Submission of Canadian Network Operators Consortium Inc
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Canadian Network Operators Consortium Inc. Consortium des Opérateurs de Réseaux Canadiens Inc. January 11, 2019 FILED VIA EMAIL ([email protected]) The Broadcasting and Telecommunications Legislative Review Panel c/o Innovation, Science and Economic Development Canada 235 Queen Street, 1st Floor Ottawa, Ontario K1A 0H5 Dear Members of the Broadcasting and Telecommunications Legislative Review Panel, Subject: Broadcasting and Telecommunications Legislative Review – Submission of Canadian Network Operators Consortium Inc. 1. Canadian Network Operators Consortium Inc. (“CNOC”) is hereby filing its submission to the review of Canada’s broadcasting and telecommunications legislation initiated by the Government of Canada. 2. CNOC’s submission consists of a written submission and the following appendices: (1) Appendix 1: a report by Dr. Martyn Roetter examining the current state of competition in fixed wireline and mobile wireless services in Canada as well as in other industrialized countries, as well as regulatory approaches in various jurisdictions (“Roetter Report”); (2) Appendix 2: a report by Dr. Roger Ware on competition issues in facilities based versus service-based competition, and disaggregated wholesale HSA and transport (“Ware Report”); (3) Appendix 3: the response of CNOC to Bell Canada’s petition to the Governor in Council to vary Telecom Regulatory Policy 2015-326 (“TRP 2015-326”), including a report by Analysis Group conducting an economic review of Bell Canada’s (report referred to as “Analysis Group FTTP Report”); (4) Appendix 4: the supplemental intervention of Ice Wireless Inc. to the proceeding initiated by Telecom Notice of Consultation 2017-259 (“TNC 2017-259”), including a report by Analysis Group conducting an economic analysis of the impact of mandated wholesale access to mobile wireless facilities (“Analysis Group MVNO Report”); (5) Appendix 5: CNOC’s submission to the Competition Bureau’s Broadband Market Study 20 Eglinton Avenue West, Suite 1105, Toronto, ON, M4R 1K8 (416) 613-CNOC www.cnoc.ca Page 2 (6) Appendix 6: CNOC’s Part 1 Application Review and Vary Telecom Regulatory Policy 2015-326 and Telecom Decision 2016-379 (“TD 2016-379”) (application referred to as “CNOC’s Part 1 Application”); (7) Appendix 7: CNOC’s intervention to the proceeding initiated by FairPlay Canada’s Part 1; (8) Appendix 8: CNOC’s proposed amendments to the Telecommunications Act1; (9) Appendix 9: CNOC’s proposed amendments to the Broadcasting Act2; (10) Appendix 10: CNOC’s proposed amendments to the Radiocommunication Act3; (11) Appendix 11: CNOC’s proposed amendments to the Canadian Radio-television and Telecommunications Commission Act4]; (12) Appendix 12: CNOC’s proposed amendments to the Policy Direction5; and (13) Appendix 13: A summary of CNOC’s answers to the specific questions posed in the Terms of Reference to the present review of Canada’s telecommunications legislation. 3. CNOC looks forward to continuing to assist the Broadcasting and Telecommunications Legislative Review Panel in this important proceeding. Yours very truly, Jill Schatz Executive Director *** END OF DOCUMENT *** 1 SC 1993, c 38. 2 SC 1991, c 11. 3 RSC 1985, c R-2. 4 RSC 1985, c C-22. 5 Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives (SOR/2006-355. BROADCASTING AND TELECOMMUNICATIONS LEGISLATIVE REVIEW SUBMISSION OF CANADIAN NETWORK OPERATORS CONSORTIUM INC. TO THE BROADCASTING AND TELECOMMUNICATIONS LEGISLATIVE REVIEW PANEL 11 JANUARY 2019 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................ 1 1.0 INTRODUCTION AND STRUCTURE OF SUBMISSION .............................................. 7 1.1 Introduction ...................................................................................................................... 7 1.2 Structure of Submission ................................................................................................. 10 2.0 BACKGROUND INFORMATION .................................................................................. 13 2.1 CNOC and service-based competitors ........................................................................... 14 2.2 The constituent elements of wholesale HSA services .................................................... 19 2.3 The regulatory history of FTTN ..................................................................................... 22 2.4 The regulatory history of FTTP ..................................................................................... 28 2.4.1 The importance of FTTP access to competitors .......................................................... 32 3.0 THE STATE OF COMPETITION IN CANADA’S FIXED BROADBAND MARKETS 36 3.1 Market Shares and Market Concentration ...................................................................... 38 3.2 Barriers to entry in Canada’s broadband market ............................................................ 41 3.3 Barriers to expansion in Canada’s broadband market .................................................... 43 4.0 SYSTEMIC BARRIERS TO EFFECTIVE COMPETITION IN CANADA’S BROADBAND MARKET ........................................................................................................... 45 4.1 The current regulatory framework for wholesale HSA services .................................... 45 4.2 Incumbent head starts are crippling competitors............................................................ 46 4.3 Lack of access to complete technical and commercial information relating to wholesale services ...................................................................................................................................... 49 4.4 Insufficient data barriers between wholesale and retail arms of Incumbents ................ 50 4.5 Pervasive wholesale quality of service issues ................................................................ 52 4.6 Incumbent gaming of wholesale rates ............................................................................ 53 4.7 The lack of access to property needed for infrastructure deployment ........................... 54 4.8 The lack of mandated wholesale access for MVNOs .................................................... 55 5.0 THE STATE OF COMPETITION IN CANADA’S MOBILE WIRELESS MARKET . 56 5.1 What is a Mobile Virtual Network Operator (“MVNO”)? ............................................ 57 5.2 Market shares and market concentration ........................................................................ 59 5.3 Barriers to entry and expansion in Canada’s mobile wireless market ........................... 61 6.0 WIRELESS AND WIRELINE SERVICES ARE COMPLEMENTARY, NOT SUBSTITUTES ............................................................................................................................ 63 7.0 INTERNATIONAL COMPARISONS .............................................................................. 65 7.1 International price comparisons ..................................................................................... 66 7.1.1 Mobile wireless services ......................................................................................... 66 7.1.2 Fixed broadband...................................................................................................... 67 7.2 International regulatory comparisons ............................................................................. 68 8.0 THE IMPORTANCE OF COMPETITION TO CANADIAN TELECOMMUNICATIONS 70 8.1 Competition improves the affordability of telecommunications services ...................... 70 8.1.1 Competition improves the affordability of wireline broadband services................ 72 8.1.2 Competition improves the affordability of mobile wireless services ..................... 74 8.2 Competition injects innovation into Canadian telecommunications .............................. 76 8.3 Other benefits of competition ......................................................................................... 79 8.4 A pro-competition framework is required by the USMCA ........................................... 80 9.0 LEGISLATIVE REFORM CAN ENHANCE COMPETITION IN CANADIAN COMMUNICATIONS ................................................................................................................. 81 10.0 CNOC’S PROPOSALS FOR A REFORMED TELECOMMUNICATIONS ACT ............ 82 10.1 Limiting distinctions between Canadian carriers and TSPs ............................................. 83 10.2 The policy objectives of the Telecommunications Act need to be streamlined .......... 83 10.3 There must be prompt and effective access to essential facilities .............................. 86 10.3.1 Service-based competitors are currently unable to obtain prompt and effective access to essential facilities .............................................................................................................. 86 10.3.2 Prompt access to essential facilities, including all access facilities ........................... 87 10.3.3 Deterrents are required to prevent gaming of the system ....................................... 89 10.3.4 Functional or structural separation may be required in some circumstances ......... 91 10.3.5 Regular reviews of wholesale competitor services are required ............................. 92 10.3.6 The Commission will have the ability to create exemptions .................................. 93 10.3.7 Expanding section