Last week, I wrote about the MTS Allstream complaint, seeking an opportunity to cross examine to cross examine the author of an expert report that was commissioned by the CRTC as part of its essential services proceeding.

MTS Allstream had cited a precedent in Decision 2002-34 where the CRTC had struck a piece of evidence from the record because parties were not afforded an opportunity to test the accuracy of the report.

Yesterday, the CRTC issued its determination on the complaint.

In Decision 2002-34, the Commission considered whether to admit a new expert report not already on the record submitted by one of the parties to the proceeding. The Commission decided to strike portions of the report from the record because the disputed evidence had been submitted as part of final argument and thus too late in the proceeding for parties to test.

The CRTC continues:

It is evident that the circumstances that gave rise to that conclusion are not analogous to those in the present proceeding. In the present context, the report in question has not been supplied by a party to the proceeding, nor is it the evidence of any party to the proceeding. Moreover, in the interest of transparency, the report has been made available to all parties prior to the hearing so that they can make use of it in the hearing and in argument. In this manner, the Commission considers that the parties’ procedural rights have been assured.

The concluding sentence allows the CRTC discretion to make its own determination about the Osborne Report after various parties make their own use or abuse of the findings:

The Commission will give Mr. Osborne’s report the weight that it considers appropriate once the record is closed.

The Canadian Association of VoIP Providers has issued a bulletin expressing some alarm at one of the findings of the report, that the CRTC should phase out mandatory access to non-essential facilities. However, CAVP does not appear to be registered to participate directly in the proceeding.

Since the report appears to provide a competition law perspective on the proceeding, we can expect to see parties look for comparisons to the evidence of the Competition Bureau, perhaps even cross-examining the Bureau’s witnesses on the content of the Osborne Report as a surrogate for directly testing the report itself.

The oral hearings get started next Tuesday morning.

The communications regulator in the UK, Ofcom, has begun a consultation to look at the regulatory issues associated with next generation broadband access. What is the purpose of such a consultation? While the deployment of next generation access networks will be very positive for consumers, Ofcom wants to see investment take place in an efficient manner and wants to remove any unnecessary regulatory barriers that may delay such investment.

As a result, it wants to move quickly to clearly set out the options for regulating new broadband networks, defining where ex ante regulation may be appropriate.

Ofcom provides insight into its considerations in the executive summary of its consultation paper. It begins by describing the principles that have guided its approach to broadband services to date.

The regulatory approach to broadband has had an important role in shaping how the market developed. … The most relevant aspects for the broadband market have been:

• contestability: making the opportunity for entering the market accessible to a wide range of companies;
• innovation: allowing the maximum scope for innovation by the promotion of competition at the deepest level at which it will be effective and sustainable; and
• equivalence: the requirement for operators with market power to make the inputs used by their downstream businesses available to their competitors on the same basis.

But it considers that Ofcom needs to adapt these principles and add two additional considerations in order to appropriately recognize the level of new capital investment required for next generation networks.

The five principles underlying our proposed approach are:

• contestability: we think that timely and efficient investment will best be achieved by making the investment contestable, allowing any operator who considers that there is a business case for deploying next generation access infrastructure to invest, as soon as they wish;
• maximising potential for innovation: as we recognised in the Telecoms Review for current networks, we believe that the scope for innovation and differentiation is essential for competition in next generation access, and that infrastructure investment is helpful in achieving this. We are consulting on an approach which maximises the potential for innovation, while allowing for the current economic and technical uncertainty around next generation access;
• equivalence: strong competition in current generation broadband has been helped by ensuring that all operators are able to buy exactly the same wholesale products, with the same processes and at the same price, as operators with market power. We propose to apply this principle to next generation access, supported by approaches such as functional separation, essential to reduce incentives for anti-competitive behaviour while retaining incentives for efficient investment;
• reflecting risk in returns: we recognise that anyone who makes investments in next generation access is likely to face significant commercial risks. Regulation should reflect these risks in order to provide appropriate incentives for investment in the first place. We are consulting on a range of approaches to reflect such risk such as anchor product regulation, and risk-adjusted returns; and
• regulatory certainty: It is also important that the regulatory regime we adopt is clear and in place for a reasonable period of time, to allow investors the clarity that they need to invest with confidence. We are publishing this consultation and establishing a program of seminars and meetings supporting it to provide this clarity.

Ofcom does not appear to be especially concerned that the UK lags other countries with fibre network deployment.

It may therefore be that the efficient deployment of next generation access is simply earlier in some other countries than in the UK. We do not yet see evidence that the UK will be significantly disadvantaged economically or socially as a result. It is important that we continue to monitor the situation closely for any new evidence that would change this view. However, we continue to think that promoting investment which is timely and efficient in the context of the UK market is the correct approach.

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broadband policy

TELUS and the Ontario College of Art and Design have announced a Handset Project, intended to “teach students how to design handsets for wireless phones that will meet the future needs of Canadian mobile users.”

The project announcement says that the most innovative and functional design will be considered by TELUS for further development and possible commercialization. Also key will be the identification of behavioural and usage trends.

Perhaps the device to emerge in 2009 will provide a way for the carriers to differentiate in an otherwise “me-too” handset market. How about comments to help include your favourite capabilities? Can we get it to include a remote starter for a car? Maybe a TV remote control?

Earlier this year, TELUS developed a phone in conjunction with Chinese manufacturer ZTE, so this would not be the carrier’s first foray into the customer handset business. OCAD has been creatively collaborating on projects that one might not normally associate with the school, including getting involved in process engineering for hospital patient flow in conjunction with the Rotman School of Business at University of Toronto.

I have an opinion piece in today’s National Post entitled “The truth on wireless” which is a collection of thoughts on a common theme that many of you have seen in my writing on this blog.

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Update [September 28, 10:00 am]
You can access a pdf version of the OpEd here.

Earlier in the week, I wrote about a complaint by Barrett Xplore about being denied due process in an early decision emerging from CRTC’s deferral account proceeding.

Now, MTS Allstream has expressed procedural concerns about being able to cross-examine the author of a report commissioned by the CRTC in the essential services proceeding.

In a letter to interested parties, the CRTC transmitted a preliminary copy of the substantial 137 page report but said that the final version and its French language translation would be available before the beginning of October. The Commission warned that the author would not be made available for cross-examination during the hearings:

The Commission commissioned the report as input for the review of its policies for wholesale services. This is an independent report, and neither Mr. Osborne nor his firm is involved in this proceeding.

The Commission does not intend to make Mr. Osborne available for cross-examination at the hearing, but parties will be able to use the report as they see fit (such as in cross-examination of other parties’ witnesses and in the argument phase of this proceeding).

MTS Allstream has now written to the CRTC to say that it wishes to cross examine the author:

MTS Allstream is concerned that the ability to reference the report in the cross-examination of other parties’ witnesses without the ability to first test the opinions and conclusions in the report itself, could easily lead to misunderstandings and mischaracterizations of the report and, ultimately, to a lack of procedural fairness in this proceeding.

Among the items in the report that might be worth challenging is a statement in the report at paragraph 63:

the refusal to deal provision could be characterized as an essential facilities provision of a sort, as could the misuse of intellectual property provision. The remedies for misuse of intellectual property are not relevant to telecom facilities; thus I do not address them.

Would Vonage, Sprint and Verizon agree with this statement? I can think of a few other cases of IP as an essential service in telecom. Anyone else?

Fundamentally, is procedural fairness becoming a more frequent complaint to the CRTC?

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Update [October 1, 3:00 pm]
The CRTC has now officially released the Osborne Report, available here.