Bell asks federal government to eliminate wholesale access to FTTH

BCE Inc. is fighting the CRTC’s wholesale wireline decision on two fronts, asking the federal cabinet to reverse the commission’s move in July to mandate wholesale access to fibre-to-the-home (FTTH) networks and asking the CRTC to put limits on who can take advantage of the new wholesale system it imposed in that decision. Bell told cabinet in a petition to the governor-in-council that mandated access to FTTH will stop or delay investment “for years” in areas of the country where the investment required wouldn’t be justified by the possible return. “The significant impact of the CRTC's decision will be borne particularly by smaller towns and rural areas, where fibre-to-the-home deployment will be delayed or not take place at all,” Bell warned in the document, filed the day after the Liberal Party was elected with a majority, replacing the Conservatives. The new cabinet is set to be named on Nov. 4. The document referred to an estimate by economist Hal Singer, who found that investment in FTTH in Ontario and Quebec could fall by as much as $384 million annually as a result of the decision. Bell said that the CRTC “unfairly” changed the rules in move that is contrary to “Canada’s longstanding policy of facilities-based competition.” It argued that it and other telecom companies relied on a decision the CRTC made in 2008 and reaffirmed in 2011, which did not mandate access to FTTH, in order to make long-term decisions on capital investment. Bell added it built FTTH to more than two million houses relying on rules that did not mandate access. “Now, after more than six years down this road, just 90 days before a federal election the CRTC released a decision that has created significant investment instability in the midst of the deployment. Our Petition only asks that the rules that facilitated the investments we have made not be changed unfairly in the midst of our plans to build out fibre-to-the-home,” the company argued. The CRTC mandated access to the FTTH network in July, though analysts said at the time that the move likely wouldn’t have a significant impact on investments in FTTH by large telecoms. The document filed by Bell also asked the cabinet to exempt access to networks running on DOCSIS 3.1, used by cablecos to offer speeds comparable to those offered over FTTH, to maintain “competitive neutrality.” “We would still have the obligation to provide Reseller ISPs access to our legacy broadband technology, where it exists (i.e., DSL and FTTN). Likewise, cable companies would still have an obligation to provide access to their legacy broadband (using DOCSIS 3.0 and providing broadband speeds up to 100 Mbps anywhere they have such plant today),” it said. It said granting the petition would “provide the regulatory certainty required to extend our investments aggressively into additional communities.“ Bell noted it has spent $2.5 billion thus far on its Gigabit Fibe Internet service and said that it is impossible for the CRTC to set a wholesale rate that would adequately compensate companies building FTTH networks. The CRTC sets a rate that is below the retail rate charged by Bell, which “ignores the lost revenue streams from TV and home phone services that are fundamental to the business case for building fibre-to-the-home in the first place.” As a result of mandated access, jobs will be lost and the competitiveness of the Canadian economy will be “seriously undermined,” Bell said, adding that its fibre deployment in Toronto alone “could support up to 19,000 jobs.” It also argued that Canada will lose its global leadership in broadband, citing the example of Europe, which “fell far behind other developed countries when it aggressively mandated access to next-generation networks and where policy-makers are now searching for ways to recover.” Canada ranks ahead of the U.K., United States, Germany and Australia when it comes to average advertised connection speeds available to customers, and the wholesale wireline decision puts that at risk, it added. The experience in the United States showed getting rid of mandated access “restored the business case for investing in capital broadband,” Bell said. It added that “when mandated access regulations applied to large facilities-based carriers in the United States, investment in next-generation broadband networks slowed to a crawl. But when these restrictions were lifted by the regulator, broadband investment by these same facilities-based providers exploded.” Bell argued that rules designed for legacy copper networks shouldn’t apply to FTTH networks that must be built from scratch, because while the company has been an incumbent “in communications services delivered over legacy copper networks” since 1880, fibre is different. “All potential service providers wishing to offer these new fibre-to-the-home Internet services, whether they are traditional telephone companies, cable companies, resellers, utilities, or other technology companies, begin from the same starting point,” it said. “Specifically, fibre-to-the-home requires a brand new build using no legacy components. In fact, for Bell, the build out of fibre-to-the-home is a completely new build to replace our 135 year old legacy copper plant.” In the wholesale wireline decision, Bell argued, the CRTC applied rules that “had previously only been applied to networks that used ‘legacy’ copper and coaxial cable infrastructure that was built in a monopoly environment from a long bygone era.“ Unlike legacy infrastructure, it added, companies did not rely on public assets or subsidies to build FTTH networks. This is the fifth time it has appealed to cabinet to change a CRTC decision in the more than 20 years since the Telecommunications Act was introduced, it said, during which the commission has issued more than 13,000 telecom-related decisions. “In each of these cases, we had a serious concern that a CRTC decision would do long-term damage to the country's telecommunications system by undermining investment and facilities-based competition for decades to come,” Bell said. The company added that the wholesale wireline decision is “one of the most critical regulatory decisions the CRTC has made since the introduction of local telephone competition in the 1990s.” The company also filed a review-and-vary application with the CRTC Tuesday. It asked the commission to require wholesale companies to invest in their own transport to the central office or head-end in order to take advantage of the new disaggregated wholesale system imposed in the CRTC’s July decision, expected to be in place by the end of 2016. The CRTC should also ensure that ISPs using the wholesale system must serve the end-users directly and limit wholesale access to ISPs with revenues of $500 million a year or less, Bell asked. It said the changes are needed in order to make the disaggregated system the CRTC introduced in July “efficient and proportionate to its purpose, by limiting … eligibility to only those smaller ISPs who may require regulatory assistance to overcome the barriers to entry identified by the Commission.” Bell said that by restricting eligibility to companies earning under $500 million a year in revenues, “larger providers, who have the necessary resources to invest in their own access facilities where they so choose, will be incented to participate fully as facilities-based access competitors.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Shruti Shekar at sshekar@thewirereport.ca

Bell asks federal government to eliminate wholesale access to FTTH

News | October 21, 2015

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