Bell Canada says HSPA+ deferral account plan will ‘future proof’ communities

Bell Canada’s plan to use deferral account funds to finance the expansion of its HSPA+ network in rural Ontario and Quebec will “future proof” rural communities better than than its previous DSL plan, the company said in reply comments filed with the CRTC last week. Bell responded to comments from competitors that said the company’s proposal to spend $463 million in deferral account funds would amount to mismanagement of the funds and give Bell an unfair competitive advantage. Deferral accounts are funds collected from Bell Canada’s urban phone customers during the last price cap period, 2002 to 2006. The funds are to be used to provide broadband Internet access in rural and remote areas where it is not financially viable to do so without a subsidy. Bell has planned to provide broadband Internet access by expanding its HSPA+ network in 112 communities in Ontario and Quebec with the deferral account funds. Videotron Ltd., a subsidiary of Quebecor Media Inc., was sharply critical of Bell’s deferral account plans in a May 21 letter to the CRTC. “They have a directive to provide Internet access services that are comparable to what is provided in urban areas and to use the least cost solution,” Dennis Béland, Quebecor’s director of regulatory affairs and telecommunications, told The Wire Report. “On both of those fronts, the HSPA solution clearly doesn’t match up to DSL.” In Bell’s response filed with the CRTC, Mirko Bibic, senior vice-president of regulatory and government affairs, and Denis Henry, vice-president of legal, regulatory and government affairs, said an HSPA network would provide more benefits than a legacy DSL network. “The deployment of HSPA technology will provide 67 of the 112 communities with the added benefits of mobile voice services, which is especially significant in the 19 communities and certain portions of the 48 communities where such services are not yet available,” Bell wrote. Jonathan Daniels, Bell Canada’s vice-president of regulatory law, told The Wire Report that the plan to expand its HSPA network into those 112 communities would “future-proof” them. “If you bring in DSL, it’s great,” he said. “But then you still rely on your legacy copper loops, and if there’s no business case for upgrading those in the future, these are the speeds that you have.” Daniels said the HSPA+ network would be relatively easy to upgrade to fourth-generation LTE to meet demand for more bandwidth and faster download speeds. “Give us a half billion dollars and we promise down the road it will look pretty good? That’s something we can’t stand for,” Béland said in response to Bell’s position that the network would be upgradeable. Competitors criticized the limited 2 GB monthly download cap associated with Bell’s HSPA+ network, but the company said the cap is similar to what it offers through its DSL-based Essential Plus-Ontario service. Customers pay an additional $2.50 per gigabyte if they surpass the monthly cap. In a May 21 letter to the CRTC, Robert Dépatie, CEO of Videotron, said Bell’s switch from DSL-based technology to a wireless HSPA+ plan for the deferral account funds would distort the wireless market in Ontario and Quebec. “The cynicism of Bell’s financial manipulation has been compounded by an equally cynical attempt to use deferral account funds to distort Canada’s vital and increasingly competitive wireless marketplace,” Dépatie wrote. Bell said its HSPA plan would require it to offer tower sharing and access to its backhaul facilities to competitors. Competitors would also be able to negotiate roaming agreements with Bell on the network. But Béland said the tower sharing option is a “distraction” that would not address the anti-competitive nature of the proposal. “The subsidy goes far beyond the simple cost of putting up towers,” he said. But Daniels said the cost of putting up cellular towers would not be an insignificant portion of the total funds. The total cost per household under Bell’s deferral account plan is also an area of contention. Videotron said Bell’s plan would amount to a cost of $7,590 per household to provide broadband Internet access to approximately 61,000 homes in the 112 communities. Dépatie noted in his letter to the CRTC that Industry Canada’s Broadband Canada program, to connect rural Canadians to the Internet, costs $76.7 million and extends broadband Internet access to 160,000 households in remote areas across the country. That amounts to a cost of $454 per household, he wrote. But Daniels refuted Dépatie’s comparison. “You’ve got to make sure that you’re comparing apples to apples,” Daniels said. “The cost in some communities may be completely different than other communities.” Bell noted in its letter to the CRTC that the $76.7 million under Industry Canada’s Broadband Canada plan covers only half of the cost of deploying the network infrastructure attached to its 52 projects. The Bell deferral account plan includes deployment capital and operating expenses, minus the plan’s projected revenues over a 15-year period. “Bell’s argument is, in effect, ‘The reason we need more money is because we’re asking for more money,’” Béland said. Videotron previously said Bell should return to its original plan to roll out DSL-based technology in the 112 communities or return the $463 million to its subscribers by way of a one-time rebate. jmigneault@thewirereport.ca

Bell Canada says HSPA+ deferral account plan will ‘future proof’ communities

News | June 18, 2010

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