Bell’s claim FTTH investment at risk is ‘fear-mongering’: CNOC

Small Internet service providers (ISPs) are asking the government to reject an appeal, filed by BCE Inc., of a CRTC decision that mandated access by smaller competitors to fibre-to-the-home (FTTH) networks, stating Bell’s arguments in the case contradict statements it has made to investors. The Canadian Network Operators Consortium (CNOC) said in a document filed in late December that despite Bell’s assurances to investors that the CRTC decision would “have no material financial, operational or competitive consequences, is now associating the CRTC’s rulings with massive investment losses in the billions of dollars.” In October, Bell asked the federal cabinet to reverse a decision that allowed wholesalers access to fibre-to-the-home (FTTH) networks, imposed by the CRTC in July 2015 and praised by small ISPs. Some of those ISPs are now lobbying against Bell’s attempt to appeal that decision. CNOC said the company “cannot have it both ways. In other words, Bell cannot reassure investors that it is ‘business as usual’ … while simultaneously urging the Governor in Council to reverse the due to its catastrophic consequences for Bell and its FTTH deployments.” When it filed the appeal, Bell argued that mandated access to FTTH would stop or delay investment “for years” in areas of the country where the investment required wouldn’t be justified by the possible return, especially in smaller towns and rural areas. CNOC called that claim “unjustified fear-mongering.” “Bell has already stated publically that there is no business case to deploy broadband to certain areas of the country,” CNOC said, arguing that Bell won’t deploy FTTH in those areas regardless. Bell’s appeal “renders an inaccurate portrayal of the business case for FTTH deployment as fragile and challenging. In reality, this business case is very simple and easy,” CNOC argued. “Bell must invest heavily in FTTH networks in order to respond to consumer demand and the next-generation services of the cable carriers. Mandated access to FTTH will not affect these investments.” CNOC argued that in areas where deployment could be affected by the CRTC decision, this would apply to about 10 per cent of homes because customers in 90 per cent of its territory have the option of subscribing to service from a cable competitor. Even if that does happen, CNOC said, it would be an “unfathomable” trade-off to scrap mandated access and all of its “resulting societal and economic benefits … simply to accelerate broadband deployment to 10 percent of homes in a very small number of fringe areas by a few months or years.” The appropriate forum for Bell’s concerns about small rural communities is the CRTC’s ongoing proceeding on what basic telecommunications services should be available to all Canadians, CNOC said, adding that “it makes much more economic sense to use public funds to fill infrastructure gaps rather than eliminate the competition enabled by mandated FTTH access to allow for the chance that Bell might be more poised to address a minority of these gaps via its own private funding.” In its appeal, Bell argued that it and other telecom companies relied on previous decisions the CRTC made in 2008 and 2011 that did not mandate access to FTTH in order to make long-term decisions on capital investment. In its response, CNOC said “there was no demand for wholesale access to FTTH facilities in 2008 and therefore no reason to regulate such access,” and that the CRTC’s policy is to “periodically assess the regulatory status of new and emerging technologies as appropriate.” Some of Bell’s fellow large telecom companies filed submissions supporting Bell’s position. Telus Corp. said that overturning the CRTC decision would advance the priorities of the new Liberal government, referring to a mandate letter from Prime Minister Justin Trudeau to Innovation, Science and Economic Development Minister Navdeep Bains, which instructed him to increase high-speed broadband coverage and foster a strong investment environment for telecom. Telus argued that it’s “clear that this government’s priorities align with the benefits of increased Internet investment. The question is how this should be accomplished. answer is that it can only be accomplished where providers are not mandated to provide their competitors with discounted access to their investments. It requires that private sector network builders be incentivized to continue investing in next generation broadband networks.” Telus noted it recently made a “massive” investment in FTTH in British Columbia, Alberta and eastern Quebec, despite significant risk, in order to stay competitive. Mandated access to those networks threatens some of those investments, it said. “This turns already risky investments into potentially untenable ones,” Telus said. If the CRTC policy isn’t overturned, Telus “will be compelled to reconsider the scale and timing of its FTTP investments, and instead focus its capital investments elsewhere,” it said. While it would continue with already-announced investments in Edmonton and Vancouver, it would have to renew its plans for communities where it planned but had not confirmed FTTH deployment, it said. “The business case for investments on a generational scale, with a generational payback period, is acutely sensitive to regulatory risk. The federal government should be encouraging such investments — not allowing the CRTC to frustrate them by conferring these gigantic investments on competitors at deeply discounted rates,” Telus argued. It added that the business risk Telus faces as a result of the CRTC policy is more acute than that faced by Bell because of the geography of Telus’ operating territory, much of which “is mountainous, remote, and sparsely populated — all factors that increase the time and cost of FTTP deployment. In some cases, especially in high-cost areas, mandated access will potentially tip the balance from investment to stagnation.” The interventions posted to a government website as of Tuesday did not include a submission from Rogers Communications Inc. Saskatchewan Telecommunications Holding Corp. filed a document in support of Bell, as did Quebecor Inc. Cogeco Cable Inc. asked the government to leave the CRTC decision in place. It referred to the CRTC’s decision on wholesale wireless, in which the commission decided not to mandate wholesale access by mobile virtual network operators (MVNOs), and said it “remains concerned” that the CRTC did not come to a similar conclusion in that proceeding as it did in the wholesale wireline hearing. BlackBerry Ltd. backed Bell, telling the government that investments in FTTH will help it "continue to develop solutions that enhance mobile computing experiences for the benefit of Canadians and our millions of customers around the world." The company added that overturning the CRTC decision "will support investment, help create jobs and ensure more Canadians have access to the best possible broadband infrastructure, something we believe is critically important to our own ongoing success as a global leader in providing secure mobile communications." Huawei Technologies Co. Ltd also filed a submission in support of Bell, stating that the “tremendous disincentive” to investment would affect equipment manufacturers like Huawei, which invest in Canada “because of what we view as a balanced, competitive, and thriving telecommunications and ICT industry.” EricssonAB also asked that the CRTC reconsider its decision on wholesale access to FTTH, saying that “slowing the pace, or reducing the amount of network investment, could have strong negative secondary impacts on suppliers to network service providers and related jobs.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Bell’s claim FTTH investment at risk is ‘fear-mongering’: CNOC

News | January 5, 2016

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Bell’s claim FTTH investment at risk is ‘fear-mongering’: CNOC

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