Carriers fire broadsides at CRTC hearing

It didn’t take long for the knives to come out at a telecommunications hearing into which basic services phone companies should have to offer rural customers.

Plans were called “unadulterated nonsense,” “ludicrous,” “beyond outrageous” and simplistic when carriers were given an opportunity Wednesday to rebut the testimony by competitors during the first five days of testimony to the Canadian Radio-television and Telecommunications Commission (CRTC).

Some of the most heated words came from the Ontario Telecommunications Association (OTA), representing 19 small phone companies in the province, who hammered at the demand from some of the country’s largest cable companies to do away with the subsidies telcos get in high cost areas.

If the subsidy is gone, add the cablecos, there is no need for incumbent phone companies to have an obligation to serve all customers in their exchanges or offer basic services, which the subsidy helps underwrite.

“Maybe it’s a rural way of looking at life, but when we want advice, we ask people who know something about what they are talking about,” said Tracy Cant, director of finance and regulatory matters at provincially-owned association member Ontera, which covers a large swath of northern Ontario.

“The cablecos’ position on obligation to serve must be dismissed for the rhetorical regulatory gibberish it is,” Cant said.

Cable companies have complained competitors get subsidies, but small incumbent local exchange carriers (SILECs) say they are under considerable pressure from cable companies pushing into their territories.

“Why would the commission give serious credence on this issue to a group of companies that have no idea what it means to operate an obligation to serve?” the association asked, referring to the obligations incumbent phone companies have to meet.

But speaking for the cable companies, Ken Engelhart, Rogers’ vice-president of regulatory affairs, retorted that cablecos once did have an obligation to offer service to every residence in their areas. However, that was removed 10 years ago under deregulation, he said.

The OTA didn’t get away unscathed. Natalie MacDonald, vice-president of regulatory affairs for Bragg Communications, whose Eastlink cable network stretches across nine provinces, complained the OTA’s plan to protect SILECs – even after being amended Wednesday –is an attempt to stop competition.

Concerns about SILECs not being ready to face phone competition from cable or independent Internet providers is a “red herring,” she said, in an era when the hearing is discussing how people are shifting to cellular service.

The hearing is reviewing the commission’s decade-old basic service and obligation to serve rules that all incumbent phone companies face. However, it has focused on two issues:  What to do about the rural carrier subsidy and the lack of high speed Internet access that an estimated 700,000 to 1 million Canadian households in outlying areas face.

In defending its proposal to expand the subsidy to raise $7 billion over 10 years to fund rural broadband, Teresa Griffin‑Muir, vice-president of regulatory affairs at Manitoba Telecom Services Inc. (the parent of MTS Allstream), said governments alone can’t fund the money it will take to close the rural-urban broadband divide.

To carriers urging the commission not to set an enforceable rural broadband goal and to give them time to expand their networks to cover the country, she maintained that where there is no business case for service there will be no broadband access.

She was also skeptical of satellite provider Barrett Xplore Inc.’s promise to be able to offer all of the country broadband access next year with the launch of new satellites.

But that reminder of Barrett’s promise drew Telus Corp. vice-president Michael Hennessy to comment that it “doesn’t sound to me we have a growing digital divide. It sounds to me that within a year we have a very significant art of the solution to the problem.”

Meanwhile MTS’ $7 billion plan was attacked by Barrett CEO John Maduri, who said “the cost is beyond outrageous” and Michael Hennessy, who called it “ludicrous.” An official of BCE Inc.’s Bell Canada said it now pays $64 million a year into the rural subsidy fund, would see that leap to $214 million. The bulk of that, he complained, would go to carriers outside of its home territory in Quebec and Ontario.

MTS countered by complaining that Bell’s idea of solving rural carrier funding by letting them raise local phone rates to around $36 a month would mean a 71 per cent rate hike for some of its subscribers.

No one said anything about SaskTel’s suggestion for a “small levy” to raise $445 million a year to fund rural broadband, plus a general goal of

Finally, Barrett wound up the day with a vigorous defence of its ability to deliver broadband to outlying areas, vowing that by the end of next year every part of the country will be able to get at least 1.5 Mbps download speeds.

Some have alleged that satellite has installation and equipment fees as high as $700, which some on the commission feel would be a barrier to access, particularly in areas where satellite is the only way residents can get broadband.

But Maduri said costs continue to drop. Barrett promotions sometimes make the install fee as low as $300, he said, $99 if there’s a provincial subsidy.

On Thursday, Telus Corp. and the four cable companies – Rogers Communications Inc., Shaw Communications Inc., Quebecor Inc.’s Videotron and Cogeco Cable – will offer their rebuttals to other presenters’ submissions.

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