and businesses via USB modems as well as hubs that will connect multiple computers in what the companies describe as “the Home Zone.” Competitors will also have wholesale access to the network, Bell says. “Expansion of this state-of-the-art wireless network to those areas will provide both retail and wholesale customers in those communities with access to next generation wireless broadband services, on par with more urban communities in the Companies' operating territories,” Bell’s proposal says. The company’s HSPA-based broadband service would be priced at $31.95 per month. It would give consumers and business customers 2 Mbps download and 800 kbps upload speeds, a 2 GB monthly usage cap with additional capacity charged at $2.50 per GB, and five email addresses. Bell spokeswoman Jacqueline Michelis said by email that using deferral account funds to expand its HSPA network “to 102 approved communities in Ontario and Québec will provide retail and wholesale customers in these areas with access to next generation wireless broadband services that are on par with service features and prices offered to customers in more urban communities.” Bell’s proposal comes as the CRTC prepares to evaluate the incumbent telephone companies’ broadband expansion plans. Telus Corp. and MTS Allstream have also filed plans. One telecom analyst says Bell isn’t breaking the rules as set out in the CRTC’s original deferral account decision in 2008, and that the company has come up with a creative way to serve the broadband needs of a population within its operating territory. “There is no rule that says they can’t . The question is what the commission will do with that proposal,” Mark Goldberg, of Mark H. Goldberg & Associates, told The Wire Report. Rogers’ Engelhart acknowledged that Bell may not be violating the rules of the deferral accounts decision, but said it may be trampling on the spirit of the ruling. “I suppose I would try and do the same thing if I was them. HSPA is a broadband network with a future so you can’t blame them for wanting to use the money to expand HSPA,” Engelhart said. “I don’t think they’re breaking the rules, but I think the rules didn’t anticipate what they’re doing. Engelhart added that if the CRTC had known Bell would subsidize its wireless network with its deferral account, the commission would not have granted Bell the subsidy. Rogers, the media and communications conglomerate, suggests that since Bell is proposing to use its deferral account to fund its HSPA network expansion in rural and remote areas, other wireless carriers should be given the right to roam on it. “I’m wondering if they’re going to use this money, what is essentially public money, to expand their HSPA network, shouldn’t Rogers, for example, get mandatory roaming on it?” Engelhart asked rhetorically. “Why shouldn’t all wireless carriers get to use it?” Goldberg said Bell’s proposal raises a number of questions that should be resolved by the CRTC. “There could be a need for the commission to re-open this process to ensure that you have competitive equity and you don’t have, as an unintended consequence, interference with the workable market operations in these areas because it can lead to a distortion not just in the competitive broadband market, but also distortion in the mobile wireless market,” he said. Goldberg said Bell’s competitors have a right to raise questions. “I think that all of the mobile wireless providers are going to have to question whether any monies are used to advantage one service provider over another in the expansion of their territories,” he said. “It impacts not just providing benefits to rural and remote parts of Ontario, but it provides a real benefit in the service coverage to people in the urban centres.” Perry Hoffman is an Ottawa-based freelance writer. He can be reached at perry@messagingmechanics.com.

Bell using ‘public money’ to roll out HSPA mobile network in rural Ontario and Quebec, competitors say

News | January 26, 2010

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