Regulatory delays a slow-moving incumbent tantrum: CNOC

On the heels of the incumbent appeal of a Federal Court of Appeal decision upholding the CRTC's setting of third-party access rates for wholesale internet to the Supreme Court of Canada, Competitive Network Operators of Canada's director of legal and regulatory affairs Geoff White said that the incumbents are throwing "the slowest moving temper tantrum in Canadian telecom history." The appeal to the SCC, filed Nov. 12, is the newest front in a now-14-months long court battle over the CRTC's August 2019 rates. Incumbents filed three separate challenges to the new lower rates. In September, the FCA dismissed the court challenge, and in August of this year, the federal government declined to overturn the CRTC's rates, while issuing a statement that bolstered many incumbent claims about harm to investments. The CRTC is yet to decide on a separate review-and-vary application from the incumbents. BCE Inc.'s chief regulatory officer Robert Malcolmson responded to White, saying it was within the right of any organization to appeal decisions. "Your organization and members do the same when they feel aggrieved by a regulatory decision. But I guess the difference between you and us is that while we're doing that we're also investing," Malcolmson said to White. The exchange came in a Wednesday afternoon panel on regulatory issues on the second day of this year's online edition of the Canadian Telecom Summit, hosted by Cartt.ca's Greg O'Brien. The panel saw regulatory officers from incumbents Bell, Rogers Communications Inc., Telus Corp., Cogeco Inc., debate regulatory matters with CNOC's White, and Iristel Inc. CEO Samer Bishay. Asked about the federal government's launch of the Universal Broadband Fund last week, White said that incumbents are celebrating the arrival of the funding, while at the same time threatening to trim investments. "There's a tremendous amount of subsidy going on. On the other hand, in other forums, there's a threat to the investment," White said. "There's a threat to indigenous communities, a threat to rural deployment if the CRTC doesn't set rates in a certain way." "I just think that's very ironic that the industry is so reliant on subsidies, yet doesn't want to allow open access to it, and yet threatens it in other forums," he said. Both Bell and Rogers have trimmed back capital expenditure in response to regulatory decisions. In Wednesday's panel, Bell's Malcolmson said he thought that the regulatory momentum was swinging back towards the incumbents and incentivizing their investments. "I think policy makers have a choice to make: they have to decide between propping up resellers that live on mandated access and artificially low wholesale rates, or they have to pivot towards incenting investment, incenting footprint expansion," Malcolmson said. "I think the pendulum used to be quite focused on access to networks, and it now needs to pivot to the build out of networks." Cogeco's senior director of regulatory affairs for telecom Leonard Eichel countered that CNOC is itself delaying regulatory affairs on the issue of the level of disaggregated network access. CNOC had initially supported the disaggregated regime in 2015, before saying it was unworkable in 2017. In interventions to a new consultation on the regime filed last month, CNOC called for a reduced level of aggregation in the networks. "CNOC is as guilty or more with regards to putting delay into the whole process," Eichel said pointing to ongoing proceedings at the regulator around disaggregated network access. Iristel CEO Samer Bishay acknowledged that there have been delays from competitors, not just incumbents. "If there's delays coming from the smaller guys like us, it's because we're trying to come up to the same level of sophistication, let's say, as what the incumbents have been doing for the last 50 years," Bishay said. Earlier this month, delays in regulatory proceedings were also front and center at CNOC's ISP Summit, where White said that incumbent procedural requests are having the effect of “diluting” CRTC policy objectives. Wednesday White said that regulatory intervention was the logical outcome of incumbent behaviour. "The system exists with built-in trade-offs that are recognized by the government and the CRTC: that if you act like a monopoly, certain regulatory requirements will follow. are acting like an oligopoly, and therefore there are certain consumer protection trade-offs that have been made, and a certain recognition of the legitimate role of wholesalers," White said. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Regulatory delays a slow-moving incumbent tantrum: CNOC

News | November 19, 2020

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Regulatory delays a slow-moving incumbent tantrum: CNOC

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