In March 2008, the CRTC issued its Revised regulatory framework for wholesale and definition of essential services, Decision 2008-17. This was a lengthy and extremely complex decision which restructured the way wholesale services were regulated, and categorized them into six service categories. That decision determined the pricing principles for each category and most relevant to this posting, the phase-out periods for a number of non-essential services.
At the time, I wrote that the decision appeared to be “Predictable, transparent and consistent“, calling it “a reasoned approach – a reasonable approach.”
The rationale provided by the CRTC at the time for phasing out tariffs for certain services was:
Services in the non-essential subject to phase-out category are those that the Commission has determined do not meet the definition of an essential service and that have not been classified as conditional mandated non-essential, public good, or interconnection services. The term “phase-out” means phasing out mandated access at the end of the transition period.
Earlier this month, Primus raised an alarm, recognizing that the 5-year time horizon set out in Decision 2008-17 was only 4 months away. Primus had asked Bell and TELUS for renewal pricing for the services that were categorized as “non-essential subject to phase-out” – in other words, these services will no longer be subject to CRTC regulation after March 2013. Primus has asked for the CRTC to extend the tariff phase out period to be 6 months following receipt of renewal prices.
The CRTC addressed the transition period in the original decision:
With respect to each non-essential service subject to phase-out, the Commission directs the affected carrier to provide written notice, to the Commission and all customers of that service, to permit customers to review and rearrange their provisioning arrangements as appropriate. The written notice must be made at least six months before the end of the phase-out period for that service, identify the tariff pages that will be withdrawn, and describe the carrier’s intentions with respect to the continued provision of that service in each geographic market in which it is offered at that time. The Commission notes that it may, at any time, request further information about these forborne services from affected carriers for data collection or other purposes.
Primus acknowledges that it received appropriate notice. It has not received pricing for the soon-to-be unregulated wholesale rates. Bell argues that 60 days is sufficient notice for a price change. It argues that competitors have had 5-years to find alternate sources of supply or to construct their own facilities.
At the time of Decision 2008-17, the CRTC had promised a review of the wholesale framework by March of 2014, following the conclusion of the five-year phase-out period.
Five years seemed a long way off at the time of the decision. More than 4½ years later, that deadline is fast approaching and competitors are recognizing that time for making alternate arrangements may have already run out.
The CRTC is reviewing this file on an expedited basis.
Primus is not the first one to challenge the essential services “imminent” effecs in March 2013.
MTS Allstream challenged the ethernet services earlier this year. CRTC ruled at end of september that wholesale ethernet is to continue towards forbearance on march 3rd. The ruling was September 29th which gives users of wholesale ethernet less than 6 months to either negotiate with Bell or find alternate suppliers. The irony is that retail ethernet continues to be regulated. (retail service is what ISPs use to connect to Bell’s GAS BTW).
The problem with such decisions is that the nature of telecom is so fast changing that one really cannot predict what will and will not be “essential” 5 years down the road.
CRTC has already realised that the concept of getting indy ISPs to deploy their own DSLAMs in COs (facilities based competition as envisaged by 2008-17) was no longer workable and in 2010-632 declared that good old GAS turns out to be required to prevent a duopoly. (but did not reclassify GAS as essential).
Things change and often you can’t predict what the environment will be like 5 years down the road.
2008-17 is a good framework as a report card of what has been achieved and can be deregulated. It is not a good framework to predict the future which is what it tried to do.