CRTC vs Bell: You decide

There’s been some heat heaved at the federal telecom regulator forTuesday’s decision denying BCE Inc.’s Bell Canada and its Bell Aliant partner the right to extend broadband to small outlying communities with HSPA-based wireless service rather than through their phone lines with DSL technology.

In an era when the Harper government directly told the Canadian Radio-television and Telecommunications Commission (CRTC) in 2006 to let market forces meet objectives, the commission is still finding ways of saying no to incumbents. It has been relaxing its grip, but isn’t rolling over and playing dead. It won’t until it’s erased by Parliament.

Personally, on the wireless issue I think Bell boxed itself into a corner. Here are the relevant paragraphs from the commission’s decision, and the dissent by commissioner Len Katz. I've underlined portions I think are significant. You decide.

“In the [previous] deferral account decisions, the commission directed the Bell companies to deploy broadband services in the approved communities using least-cost technology and to make services available that would be comparable to the services they provide in urban areas in terms of rates, terms and conditions, upload and download speeds, and reliability. The commission also considered that it would be in the public interest for ILECs to offer various speed levels.

[These terms were also imposed on other phone companies.]

“As part of their revised plans, the Bell companies proposed to offer residents in the approved communities a wireless broadband service that would provide up to 2 megabits per second (Mbps) of download speed and up to 800 kilobits per second of upload speed, with a 2 gigabyte (GB) monthly usage allowance, for a monthly rate of $31.95. Usage above the 2 GB monthly allowance would cost $2.50 per GB …

“The majority of the intervening municipalities and towns generally supported the Bell companies' proposal, provided that the proposed broadband wireless service is on par with the broadband service the Bell companies currently provide in urban areas

“The commission notes that, under their proposal, the Bell companies will provide a single service offering, unlike the variety of service options, including various speeds and usage caps, that they offer in urban areas. For example, the most popular broadband service in urban areas appears to be the Bell companies' Residential Performance Service option, which provides a downstream speed of up to 6 Mbps with a monthly usage cap of 25 GB in Ontario, and download speeds of up to 7 Mbps with a monthly usage cap of 60 GB in Quebec.

“Further, the commission notes that, based on evidence filed by the Bell companies, the average monthly usage of subscribers to all the Bell companies' existing wireless and wireline broadband services is well above the 2 GB usage allocation proposed by the Bell companies. In this respect, the commission considers that the average usage requirements of subscribers in the approved communities will more closely approximate the average usage of all subscribers in other communities. Accordingly, in the commission's view, the 2 GB usage allowance will not meet the needs of the average user of the service in the approved communities.

“The commission also notes that, for residential subscribers in urban areas with higher usage requirements, an insurance option is available that will provide an extra 40 GB of usage each month for $5 per month. The commission notes that the Bell companies' proposal does not offer a comparable insurance option.

“Based on the above, the commission considers that the single service offering proposed by the Bell companies under the HSPA proposal does not satisfy the commission's requirements as set out in the [previous] deferral account decisions.”

Commission member Len Katz:

“ … I believe that the Bell companies' proposal to roll out broadband using alternative technologies [HSPA] is consistent with the commission's determinations in the deferral account decisions, while my colleagues have modified the Bell companies' proposal based on technological criteria. Having set a “hard cap” on the funds to be drawn from the Bell companies' deferral account for the purposes of deploying broadband services to the approved communities, the decision should then have limited itself to requiring the Bell companies to provide broadband services comparable to those offered in urban areas, as per the deferral account decisions …

“… By limiting the rollout of broadband services in these communities to DSL technology, the commission has taken a static view of technology and failed to recognize the dynamic changes taking place in functionality and cost from newer technologies …

“…By limiting the deployment to DSL-based technology, I question whether Canada will really be keeping pace with technological developments and whether, during the 4-year implementation horizon for the rollout of the approved broadband expansion projects, DSL will provide the “best” solution, the “least-cost” solution or even the equivalent solution to that which will be available in urban markets across Canada. I believe in many markets today, DSL is not the optimal solution.”

Katz also argued the decision doesn’t comply with the federal objectives in the Telecommunications Act, is inconsistent with previous CRTC decisions saying the commission has a policy of technology neutrality and the 2006 cabinet directive.

I note that in its decision commission also said Bell cost its HSPA solution at $463 million, whereas DSL would cost $406 million. That would violate the commission’s direction the telcos use the least-cost technology, but Bell argued there are advantages.

On the one hand, it can be argued that providers should be free to offer any service at any price where they want. On the other hand, why wouldn’t we expect a regulator to ensure rural areas some level of equality with urban centres?

All telcos were warned four years ago any rural service using deferral funds had to be similar to their urban offerings, including offering choice. Did Bell make a mistake by not taking the hint?

Looking forward to your opinions.


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