Mandating wholesale FTTH would be ‘another risk factor’: Bell

GATINEAU, Que. — BCE Inc. told the CRTC Wednesday that many of its customers could be delayed from upgrading to an Internet connection faster than what's available through fibre-to-the-node (FTTN) if smaller Internet service providers receive the right to buy wholesale space on fibre-to-the-home networks (FTTH). Bell chief legal and regulatory officer Mirko Bibic said that while mandated access won’t “immediately grind investment to a halt in every location in Canada,” it “will have an impact.” “Mandated access rules will affect the pace of deployment and breadth of deployment. That’s essentially the issue,” he said, adding that the majority of Bell’s network is currently FTTN, and that it allows the company to offer its IPTV service and speeds up to 50 Mbps a second. “We can hold on and do really well with FTTN longer than we otherwise might,” he said during the CRTC’s hearing into its wholesale wireline regulations. Bibic said fibre as an investment is “risky to begin with, a with a long payback period. In many communities where it’s borderline, you add another risk factor, which is mandated access, it gets riskier.” Some communities won’t get that investment because the extra risk factor will cause the company to prioritize “vis-à-vis other potential investments you can make that might have a better payback.” “Pretty soon, you’re going, ‘OK, let me focus on Montreal, Ottawa, Quebec City and Toronto,' ” Bibic added. Dan McKeen, Bell’s vice-chairman and senior vice-president, added that the reason FTTH investment is risky is because companies have to spend two-thirds of it up front, and the only part that can be spent incrementally is the last connection directly to the home. “You actually engineer the entire city, you build all the fibre, you put in the capacity to serve 100 per cent of the customers, because you don’t know which customers are going to take your service,” McKeen said. “If you get enough customers, it’s OK. If you fall short, it’s bad, it’s disastrous,” he said. Cable companies can build more incrementally because of the technology they use, he said. The investment Bell Aliant (recently acquired by BCE) made in Atlantic Canada was “as good as it gets,” and the reason Bell Aliant was ahead in terms of the competition in building FTTH was because it was a solid business case, he said, due to factors like low density and aerial infrastructure. In response to a question from CRTC commissioner Candace Molnar about whether Bell was still deciding between investing in FTTH and FTTN, Bibic said Bell Aliant decided to go FTTH, while Bell Canada had a “big push, until a couple of years ago, with FTTN.” He added the company has been more focused on FTTH in recent years, building a network in Quebec City, building FTTH in new developments, and recently announcing that the next cities to receive FTTH would be Kingston, Ont. and Gatineau, QC. “So just to confirm, at this point, you have not made the commitment that it is only going forward?” Molnar asked. Bibic did not answer the question directly, referring instead to Bell’s projections about the future growth of FTTH, FTTN and other networks. When asked by reporters after Bell’s appearance whether Bell’s goal is to get all customers on FTTH and whether the company has a timeline to do so, Bibic said: “You’ve got to build community by community. It’s a multi-year program, so we just want to go as fast as possible.” “We’re building FTTP largely where we don’t have FTTN. I mean, the goal is build the advanced networks, and then try to load as many consumers as possible onto that network,” he said. Representatives from Quebecor Inc. also appeared at the hearing on Wednesday. They told the CRTC that FTTH networks and cable networks running on DOCSIS (data-over-cable interface specifications) are not treated equally by the commission even though they have similar performance, noting that the cable networks are subject to wholesale access. In Quebecor’s view, this unequal treatment isn’t “justifiable,” said Denis Beland, vice-president of regulatory affairs for telecommunications at Quebecor, adding that the most advanced DOCIS services require significant investments and are of “equal quality” to FTTH networks. “Treating these two services differently in terms of their resale obligations goes against the principle of technological neutrality,” he said. Instead, the CRTC should set a speed limit, such as 50 Mbps, after which broadband services wouldn’t be subject to mandated access, Beland suggested. Quebecor also said existing rates for third-party Internet access services aren’t high enough. As a result, they don’t “reflect the real cost of the network, and as a consequence our resellers don’t contribute enough to the infrastructure they use,” said Daniel Proulx, chief technology officer of Quebecor subsidiary Videotron. Wednesday’s appearances were preceded by representatives from Canada’s small Internet service providers on Tuesday, who asked the CRTC to mandate wholesale access for FTTH connections, and give the smaller ISPs the ability to build so-called “middle-mile” connections within the incumbents' networks. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Mandating wholesale FTTH would be ‘another risk factor’: Bell

News | 11/26/2014 9:53 pm EST

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