Facilities ownership key to competition, ISP conference hears

TORONTO — Owning fibre facilities is the primary way to drive competition, panelists told a conference on the first day of the annual ISP Summit in Toronto, and having to lease those last mile facilities would put competitors at a disadvantage. “If I'm forced to use somebody else's infrastructure, I will have completely lost my competitive advantage and market differentiator,” said Dan Armstrong, CEO and Chief Technology Officer at Beanfield Technologies Inc., which owns its its own fibre infrastructure. The conference is organized by the Canadian Network Operators’ Consortium (CNOC), which represents small internet service providers (ISPs). “I will say, respectfully, that I think we must own our infrastructure for us to remain competitive,” he said, adding part of the competitive edge is to be able to control when and how quickly you can service the network. The comments come in light of a recent decision by the CRTC to kickstart its disaggregated regime by setting interim rates for last mile fibre access. Unlike the previous aggregated regime, the new system will allow smaller providers to lease fibre-to-those-home (FTTH) access from the bigger players. The new regime would also encourage investment in transport, or middle-mile facilities, in order to connect the last mile, which has been pushed as an argument for encouraging facilities-based competition. Armstrong was one of four people on the panel, which included Jeffrey Cowan, vice-president and chief technology officer of facilities-based provider HCE Telecom, owned by the City of Hamilton, and Geoff Hogan, CEO of southwestern Ontario's SouthWest Integrated Fibre Technology (SWIFT). The latter is a community broadband project, which receives funding from from the local government. As such, Hogan made the point that facilities-based competition in rural areas, where it has services, is simply not feasible. “For an urban market, I think that's an interesting perspective,” he said of Armstrong's comments. “But I think in a rural market ...we can't afford to put the first piece of fibre in. To do facilities-based competition in a rural area is completely unaffordable and we need to think of ways to change that. “I personally believe that open access is the way to do that,” Hogan added. Hogan said that because there is no business case for the private sector and private capital to build in low-density areas, a government subsidy is needed to be able to make the business case for providers to make a profit. He added having open access fibre and delivering innovative service with great customer service is the way to ensure differentiation. “We need that to then open access, otherwise there will be no competition at all because, typically in rural areas, the first one in with fibre is the last one in with fibre, because no one else then puts their hand up to spend the money again,” Hogan said, At last year's ISP Summit, Ysni Semsedini, CEO of electrical distributing company Festival Hydro Inc. and of ISP, made the point that trying to build fibre-to-the-home (FTTH) in very competitive markets makes little economic sense. Armstrong agreed with Hogan that the open access model, where players can lease from others' facilities, would be one way to make this work in a rural area. However, he encouraged players in that space to “think long and hard” about how operators will create market differentiation for themselves. Otherwise, he said, this becomes a price game. “Then it's a race to zero and no one makes any money,” with the dramatic consequence that you have no service providers on the network because players will be put out of business. Cowan added that owning infrastructure to the last mile “definitely drives innovation” and competitiveness. “You are definitely in control of the outcome; you are in control of the customer experience, and you are in control of the pace of innovation,” he said. “The part of this industry that will always be a scarce commodity is how you actually connect the end-user, and from that perspective, I still encourage, where feasible, as much last mile competition to directly connect end-users.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Facilities ownership key to competition, ISP conference hears

News | November 6, 2017

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Facilities ownership key to competition, ISP conference hears

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