Dave Scharf, Centretown News
Smaller telecom providers like Distributel want Bell to share their high-speed fibre networks.Bell Canada’s efforts to overturn a Canadian Radio-television and Telecommunications Commission ruling is facing mounting opposition across the capital.
The original CRTC decision would allow small, local internet providers access to their high-speed fibre networks.
Canada’s largest Internet provider rejected recent claims by Kitchissippi Coun. Jeff Leiper and others that reversing the ruling would stifle competition and disadvantage local customers.
Bell’s chief legal and regulatory officer, Mirko Bibic, says economically vibrant cities need to have the highest standard of networks in the world.
“You’re not going to be able to get those unless there is a policy environment which supports the billions of dollars that it’s going to take to get that done by companies like Bell,” says Bibic.
He argues that there is a particularly tough economic situation across the country, where most companies are being forced to reduce capital investments. “You get companies like Bell which are actually increasing capital investment in jobs and deliver those networks that communities like Ottawa need,” says Bibic.
Bibic refers to Mayor Jim Watson’s openly expressed support of Bell’s appeal against the CRTC ruling.
Watson recently wrote a letter to the clerk of the privy council, backing Bell’s position.
“So, Mayor Watson gets it and the other mayors who support us get it.”
Watson told the Ottawa Citizen in February that Bell has created a lot of jobs locally and invested a considerable amount of money in its fibre networks, only to have competing providers piggyback on them at a severely reduced cost.
At the helm of one of those competitors is Matt Stein, CEO of Distributel Communications Ltd.
“Our largest office is right here in downtown Ottawa,” says Stein. “We employ hundreds of Ottawans, we’ve been there for a very long time. We certainly are as much, possibly far more a local Ottawa company.”
Stein says his company brings a competitive product to market, based in part on Bell’s infrastructure. Distributel typically sells that product at a discount compared to the Bell offering, Stein adds, but it pays for the privilege.
“We’re not getting it for free,” says Stein. “We’re getting it at what the CRTC deems is a fair and reasonable return for Bell.”
Not all critics are convinced that the return is reasonable. Dwayne Winseck is a Carleton University journalism professor and director of the Canadian Media Concentration Research Project.
“I’m fully supportive of the CRTC decision and, in fact, one could argue that it did not go far enough,” says Winseck.
Historically, Winseck says, the wholesale rates set by the CRTC are typically marked up by 40 per cent.
On top of that, he says it’s widely understood that the base rate is likely to be inflated, since Bell controls access to the costs that determine how it’s calculated.
But Bibic doesn’t agree. “He (Winseck) has made it out to be as if it’s a 40 per cent profit margin markup on costs,” says Bibic. “But the 40 per cent is some measure to recover common costs across the network. So from a regulatory costing point of view, he’s wrong.”
Furthermore, he says, building these high-speed fibre networks is expensive.
To get the necessary return on investment, companies such as Bell need a meaningful market share.
“When a subscriber subscribes they buy three products from us: Internet, TV and home phone,” says Bibic. Each time Bell loses a customer to a competitor using its network, it is deprived of not one, but three revenue streams. He argues that the wholesale rate set by the CRTC isn’t enough to compensate it.
Stein says he is surprised by Bell’s argument. He says that Bell has supplied no evidence that opening their fibre networks to competitors will harm investment.
In fact, he adds, when it was clear that the CRTC would make the ruling, Bell announced further investments in the Toronto area.
Stein says that ultimately, the CRTC decision wasn’t about Bell and competitors. It was about small competitors and the established players, which include many other phone and cable companies across Canada.
“I think this is about sustaining competition which has been in the Internet market for over 15 years,” says Stein.