Bell tells Senate committee telcos need to free up funds for network investments

OTTAWA--After emphasizing the need to free up funds for network investments, officials from Bell Canada and Bell Aliant received questions Tuesday about mobile pricing and broadband access from members of the Senate transport and communications committee. The committee is studying emerging issues related to the wireless sector, including “access to high-speed Internet, the supply of bandwidth, the nation-building role of wireless, the pace of the adoption of innovations, the financial aspects associated with possible changes to the sector, and Canada's development of the sector in comparison to the performance in other countries.” Bell Canada and Bell Aliant officials were invited to speak at the committee Tuesday, where the company emphasized the need to free up funds to invest in its fibre to-the-home network and expand broadband access. The company expressed concern with protecting itself from subsidy contribution fees—which it said have cost it $440 million and the industry $1 billion—as well as competitors' wholesale access to its network. But committee members focused on mobile wireless pricing, roaming fees, and broadband access. Under committee questioning, Mirko Bibic, Bell Canada senior vice-president of regulatory affairs, said easing the foreign ownership rules for the telecom sector is not a solution to high mobile phone pricing. “If competition is not the way to keep the price down for consumers, what is the way?” Conservative Senator Michael MacDonald asked. Bibic argued that prices are higher in Canada than in the United States due to the lower population density north of the border. There are fewer people covered for each cellular phone tower built in Canada. Public Interest Advocacy Centre (PIAC) executive director and general counsel Michael Janigan told The Wire Reportthat, when it comes to pricing issues, it is to Bell’s advantage to argue that there is enough competition in the Canadian telecom market. “Obviously, that’s in their self-interest. Roaming fees and some other fees of this nature, including things like long-distance, have been a continual source of friction with customers,” he said in a phone interview. “This has led to jurisdictions like the European Union setting price ceilings to prevent the gouging of customers, and certainly that’s something that may be on the table for the future.” Bibic said in his presentation that Bell customers would benefit from a reduction in the contribution subsidy fees that the company must pay. Canada’s current contribution regime was established a decade ago by the CRTC. It requires all telecom service providers with revenues over $10 million to contribute to a national fund available to providers in high-cost serving areas. The CRTC announced on Jan. 28 a proceeding on the matter. Bell, Rogers Communications and Telus have come out against the fees. MTS Allstream told the Wire Report by email that will come forward with a position on the subsidies through the CRTC proceeding. “You add it all up, for Bell, it’s $440 million. For the whole industry, it’s well over a billion dollars. These are all fees that are government mandated. What we’re saying is we need to have a look at this,” Bibic told The Wire Report following the committee meeting. “We can’t possibly think about increasing these . We have to think about decreasing these. And then we’d have more money to invest in broadband networks.” But Janigan said he isn’t persuaded Bell needs the money to invest in its networks. “They can also use the super-normal profits they’ve been getting from their wireless operations and invest them in their network as well,” he said. “It just seems to me they certainly have other sources of funding rather than attempting to raid the funds that are available for network maintenance.” Bibic also argued against wholesale access and speed matching, policies under which companies like Bell and Telus would be required to offer wholesale Internet service to competitors at speeds matching their own retail Internet services. Bibic told the committee that allowing companies to use its network without investing dollars of their own would take a financial toll on incumbents. “Depending on what the decision is, we’ll have to go back and review our deployment plan. We’ll review the economics of the build-out in every single community,” he told The Wire Report. “Some communities may be left out all together. Some communities may be delayed in receiving fibre-to-the-node or fibre-to-the-home networks, and it may delay the deployment in areas that already have fibre-to-the-home with the next evolution in technology.” The CRTC is holding a hearing on speed matching on May 31. In its CRTC submission, PIAC wrote that “threats” to stop network build-out are without substance should the CRTC decide to allow wholesale access. “The ILECs need more powerful networks if they are to successfully compete with the cable companies. The threats they have made before the commission and before the Governor-in-Council are inconsistent with what they have been telling their shareholders and, in any event, are groundless,” PIAC’s submission said. kfournier@thewirereport.ca

Bell tells Senate committee telcos need to free up funds for network investments

News | March 30, 2010

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