Here is the entire CRTC desicion. A must read! The link I tried to post will not connect.
CRTC - Telecommunications (English)
Ottawa, 6 July 1999
Telecom Decision CRTC 99-8
REGULATION UNDER THE
TELECOMMUNICATIONS ACT OF
CABLE CARRIERS' ACCESS SERVICES
File No.: 8697-C12-02/98
I SUMMARY
1.The Commission will require incumbent cable
carriers to file proposed rates for higher speed
access services supported by costing
information. These services will enable
competitive providers of retail Internet
services (IS) to offer higher speed IS using
cable infrastructure. The Commission considers
that the requirement for costing support should
not delay the roll-out of such access services.
II INTRODUCTION
2.In Regulation under the Telecommunications
Act of Cable Carriers' Access Services,
Telecom Public Notice CRTC 98-14, 9 July
1998 (PN 98-14), the Commission sought
comment on various issues concerning the
regulation of incumbent cable carriers' higher
speed access service. This service will enable
competitive providers of retail Internet
services (Internet Service providers or ISPs)
to offer higher speed IS using incumbent cable
carriers' infrastructure.
3.In Regulation under the Telecommunications
Act of Certain Telecommunications Services
offered by "Broadcast Carriers", Telecom
Decision CRTC 98-9, 9 July 1998 (Decision
98-9) the Commission decided that it will
approve the rates and terms on which
incumbent cable companies provide higher
speed access to their telecommunications
facilities with respect to competitive providers
of retail Internet services. "Higher speed
access services" were defined as services
which offer transmission at speeds above
64Kbps. "Cable carrier" is used in a
telecommunications context to refer to a carrier
that is also licensed as a cable distribution
undertaking and which uses traditional coaxial
infrastructure (perhaps in combination with
other serving technologies) to offer a
telecommunications service.
4.However, as noted in Decision 98-9, while the
cable industry stated it proposes to provide
higher speed access services as soon as
possible, technical and related work required to
implement this service had not yet been
completed. The Commission issued PN 98-14
before technical issues relating to the provision
of such access were resolved in order to avoid
regulatory delays in making access available
once technical issues are resolved. A Technical
Working Group of the Canadian Association of
Internet Providers (CAIP) and the Canadian
Cable Television Association (CCTA) is
currently addressing these issues.
5.Submissions were received from the
Independent Members of CAIP, the CCTA,
Fundy Cable Ltd./lt‚e (Fundy) and Stentor
Resource Centre Inc. (Stentor) on behalf of BC
TEL, Bell Canada, Island Telecom Inc.,
Maritime Tel & Tel Limited, MTS
Communications Inc., and NBTel Inc.
III RATES FOR HIGHER SPEED ACCESS
SERVICES
6.CCTA proposed that rates be "market based"
and, as a result, no cost studies would be
required. Stentor and CAIP opposed this
position and argued that any rates filed should
be supported by a cost study. CCTA submitted
that there are no incentives for the incumbent
cable carriers to price too high or too low.
CCTA stated that cable carriers have no
incentive to price ISP access at excessive
levels because they want to stimulate use of
their facilities by ISPs. CCTA submitted that,
because there is no incentive to under-recover
costs, costing information is not needed to
demonstrate that the rates exceed a cost based
floor.
7.However, CCTA also stated that it does not
object to filing costing studies but it considers
them unnecessary in light of the incentives
facing cable carriers. CCTA stated that its
members would be prepared to file Phase II
costing support for high speed access services.
However, in its view, such a requirement must
reflect (a) a reasonable period of time for cable
companies individually or collectively to
implement Phase II costing and (b) alternate
arrangements (such as use of proxy costing,
use of prices approved for larger members, or
establishing representative, not company
specific, costs or network configurations) for
smaller cable companies which do not have the
resources necessary to perform Phase II cost
studies.
8.CCTA submitted that the provision of third
party access should not necessarily await the
implementation of Phase II costing. CCTA
stated that, if the Commission were to require
Phase II costing studies, it expects that tariffed
rates for third party access would be
established during the period when the costing
studies were not yet available.
9.CCTA also submitted that its access facilities
are not essential. CCTA noted that in Decision
98-9 the Commission did not find that cable
access facilities are essential.
10.CAIP supported the use of the Phase II
costing methodology to develop the costs
required to justify any proposed access rates.
CAIP submitted that it sees no reason to apply
a different costing standard to cable carriers,
and it considers that regulatory symmetry with
the telephone companies' Asymmetric Digital
Subscriber Line (ADSL) services requires
Phase II costing.
11.Stentor agreed with CAIP that there is no
reason why all parties should not be subject to
the same costing rules (although Stentor
submitted that forbearance would be the better
approach). Stentor also noted that market based
pricing and Phase II costing are not
incompatible, stating that it is the level of the
mark-up over Phase II costs that CAIP is
concerned about.
12.Stentor submitted that market based pricing
could mean pricing below Phase II costs
because of an expectation that customers will
not pay more. Stentor noted this form of market
based pricing is usually inconsistent with Phase
II costing requirements but stated that a carrier
can file for approval rates that are below cost
where it believes unusual circumstances justify
it.
13.The Commission has considered the general
issue of the basis on which rates for incumbent
cable carriers' higher speed access services will
be determined. It has also considered related
issues: (a) whether, if costing support is
required, an approved Phase II costing
methodology is required; (b) whether, if costing
is required, a different approach is appropriate
for smaller cable companies, recognizing that
these companies have limited resources; and
(c) how cable carriers' costs of implementing
the third party connection capability (i.e.
"start-up costs") should be recovered.
14.The following findings apply only to higher
speed access services offered by incumbent
cable carriers to enable the provision of retail
IS. In order to provide such third party access,
cable carriers must provide to ISPs the
Internet Protocol (IP) data transmission
capabilities they use to provide their own retail
level higher speed IS. Cable carriers must also
provide facilities to interconnect with the ISPs'
networks (the point of interconnection). Cable
carriers will be required to develop a rate
structure that covers both of these functions.
15.Some cable carriers currently charge an
additional fee (e.g. $10) to their IS customers
who are not subscribers to cable service. This
charge effectively unbundles, from the rate for
the broadcast distribution (cable) service, a
charge for the use of the cable carrier's
distribution facilities. Because cable carriers
offer their IS to customers that do not also
subscribe to their cable service, the Commission
considers that it should be a requirement that
higher speed access service should also be
available to an ISP's customers who do not
subscribe to the cable carrier's cable service.
16.While the Commission has in the past given
interim approval to rates for use of the cable
distribution system without cost support,
incumbent cable carriers will be required to
provide cost justification for rates currently
charged and all future proposed rates for this
service.
17.In the Commission's view, it would not be
appropriate to rely solely on the marketplace to
ensure that rates charged by incumbent cable
carriers for higher speed access service are just
and reasonable, as required by subsection 27(1)
of the Telecommunications Act (the Act). The
Commission therefore considers that incumbent
cable carriers' proposed rates for higher speed
access service should be supported by costing
information.
18.In order to determine appropriate service
costs, cable carriers must identify all network
components that are causal to their provision of
higher speed access service. In this regard, the
Commission notes that cable companies have
made significant investments over the last
several years rebuilding and improving their
plant and equipment. This has included
increasing channel capacity, improving the
technical capabilities of their distribution
systems and implementing digital technology to
facilitate delivery of broadcasting services to
subscribers and to improve the quality of their
services. To further encourage cable
companies to make these expenditures and
better enable them to compete with new
broadcast distribution technologies, in various
decisions made under the Broadcasting Act, the
Commission created a regulatory framework
which permitted cable companies to increase
basic cable rates to recover certain of the costs
associated with such network enhancements.
19.Advancements in the technical capabilities
of the distribution equipment used to improve
the quality and increase the quantity of
broadcast services have also provided
incumbent cable companies with the two-way
transmission capability and addressability which
are key requirements to allow them to offer IS.
However, because the Commission previously
determined these enhancements to be causal to
the provision of basic cable service, the
associated costs are being recovered from
subscribers to basic cable service. Therefore,
the Commission is of the view that these costs
should not be included when developing rates
for higher speed access services.
20.The Commission has required incumbent
cable carriers which provide retail level IS to
file tariffs for the provision of access to the
carriage facilities needed to offer these services
to competitive providers of retail level IS.
Further, in view of the market power of these
carriers in the provision of higher speed access
services, the Commission determined that it will
approve the rates and terms on which they
provide such services to competitive providers
of retail level IS. However, the Commission
agrees with CCTA that the IP data transport
function is not in the nature of an essential
facility.
Use of Proxy Costing for Smaller Cable
Carriers
21.CCTA noted that smaller cable companies
would not have the resources to engage in
costing. However CCTA noted that the
Commission has frequently accepted costs
provided by the former Stentor group (or Bell
Canada's costs) as a proxy for use by smaller
companies. CAIP noted that Multiple System
Operators (MSOs) are the main suppliers of
higher speed IS, and that these entities have the
staff and expertise to do any costing that might
be required.
22.The Commission considers that larger MSOs
should develop appropriate service cost studies
applicable to their operations. These studies
would be based on the prospective incremental
costing approach as set out in Inquiry into
Telecommunications Carriers' Costing and
Accounting Procedures - Phase II: Information
Requirements for New Service Tariff Filings,
Telecom Decision CRTC 79-16 (Decision
79-16). The Commission further considers that
it would be appropriate to provide smaller cable
carriers with the choice of proposing their own
rates based on their incremental costs or using
one of the alternatives proposed by CCTA.
23.It is the Commission's preliminary view that,
for the purposes of this Decision, "larger" cable
carriers are the seven largest MSOs, defined
with reference to the number of cable
subscribers. The Commission has selected the
number of cable subscribers, not the number of
higher speed access IS subscribers, as the
reference point because all cable subscribers
represent the potential market for higher speed
IS, even if such customers do not now
subscribe to such services. Based on
information filed with the Commission under the
Broadcasting Act, the Commission considers
Rogers Communications Inc. (Rogers),
Vid‚otron lt‚e (Vid‚otron), Shaw
Communications Inc. (Shaw), Cogeco Cƒble
Canada inc. (Cogeco), Moffat Communications
Limited (Moffat), Fundy and Bragg
Communications Incorporated (Bragg) to be the
seven largest MSOs defined with reference to
the number of cable subscribers. In order to
expedite the development of rates for higher
speed access service and because it is the
Commission's view that Rogers, Vid‚otron,
Shaw and Cogeco would be the largest four
MSOs with reference to any measure, the
Commission requires these companies to file
proposed rates supported by cost information as
set out in Part VII of this Decision.
Recovery of Start-up Costs
24.The Commission considers that the costs
associated with the point of interconnection and
its development are the start up costs
associated with the provision of higher speed
third party access service.
25.The Commission dealt with start-up costs in
the proceedings leading to Competition in the
Provision of Public Long Distance Voice
Telephone Services and Related Resale and
Sharing Issues, Telecom Decision CRTC 92-12,
12 June 1992, (Decision 92-12) and Local
Competition, Telecom Decision CRTC 97-8,
1 May 1997, (Decision 97-8) relating to the
introduction of competition into the public voice
interexchange and local markets, respectively.
26.In Decision 97-8, the Commission treated
new entrants i.e. the competitive local
exchange carriers (CLECs), and incumbents as
peers, and determined that each party would be
responsible for recovery of its own start-up
costs. On the other hand, in Decision 92-12 the
Commission considered that competitors in the
interexchange market (including the toll arm of
the incumbent telephone company) were
customers of the local telephone company. In
those circumstances, the recovery of the
start-up costs was shared between the entrant
and the incumbent toll provider based on the
projected market share of the two groups.
27.The Commission considers that the
circumstances for the higher speed access
services under consideration in this Decision
are similar to the circumstances for
interexchange competition where a competitor
was considered to be a customer of the local
telephone company. The Commission considers
it is appropriate to regard competitive ISPs as
customers of cable carriers' higher speed
access services.
28.Further, it is the Commission's preliminary
view that the start-up costs should be recovered
from cable carriers and competitive ISPs based
on the projected demand for cable carriers'
higher speed IS and competitors' higher speed
IS provided using cable carriers' higher speed
access service.
IV COMPETITIVELY SENSITIVE
COMPETITOR INFORMATION
29.CCTA submitted that cable carriers and
ISPs should develop non-disclosure agreements
on an as-required basis to address concerns
about the confidentiality of competitively
sensitive competitor information. CCTA
preferred this option, which it describes as
flexible, economical and adaptable, to others it
identified. CCTA did not favour the Customer
Service Group (CSG) option for larger cable
companies, considering that it may prove to be
unreasonably expensive for these companies'
high-speed businesses at this time, given their
nascent state of development.
30.CAIP supported establishing CSGs. It
considered that issues relating to the control of
access to and information about subscribers in
the cable market are analogous to those in the
long distance market, where such a model was
required. Fundy Cable also supported a
requirement for CSGs.
31.Stentor considered that broadcast carriers
which implement a CSG will enjoy competitive
advantages over those who do not and
therefore competition for the business of
alternate service providers will incent carriers
to implement CSGs or other safeguards, even in
the absence of a regulatory requirement.
Stentor considered that the Commission should
rely on the market to incent carriers to offer
appropriate non-disclosure commitments and to
implement organizational structures to support
these commitments. Stentor agreed with CAIP
that most cable carriers which now offer higher
speed retail level Internet Services also have
the resources to implement CSGs, but
considered that, if CSGs are required, it would
be reasonable to exempt smaller cable carriers.
32.The Commission considers that the position
of incumbent cable carriers that offer both
access services and retail IS is analogous to the
position of incumbent telephone companies in
Decision 92-12. The Commission also notes
that, at present, it is predominantly the larger
cable carriers which offer retail IS and
considers that a different approach to protecting
competitor confidential information is
appropriate for smaller cable carriers in view of
the resources available to such carriers.
33.With respect to Stentor's submission, the
Commission does not consider it appropriate to
require a cable carrier's competitors to weigh
and potentially "trade-off" measures to protect
their confidential information against the other
features of a carrier's service offering.
34.The Commission therefore considers that
larger cable carriers that offer both higher
speed retail IS and access services should be
required to create a CSG group to handle the
access service requests of competitor ISPs. All
other incumbent cable carriers offering higher
speed access services and retail IS should enter
into a standardized non-disclosure agreement
with ISPs for the protection of competitively
sensitive ISP information.
35.Standardized non-disclosure agreements are
preferable to those negotiated on a case by
case basis in that more balanced negotiating
strength will flow from industry-industry
negotiations around a working group table. The
specifics of the agreement should be negotiated
by ISPs, cable carriers and their
representatives. The Commission considers that
the list of items proposed by CAIP in its
submission for such an agreement and the
ILECs' CSG agreements represent a
reasonable starting point for discussions.
36.With respect to the issue of defining the
cut-off point between "larger" and "smaller"
cable carriers, it is the Commission's
preliminary view that the approach suggested
for defining larger cable carriers for rating
purposes is also appropriate in this context.
V TARIFFS FOR TERMS OF SERVICE
37.In Telecom Public Notice CRTC 97-40,
Review of the Terms of Service and General
Regulations of Telephone Companies with
respect to Services and Facilities Provided to
Competitive Providers of Telecommunications
Services, 1 December 1997 (PN 97-40), the
Commission is examining whether separate
terms of service should be established for ILEC
competitors. Current ILEC Terms of Service,
which are tariffed, treat these competitors in
the same manner as customers that are
end-users.
38.CAIP preferred tariffs for the rights and
obligations associated with higher speed access
services, and stated that the exact terms should
be negotiated by a Working Group, once a
technical access arrangement is in place.
39.Stentor considered that issues in this
proceeding are essentially the same as those
being considered in PN 97-40, and that there
should be no inconsistency between the
Commission's determinations in that proceeding
and this one.
40.Stentor made the same submission in this
proceeding as in PN 97-40: where market
mechanisms are sufficient to protect the
interests of all parties, Terms of Service are not
required; all mandatory terms should apply to
similar services offered by competitors; Terms
of Service applicable to customers who are
competitors should not differ from the terms
which apply to other customers; most existing
terms applying to tariffed services, including
limitations on liability should remain in place.
41.Stentor considered negotiated agreements to
be the best approach but consistency between
the Commission's determinations in PN 97-40
and this proceeding is paramount in its view.
Stentor disagreed with CCTA that PN 97-40 is
irrelevant to this proceeding.
42.CAIP supported Stentor's position with
respect to the relationship between this
proceeding and PN 97-40 to the extent it results
in terms of access that are in a General Tariff;
CAIP sees no reason to treat broadcast
carriers differently than ILECs.
43.CCTA generally opposed a tariffing
approach, stating that the procedures developed
in the CAIP/CCTA Technical Working Group
should be used as the standard operations
procedures for third party access agreements.
In CCTA's view, the issues in PN 97-40 and
this proceeding are not interdependent; for
example, higher speed access will not be like a
traditional telephony service and it is possible
that limits on cable carrier liability could have a
significant impact on the risks and costs of
providing third party access or the time required
to implement the service.
44.The Commission generally considers that it
is important to take a symmetrical approach
with respect to regulating carriers which have
market power, unless there are compelling
reasons to do otherwise. The Commission notes
that, in Decision 98-9, it found that incumbent
telephone carriers and incumbent cable carriers
have substantial market power in higher speed
access services.
45.This would mean that, unless the
appropriateness of doing otherwise is
demonstrated, the general approach to terms
which are tariffed for ILECs and cable carriers
should be the same. It is also the Commission's
view that the terms themselves would be the
same, unless the appropriateness of doing
otherwise is demonstrated. The Commission is
of the further view that it is appropriate to tariff
certain of the terms on which carriers with
market power provide services to their
competitors. On the release of its
determinations in PN 97-40, the Commission
intends to seek comment as to why the
approach in that decision should not apply to
cable carriers in respect of the provision of
higher speed access service.
VI RESALE OF HIGHER SPEED ACCESS
SERVICES
46.CAIP wanted mandatory resale of all
underlying facilities, network components and
services used by cable carriers to provide their
own retail IS.
47.CCTA opposed mandatory resale of access
services, and submitted that such mandatory
resale is not required for competition in the
market for high speed access to continue to
develop. CCTA submitted that resale may not
be workable with the currently proposed
approach to implementing access. CCTA
considered that the record shows that parties
are confused about what resale means in this
context. In its view, ISPs want mandatory
resale because they want to be able to bill the
end-user directly for access. Fundy submitted
that resale should not be mandatory, but
supported resale if there is enough bandwidth
and existing service quality is not compromised.
48.Stentor stated that "resale" may not be the
most appropriate description of the use ISPs
wish to make of higher speed access services.
Stentor stated that what ISPs want is the right
to use a broadcast carrier's tariffed higher
speed access service as a component in a
bundled, end to end IS, whether or not this
arrangement is called "resale". Stentor noted
that this right appears to be inherent in the
determination that broadcast carriers will
provide higher speed access services on a
tariffed basis.
49.In Decision 98-9, the Commission stated
that:
"Certain parties requested that the Commission
require resale of access. With respect to
CAIP's request that its members be permitted
to resell a cable carrier's access service so as
to retain a complete relationship with their ISP
customers, the Commission considers that there
may be benefits from such an arrangement.
The issue of whether the Commission should
mandate resale and sharing of carriers' higher
speed access services will be addressed in
Telecom PN 98-14."
50.In the Commission's view, resale of higher
speed access services will contribute to a
continued competitive market for retail IS. The
Commission further notes that restrictions on
the resale of access services would not be
consistent with the requirement imposed on
other Canadian carriers that their tariffed
services be generally available for resale. The
Commission therefore considers that, consistent
with its general approach of allowing resale of
tariffed services, a condition of the provision of
tariffed third party access is that it be available
for resale.
51.With respect to CCTA's point that dial-up
access (primary exchange) is billed separately
from Internet Service, the Commission notes
that, with respect to other access methods (e.g.
ADSL), ISPs have the option of including the
access charge in their bills to customers. CCTA
considered "resale" to mean that without resale
the end customer will pay the cable carrier;
where there is resale, the ISP will be billed for
the access. The Commission considers that
ISPs should be able to provide an end-to-end IS
service to their customers. This could be
effected by, for example, the end-user
appointing the ISP as its agent for the purpose
of dealing with the cable carrier.
VII FURTHER PROCESS
Further Process with Respect to Rates for
Higher Speed Access Services
52.The Commission directs Rogers, Vid‚otron,
Shaw and Cogeco to file proposed tariffs
setting out rates for higher speed access
service and for the use of cable facilities
required to provide that service, within 60 days
of the date of this Decision.
53.Carriers filing proposed tariffs are directed
to provide:
a) proposed rates for higher speed access
service and for the use of cable facilities;
proposed rates should include the recovery of
start-up costs (point of interconnection) based
on the principles set out in the Commission's
preliminary view respecting start up costs in this
Decision, and
b) a supporting cost study developed using to
the extent possible the incremental Phase II
costing approach as set out in Decision 79-16.
The costing study should indicate clearly, for
each of the network and point of
interconnection, which components are included
in the costing. Specific justification must also be
provided in respect of any component that could
be considered to be part of an infrastructure
upgrade the cost of which is being recovered, in
whole or in part, through the framework put in
place by the Commission under the
Broadcasting Act.
54.As noted above, it is the Commission's
preliminary view that each of Moffat, Fundy
and Bragg would also be a "larger MSO".
Accordingly, at its option, each of these
companies may either (a) file, within 60 days of
the date of this Decision, proposed tariffs as set
out in the preceding paragraph or provide
justification as to why it wishes to use an
alternate approach to the development of rates,
serving copies on all other parties, or (b) await
the Commission's final determination of the
definition of a "larger" MSO.
55.Each of Rogers, Vid‚otron, Shaw, Cogeco,
Moffat, Fundy and Bragg may also submit
proposed rates reflecting any alternate
proposed method for the recovery of start-up
costs. Carriers using an alternate approach,
such as proxy costs, are requested to describe
fully the methodology of the approach used and
to explain why that approach has b
some quotes:
"However, as noted in Decision 98-9, while the
cable industry stated it proposes to provide
higher speed access services as soon as
possible, technical and related work required to
implement this service had not yet been
completed. The Commission issued PN 98-14
before technical issues relating to the provision
of such access were resolved in order to avoid
regulatory delays in making access available
once technical issues are resolved. A Technical
Working Group of the Canadian Association of
Internet Providers (CAIP) and the Canadian
Cable Television Association (CCTA) is
currently addressing these issues."
CRTC knows there are technical problems and will not require open access untill these problems are solved.
"14.The following findings apply only to higher
speed access services offered by incumbent
cable carriers to enable the provision of retail
IS. In order to provide such third party access,
cable carriers must provide to ISPs the
Internet Protocol (IP) data transmission
capabilities they use to provide their own retail
level higher speed IS. Cable carriers must also
provide facilities to interconnect with the ISPs'
networks (the point of interconnection). Cable
carriers will be required to develop a rate
structure that covers both of these functions..."
"In order to determine appropriate service
costs, cable carriers must identify all network
components that are causal to their provision of
higher speed access service]"
Is this where @HOME's network is used?
I would appreciate anyones comments on the above.
regards
Jay |
