Small ISPs tell CRTC they want to invest in ‘middle mile’

GATINEAU, Que. — Representatives from Canada’s small Internet service providers on Tuesday asked the CRTC to open up more of the incumbents’ broadband networks, mandating wholesale access for fibre-to-the-premises connections and giving the ISPs the ability to build so-called “middle-mile” connections. Infrastructure investment was the main issue as more than a dozen executives, lawyers and experts representing the Canadian Network Operators Consortium (CNOC) spoke at the CRTC’s hearing into its wholesale regulations for wireline networks. BCE Inc., which has invested tens of millions in a fibre-to-the-premises (FTTP) network that is still closed to wholesale access, has said in its filings to the proceeding that opening up that network to wholesale access would deter it and other infrastructure builders from building the network out to Canadian homes and businesses. CNOC lawyer Chris Tacit said the legal justification for wholesale regulation of fibre networks is clear because broadband Internet is essential and should be treated like a telephone or cable line. Those who want to build fibre networks, he said, would actually benefit from wholesale access. “By being on their network, we actually reduce their risk by adding customers,” he said. “To that extent, that part of it actually de-risks their investment.” Bell already has a “natural incentive” to build out its fibre network, Tacit said, because of the lead Rogers Communications Inc. has in offering broadband services via its own network. “There’s a reason they're sinking all that money into FTTP,” he said. “It's because they have to keep up. I don't believe for a minute that they're going to stop investing if they have to grant wholesale access to FTTP or anything. We've heard this story before and it's proven not to be true.” Marc Gaudrault, CEO of Teksavvy Solutions Inc., told the commission that more wholesale access would actually increase investment as the small ISPs want access to the incumbents’networks closer to the end user. “As companies like ours grow, investing in middle-mile transport facilities is how we reduce costs,” he said. The so-called “Broadband Access Services” model, under which small ISPs have access to everything before the last mile, is “essential,” he said, because it means ISPs of all sizes can compete on services and access while still maintaining the wholesale rules that ensure fair access for each company. “Our view is that we don't really affect investment,” he said. Without regulated access to fibre networks, he said, small ISPs would be forced to lay their own redundant fibre networks at great cost. “It just doesn't make sense; it's inefficient,” he said. “In the end it would just lead to higher consumer rates for no good reason.” The CRTC, he said, needs to act to enable Teksavvy and the others to build middle-mile networks. “Right now, the message I've received pretty much is don't invest; that's the signal I'm getting from you guys,” he said. “For me, I'm saying I'm ready, I'm willing. There's risk involved and I'm totally willing to go. But I've got nowhere to go.” CNOC also asked the commission for lower wholesale access rates overall under the CRTC’s capacity-based billing (CBB) pricing scheme. Peter Rocca, CEO of Start Communications, said the BAS model is the next step in the facilities-based competition between ISPs. “We and a lot of our competitors here have invested in facilities of the first mile, let's say, our interconnections, our buildings, or process operations and services,” he told the hearing. “The next incremental step to that is that middle mile. With BAS, regardless of an attractive CBB rate, there's still an incentive to build our networks out to build that facility and continue to invest in that middle mile.” Rocca said about 71 per cent of the money his company gets for Internet services is passed on to the incumbents. “Almost every dollar we make is reinvested back into our companies, back into our network,” he said. “If the rates were lower I think you would see more investment in the network.” Michael Nowlan, CEO of Primus Telecommunications Canada Inc., said in his company’s presentation before the hearing that he too would like to have the CRTC mandate wholesale Internet access closer to the consumer so Primus could invest in “alternative transport supply” for its customers. Nowlan also called the contention that wholesale access for FTTP networks would deter investment “fear mongering,” adding that telcos without cable networks “have no choice but to invest in fibre … otherwise their Internet and video services will become increasingly inferior to what cable companies can provide.” The rapidly growing bandwidth demands of their consumers ensures all infrastructure owners will continue to invest, he said. “The presence of competitors like Primus will only enhance retail competition, without impeding that investment.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Small ISPs tell CRTC they want to invest in ‘middle mile’

News | November 25, 2014

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Small ISPs tell CRTC they want to invest in ‘middle mile’

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