Allstream takes its fight public


MTS Allstream has decided a quiet campaign to get the federal cabinet to overturn a controversial telecom regulatory ruling involving high speed service to business hasn’t been loud enough.

So with just over three months left before cabinet has to make a decision the telco is trying to rally the business community behind it. On Thursday MTS said it has joined forces with independent Internet providers and small business to push an online petition to MPs demanding that Ottawa block the ruling.

If it doesn’t, they say Bell Canada and Telus Corp. could shut competitors from their newest and fastest networks, resulting in less competition for businesses in communications services.

“One of the things we heard [while lobbying members of parliament] is ‘Who’s concerned about this?’” Chris Peirce, MTS’ chief corporate officer said Thursday.

As a result “we wanted to demonstrate that there are concerns out there about rising costs for broadband services and about the lack of choice large pieces of the marketplace feel they are constrained by … This is not just us.”

Allstream, the Canadian Association of Internet Service Providers (CAIP) and the Canadian Federation of Independent Businesses have formed a ‘Campaign for Competitive Broadband’ with an online petition  aimed at blocking a decision last year by the Canadian Radio-television and Telecommunications Commission (CRTC).

Under the Telecommunications Act, the Industry minister can recommend the cabinet overturn or amend a commission ruling, or send it back for more consideration – and cabinet must give written reasons. Otherwise, the act is silent on what cabinet can take into account.

The decision surrounds the CRTC’s power to deregulate essential services offered by incumbent phone companies. When a service is ruled essential, competitors can hook onto the incumbents’ networks at wholesale prices and offer competing service. Winnipeg-based Allstream, for example, buys Internet connectivity from Bell and Telus so it can offer DSL service in parts of the country it doesn’t have a network.

However, in March, 2008 the commission re-defined essential services,  concluding that deregulation only applied to Bell’s legacy network and no longer to its newer – and faster – Ethernet network. It ruled there was evidence that at least in metropolitan areas competitors have duplicated the incumbents’ networks for Ethernet access and transport, so they couldn’t be considered essential.

As a result, Bell (and by extension Telus) can exclusively offer better services on those parts of their networks.

MTS urged the commission to re-examine its ruling, arguing competitors can’t afford to build new national networks, and that that they can’t duplicate the incumbents’ last-mile fibre optic connectivity to businesses and homes.

“We say that [CRTC] finding is really absurd on its face,” Peirce said. “We know the experience in the United States has been clear, the experience in Europe has been clear that networks cannot be duplicated on risk capital.”

In fact, he said, the CRTC concluded earlier that the incumbent telcos were dominant in the supply of local high speed access.

But last December the CRTC refused to budge, saying that having a national Ethernet network wasn’t a criteria in determining if a service is essential.

Allstream quickly appealed to cabinet and has been quietly lobbying ever since. By law, cabinet has 12 months to make a decision.

The ruling was immediately denounced by the CAIP, whose members buy wholesale services from incumbent telcos.

Iain Grant, managing director of the SeaBoard Group telecommunications consultancy, wrote in April that the decision “essentially amounts to a re-monopolization of the most critical sector of communications business and will result in Canadians paying more for poorer service in the future.”

“Competition in business services will wither, innovation will dry up, prices will rise, and service levels will decline,” if the decision stands, he predicted.

In July the CFIB, which represents 105,000 small and medium-sized businesses, including ISPs, joined in by calling on Industry minister Tony Clement to restore Ethernet services to essential status.

“Going forward, we’re only going to be using broadband more and more,” Corinne Pohlmann, the federation’s vice-president of national affairs said Thursday in explaining why the CFIB backs the petition. “We truly believe you need competition in the marketplace to keep prices down and service very effective.”

Tom Copeland, chairman of CAIP’s board of directors, said the petition is aimed at educating MPs, businesses and consumers about the impact of the CRTC decision, which will lessen competition. “If Bell and Telus are successful they would not be required to provide access to certain elements within their network that we now need, and we cannot reasonably duplicate, to reach our customers.”

“What we’re concerned with is cabinet may make their decision in a vacuum and not fully appreciate the impact on business and consumers their action may have. This is a government relations effort, a public relations effort and a significant education effort.”

For its part, Bell doesn’t like being made to be the heavy on this issue. Spokesperson Jacqueline Michelis objected to the public nature of the campaign, whose petition can be signed by anyone. The issue doesn’t involve high-speed service to consumers, she stressed, but connectivity to businesses. “What they are saying today is misleading,” she complained. “They’re trying to make it sound like a consumer issue.”

“These are networks that can be built by the competition,” she added, “they are being built and they will continue to be built.”

In addition, she said, competitors like Allstream who have been buying Ethernet services from incumbents until now have three to five years to find alternative suppliers. “MTS is confusing a very important point: No regulation does not mean no access. Bell’s in the business of selling services to our customers,” she added, “and MTS is one of our largest customers.”

Pohlmann can’t say how many signatures the group wants, but she added that from experience the CFIB knows a campaign can be effective with even 6,000 signatures.