CRTC launches satellite inquiry, NWTel appeals December decision

The simmering debate over Northern Canada’s telecommunications services heated up again this week as Northwestel Inc. asked the CRTC to re-examine parts of its most recent decision on the company’s services, and as the commission launched a planned inquiry into satellite “transport” services. In an application filed with the CRTC on Tuesday, Northwestel said the commission erred in its December decision on the company’s northern telecom services when it determined that the incumbent provider could not apply a “stand-alone surcharge” to remote northern subscribers who subscribe to the company’s DSL Internet service but not its home-phone service, and when it applied strict rates the company could charge for some of its services as opposed to more flexible “rate ranges.” On Thursday, the CRTC launched an inquiry into Canada’s satellite transport services, which are used to connect the communications networks of some rural and remote communities — inlcuding some in the North — to those in other parts of the country. The CRTC said in its December decision that the high cost of those satellite services are a major hurdle to overcome in the development of northern telecommunications. “The CRTC believes that modern telecommunications services are essential tools that Canadians in the North and remote areas need for economic development and to meet the growing demand for digital services such as health care, education and government services,” the commission said in a release. “This inquiry will examine the impact have on the quality of the services and on the costs to service providers to offer telecommunications services to these communities.” In a notice of consultation posted on website Thursday, the CRTC said its satellite inquiry will focus on identifying which satellite providers are serving Canadian telecom companies, the rates they charge for transport services and how those rates are established. The inquiry, which will be led by commissioner Candice Molnar, will also consider the “current and future satellite capacity” to serve telecom providers, what technological or other changes could impact satellite transport capacity, quality or rates, and “whether the Commission’s existing regulatory framework for satellite services remains appropriate.” Molnar, the commission added, is expected to issue a report on her findings by October, while anyone who wants to participate in the inquiry must ask to do so by Feb. 19. Paul Flaherty, Northwestel’s president and CEO, said in an interview last month that the commission will have to find a way to overcome the “high cost” of satellite transport if it wants northerners to receive similar telecom services to those in other parts of the country at similar prices. He said Northwestel’s satellite transport provider, Telesat, has lowered the price of its transport services in some areas by as much 25 per cent over the past five years, though he added that satellite communities are still much more costly to serve than are those that have fibre connections. “Telesat has been a good partner for us over the years. They have brought prices down for us,” Flaherty said. “Whether they have more room to move or not, that’s difficult for me to say without understanding the cost of doing it.” Jean-François Léger, counsel for the Public Interest Advocacy Centre (PIAC) and the Consumers Association of Canada (CAC), said in a separate interview last month that lowering the cost of getting telecom signals from remote northern communities to the rest of the country is the “main challenge” to improving the North’s telecom services. Léger noted that satellite transport, while expensive, is generally believed to be much cheaper than building fibre infrastructure to each of the 38 remote northern communities that currently don’t have a wired connection to the rest of the country. “Transport to the south is really the fundamental issue,” Léger said. Oana Spinu, executive director of the advocacy group Nunavut Broadband Development Corp., said in a January interview that she was happy to see the commission’s desire to further explore issues relating to satellite transport and its acknowledgement that the efforts of private companies alone might not be enough to bridge the North’s digital divide. At the same time, she said, there remains uncertainty about which government department or agency will play the leading role in guiding northern telecom development, and where future funding will come from. A series of northern broadband development initiatives that received federal funding under the government’s 2009 Broadband Canada plan will lose their funding in 2016, she added, leaving the source of future funding unclear. “We want to know what government body or department really leads the broadband file or it will continue to fall through the cracks between different government departments,” she said. She said the recent practice of funding the North’s broadband development though various government subsidies requires her group and others to dedicate time and money to applying for those subsidies every few years, and it doesn’t allow them to engage in a long-term plan to improve northern Internet services. “The key is continuity — something that is long-term, not a three- or four-year program,” she said. Flaherty said it is also important that the commission apply the right regulatory framework to telecom providers who want to offer services in the North, including Northwestel, the region’s former monopoly provider and a BCE Inc. subsidiary. He said at the time that the he was concerned that new commission rules to regulate some of Northwestel’s services would impact the company’s ability to contend with aggressive new competitors, and to invest in new services or technology upgrades beyond a $233-million modernization plan the commission approved, in principle, in December. In particular, he pointed to the commission’s decision to prohibit the company from applying a service charge to customers who order Northwestel’s DSL Internet but not its home-phone service, and its decision to maintain strict regulation of the rates the company can charge for some of its services. Those two aspects of the commission’s decision were the focus of Northwestel’s review application this week, in which the company said the commission “failed to appreciate” the cost of providing DSL Internet service to customers who don’t also subscribe to the company’s home-phone service, and that not allowing the company to lower the price of some of its services in response to competitors’ offerings could lead to a less competitive marketplace. The CRTC said in its decision that Northwestel “has significant market power in many markets in its operating territory,” and that giving it “additional pricing flexibility at this time through the use of rate ranges could be detrimental to the development of competition.” Northwestel asked the commission to allow it to charge a $20 surcharge for Internet-only subscribers, and to let the company change the price of its restricted services so long as the price of those services stayed within a pre-determined range. Without those changes, the company added, the bulk of its Internet subscribers would subsidize the high cost of servicing the few remote customers who only receive Internet service, and it would prevent Northwestel from lowering its prices so its customers can benefit from “more market-based pricing.” “This could impact our ability to offer services at competitive rates … and could reduce our margins,” Flaherty said of those aspects of the commission’s decision. “If you bring our margins way down to nothing, we don’t have anything to invest in other services.” — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

CRTC launches satellite inquiry, NWTel appeals December decision

News | February 6, 2014

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CRTC launches satellite inquiry, NWTel appeals December decision

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