A couple of weeks ago, I wrote about the artificial distinction that is being maintained between business and residential lines on a wholesale level.

In the olden days, these distinctions made sense. We cross subsidized to keep residential rates low, justifying it based on the value of service and all sorts of reasons that made sense in an era of regulated rates. In the case of internet service, especially wholesale internet service, this distinction no longer makes sense.

In many cases, residential users are more demanding on their internet service provider than their business clientele. Imagine an airline that insisted that all people travelling for business purposes had to buy business class seats and no vacationers were ever allowed up front. Or if businesses had to buy different printer cartridges and paper than school kids – by government fiat. There may be very good reasons to buy a different grade of office supplies, but it is up to the purchaser to decide.

I continue to be troubled by the resolution of the wholesale internet access decision. There are many who think the rate setting process was unfair because competitors aren’t given the chance to go through the incumbents’ financial details. They need to get over that; we have competent regulators who are able to review the numbers, balancing the public interest with reasonable provisions of corporate confidentiality.

The wholesale regime correctly tries to emulate the way that networks are built – with lumpy amounts of capacity being acquired by the independent ISPs and then managed as best they can toward profitability.

Except for one big management tool. The way the wholesale regime got structured, independent ISPs can’t mix business and residential customers on their access network connections because the CRTC created two different wholesale regimes.

Since the beginning of time – at least since the beginning of telecom networks – service providers have been able to take advantage of non-coincident busy periods. Residential customers make greater use of telecommunications in the evenings and weekends; businesses place heavier demands during weekdays. It’s why we call them business hours.

So when intercity and interconnecting facilities get built, they are engineered for the busiest period of the week and the rest rides for free.

The capacity-based billing for ISPs was the intent of the CRTC approach. It is sound policy except for one important piece. By artificially separating business traffic from residential traffic, independent ISPs have to buy double the real requirement. They need to buy the capacity for their business peak separate from capacity required for their residential peak. In a normal network world, the traffic would be intermixed and there would be just one peak driving the capacity requirements for the interconnecting group.

There are strong public policy reasons to combine business and residential traffic: it will increases overall competitive market intensity. Allowing the mixing will ensure that ISPs try to balance their business users with residential clients, with an eye toward keeping traffic loads balanced.

The independent ISPs have expressed concerns about the rates that were set in the CRTC’s UBB decisions [business, residential]. I am somewhat inclined to think that the rates may be close to the right numbers, but the problem is more fundamental. The inability to combine residential and business traffic means that independent ISPs will be unable to optimize the utilization of the facilities through balancing of their customer mix.

It is a point worth re-examination.

Let’s say you have a long term lease on an apartment and the landlord decides he wants to demolish your building. You might think that the landlord would need to share the costs of you relocating. At the very least, you would want the landlord to waive the “move-in” fees – your key money – for the new place.

Well, in the world of telecommunications, that isn’t how it works.

TELUS is redeveloping a city block in Vancouver as part of its $750M TELUS Gardens headquarters project. About 6 months later, TELUS advised Allstream that it had 5 months to relocate its equipment colocated in a TELUS building at 720 Seymour Street to an adjacent building at 768 Seymour.

Allstream went to the CRTC saying that the 5 months wasn’t enough time and asking in any case for TELUS to be ordered not to charge one-time fees for the new installation.

The CRTC told the parties that the co-location agreement would govern the issues of timing of notice and responsibilities for costs. The outcome is not what you might expect.

You would think mobile devices should have killed off payphones by now. Those of us who have an alternative don’t go looking for a couple quarters to make a call from the shopping centre or the airport.

Most Canadians now have a mobile option, but 25% of households don’t. That is what is behind a request by PIAC for the CRTC to take a fresh look at the issue of access to pay telephones. The last time the CRTC looked at the issue was in 2002, with a Decision that came out in 2004.

The CRTC wrote at that time:

Based on information presented in this proceeding, the Commission considers that low-income Canadians, especially those without access to basic residential service, are more likely to use pay telephone service for important personal and emergency calls. The Commission notes that although wireless service may constitute an alternative for many consumers, it is not an affordable option for all.
…
The Commission concludes that, although demand for pay telephone service is declining, pay telephone service is still an important public service that wireless services have not rendered obsolete.

PIAC’s letter is asking the CRTC to expand the scope of a recent tariff filing to allow it to update the evidence last reviewed nearly a decade ago.

PIAC expects to raise issues of social utility of payphones and ideally to introduce evidence of payphone use by the public, in particular those persons living on low income. However, commissioning and compiling this information will take more time than is allotted for intervention.

PIAC raises a valid point. The CRTC should take a fresh look at payphone accessibility.

The tweet from Keith McIntosh at CWTA summed it up:

After 28 years, WSPs are no longer simply a customer of the phone companies.

He was referring to the CRTC decision that updates “Network interconnection for voice services”. In today’s decision, the last major telecom proceeding to be issued under the signature of Chairman Konrad von Finckenstein, the CRTC decided to treat wireless and wireline networks as peers:

Currently, independent wireless carriers are responsible for paying the entire cost of interconnection unless they allow alternative long-distance providers access to their networks. The Commission has decided that wireless carriers can interconnect with LECs for the exchange of local voice traffic on a shared‑cost basis (with the bill‑and‑keep compensation method)

This decision was made, despite the CRTC determining that it would not be in the public interest to impose equal access to alternative long distance. Prior to today’s decision, wireless companies that wanted to be treated as peers (for the purpose of sharing interconnection costs) needed to offer equal access, as well as directory listings and file details of all their service options with applicable prices and applicable service charges to the Commission.

The decision also addressed the technical aspects of evolution of interconnection circuits for competitive carriers. We’ll look at that in another post.

In many ways, today’s decision was a recognition by the Commission of the heightened level of competition present in today’s wireless space, contrary to the views of an Open Media campaign that seeks increased government intervention in the space.

In its upcoming policy for the auction of the 700 MHz band, it will be interesting to see if Industry Canada shares that view of the competitive landscape.

A reseller learned that the CRTC has powerful tools to ensure compliance with its orders.

In December, I wrote about the CRTC having threatened Brama Telecom with disconnection for failing to comply with the requirement to become a member of the Commissioner for Complaints for Telecommunications Services (CCTS) Inc.

According to the CRTC, the saga started 10 months ago, when the service provider failed to respond to letters from the CRTC. Subsequent discussions failed to produce fruit and so in August, the Commission ordered Brama to produce:

• proof that it had become a member of the CCTS or arguments demonstrating that Brama does not provide services within the scope of the CCTS’s mandate; and
• identification of the service providers from which Brama obtained service from as well as a list of the services provided to it.

It still did not comply so the CRTC took the extreme step of ordered the company to appear before it on March 22, 2012. In addition, all service providers in Canada were told to check their records to see if they are providing any services to Brama and if so, describe the services to the CRTC.

Whether it was the threat to its business continuity – or perhaps simply being summoned to Ottawa in late March – Brama has acceded to the requirement to join the CCTS. As such, the CRTC has terminated its proceeding. Return to DefCon 4.