Northwestel applications for fee deregulation denied

Two applications by Northwestel Inc. asking the CRTC to exempt two services from regulation in the area it covers have been denied by the regulator. The BCE Inc. subsidiary, in partnership with Ledcor Developments Ltd. to form Northern Lights General Partnership (NLGP), had won a 20-year contract to operate and maintain services for the Government of Northwest Territories’ Mackenzie Valley Fibre Link (MVFL) network and later sought in a Part 1 to have the CRTC stop regulating the service fees it charges the government to operate the network. Northwestel argued in its application earlier this month that CRTC forbearance criteria are pegged on factors including the likelihood of entry of other companies in the market. It pointed to the competitive bidding process — involving eight companies vying for the single-company contract — as evidence of “practical substitutes,” arguing there should be no concern on the part of Northwest Territories government about the costs of switching suppliers at the end of the contract. “There is clear evidence of available supply from alternative sources,” the company said in the application. “Since the contract is a twenty year commitment, there is also no concern about the ability of other firms during the length of the contract to respond to supply conditions.” It argued that the relevant criteria for competition shouldn’t be market share of the contract, but the territorial government’s “ability to receive competitive bids for operating the MVFL system.” In denying the application in a decision Thursday, the CRTC said that there was insufficient evidence proving that the “level of competition in the provision of operation and maintenance services for the MVFL network facilities will protect the interests of users of these services in the MVFL communities.” It noted that because the company will have 100 per cent of the market share during the 20-year period, it is not possible to assess current demand and supply conditions since no substitutes exist and relying solely on the bidding process is not sufficient. The CRTC also rejected Northwestel’s request for the commission to exempt its Wholesale Connect service in the same region based on similar reasoning — that competition is currently insufficient to do so, considering the MVFL network is the only alternative to that service and noting the company’s relationship with that network as complicating the market power analysis. In its Part 1 addressing Wholesale Connect, Northwestel said the MVFL’s lower rates would likely attract service providers, making it “workably competitive.” It added under a CRTC forbearance framework, it can grant forbearance when there are two or more facilities in the wholesale transport market — in this case, transport services for voice, internet and data services to residents and businesses. On this point, Northwestel said that it does not control the transport facilities provided by the MVFL network, which makes its Wholesale Connect a competitor. The regulator had previously rejected the company’s Part 1 application to revise rates it set for its Wholesale Connect service.

Northwestel applications for fee deregulation denied

Brief | August 25, 2017

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Northwestel applications for fee deregulation denied

Brief | August 25, 2017

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