Incumbents push back on interim fibre resale rates proposal

The request from the Competitive Network Operators of Canada (CNOC) for the CRTC to implement a “retail Internet service resale” (RISR) framework for fibre-to-the-premise (FTTP) services is premature and circumvents an ongoing CRTC consultation, according to several incumbent telecom companies. In interventions on CNOC's Part 1 application from January, the facilities-based incumbents argue that the request — which CNOC said is aimed at stimulating competition in the FTTP market — undermines the regulator's 2015 decision to move toward a disaggregated network framework, incumbents say. The application, Rogers Communications Inc. argued in its intervention, is "simply a transparent attempt to delay the establishment of an orderly and cost-effective transition to disaggregated services and Rogers request the Commission deny CNOC’s Application." "The mere existence of these applications introduce uncertainty into the disaggregated regime and thus accomplish the goal of creating an unworkable transition plan," the company wrote, adding that "such an absent-minded approach to wholesale rate setting could do immeasurable damage to investment for facilities-based carriers." In its application, CNOC had called on the regulator to require incumbent telecom companies to make FTTP facilities available to wholesale competitors at a 25 per cent discount from the cheapest retail rate in a given market, at least until the outstanding proceedings involving newly regulated wholesale rates and the disaggregated regime are concluded. CNOC also pointed out in its January request that under the existing proceedings, “it will likely be a minimum of at least two to three additional years before any workable solution, if one is possible, could materialize.” BCE Inc., in its own intervention, wrote that the request is an "end-run" around the regulator’s decision to move toward disaggregation. The CRTC announced the disaggregated regime in 2015; though initially supported by CNOC, the group sounded the alarm that the system had turned out to be “unworkable” in 2017, and asked the regulator to reconsider aspects of the regime. The CRTC then acknowledged that the level of disaggregation may need to be reconsidered, initiating a consultation in June and suspending its proceeding to set final rates for the regime. The new CNOC proposal, Bell wrote, would further undermine investment. "Investment and innovation are altogether absent from the pure resale model that CNOC wishes to be implemented immediately," Bell argued. Telus Corp. likewise argued that CNOC's proposal would decrease investment, a common refrain for incumbents when it comes to wholesale competitor access. "Accepting CNOC’s resale proposal would reverse the Commission’s established policy and destabilize the regulatory framework," Telus wrote. "This will increase investment risk and decrease investment in FTTP facilities at a time when it is more important than ever to support ongoing investment." The Public Interest Advocacy Centre in its own intervention wrote that while it supports CNOC's request for a RISR framework for FTTP service, it disagreed with CNOC's legal argument that claims that incumbents are conferring an undue preference on themselves by offering service at speeds that only FTTP will support, while they deny competitors the same ability. Incumbent telecom companies "cannot be said to discriminate by simply offering approved tariffs, even if they are, frankly, taking advantage of the regulatory delay and high tariffs to roll-out FTTP to their own territories on accelerated schedules," PIAC argued. However, PIAC suggests the regulator should grant CNOC's request on grounds provided for by policy directives promoting competition. "The Commission can grant CNOC’s requested relief if it is satisfied that the present retail market is not competitive and it considers that the policy objectives favour relief," PIAC argued. TekSavvy Solutions Inc. argued in support of the RISR framework, but only as a "last-resort" measure. The company reiterated a previously stated view that it would rather see the CRTC finalize the disaggregated regime. "While the interim disaggregated access rates are obviously inflated and unworkable, TekSavvy is confident that they will be corrected and a sustainable competitive framework will emerge," the company wrote. "Competitors are walking a frayed, aging tightrope that is about to break. What we need is a new tightrope, one that is robust and strong, that can restore stability and balance to the broadband industry and support meaningful competition and choice for the benefit of telecom consumers," TekSavvy said. CNOC, TekSavvy continued, is proposing a "safety net." Indeed, CNOC president Matt Stein wrote in an email to The Wire Report in January that the proposal is a "stop-gap measure." “This Part 1 proposes a simple framework based on tools the Commission has successfully used before, and outlines an easy way to give Canadians immediate competitive options right away, while the full methods are worked out,” Stein wrote. "So if we are going to be stuck with today’s frayed, old rope for any longer, then yes, TekSavvy supports implementing RISR on an expedited and temporary basis as proposed by CNOC in the Application as a last-resort measure," TekSavvy wrote in its intervention Friday. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Charelle Evelyn at cevelyn@hilltimes.com

Incumbents push back on interim fibre resale rates proposal

News | February 12, 2021

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Incumbents push back on interim fibre resale rates proposal

News | February 12, 2021

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