Cogeco, SaskTel warn against mandatory wholesale on fibre connections

GATINEAU, Que. — Two Canadian Internet service providers told the CRTC on Thursday that opening up fibre-to-the-premises (FTTP) networks to wholesale access could hurt the “fragile” case for spending money to build such networks. Executives from Cogeco Cable Inc. and Saskatchewan Telecommunications Holding Corp. told the commission at the wholesale wireline hearing that FTTP is still an emerging technology and the investment required for connecting consumers directly to fibre networks needs to be justified by ensuring those who build them are the only ones who can use them. John Meldrum, vice-president of regulatory affairs at SaskTel, said the commission had said in 2010 that it wasn’t the time to regulate FTTP and that reversing that decision now would be “detrimental” to broadband access for Canadians. “Although these networks are finally being deployed in certain areas of the country, they are still by no mean ubiquitous,” he said. “Services are still evolving, and the business case for continued deployment is far too fragile for you to change your determination at this time.” Philippe Jette, chief technology officer at Cogeco, told the commissioners in his company’s opening statement that the deployment of FTTP in “in its infancy” and that, for fibre networks at least, an incumbent carrier has yet to establish itself in the market. Mandating wholesale access would “simply increase the investment risks for such an undertaking and would hence, to a certain extent, reduce the incentive to invest in future-generation networks.” On Wednesday, executives from BCE Inc. also told the hearing that opening up FTTP networks to wholesale access would harm the business case for investment. On Tuesday, representatives from several of Canada’s small ISPs said wholesale access would actually help the infrastructure builders pay off their investment because of the premium built into the wholesale pricing scheme, although they also want those rates to be lowered. On Thursday, Cogeco vice-president of regulatory affairs Nathalie Dorval argued the opposite, saying wholesale rates should be raised in some cases and that the CRTC’s process for setting the rates needs to be more “flexible.” The approval process for the wholesale tariffs, she said, doesn’t allow for infrastructure owners like Cogeco to raise, lower or introduce new terms of service “in a timely manner.” “This regulatory process does not promote constructive business relationships,” she said. “Rather, it perpetuates adversarial relationships.” The Competition Bureau on Monday told the commission that it was too early to decide on FTTP regulation and called for more study, a position Cogeco echoed on Thursday. Jette said the CRTC should wait five years and review wholesale access to fibre networks in 2019. He added that, as evidenced by the fibre connections some smaller ISPs have built on the back ends of their networks, FTTP networks are “duplicable” and there is no reason that smaller ISPs can’t build out their own. Mel Cohen, chairman of small ISP Distributel, told the commission on Thursday that the disparity between his company and the incumbents means building out FTTP is much easier for them. He pointed to the brand recognition companies such as Rogers Communications Inc. and Bell enjoy, as well as the money they can pour into advertising their services and subsidizing introductory offers and equipment. “Despite all of these advantages, incumbents would have you believe that when it comes to FTTP, there are no advantages to incumbency,” Cohen said. “Yet when a service provider is contemplating deploying … a critical factor in the business case is the number of takers. Except in the most underserved areas, only an incumbent would expect to reach the required penetration rate.” Where Cohen did partially agree with Cogeco was on the question of wholesale rate setting by the CRTC, which he said needed to be a more “frequent” and “regular” regime. “For the mandated wholesale regime to function well, it requires considerable commitment on the part of the commission to keep wholesale prices in line with costs,” he said. “I strongly urge the commission to resolve as quickly as possible those interim rate issues that have been set aside so that staff could work on the three great hearings of 2014,” in reference to the current proceeding on wireline wholesale and September hearings on wholesale wireless and the television industry. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Cogeco, SaskTel warn against mandatory wholesale on fibre connections

News | November 27, 2014

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Cogeco, SaskTel warn against mandatory wholesale on fibre connections

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