A few weeks ago, I mentioned that the CRTC will be launching a proceeding to consider types of exclusions for failure to meet Quality of Service standards.

Public Notice 2007-9 was released last week to look at the appropriateness of a force majeure type of escape clause for carriers in their retail and wholesale rebate plans.

The CRTC has proposed language like:

No penalty shall apply in a month where failure to meet the retail or competitor Q of S standard is caused, in that month, by fire, acts of God, labour difficulties (such as work stoppages, strikes, lock-outs, slow-downs and similar labour disrupting events), default or failure of other carrier, epidemics, war, civil commotions including acts of terrorism, acts of public authorities or other events beyond the reasonable control of the Company.

Should labour difficulties be included? The phone companies will argue that they shouldn’t be accountable for failure to meet their service level commitments during a labour dispute.

Who then should be called to account?

Should customers (retail or wholesale) pay full freight if quality is substandard? If you purchase a product and it is defective, would you allow the manufacturer to escape with an excuse like “sorry, it was raining that day” or “the electricians were on strike”? If your lawn care company provides less than committed service levels, what excuses would you accept and still pay full price?

Should phone service be any different?

Bell, Bell Aliant and TELUS wanted to get rid of those pesky service charges.

The way the system works right now, if you order phone service from the ILECs, you have to pay a service charge. If you test drive a competitor and want to go back, they have to charge what seems to be a punitive fee. It is in the tariffs, so they can’t waive them. Period.

Last summer, the companies applied to get rid of service charges by raising monthly bills for everyone. Today, the CRTC said no to that idea.

As Vice Chair Richard French said in a statement

We did not feel it was appropriate to approve a rate increase for all residential customers to compensate for the elimination of connection charges. The government’s recent direction on forbearance removed the CRTC’s restrictions over promotions and winbacks. Telephone companies are free to apply at any time to reduce or eliminate their connection charges, and the Commission will deal with their requests expeditiously.

Given the flexibility soon to be enabled by forbearance and from the recent Price Cap decision, the telephone companies have other tools, less intrusive to consumers, to allow them to compete.

Watch for revised tariff filing soon.

My wife likes to go to estate auctions when we are at the cottage. She’ll come home with some interesting treasures, like a couple beautiful old phones. And often there will be a box of junk that was thrown in by the auctioneer in order to clear the table.

After all, the auctioneer has a responsibility to clear out the house. As a result, he’ll combine whatever isn’t selling into a lot that is more attractive. So, my wife ends up getting a collection of cut crystal shot glasses combined with some Tony the Tiger cereal bowls. Can you guess which she was actually bidding on?

Some would say that the AWS spectrum auction has proposed to combine lots the same way as estate auctioneers. Combining less attractive rural areas with more desirable urban territory.

I have mentioned in the past that I act as an advisor to Barrett Xplore Inc. (BXI). BXI has focussed on serving rural Canada:

Our vision is simple — more for rural Canada: more choice, competition, and availability of broadband access, applications, and accessories.

BXI’s submission in the AWS consultation has a novel suggestion to address the level of competition in rural markets.

Unlike many who suggest a set aside for new entrants or mandated roaming and access to incumbent infrastructure, BXI simply wants some of the regional spectrum blocks to be broken up into more manageable, bite-sized chunks. Barrett Xplore isn’t asking for a handout or help in lowering competition for the spectrum. Just let them bid for the parts they really want.

Barrett Xplore is a company that just wants the rural pieces. Without changes, most bidders will pick up unwanted rural territories when their target was the urban core.

The problem of urban-rural market segmentation can also be seen in the results of the 2.5 GHz MCS comparative selection process conducted in 2000 that awarded almost all of the Canadian licenses to Inukshuk Internet Inc. through a comparative licensing or “beauty contest” approach. Unfortunately the very large MCS license areas include both rural and urban markets. The lure of the large urban population and easier business case returns likely explains why the deployments, announced to date, focus on large urban areas.

Barrett Xplore’s proposal merits consideration. If there are bidders that want the cereal bowls, why would we make them pay for the crystal? And vice-versa.

John Maduri of Barrett Xplore will be speaking on June 11 at The 2007 Canadian Telecom Summit.