Phone companies competing against incumbents for Canada’s local voice market should expect some savings – if not major discounts – from an upcoming regulatory review concerning costs, according to one analyst.
Call-Net Enterprises Inc., a competitive local exchange carrier (CLEC), asked the Canadian Radio-television Telecommunications Commission (CRTC) to reconsider and add to its list of topics to be discussed during an industry review later this year.
The procedure is expected to clear up some confusion surrounding the Commission’s “price cap” decision of May 30, wherein the government coined new rules for competing in the local voice market.
Although that decision spelled cost savings for CLECs, Call-Net says the rules do not go far enough. The company, known for its “Sprint Canada” brand of phone service, is looking to the CRTC to discount more of the products CLECs purchase from incumbent local exchange carriers (ILECs).
According to Lawrence Surtees, director of telecom research with IDC Canada Ltd. in Toronto, the review process “could help (CLECs) a little bit, but it’s not going to be a big windfall.” He alluded to the CRTC’s history of balancing CLEC and ILEC interests and of pleasing neither camp completely.
At issue this time are “digital network access” (DNA) services. CLECs purchase DNA services from ILECs to send customers’ calls across the PSTN. The CRTC in its price cap decision said some DNA services count as “essential” services, so ILECs can charge no more than cost plus 15 per cent for them.
“DNA is important because there are a bunch of little services in there, but collectively they are the largest carrier costs,” said Ian Scott, Call-Net’s vice-president, government affairs. “This is what you use to go from the customer to our wire centre, between our wire centres, or between the wire centre and our switch. There’s a lot of transport in there.”
Call-Net wants the government to expand the list of DNA services denoted as essential.
“The more complete the competitor DNA tariff is – the more things the Commission ultimately decides belong in that tariff – the more savings we’ll experience,” Scott said.
Call-Net asked the CRTC to consider “interexchange services” as well as “intraexchange services” for possible inclusion in the essential basket during the upcoming review.
At first the Commission planned to limit discussion to the intraexchange service. But according to Don Bowles, Call-Net’s vice-president, regulatory affairs, inter- and intraexchange services do the same thing: connect customer locations across incumbent wires. If the CRTC plans to consider one for inclusion, it should consider the other, Call-Net argued.