Wireline wholesale hearing to put focus on ISP access

The CRTC faces another major policy hearing next month, and this one has the potential to affect independent Internet service providers that depend on major telecom companies to connect them to customers. In September, the commission held separate hearings on the future of the television industry and wholesale wireless access. On Nov. 24, the CRTC begins up to nine days of public proceedings into wireline wholesale services. A letter, posted on the CRTC's website last week and outlining the schedule and mandate of the hearing, said it will consider, among other things, when and where to mandate wholesale access to telecom networks, how to go about setting rates that should be paid for such access and to take a careful look at access for providing high-speed Internet service, particularly with fibre-to-the-premise connections. The last wholesale services review was conducted in 2008, and the regulator said in the notice of consultation posted to its website on last year that “the telecommunications landscape in Canada has changed significantly” since then. In their initial filings to the commission, two of Canada's three biggest ISPs, Rogers Communications Inc. and BCE Inc., asked the regulator to step back from the current policy of mandated wholesale access, while the third-largest by its 2013 subscriber base, Shaw Communications Inc., asked the commission to keep some wholesale access while pursuing a “market-based approach.” Bram Abramson, chief legal and regulatory officer at independent ISP Teksavvy Solutions Inc., said in a phone interview this week that the hearing would be a chance for the CRTC to “foster investment and innovation” by Internet providers. "One thing the regulations ought not lead to is economically wasteful investment just for the sake of following some ideology." he said. "In other words, if it's a bottleneck facility that's not rational to reproduce, then your goal isn't and shouldn't be that somebody build it out anyway when they're big enough, just because. You want investment going to things that truly benefit the Canadian telecommunications system." In an intervention filed for the wholesale review early this year, Rogers asked that mandated wholesale access for Internet service be phased out over five years. The company said such access was supposed to be temporary, and that the CRTC has never categorized third-party access to Internet networks as “essential.” “The Commission indicated that the conditional mandated classification for TPIA services would be lifted based on evidence of changes in the market,” the company said. “Rogers submits that there is extensive evidence of changes in market conditions, notably the increased competitiveness of the retail market and the emergence of mobile broadband as a viable alternative to fixed broadband.” In a “vigorously competitive market” like the one that exists today, Rogers said, there is no need for mandated wholesale access. The company said wholesale prices have been set so low that they represent a barrier to investment, encouraging wholesale buyers to piggyback on Rogers’ network without building their own facilities. “The depressed service rates entrench resale-based competition and interfere with the evolution of the market to greater facilities-based competition,” Rogers said in the filing. “The supply of lower-priced retail internet services by reseller ISPs may be seen as a benefit to consumers. However, subsidizing the entry of reseller ISPs through artificially low service rates creates inefficiency in the retail market.” Phasing out wholesale Internet services would ensure these reseller ISPs invest in their own infrastructure, Rogers said, and would “send the correct investment signals to existing and potential suppliers of wholesale and retail services.” In a filing made in January, Bell said the CRTC should “remove all broadband-related mandated access obligations” in urban centres “where extensive facilities-based broadband competition is well-established.” In its Jan. 31 filing, Shaw asked the CRTC to take a “market-driven approach” in determining the future of Canadian Internet access regulation. “Any regulatory framework must put Canadian consumers at the core by ensuring an environment that fosters facilities-based investment and innovation and allows market forces to meet consumer demand,” Shaw said in its filing. The “rapidly evolving market” for Internet access requires Shaw to invest in its network if it hopes to attract customers, the company said, and it has committed to “the highest levels of capital intensity in the country.” However, Shaw said it still relies on wholesale access to reach business customers, as the only “ubiquitous network” in its Western Canada market is owned by Manitoba Telecom Services Inc. The company “continues to make inroads” into the business market, Shaw said in the filing, “relying on a combination of facilities owned by it and those leased from . Without the mandated availability of this limited number of ILEC-controlled facilities, there would be a substantial lessening or prevention of competition in the business market.” The Canadian Network Operators Consortium (CNOC), which represents independent ISPs, said in a June 27 filing that the CRTC needs to continue to maintain mandated wholesale access. Mobile wireless and wireline services are not comparable or substitutable for one another from either a technological or economic perspective, CNOC said in its filing, and continued wholesale access is needed if consumers are going to be able to choose from multiple broadband providers. Consumers would have better Internet access if, instead of removing wholesale regulation, the CRTC acted more to enforce what it already has in place, CNOC said. “In the course of obtaining services from incumbents, competitors have encountered a number of obstacles that have significantly interfered with their operations,” CNOC said in the filing. “These obstacles can be resolved through simple clarifications and better enforcement of the current regime.” The Competition Bureau, in a June 27 filing, said the CRTC must “be careful not to endanger the competitive benefits that Canadians currently enjoy while, at the same time, taking steps, where necessary, to develop a modern regulatory framework that is minimally intrusive to competition and appropriate for a dynamic and ever changing market.” Only in areas where telecom carriers exercise excessive “market power” should the CRTC intervene, the bureau said, adding that there were some areas in which wholesale regulation could be removed. An expected point of contention in these upcoming hearings is whether fibre-to-the-premise networks should fall under rules requiring mandated wholesale access, as is the case with copper, cable and fibre-to-the-node networks. The Wire Report reported earlier this year that Canada's bigger ISPs are arguing against such regulation, saying that it would stymie the incentive of service providers to invest in such infrastructure. TekSavvy's Abramson had a different take. "In our view, clearly an essential facility because it's not something that could be feasibly reproduced by competitors," he said. "It simply isn't efficient to have everyone build their own redundant fibre-to-the-premises of which some would lie fallow when you haven't chosen the competitor that's operating it." Abramson added that independent ISPs value "the contributions that major players make. We're some of their biggest customers." — With reporting by Peter Henderson phenderson@thewirereport.ca and editing by Derek Abma dabma@thewirereport.ca

Wireline wholesale hearing to put focus on ISP access

News | October 29, 2014

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Wireline wholesale hearing to put focus on ISP access

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