Small ISPs happy with new cost disclosure rules for large telcos

Canada’s telephone and cable companies will have to make more information about their costs publicly available when they propose rates for the wholesale network services they sell to small phone and Internet service providers, the CRTC said Friday in a decision supported by small providers. In decision 2012-592, the commission said it established more extensive disclosure guidelines for cost information associated with incumbent telcos' wholesale services. “Smaller companies offer competitive and innovative choices to Canadians, by using access they have purchased at wholesale prices from the large companies,” Jean-Pierre Blais, chairman of the CRTC, said in a statement. “Today’s guidelines will increase transparency to allow Canadians to better understand how we establish wholesale rates.” The CRTC said in its decision that carriers must now disclose demand forecasts for a wholesale service. The forecast is based on annual competitor demand and is “critical input” related to the calculation of the service’s unit cost, the commission said. “The total cost of the wholesale service is divided by the demand in order to calculate a unit cost and, as such, the underestimation of the demand forecast may lead to an overstatement of this cost,” the decision said. The CRTC said “aggregate” competitor demand forecasts should be disclosed and should include the demand of at least three competitors to prevent other parties from securing a competitive advantage from the information. The commission said “knowledge of the number of end-customers of a particular competitor could provide competitively sensitive information that would be harmful to the competitor,” and determined that “competitor demand forecasts should generally be disclosed, provided that the forecast includes the demand of at least three competitors.” The CRTC determined Friday that markups on service level costs will also be disclosed. It said the disclosure would result in a “more complete” record and allow other parties to comment on the proposed markups. In March, the Canadian Network Operators Consortium (CNOC), a group of small Internet service providers that purchase wholesale network access from large telcos, said incumbent service providers may have been using the CRTC’s confidential rate-setting process to overstate network costs and gain approval to charge higher wholesale rates. A CRTC decision last year established a new capacity-based billing system for wholesale network services. The decision set out fixed rates that each incumbent ISP could charge small ISPs for access to their networks based on the capacity of traffic those small providers want to purchase. In March, CNOC requested a review of the CRTC’s capacity-based billing rates, saying the commission's wholesale rates would be unfair to small ISPs and their customers. Bill Sandiford, president of CNOC, said in an emailed statement that the organization is “very pleased” with the CRTC decision. “This decision will ensure that wholesale services have a better chance of being costed correctly on a going forward basis,” Sandiford said. “The result of this will be a more vibrant competitive market for telecommunications services, including Internet service, which will lead to more choice and better prices for Canadian consumers.” The commission added in the decision that companies will be required to disclose some resource unit costs, corporate cost factors and parameters as well as financial parameters. Shaw Communications Inc., Rogers Communications Inc. and Videotron (a Quebecor Media Inc. subsidiary) also filed appeals to contest the rates they can charge under the new regime. dgrenier@thewirereport.ca

Small ISPs happy with new cost disclosure rules for large telcos

News | October 26, 2012

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Small ISPs happy with new cost disclosure rules for large telcos

News | October 26, 2012

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