Northwestel ‘gaming’ regulatory system with Part 1: SSi Micro

SSi Micro Ltd. is claiming a BCE Inc. subsidiary is engaging in delay tactics with its recent request for the CRTC to revise a decision setting rates for its Wholesale Connect service, while Northwestel is arguing the CRTC’s decision last fall was based on faulty information. In a Wednesday press release, SSi said it asked the CRTC “to end Northwestel’s ongoing attempts to delay complying with Commission orders” and that “these delays thwart competition and cause consumers harm.” Jeff Philipp, SSi CEO, said in the release that “after years of delays and appeals, Northwestel finally filed new wholesale rates as required by clear direction from the CRTC. Unfortunately, Northwestel also immediately appealed its own filing, continuing a pattern of delay and denial of fair access.” He added: “This gaming of the regulatory system has to end — it is killing competition and causing real harm to consumers in the North.” The Yellowknife, N.W.T-based Internet service provider (ISP) filed an intervention Wednesday regarding Northwestel’s Part 1 application to review and vary a Nov. 8 decision ordering the company to file new cost studies for all speeds offered through its Wholesale Connect service, which provides for transport of telecom traffic “across communities served by the company’s fibre or high-capacity microwave radio transport links.” In the application filed Feb. 6, Northwestel said it was specifically disputing “that traffic-driven equipment used to provision our Wholesale Connect service, should be costed using an annual capital unit cost change assumption of -26.4% per Mbps, and that this factor should be applied to labour as well.” Northwestel said new information about the data on which the CRTC based its decision has come to light “that demonstrates that this costing assumption is not appropriate to use in our updated cost studies and also that, in any event, the Commission made a factual error in concluding that this is the appropriate annual cost reduction target to use in the case of Northwestel.” A 2011 report has since been updated with new figures in 2016, Northwestel said, and based on the new data they “submit that the proper annual capital cost change assumptions should be -11.3% for the years 2012 to 2017, which will be used to restate our 2012 costs to 2017 dollars in our updated cost studies, and -12.3% for use in our updated cost studies during the study period (from 2017 to 2021).” According to Northwestel, the CRTC also directed the company to use that change factor of -26.4 per cent per Mbps “assuming a maximum switch capacity of 10,000 Mbps,” even though the figure was “derived from data reflecting price changes for all high-capacity routers, including routers with a capacity that exceeds 10,000 Mbps.” This means the CRTC has “set a steeper annual productivity target for our cost studies than it should have which is unjustified and should be changed,” the application said. Northwestel also said the figures were never adjusted into Canadian dollars, which needs to happen to properly ascertain the right target unit cost change. “The reason is that the equipment purchases we make must be funded entirely from revenues received in Canadian dollars and are only converted to U.S. dollars at the time of purchase. Thus, the actual cost to our company is not what the cost per Mbps is in U.S. dollars, but what it costs us in Canadian dollars,” it said. November’s CRTC decision directed Northwestel to file its new rates by Feb. 6 for approval, and its application noted that, “as to not slow down the review process,” it would be filing two versions — one that factored in its proposed revisions and one using the assumptions outlined in the CRTC decision. In its intervention, SSi asked the commission to “issue a streamlined order giving interim approval” to the Northwestel rates submitted that align with the November decision. “SSi submits that Northwestel’s tactic of filing alternative rates… is yet another attempt by that company to delay, obfuscate and muddy the waters,” the intervention said. The deadline for interventions is March 9. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Northwestel ‘gaming’ regulatory system with Part 1: SSi Micro

News | February 23, 2017

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Northwestel ‘gaming’ regulatory system with Part 1: SSi Micro

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