U.S. providers join Canadian fibre war

Three U.S.-based telecommunications providers with Canadian operations say they are baffled why a federal regulator is looking into an unregulated telecom reseller’s ability to light leased dark fibre optic lines without becoming a regulated carrier.

In a case that has foreign ownership undertones, Cogent Canada, Inc., Level 3 Communications, LLC, and Verizon Canada Ltd. have told the Canadian Radio-television and Telecommunications Commission (CRTC) that the regulator decided the definition of a telecom reseller 16 years ago.

As a result, the trio said in a letter this month to CRTC, “it is difficult to understand why this matter is currently before the commission.”

However, two of the country’s biggest phone companies are adamant the commission has to find the Canadian division of AboveNet Communications Inc. automatically becomes a telecom carrier if it lights leased dark fibre. As a result, it would have to comply with the foreign ownership restrictions of the Telecommunications Act. The act doesn’t apply to resellers of telecom services.

“AboveNet [Canada] must not provide telecommunications services over leased dark fibre until having shown that it meets the obligations of a telecommunications common carrier,” BCE Inc.’s Bell Canada and its Atlantic partner, Bell Aliant Regional Communications, wrote the commission, “including the rules regarding foreign ownership and control.”

The deadline for written submissions in the case ends today. The commission has promised a decision before the end of the year.

The dispute pits three of the country’s biggest phone companies, Bell Canada, Bell Aliant and Telus Corp., against four U.S.-based telecommunications companies with Canadian operations. Also on AboveNet’s side are Manitoba telco MTS Allstream; long-distance and Internet provider Yak Communications, a division of Globalive Investment Holdings Corp.; and TekSavvy Solutions Inc., a Chatham, Ont. Internet provider.

Ostensibly, the dispute is about technical definitions: What’s the difference between a telecom reseller and a telecom carrier? What is the effect of lighting leased dark fibre optic lines? Does the equipment used to light fibre make a reseller into a carrier?

The real issue, however, is whether resellers of telecom services can start competing against the country’s biggest owners of lit fibre.

Dark fibre doesn’t carry any services. Providers of lit fibre offer services such as Ethernet.

The case before the commission began last November when AboveNet Communications asked the CRTC to register AboveNet Canada Inc. as a reseller of fibre it wants to lease from Telus in southwestern Ontairo. Not only will it resell dark fibre from Telus and other Canadian carriers, the company said, it plans to also light that leased fibre with its own equipment.

Actually, according to AboveNet’s filing to the commission, it began earlier than that. AboveNet Communications has had an agreement to lease dark fibre from Telus since January, 2001. In 2008 it finally requested dark fibre from Telus. However, it claims Telus has raised “spurious” legal or regulatory challenges to the request.

For its part, Telus told the commission that AboveNet “declined” to tell it what it intended to do with its dark fibre or acknowledge by lighting fibre it would be a foreign owned carrier. This conduct “implies a danger” that if approved as a reseller AboveNet Canada might sell services it can’t, Telus wrote.

AboveNet called the remarks “an insult.”

Telus and the Bell companies say that by lighting dark fibre AboveNet Canada would clearly be a carrier.

The Telecommunications Act allows providers to buy or lease services from a carrier and resell it without becoming a regulated carrier themselves. Among other things, it includes a definition of equipment a reseller can attach to a transmission facility, such as fibre optic. The exempt apparatus can engage in switching, capture, input, storage and processing data, as well as control the speed, protocol, format, content and routing.

AboveNet says it will attach high-capacity routers with optical transmission interfaces, along with wavelength division multiplexing optical transmission equipment. That gear will control the protocol and format of the data in the fibre, it says.

Attaching anything other than this exempt equipment makes the provider a carrier. The act also says anyone who owns or operates a transmission facility is a telecom carrier.

To the commission, AboveNet has argued it won’t own the fibre: Telus does. Nor, it says, will it operate the fibre by lighting it. It’s no different, the company argues, than telecom resellers that add switches to leased lines.

Telus argues the conversion of signals into pulses of light that travel down fibre optic is the core function of a carrier. “The notion that the conversion of electronic signals into light can be described as a ‘format’ change is preposterous,” Telus said in one of its written submissions to the commission. Accepting that interpretation “does violence to the facts would have significant consequences for the scope of the commission’s authority.”

In its written submission, Yak said said a ruling against AboveNet “would be immediately disruptive to the Canadian telecommunications environment by placing a number of large resellers off-side.” A suggested workaround that a carrier reselling lit fibre should place its optical transmission gear at the customer’s premises “would be a waste of precious capital for little or no benefit to the carrier or its reseller customers.”

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