Dark fibre ruling will introduce foreign competition, says U.S. ISP

The CRTC’s ruling last Thursday to allow non-Canadian companies to lease and light dark fibre as resellers will increase foreign competition in the telecommunications market, U.S.-based Internet service provider (ISP) AboveNet says. “The ruling may convince other non-Canadian companies that lease dark fibre and provide resold services to enter the market because the rules are a lot clearer now,” Lome Abugov, AboveNet’s Canadian regulatory counsel, said in an interview. Last week, the commission ruled that a service provider that leases dark fibre and lights it using its own optical equipment does not own or operate a transmission facility, and therefore is not considered a “telecommunications common carrier” under the Telecommunications Act. Dark fibre optic networks are those that are unused, but they can be “lighted” for use. The CRTC last week decision means that companies leasing dark fibre from Canadian-owned facilities are considered resellers and are not subject to foreign ownership and control laws. “The real significance of the decision from a legal standpoint is that it finally provides clarity around the word ‘operates’ in the telecom legislation,” Abugov said. “Within the Canadian carrier definition, it says that to be a carrier you need to own and operate your own transmission facilities. Everyone knew what owning your own transmission facilities meant, but it was not 100 per cent clear what it meant to operate your own facility.” Abugov said the decision validates the way fibre resellers have been operating for years. “Allowing more businesses to operate in Canada as resellers and build business based on leasing dark fibre will provide more competition in this country, which is what most of us in the industry are trying to achieve,” he said. AboveNet is an American business-to-business ISP that became involved in the commission proceeding on dark fibre when Telus Corp. opposed its registration as a fibre reseller in 2009. In March 2010, to settle the dispute, the commission opened a consultation on the classification of companies that lease dark fibre. Ted Woodhead, Telus’ vice-president of telecom and regulatory affairs, wrote in an April submission to the consultation that ISPs like AboveNet should not be classified as resellers and should be subject to the requirements that come with being a carrier. “As the operator of a system consisting of dark fibre to which exempt and non-exempt transmissions apparatus is attached and used to light fibre and thereby transmit intelligence between network termination points, AboveNet Canada satisfies the definition of a telecommunications common carrier. It should not be registered as a reseller,” Woodhead wrote. Bell Canada agreed with Telus. “AboveNet must not provide telecommunications services over leased dark fibre until having shown that it meets the obligations required of a telecommunications common carrier, including the rules regarding foreign ownership and control,” Bell wrote in a submission in April. But during the consultation, AT&T Global Services, Cogent Canada Inc., Level 3 Communications, Verizon Canada Ltd., MTS AllStream, NextG Networks Canada, TekSavvy and Yak Communications said companies like AboveNet should be considered resellers. Despite resistance from Bell and Telus, the CRTC ruling allows AboveNet to move forward with its Canadian expansion, something it said will happen very soon. “We are looking forward to offering high bandwidth services in Toronto starting in 2011,” Kristen Hyland, corporate communications manager at AboveNet, said in an interview. “Toronto is a good market for us because we provide to customers in financial services, health services, media and web-centric businesses. People who have a need for a secure high bandwidth dedicated network.” Washington-based ISP Cogent, which has operated as a reseller on fibre in Canada since 2002, said it also supports the ruling. “We are supportive of the CRTC’s decision,” David Schaeffer, Cogent’s CEO, said in an interview. “It is helpful for the Canadian market because it allows companies to come in and offer non-traditional services. We are purely an Internet service provider and I think it would be difficult to deliver our services at our price point if we were subject to the same regulations as a voice carrier would be.” Schaeffer said he sees benefits to using dark fibre to provide business and residential services. “It’s more scalable, reliable, and provides you with the ability to offer lower prices than pretty much any other technology,” he said. Schaeffer said the ruling may introduce some competition to the Canadian broadband market. “There may be one or two other international carriers wanting to serve the Canadian market, but I do think that this does open the door for new business models that may in the future see Canada as a viable market,” he said. Independent telecom and media analyst Carmi Levy said in an interview the details of the CRTC’s ruling on fibre resellers will need clarification as companies enter the market. “The downstream implications of this decision remain to be understood by all parties,” he said. “What isn’t clear is what the Canadian carriers can now charge and the conditions under which they will deliver those services to third parties that want to make use of the dark fibre … This isn’t the last of this decision. We will be hearing more in the months to come.” Levy said Canada has an extensive network of dark fibre buried underground that is the result of incumbent telcos overbuilding during earlier expansions. But Mark Goldberg, head of telecom consultancy Mark H. Goldberg & Associates Inc., said in an interview that dark fibre is not the exclusive property of telcos. “The point on dark fibre is that anybody can construct dark fibre. There is a history of non-carriers building fibre facilities. Whether it’s construction companies or electric companies, many people have the ability to do it,” Goldberg said. “The CRTC’s decision clarified that foreign companies can’t own the fibre facilities but they can operate them. own the optical equipment and control the speeds that are operated across them.” Goldberg said there are only two remaining privileges that, following the CRTC’s ruling, are exclusively available to Canadian companies: the ability to buy spectrum and the ability to become a competitor in the voice market, also known as a competitive local exchange carrier (CLEC). asmith@thewirereport.ca

Dark fibre ruling will introduce foreign competition, says U.S. ISP

News | December 15, 2010

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