Telus seeking phone service deregulation in more than 85 communities

After granting Telus Communications Co. an exemption from residential phone service regulation in several jurisdictions last week, the CRTC is now considering one of the provider’s last outstanding applications under opposition from MTS Allstream. “We are concerned that Telus meets its quality of service requirements to justify forbearance—something they have not been good at,” Gillian Giesbrecht, MTS Allstream corporate communications specialist, said in an email to The Wire Report. On July 16, 2009, Telus filed an application with the CRTC asking for an exemption, or forbearance, from regulation in St-Agapit, Que. The application is one many covering more than 85 communities across Alberta, British Columbia and Quebec, filed by the company since 2008. According to CRTC policy, incumbent phone companies, or incumbent local exchange carriers (ILECs), operating in small markets are subject to the regulation of services ranging from basic residential service to voicemail. To promote competition in small markets, the commission set up a framework in 2006 to refrain from regulating markets where the incumbent can prove there is sufficient competition. In the absence of regulation, the ILEC can increase its prices or service conditions without putting in a request with the CRTC—until a certain point fixed by the commission. Telus spokesman Shawn Hall said in an interview that the forbearance allows the company to offer a single price for one territory. “ we’re forced to charge esoteric rates that are based on historic that just aren’t relevant anymore,” he said. “ $27.11 here, a couple of blocks away it’s $28.93. What we’ve been able to do where we’re forborne is sweep that old system away and just apply one price.” Hall said forbearance also allows the company to better compete with other providers in the market. “We’re able to set our prices in a competitive way and bundle our services together in a way customers find compelling,” he said. To qualify for forbearance, the phone company must operate in a market served by at least three providers, including itself, two of which have their own facilities. The phone company applying for forbearance must also meet nine quality of service indicators for services it provides resellers using its facilities. In a March 25, 2009, in response to applications from Telus, MTS argued the company did not meet one of the quality of service criteria—a deadline for the provision of services for resellers. In response, Telus argued that it complied with all critera under the framework. Shaw Communications Inc. also told the commission in a Nov. 20, 2008 letter that Telus’ forbearance requests for communities in Alberta and British Columbia should be denied. “Shaw however submits that Telus has failed to meet the quality of service ... indicators required to meet the forbearance criteria,” Shaw wrote. “Shaw continues to consistently receive below-standard service.” Shaw’s complaint echoed an application MTS had put forward to the commission in December 2008, asking to review the criteria. Given the complaint, the CRTC determined it would not decide on forbearance requests until it had redrawn its framework. In a decision issued on Aug. 21, 2009, the commission clarified the quality of service criteria, allowing it to proceed with Telus’ forbearance applications. Last week, on Sept. 21, the commission approved Telus’ forbearance requests in 70 communities across Alberta and British Columbia. Two days later, the commission approved requests in seven Quebec communities, but rejected the same number for other municipalities in the province due to a lack of competition. The decisions leave the St-Agapit application as one of the last awaiting a ruling. On Jan. 22, 2008, Telus originally requested forbearance for the municipality of St-Agapit--which the CRTC subsequently rejected—due to a lack of competition and coverage across the community. But on July 16, 2009, Telus reissued its request, arguing that the data collected on the municipality, which determined the area lacked coverage, was biased. Telus said a large portion of its population is concentrated inside the community and said the concentrated area should not be subject to regulation. In a July 27, 2009 letter to the commission, Quebecor Media Inc. supported Telus’ argument, but MTS Allstream came out against the request. “While MTS Allstream appreciates the complexity of the situation in the St-Agapit exchange, MTS Allstream submits that Telus can not simply pick and choose the aspects of the ,” the company wrote. A CRTC official told The Wire Report that the commission is now reviewing the request under the framework for quality of service criteria issued in the summer of 2009. Hall said Telus hopes the CRTC will approve its application for a regulatory exemption. But despite the recent wave of approvals, Telus’ requests garnered a fair amount of criticism from the competition during the proceedings. Xittel Telecommunications Inc., a local phone company and Internet service provider (ISP) based in Trois-Rivières, Que., opposed a forbearance request by Telus in four Quebec towns where Cogeco Cable Inc. is a competitor. Xittel said that while Telus identified Cogeco as a competitive local phone company to prove it had sufficient competition, the company was in reality acting as a reseller of Telus’ services. The company argued that the CRTC’s forbearance criteria does not account for the fact that an incumbent phone company can count one of its resellers as competition in a market. “Xittel considers that the commercial arrangement between Telus and Cogeco yields substantial commercial benefits to Telus, which has the effect of raising the market power of Telus rather than decreasing it,” the company wrote. The company added that the reselling model gave ILECs increased market power and that they should not be awarded the advantage of deregulation. “I suspected some kind of a between Telus and Cogeco, where Cogeco was permitted to resell Telus services in a Telus incumbency exchange, in exchange for expedited forbearance and this is why we intervened,” François Ménard, Xittel’s director of technology, told The Wire Report in an email. But Cogeco later reported to the CRTC that it did not cover a sufficient amount of territory, and the request for forbearance on the four towns was automatically disqualified. In response to Xittel’s written comments, Telus said the commission had previously approved its agreement with Cogeco. kfournier@thewirereport.ca

Telus seeking phone service deregulation in more than 85 communities

News | September 27, 2010

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