Musings on the Deferral Account

February 22, 2006

Last week’s CRTC Decision on the Deferral accounts has 95% of the money going to fund expanded broadband access in rural and remote territory. There is an interesting twist that has gone without notice by the majority of analysts. Paragraph 194 says

As indicated above, the Commission considers that any backbone facilities constructed with funds from the deferral accounts should be made available to alternative broadband service providers on the same terms as the ILECs. The Commission considers that allowing all providers to use backbone facilities on the same terms will encourage competition while also providing direct benefits to consumers. The Commission further considers that, since the ILECs would be compensated from the deferral accounts for the uneconomic portion of these initiatives, all service providers should have access to these backbone facilities at a minimal rate. The Commission considers that the maintenance rate applicable to dark fibre backbone facilities could be a reasonable proxy rate in these circumstances. This rate will be established when the Commission approves each ILEC’s broadband expansion proposal. [emphasis added]

What does this all mean? It looks like a return to the old days of Construction Program Reviews when the ILECs file their plans this summer. For each of the projects, it looks like the ILECs will need to identify what portion of the draw from the deferral account is attributable to backbone facilities (versus access facilities). If deferral account money is going to subsidize the construction of the backbone, then competitors stand to get access at reduced (or free) rates. That kind of stimulation of competition will be interesting to manage.

Presumably, we will see tables that identify reduced prices for competitors on a route-by-route basis. What rules will apply for this access? If backbone is free to competitors for a given community, will a user sharing group get together in order to qualify a service provider and thereby get free service? Will the route get forborne if someone else builds facilities (such as the electric utilities)?

Bell responds to Videotron

February 21, 2006

In a letter to the editor of CARTT, Bell regulatory chief, Mirko Bibic responded to Videotron’s charges that Bell was trying to kill competition in phone service. Back on February 1, Videotron’s president and CEO, Robert Dépatie wrote:

While it used to take the telephone companies up to several months to get approval for new rates, the CRTC is now guaranteeing that it will deal with their rate applications within 10 days. Most disturbingly, the phone companies can now file their rate applications ex parte, i.e. without other interested parties being informed. No cable company has ever received this type of confidential treatment for its rate applications and supporting arguments.

In Bibic’s reply, he charged back:

No cable company ever needed regulatory permission to change prices or service features on anything other than their basic service, and even that was deregulated soon after satellite TV arrived. No cable company ever faced a one year prohibition on contacting its customers who switch to a competitor. No cable company was ever prevented from pricing differently in different regions of its territory, or restricted from introducing promotions for its services. No cable company has ever had to receive prior approval for bundles of its multiple services like internet, cable and telephone.

The battle is on. Consumers can only benefit from the battle of the big guys – and no one needs to start a charity drive for either of these combatants.

Telemarketers, Beware!

February 20, 2006

The CRTC has come out with its Public Notice on the Do Not Call list for Telemarketers

The first deadline is March 6 to simply register as an interested party.

Comments are due by May 10, but there are some parts that will require comments by March 20 – especially if you want them to be taken more seriously by the various parties (subject to reply, etc…)

CRTC Windfall for Incumbents

February 20, 2006

The CRTC’s Decision last week for the Deferral Account was a gift for Bell and TELUS capital budgets. The Decision takes money that had been accumulating and requires that the incumbent carriers spend 95% on expanding broadband access to underserved territories and take the rest to improve access for the disabled.

BC and Ontario should be the biggest winners – Alberta already spent tax dollars on its SuperNet project; Quebec’s remote territories, in general, don’t belong to Bell. We’ll want to watch to see what happens with Fixed Wireless.

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