CRTC hears differing pitches to fix lagging disaggregated regime

In order to make its disaggregated wholesale regime work, the CRTC should reintroduce a level of aggregation to cut down on the amount wholesale-based providers would have to spend to connect, the Competitive Network Operators of Canada (CNOC) told the CRTC. Under the older aggregated regime — currently the subject of ongoing conflict between incumbents and wholesale-based providers — that is currently in use, wholesale-based providers connect to one point in a telco’s network, or a limited number of points in a cableco’s network, to obtain wholesale service. The idea behind the disaggregated regime was that it would include access to fibre-to-the-home networks in exchange for the smaller, wholesale-based providers building their own transport links to individual incumbent central offices or head ends. The CRTC announced the disaggregated regime in 2015; though initially supported by CNOC, the group sounded the alarm that the system had turned out to be “unworkable” in 2017, and asked the regulator to reconsider aspects of the regime. The CRTC then acknowledged that the level of disaggregation may need to be reconsidered, initiating a consultation in June and suspending its proceeding to set final rates for the regime. Though the CRTC had launched the regime with interim tariff pages in July 2017, in that June notice of consultation the commission acknowledged that it "does not have confirmation that there has been any implementation of the disaggregated wholesale HSA service regime in its existing configurations." In its intervention to the consultation, CNOC said the level of disaggregation must be "reduced significantly" for a new regime to work, and the number of points of interconnection should be based on population density, the degree of regulated or competitive transport available to competitors, and existing points of aggregation. It argued that the CRTC should mandate more aggregation in less densely populated areas to reduce the cost of transport for competitors. Fewer POIs would mean the wholesale-based ISPs CNOC represents would have to interconnect at fewer locations in an incumbent's network, making the process cheaper and reducing the amount of time needed, CNOC argued. In more densely populated areas, CNOC proposed an "access tandem" model, where interconnection takes place at carrier-neutral POIs. These POIs, CNOC continued, could be operated as not-for-profit Internet exchanges in data centres, which would further reduce the number of locations necessary for smaller ISPs to connect to. The Public Interest Advocacy Centre endorsed much of CNOC's assertion that wholesale-based ISPs cannot enter the disaggregated high speed access market because of prohibitive costs, and that a reduced level of disaggregation is necessary. "The Commission must re-evaluate the appropriate level of disaggregation and provide the competing carriers with regulatory certainty as soon as possible," PIAC wrote in the intervention. The lack of entrants in the disaggregated market calls “for a return to mandated aggregated wholesale HSA services and transport, or at least some level of 'less distributed/diffuse' disaggregated transport services," PIAC wrote. Large wholesale-based provider TekSavvy Solutions Inc., on the other hand, argued for a finalized fully disaggregated model in its intervention, saying that only a disaggregated model would allow companies like it to compete with incumbents at scale. The proposal marks a point of departure from CNOC. Whereas CNOC called for an intermediate level of aggregation, TekSavvy argued that the fully disaggregated configuration must remain an option. "A properly designed disaggregated model would solve the cost-curve problem ... because it would let competitors manage their own backhaul transport, enabling competitors to take advantage of the same economies of scale that incumbents use for their transport networks," TekSavvy wrote. Only the fully disaggregated model, TekSavvy said, would allow companies to take advantage of economies of scale, and fully compete with incumbents as their operations scale up. Under an aggregated model, TekSavvy wrote, "each additional 1 Gbps of traffic costs the same amount; in a sense, the architecture is designed to prevent any economies of scale...usage increases exponentially, but transport increases linearly on the aggregated model." The reason for the delay in uptake to the disaggregated system, TekSavvy argued, is uncertainty around the final rates. "Not only has the delay in finalizing the disaggregated regime directly deprived wholesale-based providers of access to FTTP facilities, it casts a shadow that has disrupted the entire competitive broadband industry," TekSavvy wrote, explaining that it does not know how much transport infrastructure it will have to build. In response to commission questions about what a proposed configuration might look like, TekSavvy declined to provide its own model, except to say that "if the Commission decides that some form of aggregation is required, TekSavvy proposes that it exist alongside the fully disaggregated model." The incumbents, too, say the current disaggregated regime doesn't need fixing, it just needs some certainty about disaggregated wholesale rates. Telus Corp. argued in its intervention that the commission should not move off a fully disaggregated regime, and that the lack of uptake does not signify a problem with the regime configuration. "Other elements of the service conception have contributed to the lack of demand and an overall climate of uncertainty," Telus wrote. The company cited the lack of a decision to finalize rates, the removal of the speed cap on the aggregated service and the regulator's "significant and unwarranted" cut to the aggregated wholesale rates as reasons companies have been reluctant to move from the aggregated regime to the disaggregated. "What is needed is a commitment to a stringent transition plan rather than any changes to the disaggregated service configuration," Telus wrote. But in response to commission requests for a new configuration proposal, Telus suggested a model "based in part on our evolving network’s concept of 'Core' central offices" in urban high-density areas, which Telus says will reduce the number of POIs needed by competitors in urban areas by some 79 per cent. "This proposal provides long-term certainty to competitors on the location of POIs and TELUS the flexibility to evolve its network without disrupting the disaggregated wholesale HSA service," Telus wrote. Rogers Communications Inc. wrote in its intervention that it already has a low number of POIs -- 41 in Ontario versus 893 for BCE Inc. "Rogers questions what reduced level of disaggregation would satisfy the resellers’ desires as 41 POIs for Rogers is clearly reasonable," the company wrote in its intervention, instead calling for the re-introduction of the 100 Mbps speed cap as a "critical incentive for resellers to transition to disaggregated" service. While Bell too argued that a structural review of the disaggregated model is "premature," it proposed a model that reduces the number of central offices (COs) to which a competitor would have to connect, which would in turn reduce the number of POIs. In Ontario and Quebec, the number of POIs would be slashed down to 144 from 897, while in the Atlantic provinces the number would come down to 18 from 470. "This aggregation point exists in our retail and wholesale HSA architecture and thus we would align the limited aggregation model with something we already do," Bell wrote. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

CRTC hears differing pitches to fix lagging disaggregated regime

News | October 13, 2020

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CRTC hears differing pitches to fix lagging disaggregated regime

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