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  • Ted Woodhead

All of the soldiers lined up on their respective sides, well curiously except for one that is.

I, like surely most Canadians, attended or listened remotely to the Canadian Radio-television and Telecommunications Commission (CRTC) public hearing last week to hear parties provide their positions on the Review of the Wholesale High-Speed Access Service Framework. I say that in jest of course because I assure you dear reader that I did in fact do that, but the other people in attendance at the hearing were industry participants or their proxies. The expansive hearing room was largely empty otherwise. That's surprising (not really) to me and a pity.

I can speak from experience in saying that over the years I have been told by politicians of all stripes and all levels and have heard various CRTC Commissioners and other government officials attest to the deluge of contacts they receive from Canadians about Canadian telecom policy in all of its dimensions.

In the hearing room itself that was not the case. I have always assumed that this was due to the fact that Canada is a vast country and attending a CRTC hearing would be cost prohibitive to most. To its credit, I believe the CRTC realized it too and over the years it has taken efforts to make hearings like this more accessible to people through a variety of means, not least of which has been taking the hearings to them in their communities and for their efforts to accommodate and include Canadians. Chapeau to them for that.

That said, in my search for average Canadians who simply had a view on the wholesale framework I left empty handed. What I found was that most responses seemed to be auto generated from campaigns run by industry participants and interest groups. I will give you a clue, they almost to a number felt that material discounts to the current rates for accessing facilities-based networks built and paid for by their competitors would only be fair and good (these being standards that are subjective and not actually based on fact) and no matter, facilities-based providers will continue to invest.


These types of comments and public opinion polls figured prominently in the questions from Commissioners in the hearing and seemed sadly, to me, like the questions anyone is asked who represents the target of the day industry or other interest is subjected to at a Parliamentary Committee meeting, but not the stuff serious people are asked at a quasi-judicial proceeding like the CRTC. Public policy shouldn't be made on questionable public opinion polls, nor should it be made based on letters from supposedly "real Canadians" miraculously generated by special interest groups and bot farms.

The first day got off to a seemingly auspicious start when the CRTC Chair announced that at least one of the aims of the hearing was to determine how best to provide regulatory clarity so that companies who invest in and bring more high-quality innovative services to market will continue to do so. That really is the crux of it because the regulatory clarity has already been determined insofar as it will have to do with the rates for access set by the CRTC. This view seemed to be echoed by the Competition Bureau when they submitted that, competition among internet providers is not only about price and service quality in the short run but also about building and improving internet networks in the long run. So all together now, the mandated rate set by the CRTC here will be very, very critically important in the future state and availability of next generation networks for Canadians.

As I allude in the title to this post, what followed over five days were the regulatory soldiers of the protagonists lining up for the most part as they always do. I'll get into what I mean by "for the most part" in a moment. First though, I wanted to acknowledge the funniest comment I heard all week, and is an example of "people will say the damndest things". In this particular presentation, the presenter seemed to be advocating for reseller ISP's having the ability to choose their own optical network terminal (ONT), configure it however they like, choose their own router if need be, and have the right to attach it all to the facilities-based host's network at their discretion. The wonderful part of this was that the presenter had found an ONT on eBay for $5. Network architects and engineers will be happy to learn of this new method and low, low pricing available for their mission critical and national security ensuring telecom networks. That particular regulatory soldier was true to form and lined up as he always has. The access rate for reseller ISPs is too damn high. Good luck with that one. That said, the presenter conformed in one fundamental aspect with other regulatory soldiers for the reseller ISPs. The access and other rate components paid by resellers are simply too high. I would hasten to add that while there are other issues at play in the proceeding the rate question is by far the most existential, critically for network providers who are subject to the ensuing mandate.

During the hearing we learned that a very few of the large network providers are reselling services on other network providers' networks rather than investing in and expanding their own networks. That left me incredulous, as it is at a distinct variance from the positions usually exhibited and taken by network companies for whom resale is understandably anathema. But why you may ask? To the extent I can surmise, it may partly be the result of "regulatory remedies" imposed in order to obtain the regulatory approvals necessary to close acquisitions. In that sense it is not a change in behaviour, rather, it is as the result of a requirement in exchange for approval. However, the case of Telus is an outlier.

For as long as I can remember, Telus has steadfastly opposed any mandated resale whether in favour of others or themselves. Telus has deployed a score of submissions and a phalanx of economists over the years from Canada, the United States and abroad to warn of the evils and perils of resale to network investment. A likely reason for this volte face is more likely because they are immune from any similar resale opportunity by other competing network providers. Their fibre networks are only impacted in eastern Québec, and in the greater scheme of things eastern Québec is a tiny area and opportunity when compared with Telus' total national wireline network assets. Don't get me wrong, Rimouski is a lovely place but the opportunities there for a reseller ISP are infinitesimally small compared to those in Toronto, where most resale activity is clustered.

When Cogeco announced its intention to enter wireless and when Rogers purchased Shaw putting Shaw on a more sustainable financial footing, Telus suddenly faced a more capable adversary in the British Columbia and Alberta with Rogers as well as a newly invigorated Freedom now owned by Videotron. Cogeco also has the potential to be a formidable integrated competitor in Ontario and Québec. While I certainly can't say, it could be that Telus' volte face is intended to send messages not to disrupt their western markets where frankly they have had an exceptional run. The Competition Bureau seemed on the same page where it opined this multi market contact could lead to a form of "mutual forbearance" and lessen the anticipated competitive intensity and rivalry in Telus' home markets.

The price of a 50 Mbps Internet service in British Columbia is roughly $10 a month higher than it is in Ontario and Québec, a fact which has been stubbornly the same for a good number of years according to the CRTC. Across the six packages tracked by the CRTC, prices were on average 16% higher in British Columbia and Alberta. Moreover, Statistics Canada reports that since 2015 internet access prices have declined by 15% in Ontario and Québec while prices in British Columbia and Alberta have increased by 7%. That's the kind of party Telus wouldn't want to be crashed by some interloper.

All and all, none of this is good news. The CRTC shouldn't be mandating access to facilities-based carriers' networks at the expense of the unconnected and under served, it shouldn't be favouring one class of competitor using the precise same technology at the expense of another and it shouldn't accept Telus' self-serving position to the contrary which is beggar them but not me. I think on this the Competition Bureau and I would agree.


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1 commentaire

23 févr.

Brilliant comprehensive writing of a tangled mass of information . Insights and humor greatly appreciated!😀

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