Co-location not best strategy for third-party ISPs, CAIP says

The competitive wholesale access market may be facing difficulties, but co-location isn’t necessarily a safe haven for small Internet service providers (ISPs), Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP), says. “ can be cost prohibitive for anyone who is trying to set up at a small central office where would have limited reach and limited coverage,” Copeland said in an interview. Co-location is when an ISP leases space in an incumbent service provider’s central office and uses its equipment to offer Internet services. Following Bell Canada’s proposed wholesale high-speed access tariff, third party ISPs are searching for ways to secure their businesses if the CRTC rules in Bell’s favour. If accepted, the tariff will allow Bell to charge wholesale ISPs retail rates for their fibre-to-the-node services. The decision will be release at the end of January. Edward Antecol, vice-president of regulatory affairs for Globalive Communications Corp., said in an interview Yak Communications Corp. plans to begin providing Internet service out of co-locations in Bell’s central offices to avoid usage-based billing. Globalive acquired Yak in 2006. The company offers Internet, home phone and mobile services. “Our backup strategy is to set up co-locates in Bell central offices where they’re required to lease to , and we will use unbundled loops from the customer to the central office. We will be providing our own Internet that Bell can’t throttle,” he said. There is a CRTC policy in place that allows for competitive wireless carriers to co-locate their equipment within Bell’s central offices and use Bell’s local copper loops to offer services to customers. “We’ve got a number of co-locations in the pipeline at various stages and hope to have a significant number of co-locations in Toronto and around Toronto by the end of the year,” Antecol said. Small ISPs using co-location can offer competitive prices on customer plans without bandwidth caps, Antecol said. “ we deliver Internet to our customers using co-location, we have no need to charge usage-based billing. This is the best available strategy if you want to be an ISP and you don’t own a ubiquitous network like Bell Canada and Rogers ,” he said. Copeland said co-location is attractive for ISPs because it allows them greater control of their offerings. “One of the most attractive things about co-location for wholesale ISPs it that when an ISP co-locates, the company they lease from has very, very little control over their operations,” he said. “What do is lease the local loop from the central office directly to the customer. There is no network interference, no throttling.” But Copeland said high startup costs for co-location can present difficulties for small ISPs. Bell can charge a one-time fee to gain access to one of its central offices, a rental fee for the space occupied and mandatory insurance coverage. Antecol said the costs of a typical co-location can run about $100 000, plus equipment. The cost can also make it difficult for small ISPs to co-locate in areas with low population density because they will have access to less customers to offset their costs, Copeland said. Copeland said he predicts that wholesale ISPs will only be able to survive off co-location in extremely high-density population areas, such as a downtown core of Toronto or Missisauga, where they can reach thousands of people within a couple of kilometers of a central office. “Things like the 10 and 20 Mbps speeds that the phone companies are starting to introduce, what they call VDSL (very high speed DSL), are extremely distance sensitive. Some of those speeds you won’t get if you’re more than 400 metres from the switch,” he said. “Regular ADSL has a distance of 4 km before it starts to degrade significantly, by the time you get to 4.5 or 5 km it’s often no better than dial-up. So if the customer is more that 4 km from the central office still have problems serving them.” Will Gasteiger, president of ISP Vianet, said in an interview his company has been co-locating for three years in Bell central offices in Sudbury and North Bay, Ont. “You definitely have to use it in locations that are in a good rate band,” he said. “An A Rate band would be downtown Toronto. An F or G rate band would be a small town in northern Ontario where your loops from the central office extend for many miles and through several remotes before you reach your customer.” Gasteiger added that Vianet is currently building its own fibre infrastructure to reach more customers. Clayton Zekelman, president of ISP Manage Network Systems Inc. (MNSI), also said in an interview that co-location isn’t a perfect solution. “Another big problem with going the co-location route is you only get the customers who are close to the central office. Everyone else is served off of a remote and they will either get unacceptable speeds or their order blocked completely,” he said. “Even if you co-locate in a central office somewhere, you are not guaranteed access to every customer in the area. That is a big problem.” MNSI has been co-locating in Bell offices in the Windsor, Ont. area since 2001 and is now working on a fibre network. Copeland said it is possible that Bell could move to have the laws surrounding co-location changed in the future. Bell Canada spokeswoman Jacqueline Michelis said in an email Bell is studying the relationship between third-party ISPs and co-location. Michelis said Bell’s tariff proceeding has run its course, including competitor comments and Bell’s reply, and that the company is waiting for a ruling. In October, Bell filed a digital network services tariff with the CRTC. Digital network access is the transmission of information from the network to the customer. The tariff seeks to amend a current ruling by adding the paragraph, “For Bell, digital network access service transport components may only be used in conjunction with digital network access service access components.” Zekelman said the amendment means ISPs can’t use Bell’s transport components to connect to central offices when co-locating. “That’s dangerous because you can’t climb the investment ladder of co-locating by buying services from the incumbent, then switching to your own transport. You’ve got to have that much more built up before you can even do anything,” he said. asmith@thewirereport.ca

Co-location not best strategy for third-party ISPs, CAIP says

News | January 10, 2011

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us