Affordable transport key, CRTC says in NWTel decision

The CRTC has ordered Northwestel Inc. to tweak its plan to modernize the North’s lagging telecom infrastructure with a renewed emphasis on fibre investments and will also launch proceedings next year to consider the high cost of Internet backhaul and how best to fund northern telecom infrastructure, the commission said. In a decision released Wednesday, the CRTC said it approved, in principle, Northwestel’s $233-million modernization plan filed with the commission in January, though it added that Northwestel alone is incapable of bringing northern telecom services up to par with those available in other parts of the country. The decision — which follows three separate hearings over the past three years on Northwestel’s aging infrastructure and how best to improve northern telecom services — identified the high cost of transporting telecom signals as a major hurdle to overcome before those services can be improved. It ordered Northwestel to find more money to improve its fibre backhaul infrastructure as part of its plan, and said the commission will also examine the cost of other providers’ satellite backhaul services, which serve many of the North’s smallest and most remote communities. “One of the major obstacles to modernizing Northwestel’s network across all of its territory is the cost of transport facilities,” John Macri, the CRTC’s director of telecommunication policy, said of Internet transport or “backhaul” links that carry telecom signals over long distances. “We’ve asked them to go back and maybe try to reprioritize their modernization plan and see if they can squeeze a little bit more out of that $233 million and see if they can devote a little bit more of that to transport,” he added in a telephone interview Wednesday. CRTC commissioners heard during a June hearing into Northwestel’s services that the high cost of transport would prevent the company from offering Internet services that meet CRTC speed targets in 38 northern communities that are served by satellite backhaul. Paul Flaherty, Northwestel’s president and CEO, told commissioners at the time that the price the company pays for backhaul from satellite provider Telesat is “the big challenge” to improving service speeds. SSi Micro Ltd., a Yellowknife-based provider of satellite Internet in the North, also said in regulatory documents filed with the commission in February that the cost of backhaul is a significant hurdle in the development of northern telecom services. As part of its decision, the CRTC said it had agreed to Northwestel’s request to increase the rates it can charge for its “wholesale connect” fibre backhaul service, allowing the company (which is a BCE Inc. subsidiary) to apply a 40 per cent mark-up to the service instead of the 30 per cent mark-up the commission had previously approved. Macri said the commission expects that Northwestel will use some of the additional revenues it will receive from that service to further expand its fibre backhaul infrastructure. He noted that Northwestel’s original modernization plan, filed with the commission in summer 2012, had proposed more funding for fibre infrastructure, which was later removed in a revised version of the plan. “We now expect them to put some of those fibre investments back on the table,” he said. In its decision, the CRTC said it will also launch an inquiry into satellite backhaul services in an effort to understand the high cost of providing telecom services to communities that aren’t connected to a larger, fibre network, and which rely on satellites to connect their telecom networks to other parts of the country. That inquiry, Macri added, will not be restricted to an examination of Northwestel’s service area, and will look at other rural and remote communities that also rely on satellite backhaul. “It’s been a while since the CRTC has actually done an investigation into that segment of the market, and we think we need a lot more information to understand exactly what’s going on,” he said of the satellite backhaul market. Telesat did not provide comment for this story by deadline Wednesday. The commission said it will also consider new funding mechanisms to support northern telecom development next year as part of a previously planned hearing to consider its “basic service obligation” policy, which outlines specific services that incumbent telecom providers must make available to their subscribers. Macri said that hearing, which will take a broader approach to examining consumers’ telecom needs across the country, will attempt to balance northern telecom needs against the providers’ bottom lines, and what they can do to improve telecom services. The CRTC, this summer, held a broad hearing to examine Northwestel’s telecom services, and to consider, among other things, how the commission regulates the company and whether it should impose new forms of regulation, such as a “split rate base” regime that would govern Northwestel’s backhaul services separately from its commercial services. In its decision, the commission said it rejected proposals by Northwestel’s competitors to change how the CRTC regulates the rates Northwestel can charge those competitors or its retail subscribers for telecom services, adding that those proposals would result in “considerable regulatory burden.” The decision also offered up some changes to how the commission regulates specific Northwestel services that could benefit its competitors or its customers, including new regulations of the retail Internet service rates Northwestel can charge its subscribers, and new rules that prevent the company from forcing customers to subscribe to its Internet service if they want to subscribe to its voice-over-IP home phone service. The commission also agreed with Northwestel’s proposal to replace its aging telecom “switches” with newer ones that support fixed-wireless services, and which the company’s competitors had said would limit their ability to compete by impacting customers’ ability to keep their phone numbers when switching providers, among other ways. The CRTC decision said Northwestel had proposed a series of potential fixes for the problems its competitors identified, and ordered the company to keep their old switches in operation until those problems are resolved. It also ordered the company to file annual reports, starting in the first quarter of 2014, to outline the “major improvement projects” it has undertaken in the past year, how those projects are benefiting consumers, and to update the commission on the “overall progress” of the modernization plan. Macri said those reports will also address how Northwestel is solving its competitors’ qualms about the wireless switches. “As part of our monitoring of the plan, we’ve asked them to report each year on how they’re working through those limitations and what the solutions are that they are going to put forward,” he said. “That’s part of the bargain with them that they are to do that.” Emily Hoefs, a spokeswoman for Northwestel, said in an emailed statement Wednesday that the company is “pleased” its proposed modernization plan received the commission’s support. “However, it’s a complex decision and we’ll need some time to review it in detail before commenting further,” she said. — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Affordable transport key, CRTC says in NWTel decision

News | December 18, 2013

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