‘The cable network is a shared and limited resource’: Rogers

GATINEAU, Que.—The CRTC should not mandate wholesale Internet access to the cable carriers’ so-called next generation networks because there is a limited amount of spectrum in the network tubes, a consortium of Canada’s largest cable companies told the CRTC Wednesday. “The cable network is a shared and limited resource,” Tony Faccia, Rogers’ vice-president for wireline access networks, told the commission. “Splitting it up deprives the cable operator of valuable resources they need to compete with the phone companies, to innovate and to keep Canada competitive.” Faccia appeared as part of a panel that included executives from Shaw Communications Inc., Quebecor Media Inc., Bragg Communications Inc. and Cogeco Cable Inc. during the CRTC’s hearings to consider whether it should mandate wholesale access to high-speed Internet in Canada. Pierre Roy, vice-president of IP technologies with Videotron Ltd., a subsidiary of Quebecor, explained that most cable operators in Canada have a capacity of 860 MHz of spectrum available in their networks. He added that a 25 MHz capacity is available for upstream—or uploading. “As a result, cable spectrum is extremely limited in the upstream range,” Roy said. Roy added that there is no excess capacity in the downstream channels, even though they have more spectrum available. “Therefore, if the 6 MHz channel was given to a third party Internet service provider , the cable operator would have to remove an analog television channel or 10 digital channels from its line-up or find some other way of creating additional capacity.” Faccia emphasized that breaking up the cable networks into smaller pieces to grant wholesale access would limit the cable companies’ ability to compete with incumbent phone companies such as Bell Canada and Telus Corp. “The technical issues involved in allocating 6 MHz channels to third party ISPs would involve a level of technical complexity which would result in failure,” Faccia said. But other parties who appeared in front of the commission Wednesday were skeptical of the cable companies’ statements. Marcel Mercia, chief operating officer of Cybersurf Corp., a third party ISP, said the cable companies are worried that small Internet providers like his would use a disproportionate amount of bandwidth. “How is that exactly technically impossible to manage?” he said. “This can be managed through costing and policy approaches.” Mercia added that some of the cable companies present at the hearing have offered high-speed Internet service to their retail customers that reach speeds of up to 100 Mbps. “What are the competitors going to do that the cable companies would consider disproportionate?” Mercia asked. Mercia said Rogers and Shaw have managed their own bandwidth inefficiently by deploying telephony services—which do not require a lot of bandwidth—over 6 MHz channels. MTS Allstream, a company that functions as an incumbent phone company and a competitor—depending on the market—argued Wednesday that it is the business Internet market that is in need of more competition through increased wholesale access. “The reality is that competitors can only offer genuine choice if they have cost-effective access to existing incumbent networks,” Dean Prevost, president of the Allstream business unit, told the commission. “My ability to negotiate is zero,” Prevost said. “I’m not a customer in their eyes. I’m an annoyance, I’m a pain, I’m a problem, and I’m a reduction in return.” He said that if his company needs access to a network and there is no regulation mandating it, he either won’t get the access or he’ll pay an uneconomical price. Historically, the wholesale business market in Canada—in which providers serve small- or medium-sized businesses—has relied on the incumbent phone companies’ infrastructure rather than that of the cable companies. “The problem is our footprint doesn’t go to very many business locations,” said Ken Engelhart, senior vice-president of regulatory affairs with Rogers, noting the cable companies’ focus on the residential market. “We serve mostly residential customers.” Like many of the smaller ISPs, MTS asked the commission to mandate speed matching for aggregated ADSL access and to resist mandating a two-tier network access system, where the incumbents get access to newer, state-of-the-art networks and third party providers access the older, legacy networks. But Engelhart said the idea of wholesale Internet access to a network is flawed—not just mandating it. “Fundamentally, I don’t think the resell model works,” he said. “It’s sort of an unnatural business model. It sort of relies on a perfect God-like regulator that knows everyone’s costs to make the perfect decision at the perfect time. In the real world, of course, costing is an inexact science and you end up with a range of possible outcomes.” Engelhart said that if the commission mandates access, it does not matter what wholesale rates it sets. A low rate will make the incumbents unhappy and a high rate will upset the third party providers. “The costing ends up getting revisited and you end up with a number which has the third parties kind of limping along.” jmigneault@thewirereport.ca

‘The cable network is a shared and limited resource’: Rogers

News | June 3, 2010

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