Big ISPs warn against mandatory wholesale for all-fibre networks

Canada’s largest Internet providers are launching an early offensive against potential new rules that could require them to give their smaller competitors access to their fibre-to-the-home network infrastructure, regulatory documents show. In documents filed with the CRTC last week, incumbent Internet providers BCE Inc., Telus Corp., Rogers Communications Inc. and Shaw Communications Inc. said potential CRTC rules that would require them to lease wholesale access to their all-fibre networks would lead to reduced network investments and stunted innovation in Canadian network technology. “The Commission must reject the argument that relying on mandated access (rather than investing in facilities) will provide consumers with more choice and competition,” BCE said in a submission filed with the CRTC on Friday. “Mandated access is not likely to support any ongoing change in competitive dynamics, and the price will be reduced investment in and deployment of advanced infrastructure.” CRTC regulations currently require incumbents to offer small Internet service providers (ISPs) wholesale access to their copper, cable and fibre-to-the-node networks, though not more expensive fibre-to-the-home networks that offer faster speeds and more data capacity. CRTC Chair Jean-Pierre Blais said in June that the commission would consider expanding those rules to include fibre-to-the-home networks as part of a hearing to consider its “wholesale services” policy this year. In its response to a CRTC consultation on the future of those wholesale services, BCE said the commission’s “most important goal” during the proceeding should be to ensure that ISPs have continued investment incentive. The company added that the current rules that do not require incumbents to lease wholesale access to their fibre-to-the-home networks have allowed ISPs to invest “significantly” in fibre-to-the-home technology, and have contributed to a competitive Internet service market. It noted that the CRTC said last year that 94 per cent of Canadian households had access to an Internet service with download speeds of 5 Mbps or faster as of 2012 — the most recent year for which data is available — while more than 80 per cent of households had access to services with at least 25 Mbps speeds. Telcos, cablecos and wireless providers also each offer their own Internet services, the company added, noting that they often compete for retail customers in the same market or service area. “Indeed, the healthy state of the Canadian broadband market is attributable to facilities-based competition, not to competition enabled via mandated access,” the company said. In its submission, Telus said international comparisons show that countries that require service providers to lease wholesale access to their networks have lagged behind on broadband development, and fibre-to-the-home deployment in particular. Countries with broad fibre-to-the-home networks such as the U.S. and South Korea, the company added, have refrained from forcing service providers to offer wholesale network access to their smaller competitors. “By contrast, where competitor access to incumbent facilities has historically been mandated, relatively little FTTP has been deployed to date, particularly by incumbents.” Incumbent cableco ISPs Rogers, and Shaw echoed similar sentiments in their own interventions with the commission, with Shaw recommending a “market-driven approach” to wholesale services, and Rogers urging the commission to do away with wholesale access to cablecos’ network infrastructure entirely. In its submission, the Canadian Network Operators Consortium (CNOC) said the commission should expand its wholesale framework to require incumbent ISPs to offer their smaller competitors access to their fibre networks. The group, which represents small ISPs, said the smaller competitors are unlikely to build “ubiquitous fibre networks” like the incumbents have, and that mandating wholesale access to those networks would lead to “the early establishment of a robust market” for fibre-based services. The commission, it added, could establish “appropriate” wholesale access rates “to ensure that the proper incentives exist” for continued fibre-to-the-home network expansion. “The fact remains that wholesale access to FTTP is essential to ensuring consumer choice, quality of service and competitive prices,” the CNOC submission said. It said that “where market forces cannot be relied upon to ensure competitive services, quality and pricing, as is the case with wholesale services, the regulator must act to defend the interests of consumers and the competitive forces that wish to reach those consumers.” CNOC said in its submission that “continued regulatory uncertainty” around the commission’s wholesale regime has left its members uncertain about their budgets, and has impaired their ability to invest in infrastructure. On too many occasions, CNOC said, the commission has addressed wholesale issues on a “case-by-case, service-by-service” basis, and it should now establish “a principled and rule-based regime” that could create greater predictability in the market. The consortium asked the CRTC to establish an “equality of inputs” framework that would require incumbent providers to make wholesale access available for any retail service they offer through an “essential facility” — such as Internet network infrastructure — and for the CRTC to review the policy it uses to establish the wholesale prices the incumbents can charge. “Without a principled and predictable wholesale access regime, competitors cannot make the investments necessary to compete effectively with incumbents and guarantee performance standards at the retail level,” the group said. “The moment is ripe for the Commission to articulate a clear policy respecting wholesale access to the facilities of vertically integrated carriers.” Rogers said in its submission that the small ISPs have not yet climbed the “ladder of investment” that the commission’s wholesale framework is based on, and have refrained from investing in better network technology or offering “higher rung” services that would help provide the incumbent ISPs with greater returns. Other wholesale Internet services, Rogers added, are priced “unreasonably low,” and have led to “artificially depressed” returns on wholesale services for incumbent providers. “As a result, the reseller ISPs, and not the facilities-based carrier, gain the margins the carrier requires to be compensated for the higher risk investment,” the company said. “If the goal is to stimulate more facilities-based competition through a ladder of investment strategy, then TPIA services should not be mandated.” CNOC said in its application that there is a “significant lack of transparency” with how the incumbents’ retail rates are crafted due to CRTC rules that allow the large ISPs to file costing information confidentially. Those rates, it added, often seem “excessive,” meaning small ISPs are “subsidizing the retail offerings of the incumbents to the detriment of both competition and consumers.” The submissions filed with the CRTC Friday are part of the first phase of the commission’s year-long wholesale review process launched in October. Additional interventions are due with the commission in June, and reply comments will be due in October. The commission will also hold a two-week hearing to review its wholesale framework starting Nov. 24. — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Big ISPs warn against mandatory wholesale for all-fibre networks

News | February 3, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Big ISPs warn against mandatory wholesale for all-fibre networks

News | February 3, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Canadian telecom provider challenges CRTC’s decision in face of dominant carriers’ access to last mile fibre

Bell fibre build progress threatened by regulatory uncertainty: Bibic

CRTC addresses internet installation dispute between eastern Ontario township and small ISP

CRTC greenlights Northwestel Connecting Families packages

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us