‘An existential crisis’: CNOC files Part 1 on disaggregated criteria

TORONTO — An industry group representing smaller internet providers is asking the CRTC to reconsider aspects of its disaggregated wholesale internet service regime, which it says is forcing its members to comply with an unrealistic arrangement that is threatening to leave them out of competition in delivering higher-speed internet. The disaggregated regime was instituted in a 2015 decision by the regulator, which said the big providers must lease part of their fibre-to-the-home (FTTP) facilities to the smaller players in exchange for those competitors using their own transport facilities. Last year, the CRTC set the interim rates for that fibre access to kick-start the regime. But on Wednesday, about six months before the CRTC finalizes rates for that FTTP last mile, the Canadian Network Operators Consortium (CNOC) filed a Part 1 application to the CRTC as a last-ditch effort to relay the problem that complying with what they describe as an expensive and untenable configuration of the system would effectively jeopardize their operations. “It’s an existential crisis for our industry right now,” Christian Tacit, a lawyer for CNOC, said on a panel discussing regulatory issues on the final day of the ISP Summit Wednesday. Part of the 2015 decision stipulates that competitors who don’t configure to the disaggregated regime by the time the final rates come out won’t be able to serve their customers speeds of 100 Mbps download or more. The problem, CNOC is arguing, is that the costs to operate in the disaggregated regime are currently too high and the configuration scheme — where those providers have to connect their facilities to many more points — is unfeasible. With fibre passing through 40 per cent of Canadians homes already, and a third of Canadians subscribing to speeds over 100 Mbps, CNOC CEO Matt Stein said in an interview that smaller providers could be left out of delivering higher speeds. CNOC is arguing that in 2015, that threshold made some sense because those speeds didn’t see as much demand. The old aggregated access regime only applied to speeds up to 100 Mbps. CNOC is asking the CRTC to eliminate the cap on an expedited basis. “The speed cap just closes the door on competition even more,” he said in a speech on the second day of the conference. In the interview, Stein said the CRTC can very quickly, on an expedited basis, determine that the threshold should be abolished or raised before the final rates are determined so as to buy the independents time to deal with the other elements of the regime. He added that the organization filed the Part 1 once they had a full picture of the situation and its potential impact on the entire industry — which they say is a legitimately dire one. But more than just the high costs of access, the configuration, which Stein has warned about previously, is the major problem. Stein said Tuesday that there are so many more incumbent points to connect to in every neighbourhood under the new regime — whereas before connections were based on regions — that it can costs hundreds of millions of dollars to connect to all of them. “Even if you could muster the capital to connect to them all, you can’t even get there,” he said in his speech. “Many of these points are only accessible by the incumbent themselves, and there is no rule saying they have to sell you access to it.” According to CNOC’s application, the CRTC erred when it assumed that the disaggregated framework would allow competitors to duplicate transport facilities in incumbent serving areas all the same. It says that in Ontario and Quebec alone, it would need to connect to 1016 BCE Inc. central offices or 149 cable head-ends to serve where incumbents are. “Massive and prohibitive costs and prolonged deployment times are supply conditions for disaggregated that constitute fundamental changes in fact and circumstances which raise substantial doubt as to the correctness” of the 2015 CRTC decision. It is asking for reduced levels of disaggregation on incumbent networks, while supporting full disaggregation where economically efficient. It is also asking that the regulator allow FTTP access on the current aggregated regime until “it can be demonstrated that entry and use of the disaggregated services is economically efficient for a reasonably efficient competitor,” adding that would ensure that competitors are not left behind on “legacy platforms.” It was already denied this request earlier this year. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

‘An existential crisis’: CNOC files Part 1 on disaggregated criteria

News | November 7, 2018

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‘An existential crisis’: CNOC files Part 1 on disaggregated criteria

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