Quality of service regime needed for wholesale Internet: CNOC

Small Internet service providers (ISPs) and advocacy groups are asking the CRTC to put in place protections regarding the quality of service they and their customers receive when buying wholesale Internet service from bigger providers, while those large telecoms are arguing such measures aren’t necessary. The Canadian Network Operators Consortium (CNOC), which represents small ISPs, said in an intervention filed with the regulator that “competitors face an omnipresent risk of delays relating to service order activations, installations, repairs and disconnections.” The current environment “actually provides incumbent providers of wholesale services and/or wholesale roaming services with incentives to either wilfully or negligently undermine wholesale service levels to maintain a competitive advantage and avoid investments that may be necessary to deliver adequate Q of S levels.” It filed the comments as part of a CRTC consultation on its competitor quality of service regime, which has been in place since 2005 and applies to incumbent telcos’ wholesale landline service. The commission is considering whether the regime should be expanded to cover other services, such as wholesale Internet and wireless, and to other types of companies, such as cablecos, smaller telcos and wireless providers. CNOC said that the current regime is well designed and would make a good template for a modernized version that includes the CRTC’s current aggregated wholesale Internet service regime. It pointed to issues such as delays in installing a service or carrying out a repair, or missing appointments on the part of the incumbent, noting that in such cases, the customer will “generally hold the competitor responsible for an incumbent provider’s poor quality of service. When such poor quality of service ultimately leads the customer to switch providers, the incumbent then gains an opportunity to win-back the customer.” The organization also suggested the CRTC use its ability to levy fines in order to address issues like “gaming or wilful disregard” of the quality of service regime. The Public Interest Advocacy Centre said that wholesale regulation “is essential because, in all three markets (phone, internet and mobile), there are signs of substantial market power, including market concentration, supra-competitive pricing, and supra-competitive profitability.” It added that the regime should compare the service a large telecom’s customers receive to that provided to the wholesale ISPs’ subscribers. It gave the example of restoring service following an ice storm, where if “repairs for retail customers are prioritised, competitors could suffer lasting reputational harm which limits their ability to effectively compete.” Internet advocacy group OpenMedia said in its intervention that the quality of service regime should be updated “to include, at the very least, retail Internet services such as and , mobile wireless services and their carriers, and cable-based carriers.” It also said the fact that “complaints still abound regarding telecommunications carriers and various stages of switching providers, installing new services, or remedying service disruptions suggests that market forces have not ensured sufficiently high quality of service where Internet access services are concerned.” OpenMedia said almost 7,000 Canadians signed its petition to change the rules and that reading individual comments submitted as part of their campaign “suggests that Canadians continue to experience frustration with Internet service quality in cases where a wholesale services relationship is involved.” It added: “On the whole, respondents believe they are subjected to lesser customer service from incumbent staff and indirectly penalized for subscribing to a competitor ISP rather than to the associated incumbent provider.” But larger companies disagreed, saying there is no proof of such service issues. A joint submission by four cablecos — Rogers Communications Inc., Bragg Communications Inc.’s Eastlink, Quebecor Inc.’s Videotron and Cogeco Inc. — noted small ISPs have “nearly doubled their share of the residential retail market for high-speed Internet services.” Given that growth, they are “better positioned to bargain with competing wholesale service providers for the best combination of price and non-price terms to meet their needs.” They also said cable companies received “few complaints” from customers of the smaller ISPs, which were investigated. There was “no evidence that these are attributable to repeated failures by the Cable Carriers to meet a reasonable standard of quality for those service elements that are within their control.” The companies also argued the costs of establishing a quality of service regime for wholesale Internet service would “far outweigh the potential benefits,” given that the “implementation and maintenance costs of such a regime would lead to the increase of wholesale rates.” “It would require the industry to undertake a multi-step process that would be costly, time-consuming and complex,” they said. Shaw Communications Inc. said in a separate intervention that such costs couldn’t be justified due to a lack of evidence regarding problems with wholesale service quality. It also argued that “the static, monopoly local phone environment in which the regime was developed and implemented is vastly different from the highly dynamic, competitive telecommunications ecosystem that exists today.” That regime was “necessary in the early days of competition in Canada’s telecommunications market, a period in which there was a fundamental shift from monopoly supply and rate regulation to market forces,” Shaw said. Such a system is unnecessary today, “when the market is now characterized by intensifying rivalry among more and more players that are delivering increasingly innovative services through diverse network technologies and platforms.” BCE Inc. argued that there is no incentive for large carriers to provide poor service when they are competing for the wholesale business of smaller ISPs. “In markets with both wholesale and retail competition, if the incumbent service provider lowers its wholesale service quality, it only guarantees itself a loss of wholesale customers, without a certain gain in retail customers, due to competition from other retail providers.” In such a market, the “level of competition between wholesale service providers will promote the delivery of high quality telecommunications services to wholesale customers.” The issue of service quality for smaller ISPs’ customers is a long-standing one. CNOC filed an application with the CRTC in 2013 stating that the cablecos provide “vastly inferior” services to the small ISPs in contrast to services for their own retail customers, an allegation the larger companies denied. In its decision, the CRTC said that CNOC “lacked access to the evidence necessary to prove its allegations regarding the Cable carriers’ behaviour.” Directing the companies to resolve the issue through bilateral discussions or through a CRTC steering commission, it said that under “the circumstances, the Commission considers that allowing the industry to generate solutions is likely the most effective and efficient way to begin to resolve CNOC’s concerns.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Quality of service regime needed for wholesale Internet: CNOC

News | April 27, 2017

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Quality of service regime needed for wholesale Internet: CNOC

News | April 27, 2017

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