Last Thursday, MTS Allstream lost its appeal for the CRTC to review and vary part of its essential services decision related to the classification of Ethernet access and transport services and related services.
MTS Allstream wanted these services to be considered “essential” in order to take advantage of cost-based rates which might be as low as half of the current tariff.
The CRTC seemed to rely on statistics that may have been self-fulfilling:
20. … MTS Allstream argued that the ILECs’ legacy digital access and transport services are not adequate substitutes for Ethernet services.
…
22. As noted above, the Commission based the classification of Ethernet services on the data regarding the extent to which competitors self-supply high-speed access and transport services or lease these services from third parties. The data indicate that competitors self-supply or lease from third parties a large proportion of their service requirements. The Commission notes that self-supply is a potential substitute to leasing services from ILECs.
Let’s try to understand this a little better. MTS Allstream said that access circuits like DS-0s, DS-1s, etc. aren’t substitutes for Ethernet access; they wanted ethernet access to be designated as essential. The CRTC looked at “the extent to which competitors self-supply high-speed access” and found a large proportion of their service requirements were self-supplied.
Well, duhh! Of course that was the case – competitors couldn’t affordably lease facilities from the ILEC because the CRTC has not mandated them as essential. So, pretty much the only way competitors would deploy high speed access, if they have them at all, was through self-supply or third parties.
The CRTC should have simply stated that it has always supported facilities-based competition. High speed ethernet accesses will generally depend on fibre and we have long held that there is no inherent advantage for ILECs over new entrants for such facilities.
The Commission may have reached the right conclusion to match its policy objectives, but for the wrong reasons – and the statistics were forced to produce the answer it needed.
How can we be sure its conclusion is correct for all markets across Canada?
I have to wonder if the Public Works / DND dispute with Bell and TELUS [see yesterday’s posting] be resolved any easier had the CRTC had ruled in favour of MTS Allstream in Decision 2008-118? That case may demonstrate that there could be a difference in how to regulate (or forbear from regulating) the very large enterprise market versus the smaller business markets.