Vidéotron disappointed with CRTC ruling CDN, company takes big hit

Quebecor Media subsidiary Vidéotron ltée says it will suffer significant financial harm as a result of the CRTC’s recent decision (Telecom Decision 2006-7) confirming that only incumbent telephone companies have the right to receive compensation for lost revenue under the new competitor digital network access (CDNA) regime. The CDNA regime, which resulted from the Feb. 3, 2005 Telecom Decision 2005-6, forced incumbent telephone companies to reduce their wholesale digital network access (DNA) prices in a move that was designed to promote facilities-based competition (NL, Feb. 15/05). In return, the ILECs were granted the right to recuperate lost revenue as a result of these mandated price reductions through drawdowns on their deferral account. The Quebec-based cable company argued in a July 2005 Part VII application that the mandated price reductions resulting from the CDNA decision of Feb. 3, 2005 should also apply to other companies serving the wholesale digital network access (DNA) market. Vidéotron believes its position to be equitable and consistent with commission policy. "The focus of our application was that these mandated price reductions on the ILEC side also had a huge impact on the financial health of competitors serving the wholesale DNA market," Dennis Béland, director of regulatory affairs at Vidéotron, tells Network Letter. He says the financial impact on Vidéotron was in the order of approximately $13.2 million over a three-period beginning in June 2002 and ending in June 2005. "It’s a pretty substantial hit," he states, adding this comes at a time when Vidéotron provides "a lot of the services to these very same competitors that buy services from the ILECs." There will be a negative impact on the company’s wholesale business – an area that Vidéotron has invested a lot of time and effort to secure a foothold in. "Vidéotron Telecom was always a company that didn’t just go after the point-to-point retail market, but also went after heavily the provision of wholesale services to other competitors. It’s always been a big part of this business, and it got hammered by the creation of the CDNA regime," Béland says. The company is disappointed the commission doesn’t realize that the decision leading to the creation of the CDNA regime hasn’t done what it was supposed to do: promote facilities-based competition. There is an inconsistency, says Béland, especially when some wholesale DNA providers, notably the ILECs, are allowed to be compensated for lost revenue resulting from mandated price reductions, yet others aren’t. He notes that for the most part, the incumbent telephone companies and Vidéotron shared the same opinion about the impact of the CDNA decision on facilties-based competition, and that it wasn’t going to work. "Where we diverged was once the decision was made to put that regime in place, the ILECs got compensated for their losses and we didn’t. It’s a simple as that," Beland says. " hammered us. We were hopeful that the commission would at least recognize the inconsistency of that regime with facilities-based competition, but clearly they weren’t of that view," he tells NL. Béland was vague on what course of action, if any, Vidéotron would take as result of this decision.

Vidéotron disappointed with CRTC ruling CDN, company takes big hit

News | February 15, 2006

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