New wholesale broadband access rules imposed in Ontario, Quebec

21 Sep 2016

The Canadian Radio-television and Telecommunications Commission (CRTC) has issued a follow-up decision requiring the country’s largest telecoms companies to provide wholesale access to their high speed fibre/cable fixed broadband access networks including fibre-to-the-premises (FTTP). The policy was mandated last year, but implementation was delayed whilst Bell Canada led unsuccessful appeals claiming that investment in fibre networks would be harmed by the new rules forcing the large network operators to offer a greater level of access to smaller ISPs – a point the CRTC disagreed with, claiming that ‘increased choice is expected to drive competition, resulting in further investment in telecommunications facilities’. The ruling requires smaller companies to either lease or build their own links (‘transport component’) to access wholesale services via a larger telco/cableco’s central office/head-end – known as ‘disaggregated’ wholesale access – whilst the obligations for wholesale fibre access will initially be implemented only in Ontario and Quebec, the domain of incumbent PSTN operator Bell Canada and three major cablecos, Rogers Communications, Videotron and Cogeco. The CRTC will review implementation in Western provinces next year, when it is expected to impose new obligations on dominant Western incumbent PTO Telus Communications and major cableco Shaw Communications, whilst Saskatchewan/Manitoban provincial incumbents SaskTel and MTS will also eventually be required to implement the directives.

Whilst the new wholesale regime has been generally viewed as good for competition, consumer choice and internet pricing, some of its details were criticised by advocacy group OpenMedia for not going far enough to ensure that independent ISPs can compete on a level playing field, and for not ensuring the smaller ISPs have the autonomy to offer innovative new services to differentiate themselves from the big incumbents.

Telecom Decision CRTC 2016-379 (20 September 2016) is a follow-up to Telecom Regulatory Policy 2015-326 which determined that the provision of tariffed wholesale high speed access (HSA) by large incumbent carriers would continue to be mandated but ‘aggregated’ services (including both access and transport components) would no longer be mandated and would be phased out via implementation of a disaggregated service consisting of only an access component. The implementation of disaggregated wholesale HSA includes a requirement to make these services available over FTTP access facilities. Further, Decision 2016-379 rules that incumbents must offer wholesale capacity in 50Mbps increments, in order to provide competitors with better control of capacity and costs than the existing 100Mbps capacity increment. The CRTC added that whilst the proposed wholesale configurations from Bell Canada and Cogeco met the criterion of excluding a transport component, the filings from Rogers and Videotron did not, and these two operators must resubmit proposals.

The Commission also determined that the large operators are required to only provide solutions that utilise their proposed routing and switching techniques (characterised as ‘Layer 3’ approaches) for their configuration proposals in support of disaggregated wholesale HSA services. In response, OpenMedia’s digital rights specialist Katy Anderson noted that:

• ‘The decision will limit the ability of smaller ISPs to control quality of service in networks (via Layer 3 vs. Layer 2 network control). While it will bring greater choice and faster speeds to more Canadians it limits the ability of smaller providers to provide offerings outside of the Big Telecom incumbents’

• ‘Independent ISPs will also have less ability to offer services that the big providers don’t, because they don’t have access to the quality of service controls … enabling the large telcos to largely control the customer experience’.

In defence of its decision, however, the CRTC states: ‘As competitors have not made significant use of Bell Canada’s Layer 2 aggregated HSA service and demand for the service is decreasing, the Commission is not persuaded that competitors would choose the disaggregated version of the Layer 2 service, given that it could potentially have service provisioning costs similar to those of the Layer 2 aggregated service.’

Regarding interconnect/colocation points, several competitors had told the CRTC that a requirement for colocation in Bell Canada’s central offices to terminate their transport facilities would represent a significant barrier to their use of the disaggregated wholesale HSA service because of high costs; therefore the regulator ruled that Bell (as well as the large cablecos) must provide an external ‘meet-me point’ to support competitor interconnection to the disaggregated wholesale HSA service (in Bell’s case, in addition to its tariffed colocation option).

As the next step towards implementation, the CRTC directed Bell Canada and the cablecos to file tariffs with supporting ‘Phase II’ cost studies for disaggregated wholesale HSA within 60 days.

http://www.crtc.gc.ca/eng/archive/2016/2016-379.htm