Losing another on winning back

January 25, 2017

Winback rules are one of the more contentious issues in the rules for ILECs competing in the local services business. We recently wrote about a Bell win against Videotron on one of the skirmishes in the winback wars. On Tuesday, Primus lost another winback battle.

The winback rules state:

… an ILEC is not to attempt to win back a business customer with respect to primary exchange service [(PES)] or local VoIP [Voice over Internet Protocol] service, and in the case of a residential customer of local exchange service (i.e. PES or local VoIP service), with respect to any service, for a period commencing at the time of the local service request and terminating three months after that customer’s primary local exchange service or local VoIP service has been completely transferred to another local service provider, with one exception: ILECs should be allowed to win back customers who call to advise them that they intend to change local service provider.

Whew. Yes it is a mouthful, and it has been the source of court battles including a challenge on the basis of concerns that it infringes on ILECs rights to freedom of speech.

So, the CRTC cut the winback prohibitions to 3 months (from 12) in Decision 2006-15 and Primus fought an uphill battle to try to argue that the Commission should stick to its guns and keep to the original 12 month prohibition. My first reaction in reading the Primus application was to call their lawyer and ask if he felt a little guilty taking their money – the chances of winning were so slim.

To have the CRTC review and vary a decision requires a demonstration of substantial doubt as to the correctness of the original decision. Indeed, the CRTC said that

Primus has not presented new evidence to raise any doubt, let alone substantial doubt, as to the correctness of the Commission’s determination.

Fixing telco quality of service

January 25, 2017
Back in August, we observed that ILECs might be having trouble with delivering on the quality of service metrics for the services provided to their competitors. These quality standards are one of the gating items on the CRTC’s checklist in order to grant forbearance from regulation of ILEC local services.

The competitor quality indices were set in 2002 and updated in 2005. The CRTC has been pretty clear about its expectations for the ILECs to exceed these standards, not view them simply as targets:

The Commission reiterates that the Q of S standards are not performance targets; they are the minimum acceptable performance levels. The RRP is not intended to provide the ILECs with a choice between paying rate rebates or meeting the Q of S standards.

[Decision 2005-20, p. 67]
In an application to review and vary the rules for local forbearance [Decision 2006-15], the ILECs argue that the Competitor Quality of Service prerequisite for forbearance is irrelevant to the interests of users. We think the ILECs are wrong on this file.

Competitors order ILEC services in order to meet end user requirements, not for their own sake. When an ILEC messes up, both the competitor and its customers are losers. When the competitor is dependent on ILEC facilities and services, it is not in a position to defend its own reputation. As a result, frequently the end user simply gives up and returns to the ILEC for service.

It is precisely for this reason that the CRTC has repeatedly tried to get ILECs to pay attention to competitor quality of service metrics. Read the tone of Decision 2005-20 and Section VI of Decision 2002-34 to get a sense of the frustration of the Commission and competitors.

There is an alternate approach available to the ILECs: just meet the quality standards that are supposed to be delivered and exceeded.

And if there is a message for the CLECs at the same time, it is that customers are looking for more than just pricing advantages. CLECs and ILECs alike should be promoting quality, overcoming the challenges of delivering increasingly complex network services.

Let’s see carriers deliver better, clearer, smarter, friendlier, easier to use services.

That would be a high-quality competitive advantage.

The cost of telecom regulation

December 10, 2016

Earlier this year, the CRTC was asked to look at the way it recovers its operating costs. Under the regulations that have been in place for a the past decade, the CRTC’s costs of telecommunications regulation are borne solely by carriers that file tariffs.

Those companies, the ILECs, are finding that to be increasingly burdomesome. As more types of services are forborne, a shrinking number of carriers are bearing the costs of CRTC activities that are not necessarily driven by tariff-related activity.

In 1998, the CRTC proposed amending the 1995 regulations on its own. At that time, the Commission stated:

The Commission notes that it is not solely the Canadian carriers that file tariffs that cause the Commission’s costs. Increasingly, Commission resources are spent, not only on processing tariff applications, but also on such activities as establishing and monitoring a regulatory framework designed to ensure that there is sustainable competition.

In the Commission’s view, the proposed new regulations provide for a more appropriate and equitable means of recovering the Commission’s telecommunications costs.

A year and a half later, the CRTC mysteriously abandoned its plan to revise the scope of fee-payers and maintained the status quo.

That was 8 years ago.

In yesterday’s Decision, the CRTC agreed with Bell and Aliant that its original 1998 view, calling for a new way to allocate costs, was correct. The Commission has indicated that it will draft changes to the fees regulations and seek approval from Treasury Board.

The CRTC plans to use a process similar to that used for subsidizing high cost serving areas. All companies (carriers and resellers) with Canadian telecommunications services revenues exceeding $10M are expected to become contributors to recover the cost of the CRTC’s telecommunications operations.

As new contributors, primarily cablecos and resellers, gripe about coming under the new tax scheme, they can take comfort in having escaped hundreds of millions of dollars in CRTC costs that have been paid solely by tariff-filing telcos for the past 7 years.

Innoculation against telco IP-TV

January 25, 2017

Effective today, Videotron has announced more High Definition programming, bringing its total to 20 HD channels, many of them available with no monthly charge.

We have written before about the power of HD as a means to confound telco IP-TV plans. For the near future, homes with multiple HD TV sets will find IP-TV to be incapable of providing sufficient capacity to feed HD broadcast programming to more than one receiver. The more channels that are available in HD, the more likely a home will be to demand more than one HD feed.

In the meantime, Videotron and other cable companies are locking-in subscribers with sales of set-top boxes and personal video recorders that serve as disincentives for subscribers to switch to IP-TV. Each time an analog cable subscriber converts to digital represents an even more expensive acquisition for telco IP-TV service. A subscriber that has just paid $300-$600 for a cable set-top box is going to be less likely to switch service providers.

When will we see more than MTS with telco HDTV service? We’ll have a look at MTS financials later today.

Forbes likes Rogers

January 25, 2017
ForbesForbes likes the looks of Rogers these days for what they call its Canadian Triple Play. We would actually call the Rogers combination of TV, Internet, Wireless, Digital Home Phone a full quadruple play. Or four-play, if you like that better.

Nikhil Hutheesing, editor of Forbes Wireless Stock Watch, recommends RCI:

In the U.S., no similar company exists. There are cable-TV companies that offer high-speed Internet access and voice-over-IP telephone service. There are also wireless service providers like Cingular and Verizon Wireless that offer cellphone service and broadband 3G service, and telecom companies that provide Internet access via DSL. In Canada, Rogers Communications offers customers all of these options.

Besides, Hutheesing notes that since the Canadian penetration for wireless is only about 50%, compared to 70% in the U.S., “growth rates will be higher than companies such as Sprint Nextel and Verizon Wireless.”

Nice to see the attention from the US business community. In June, we observed that Business Week put Rogers in their IT-100 listing of the top 100 information technology performers.

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