Telcos say new interconnection regime levels the playing field

A CRTC decision Thursday will help modernize Canada’s interconnection regime by requiring traditional telcos to increasingly connect with cablecos and wireless providers using Internet-protocol (IP) technology, industry insiders say. In what's probably the last major decision issued by outgoing chairman Konrad von Finckenstein, the CRTC moved to require traditional telcos to provide IP-based interconnections with wireless carriers and cablecos that offer voice-over-IP (VoIP) services. But telcos will only be required to offer those IP connections in areas where they already offer their own IP services or where they already offer IP interconnections to affiliates or other service providers. “The networks of the future will be primarily based on Internet Protocol,” von Finckenstein said in a statement. “We have established basic principles to ensure this technology becomes the industry standard for voice networks as quickly as possible.” The decision strikes a compromise between two competing positions advanced during the opening stages of six days of interconnection hearings last fall. On one side, wireless carriers and the cablecos complained that their IP-based telephony services were continually required to incur the costs of downgrading customers' IP signals when they called numbers served by old-fashioned circuit-switched signals on traditional networks. In turn, the telcos argued that they had invested billions of dollars in circuit-switched technology and that it would be unfair to incur the costs of upgrading their still-functioning equipment to accommodate IP traffic. They also argued that they should not be required to share their competitors’ costs of downgrading signals. But by the final two days of hearings last fall, the majority of the country’s service providers agreed to support a compromise that falls roughly along the same lines as the commission’s decision issued Thursday. That loose consensus included stipulations about when the “triggers” for mandated IP-to-IP interconnections would kick in, an ability for companies to negotiate their own interconnection agreements, and basic parameters as to how quickly negotiations would be expected to proceed on IP-based interconnection agreements. The CRTC is requiring telcos to reach agreements within six months of receiving a request after from a competing carrier (after Feb. 21) or face CRTC intervention. Once an agreement is reached, IP-based interconnections should be implemented within a year in most cases, the commission added. In an effort to reduce costly redundancies often encountered under the old circuit-switched system, the commission also challenged the telcos to limit the number of points of interconnection that each IP-based carrier would have to connect to. The commission also rejected the cablecos’ and wireless carriers’ requests that the incumbent telcos assume the cost of down-converting IP signals. In an interview with The Wire Report Thursday, von Finckenstein said he expects the decision to help modernize Canada’s interconnection regime. He said the new rules should ease costs on the cablecos and wireless carriers while allowing the telcos to switch to IP-based technologies at their own pace. Consumers may see benefits too, eventually, he said. “It actually opens up opportunities for all sorts of innovation which is IP-based which otherwise could not reach the consumer,” he said. “Hopefully, in the long run, it will result in lower prices.” Ted Woodhead, vice-president of telecom policy and regulatory affairs at Telus Communications Co., said the decision “clearly shows that the industry is moving in the direction towards IP.” He agreed that the shift could lead to new telephony technologies. “IP just generally allows the potential for new kinds of applications to be developed,” he said. “You’ll start to see developers building applications that frankly, we haven’t conceived of before.” Another important aspect of the commission’s interconnection decision is designed to ease interconnection costs previously borne by wireless carriers by removing some of the previous requirements they had to fulfill to become “competitive local exchange carriers” in any given service area. Previously, wireless carriers have taken on the designation in order to receive guaranteed shared-cost interconnection access to a network or they would be forced to pay another carrier to provide access. But to become a competitive local carrier, the wireless providers also had to adhere to a series of conditions designed for traditional telcos in the mid-1980s, which led to additional costs. One requirement mandated competitive local carriers to offer equal access to competing long distance services—a requirement that was impractical under the modern Canadian wireless regime, von Finckenstein said. “That is extremely expensive and difficult to do if you’re wireless,” he said. “This requirement really affected the new entrants because the existing players all are affiliated with a CLECs and therefore they used their signals through the affiliated existing CLEC and they wouldn’t have to pay for it.” By removing this requirement for wireless carriers that seek to become local exchange carriers, the commission has evened the playing field between wireless carriers and traditional telcos, Ed Antecol, vice-president of regulatory affairs and carrier services for Globalive Communications Corp. and Wind Mobile, said. “It’s about time wireless carriers were treated as equals when negotiating and implementing interconnection,” Antecol said. “There’s no more customer-big carrier relationship. It’s an equal relationship.” “The CRTC’s decision largely reflects the consensus reached by Bell and others in the industry that interconnection agreements can be reached through commercial negotiations,” BCE Inc. spokeswoman Jacqueline Michelis added in an email to The Wire Report. “That’s consistent with the Government’s direction to rely on market forces rather than regulation wherever and whenever feasible and is good news for customers since it avoids imposing unnecessary additional costs on carriers.” Carly Suppa, a Rogers Communications Inc. spokeswoman, similarly emailed to say her company supports the decision. “We believe this is a balanced, good decision. It recognizes that some of the old interconnection rules no longer make sense,” she wrote. “We now have a practical approach to IP network interconnection to move Canada forward in the IP digital world.” nkyonka@thewirereport.ca

Telcos say new interconnection regime levels the playing field

News | January 19, 2012

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