Globalive, Telus face off on wireless

“If you are travelling in rural areas where there is no broadband today ... you can use a rocket stick (a plug-in wireless modem) and get decent Internet speed,” Michael Hennessy, Telus Corp.s’ senior vice-president for regulatory and government affairs told a telecommunications conference in Toronto this week.

“You can get stuff you’ve never had before. It’s not a substitute, but it’s another way of providing broadband to Canadians who have never had it.”

Hennessy’s was part of the regulatory blockbuster panel at the annual Canadian Telecom Summit. A regular feature of the conference, the panel is often a place where industry executives square off against regulators as well as each other.

The incumbents on the panel, whom moderator and publisher Greg O’Brien said had been characterized as “grumpy old men yelling ‘get off my lawn’ to the newcomers,” noted an increasing number of their customers are using wireless broadband as a substitute for home Internet service, despite the fact that it’s considerably more expensive on a per gigabit basis than wired service.

Rogers Communications Inc., for example, charges $60 for a 5 Gb to 10 Gbvoice and data plan on its home hub product, which combines voice and data, compared to 25 Gb of data for $35.99 on its home Internet plan.

“Most customers don't use 90 Gb of data a month,” said panelist Ken Engelhart, Rogers’ senior vice-president for regulatory affairs. “The median is 5 Gb, so you’re going to get lots of people cutting the cord because they don’t download a ton of movies and they want the benefits of portability, and in a huge part of the country, it's the only broadband you can get.”

But while useful for certain situations, wireless broadband isn’t the cost-effective solution Canadians need, argued Edward Antecol, vice-president, regulatory affairs and carrier services at Globalive Communications Corp., the company behind startup Wind Mobile.

He said it wouldn’t take long to blow through a wireless data cap if a subscriber downloads music or streams video content, typical activities Canadians use broadband for.

“If I want to watch a show on the Space channel online, I can't do that with a wireless hub -- unless I’ve got about $2,500 a month to spend on wireless,” he said.

Saying ‘wireless is coming, so don’t worry, stop regulating us,’ is not the answer, he said. “I just don’t buy it.”

Panellists also included Mirko Bibic, Bell Canada’s senior vice-president, regulatory and government affairs, John Lawford, counsel to the Public Interest Advocacy Centre, and Chris Peirce, MTS Allstream’s chief corporate officer.

As expected, the group faced off down the fault line of issues such as government regulation, with Antecol and Peirce calling for relaxation of the foreign ownership rules that limit non-Canadian ownership of and investment in telecom companies in this country, while Bibic, Hennessy and Engelhart rejected any moves forcing them to provide Internet service providers (ISPs) wholesale access to their new high speed fibre optic networks.

The CRTC, as the federal regulator of the telecom industry, held hearings on the issue last week. For the panel, Bibic repeated his presentation to the commission that forcing the incumbents who have built and invested heavily in their new networks to provide wholesale access to competitors is like telling Air Canada it has to reserve a certain number of seats on its new jets for West Jet to resell.

“We don't do that. There’s tons and tons of competition in our industry, too, so we think it's patently wrong to force ILECs or former monopoly telephone companies to give access to their brand new fibre networks,” he said.

The situation, said Engelhart, puts the government in the position of figuring out how to get a company without a network of its own into the networking business.

“It’s like how do we get someone into the shoe manufacturing business if you don’t have a shoe factory? You can’t,” he said.

 Furthermore, said Hennessy, the CRTC continues to examine the issue through the prism of monopoly regulation, although incumbents are no longer getting the same kinds of return on investment they did when they were monopolies.

“But there are still social goals you have to achieve, so you have to come up with new models,” he said. “That is a debate we’re missing, because as usual, we take polar opposite positions and no one who wants to get wholesale access is going to admit you should pay any more than incremental costs.”

The telcos and cablecos said they can live with the CRTC’s recent proposal to raise the direct and indirect foreign ownership limits on telecom company ownership to 49 per cent from about 47 per cent, as long as the rules apply to all players and it’s done in such a way as to ensure Canadians retain control of their telecom industry.

But the proposal does little for new entrants such as Globalive, argued Antecol. “That for new entrants is not going to attract one iota more of foreign capital,” he said. 

“If you want significant amounts of capital to build out a competing network, you have to do more than tinker and tweak.”

MTS Allstream’s Peirce agreed, noting that it’s difficult to find enough risk capital in Canada to build a competitive network. The past four government-sponsored committees tasked with researching the issue have all recognized the current regime benefits incumbents, not competitors, he added.

“Canadian money is generally value money, it’s looking for safer rather than riskier returns, so we need to invite foreign ownership,” he said. “The time for mushy bafflegab is long past. (MTS Allstream CEO) Pierre Blouin has pointed out that Canadians are way ahead of the government on this issue. Canadians believe in promoting Canadian content, but they don't think ownership limits are the way to do it.”