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Patricia Brady Director General Telecommunications and Policy

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Patricia Brady Director General Telecommunications and Policy 14 February 2020 To: Patricia Brady Director General Telecommunications and Policy Branch Innovation, Science and Economic Development Canada 235 Queen Street, 10th Floor Ottawa, Ontario K1A 0H5 Email: [email protected] Subject: Notice No. TIPB-002-2019 Petitions to the Governor in Council concerning Telecom Order CRTC 2019-288 Dear Ms. Brady, Allstream Business Inc. is filing the enclosed comments in opposition to the Petitions to the Governor in Council made by Bell Canada, Bragg Communications Incorporated (Eastlink), Cogeco Communications Inc., Rogers Communications Inc., Shaw Communications Inc., TELUS Communications Inc. and Videotron Ltd, concerning Telecom Order CRTC 2019-288 – Follow-up to Telecom Orders 2016-396 and 2016-448 -- Final rates for aggregated wholesale high-speed access services. Please feel free to contact me should you require additional information. Sincerely, Douglas Denney Vice President, Costs & Policy Attachments Cc: Claude Doucet, Secretary General, CRTC, [email protected] *** End of Document *** Allstream Business Inc. Comments to the Governor in Council in Opposition to Petitions to Vary Telecom Order CRTC 2019-288, Follow-up to telecom Orders 2016-396 and 2016-448 – Final Rates for aggregated wholesale high-speed access services Comments of Allstream Business Inc. Allstream Business Inc. Page 2 of 7 1. Allstream Business Inc. (Allstream) is pleased to have this opportunity to provide comments in opposition to the Petitions to the Governor in Council made by Bell Canada, Brag Communications Incorporated (Eastlink), Cogeco Communications Inc., Rogers Communications Inc., Shaw Communications Inc., TELUS Communications Inc. and Videotron Ltd, concerning Telecom Order CRTC 2019-288 – Follow-up to Telecom Orders 2016-396 and 2016-448 -- Final rates for aggregated wholesale high-speed access services. 2. A functioning competitive market is the most effective way of promoting affordability, consumer interests, innovation and investment. In December of last year the government reinforced this fact by directing the CRTC to implement the Canadian telecommunications policy objectives in a way that, a. encourages all forms of competition and investment b. fosters affordability and lower prices, particularly when telecom service providers exercise market power. c. ensure that affordable access to high-quality telecommunications services is available in all regions of Canada, including rural areas, d. enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility, e. reduce barriers to entry into the market and to competition for telecommunications service providers that are new, regional or smaller than the incumbent national service providers, f. enable innovation in telecommunications services, including new technologies and differentiated service offerings, and g. stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services;1 3. In Telecom Order CRTC 2019-288, the Commission did just this when they established just and reasonable final rates for wholesale high speed access services. 4. Order 2019-288 is the culmination of close to sixteen years of proceedings established to set the rates, terms and conditions for wholesale high speed access. Throughout the incumbent telecom and cable providers have used various methods – from filing hyper- inflated wholesale rates to abuse of the procedures – to delay the real and widespread broadband competition that will ensue as a result of just and reasonable rates for 1 Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation, SOR/2019-227, 22 December 2019. (emphasis added) Allstream Business Inc. Page 3 of 7 wholesale high-speed access services. Their various appeals of Order 2019-2882, this Petition included, is merely their most recent attempt to impede such competition. 5. At this time, the Commission itself is re-examining aspects of Order 2019-288 at the behest of Bell, TELUS and the large incumbent cable companies. The issues raised in the Bell et al applications to the Commission are identical to those raised in this Petition. While Allstream submits that this Petition is unnecessary and unwarranted, given the current CRTC proceeding, it is at the very least premature. 6. While these proceedings continue consumers continue to be denied the benefits of broadband competition. Challenges to Broadband Competition 7. “The Commission considers that competition in retail service markets drives innovation and provides end-users with the greatest choice of service providers and service characteristics, including pricing, service features, and customer service quality.”3 8. The Commission concluded this over a decade ago following a comprehensive review of wholesale high speed access services. Sadly, all these years later a competitive downstream retail services market for high speed access has yet to be achieved. 9. In 2018, competitors collectively accounted for only 13.7% of revenue for residential broadband services,4 compared to 35.6% of revenue for long distance services in 20085 2 Bell Canada, (“Bell”) Telus Communications Inc. (“TELUS”), (collectively incumbent telecom service providers), Bragg Communications Incorporated (Eastlink), Cogeco Communications Inc., Rogers Communications Canada Inc., Shaw Communications Inc., Videotron Ltd. (collectively referred to as “the large incumbent cable companies or service providers”) filed applications with the Canadian Radio- television and telecommunications Commission (“CRTC” or “Commission”) on [date] to Review and Vary Telecom Order CRTC 2019-288 (“Order 2019-288”). The proceeding is currently underway before the Commission. As well these parties applied to the Federal Court of Appeal for a stay of proceedings pending the CRTC’s review . 3 Telecom Regulatory Policy CRTC 2010-632, Wholesale high-speed access proceeding, 30 August 2010, paragraph 22. (emphasis added) 4 CRTC 2019 Communications Monitoring Report, page 203. 5 Long distance competition effectively occurred with the roll out of equal access in mid-1994. Revenue share from CRTC 2013 Communications Monitoring Report, Table 5.2.4. Allstream Business Inc. Page 4 of 7 and 39.0% of local service lines in 2014.6 Incumbent telephone and cable service providers jointly command 80% to 85% of the most highly competitive retail markets, and an even higher percentage in other less competitive markets across Canada. Bell’s own submission acknowledges this market dominance.7 10. This is largely because the wholesale high speed access services offered by the incumbent telecom and cable service providers have been over-priced (in Bell’s case in excess of retail) and unavailable at the same higher speeds as their own retail access services. Initially wholesale service speeds were capped at a fraction of the incumbents fastest retail speeds. In 2010 the Commission confirmed the speed-matching requirement between wholesale and retail service speeds. While the Cable Companies abided by this requirement, Bell and TELUS have continued to limit competitor access (a limitation which is neither competitively- nor technologically-neutral). For Bell, the highest wholesale speed available is 100 Mbps. This is less than 7% of Bell’s top retail speed of 1.5 Gbps.8 For TELUS, the highest wholesale speed available is 150 Mbps, or just 16% of TELUS’ top retail speed of 940 Mbps (branded as “Gigabit fibre”9). 11. The imbalance between wholesale and retail service speeds and the punitive pricing of wholesale services have greatly impaired the ability of competitors to participate at an optimum level in the market. This outcome is reflected in the competitors’ collective low share of the broadband market. Canadian consumers are also increasingly frustrated and dissatisfied by the lack of choice resulting from the market power exercised by the incumbent telecom and cable service providers. In response, the federal government directed the Commission to investigate the issue. In the resulting report, the Commission confirmed that consumers were being harmed, and identified the need for new consumer protection measures. This would not be necessary if there really were, as Bell and the Petitioners claim, flourishing competition. 6 Local service competition effectively opened up with the introduction of Local Interconnection Regions in mid-2004 following Decision 2004-46. Line share from CRTC 2015 Communications Monitoring Report, Table 5.2.6. 7 Bell application to Review and Vary Order 2019-288, paragraph 7. 8 Bell application to Review and Vary Order 2019-288 , paragraph 56; described as “the fastest in the galaxy” in current Bell advertising. 9 https://www.telus.com/en/deals-and-bundles/gigabit-internet Allstream Business Inc. Page 5 of 7 Delay, Delay, Delay – Systematic use (abuse) of process 12. The various appeals and applications by Bell, TELUS and the Cable Companies serve to underscore how intent the large incumbents are on rehashing matters which should long ago have been closed. 13. The process leading to Order 2019-288 began in May 2015.10 Ten months later, the Commission made current prices “interim” and directed service providers to file new cost studies within 90 days.11 Five months after this, the Commission issued two Orders in which
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