ARCHIVED - Transcript - Hull, QC - 2001/04/18
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In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
CONSULTATION / CONSULTATION
MONITORING THE CANADIAN
TELECOMMUNICATIONS INDUSTRY /
SURVEILLANCE DE L'INDUSTRIE
CANADIENNE DES TÉLÉCOMMUNICATIONS
|HELD AT:||TENUE À:|
Centre de Conférences
|April 18, 2001||le 18 avril 2001|
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Consultation / Consultation
Monitoring the Canadian
Telecommunications Industry /
Surveillance de l'industrie canadienne
|BEFORE / DEVANT:|
Directeur, Finance en
matière de réglementation,
Commission staff /
Personnel de la Commission
Commission counsel /
Avocats de la Commission
|HELD AT:||TENUE À:|
Centre de Conférences
|April 18, 2001||le 18 avril 2001|
TABLE OF CONTENTS / TABLE DES MATIÈRES
|PAGE / PARA NO.|
|PRESENTATION PAR / PRÉSENTATION PAR|
on behalf of Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications and Télébec Ltée.
|7 / 42|
pour Action Réseau Consommateur
|22 / 114|
on behalf of AOL Canada Inc.
|34 / 167|
on behalf of AT&T Canada
|46 / 214|
on behalf of Canadian Cable Television Association
|57 / 251|
on behalf of Telus
|66 / 275|
on behalf of Consumers Association of Canada and BCOAPO
|80 / 321|
on her own behalf
|88 / 343|
on his own behalf
|142 / 583|
Hull, Quebec / Hull (Québec)
--- Upon commencing the consultation on Wednesday,
April 18, 2001 at 0910 / La consultation débute
le mercredi 18 avril 2001 à 0910
1 MS SOEHN: Good morning, ladies and gentlemen.
2 Good morning, everyone.
3 My name is Shirley Soehn. I am the Executive Director of Telecom of CRTC and I would like to welcome you all here this morning. We really appreciate everybody coming and helping us out today.
4 We also have our consultants who have done a lot of work for us, but we really do appreciate the industry coming forward, Consumers Association and others, to help us in determining exactly what it is we need to do to begin our monitoring of the telecom industry.
5 Just before we get started, what we would like to know is whether or not any of the presentations will be in French. Can anybody identify whether or not -- if there are any presentations that will be in French? No? Okay.
6 Because there is translation. If anybody is in need of a translation device, they are outside, they are with the Commissionaire and you have to show a piece of ID to obtain the device.
7 This consultation has been initiated to assist the Commission in determining what information is needed to monitor the Canadian telecommunications industry more effectively.
8 As set out in our action plan for 2000 to 2003, this monitoring will allow the Commission to determine basically the state of competition, the effect the competition has on services and to consumers, as well as it provides the service providers the compliance with legal and regulatory requirements.
9 This information will be used also to assist the Commission to fulfil the requirements that were under the Order in Council P.C. 2000-1053. What that required was us to submit a report annually for the next five years. The two things we were supposed to report on specifically are the status of competition in the Canadian telecommunications industry, as well as the deployment accessibility advance telecommunications infrastructure and services in both urban and rural areas in all regions of Canada.
10 As indicated in the Public Notice 2000-175, it is anticipated that the information being collected by Statistics Canada will also be made available to the Commission. As this time we are working with Statistics Canada to put the necessary arrangements in place to allow us to draw upon this information.
11 The Commission will also require additional information to be provided directly from the telecommunications service providers. As you are all aware, the Commission has engaged consultants Lemay-Yates Associates to prepare a background report recommending appropriate mechanisms to collect this additional information.
12 The purpose of this consultation is to provide the telecommunications industry, consumer groups and other interested parties, the opportunity to comment on the recommendations in the background report.
13 This consultation is an important aspect of the broader process to monitor the Canadian telecommunications industry.
14 On behalf of the Commission, once again I would like to thank you for your participation today, for both those who are presenting, as well as those who have submitted the written comments in advance.
15 So I would just like to introduce some of the people from the Commission and our consultants.
16 Let me start by introducing Rob Yates of Lemay-Yates and Associates. I didn't get a title for Rob, but I assume Joanne didn't give him one. Rob, I assume, is Co-President of Lemay-Yates.
17 Also we have with us from Lemay-Yates, Leonard Eichel. He is Vice-President.
18 As well, seated next to me is John Macri from the Commission. He will be the moderator for today's discussion.
19 The other members who are responsible from the CRTC -- we have a fairly extensive team because it is a fairly extensive project and we have very tight time constraints on this project, so we have a number of people from the Commission who are responsible for developing and implementing this monitoring.
20 With us we have Peter Wilson. He is the team leader. Cathy Bakker, Madeleine Bisson, Tanya Rofani, Peter Bing, Vic Lawtz, Nat Natraj, Steve Malowany and Commission counsel Allan Rosenzveig and Leanne Bennett.
21 Now I would like to turn things over to John Macri for today.
22 MR. MACRI: Thank you, Shirley.
23 At this point I would just like to review a few matters with you.
24 To begin with, each of the parties will make oral presentations.
25 To ensure that the recording and transcription people are able to produce an accurate transcript, when speaking please ensure that your microphone is on. Please make sure that it is off when you are not speaking so that there is no feedback into the system.
26 We would also ask that you not speak too quickly so that the interpreters can follow you and the court reporter can follow you as well.
27 Parties wishing to purchase copies of the transcripts, either in hard copy or machine readable form, can do so by making arrangements with the court reporter.
28 With respect to the sitting hours, I think, as stated in the April 11th process letter, we are going to have a lunch break at 12 o'clock and will likely go until about 1:30. We will also break for coffee at mid-morning and mid-afternoon.
29 We anticipate now, based on the schedule that we have, that we will likely finish the consultation today.
30 Parties are reminded that the presentation will be a maximum of 20 minutes. Panel presentations will be a maximum of 25 minutes.
31 If you wish to make a visual presentation, we have a laptop and a projector available for your use, so just let us know. Let Peter Wilson know and we can make the arrangements prior to your presentation.
32 After the presentations, Commission staff may have questions of clarification. It is not intended at that time that parties address questions to each other but, as we anticipate, there likely will be some time at the end of the presentations for parties to address clarification questions to each other. This will provide an opportunity for an open discussion, so we please ask that you hold your questions until then.
33 In the December 11 letter, there was a list of parties who indicated their intention to make presentation and a proposed order of appearance. We have been since notified that there are going to be some changes to that.
34 Upper Canada Networks and Call-Net Enterprises have indicated to us that they will not be making presentations today.
35 We have also had a few additions, PIAC on behalf of CAC and BCOAPO will be making a presentation today. So will Cara Stephens and François Ménard.
36 What I would ask prior to the presentation is that the panel or the person making the presentation introduce themselves so that we have some names that go along with the faces.
37 If there are any other changes to that schedule, please let us know and we will try to accommodate you with that change.
38 I would like to remind parties that the deadline for written reply submissions is April 26.
39 Finally, I would like to remind parties that our website will contain any documents that are filed in this proceeding, so please check that as material is received for more timely information.
40 Are there any questions?
41 MR. MACRI: Okay. So we will begin with the first party. It will be a panel representing Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Sasktachewan Telecommunications and Télébec Ltée.
PRESENTATION / PRÉSENTATION
42 MR. FARMER: Thank you, John.
43 My name is Bob Farmer, I am Vice-President of Regulatory Matters at with Bell Canada. To my right is Dennis Henry, V-P of Regulatory Law. To my left is George McDougall, Director of Regulatory Matters at Bell Canada.
44 As John just indicated, we are here today representing Aliant, Bell Canada, MTS, Saskatchewan Telecommunications and Télébec Ltée.
45 On April 12 we filed our comments on the Lemay-Yates Background Report regarding Public Notice 2000-175. The Lemay-Yates report provided a variety of options as to the type of information which could be collected to determine the state of competition in our industry. We appreciate this opportunity to present our views on what information is required.
46 Before we turn our comments to the issue of the information that should be collected to monitor the industry, we have a general comment on the data collection process.
47 We are confident that the Commission is mindful that the collection of market data, and its subsequent analysis, can be burdensome tasks. Consequently, we encourage the Commission to adhere to three guidelines:
48 First, the Commission should collect only information that is needed to effectively assess the state of competition and the deployment of broadband infrastructure.
49 Second, where possible the Commission should rely upon publicly available information and data made available for other purposes such as data filed in other regulatory proceedings.
50 Third, the Commission should rely upon qualitative assessments as well as quantitative measures.
51 By doing so, the resources necessary to gather and analyze the data will only be as large as necessary.
52 Finally, we request that the Commission ensure that confidential data collected is protected from public disclosure and that results are sufficiently aggregated so as to protect the confidentiality of the data.
53 In assessing the question of the information that the Commission should collect to assess the state of competition, we believe that it should be guided by its past considerations on this matter.
54 When determining whether forbearance is appropriate in a market, the Commission has to assess the state of competition in that market. In Decision 94-19, the Commission described the conditions that should be considered in the course of its assessment.
55 Of course, the task at hand today is not forbearance. However, the task does require an assessment of the state of competition and so the same considerations are pertinent.
56 The conditions noted by the Commission in Decision 94-19 included the following:
57 i) demand conditions, such as the availability of economically feasible substitutes and the costs to the customers of changing suppliers;
58 ii) supply conditions such as the ease of rivals to expand output in response to non-transitory price increases, the likelihood of entry and the nature of any barriers that may prevent such entry;
59 iii) evidence of rivalrous behaviour, which includes both price and non-price factors;
60 iv) the nature of innovation and technological change;
61 v) poised or potential competition and whether entry is likely to occur and become effective within a reasonable period of time; and
62 vi) market share data as one of many factors to consider when assessing an incumbent's market power.
63 The Commission is well aware that in the case of a forbearance request the information that is studied can be voluminous and the process time-consuming. Examining the industry at the level of detail entailed in a forbearance application would not be practical, nor would it be necessary.
64 In the next few minutes we will outline the information we think would be practical and useful for the Commission to collect in order to make an assessment of the state of competition. In doing so, we will follow the principles found in the regulatory framework decision regarding the conditions to consider in assessing markets
65 At the same time, we will address the other issue of concern, namely the availability and deployment of advanced network infrastructure.
66 Before investigating the state of competition in a market, it is necessary to first define the market entailing both product and geographic assessments. Lemay-Yates has presented 28 product/service segments as a possible list for consideration. It has also listed options for geographic segmentation, some of which, such as central offices, exchanges and urban agglomerations, are very numerous.
67 A further breakdown by class of customer is also presented as an option. We believe that such a level of disaggregation would not be necessary, would be unwieldy and would ultimately be ineffective.
68 In defining relevant markets for study, we can generally be guided by the nature of the issue at hand. For instance, in forbearance applications or complaints by competitors regarding anti-competitive behaviour, the relevant product and geographic markets are defined by the nature of the application or the specific allegations of anti-competitive behaviour at issue. In other words, the competitive analysis regarding markets is driven by the focus of the application or complaint.
69 For example, a complaint regarding a competitor's pricing in the international toll-free market would not likely include detailed analysis of the domestic long distance market, as the services are not substitutable
70 In contrast with that approach, the broad focus of the report on the state of competition required by the Governor in Council does not lend itself to a precise definition of relevant product or geographic markets. However, in order to give some structure to the monitoring report, the companies are recommending that the report address certain key industry segments which may have some overlap or substitutability from a pure competitive analysis perspective, but nevertheless provide a reasonable overview of the industry as a whole.
71 The Commission will be able to get a good overall perspective of competition in the telecommunications industry in Canada by looking at the following six industry segments: the local market, payphone, long distance, private line and data network, Internet and wireless services.
72 Since competition in the local and payphone markets seems to be rolling out initially where populations are most concentrated, it makes sense to examine these markets in terms of disaggregations that reflect population densities. A breakdown by large urban areas, smaller urban areas and rural areas for each province or territory would appear to be reasonable.
73 Rate bands could be used to provide a relevant split, since data is often broken down in this manner and thus would be relatively easy to collect. For example, for the local market, and using the band structure proposed by Bell Canada in the proceeding initiated by Public Notice 2000-27, Rate Bands A and B could be aggregated and viewed as larger urban areas, Rate Bands C plus D could equate to smaller urban areas, and Rate Bands E plus F could equate to rural areas.
74 Since local service is typically priced differently for residential consumers and business users, it would also be appropriate to distinguish between residential and business customers when examining the local market.
75 With respect to competitive long distance services, the long distance market is national in scope, as the Commission concluded in Decision 97-19. However, the Commission may also want to collect regional market data, such as by province or territory.
76 Decision 97-20 defined the retail private line and data markets in terms of routes and provided the criteria under which each route would be eligible for forbearance. The Commission collects information with respect to the availability of private line services on a regular basis as part of its ongoing analysis of the competitiveness of these markets.
77 For example, lists of operational interexchange private line routes are filed by competitors of incumbent local exchange carriers in April and October of each year. The Commission should rely upon these existing sources of information, as well as on applications for forbearance, to monitor the status of competition in interexchange private line and data markets. To supplement this data, network schematics providing information on network capacity available on national and international routes would be useful.
78 The Internet access market is one of the fastest growing segments of the telecommunications sector of the Canadian marketplace. There are literally hundreds of Internet service providers in the Canadian market ranging from the largest ISP in the world, AOL, to locally owned ISPs that operate in only one city or town. For the purposes of assessing the competitiveness of the Internet access market, it is not necessary to collect information separately for dial access services and high speed access services. In fact, the Commission determined in 1999 that these are two components of a single market.
79 However, since this monitoring initiative also includes a focus upon the availability and deployment of advanced network infrastructure, it might be appropriate to measure the availability of high speed Internet access services separately. There may also be benefit in collecting data with respect to the availability of Internet services in urban and rural areas.
80 The National Broadband Task Force initiative being led by Industry Canada is currently studying the availability of high-speed broadband Internet services to Canadian communities. The initial findings of the Task Force are expected in the next few months.
81 Information and conclusions coming from this Task Force in examining the deployment and accessibility of broadband network infrastructure and high-speed access may prove useful in this regard.
82 Though wireless services may be considered by some to be substitutes in some respects for local services, long distance services and increasingly for Internet access services, pricing levels and structures are currently substantially different. For this reason, we believe that wireless should be viewed as a separate market, at least in the short term.
83 Now that we have described the way in which the relevant product and geographic markets should be defined, we will address the conditions that should be considered in assessing the state of competition in each of these markets.
84 Market share is one, but only one of several factors that should be analyzed in assessing the state of competition in any market. Market share can be measured using the units of demand in the market in a given reporting period.
85 For instance, for local service, each telecommunications service provider should report, by province or territory, the total number of residential and business network access services for each of large urban, smaller urban and rural areas. Our written submission suggests measures for each of the other relevant product and geographic markets.
86 As an alternative, revenues for each of the product and geographic markets could be reported. Whether the Commission opts for measures of demand or measures of revenue, it will be important to have clearly defined reporting rules to ensure consistency among reporting TSPs.
87 Other conditions that should be examined in evaluating the state of competition in any market are the demand and supply conditions in that market.
88 Demand conditions can broadly be viewed as the ability of customers to switch to other service providers or reduce the consumption of the good or service in response to a price increase.
89 Factors affecting demand conditions include:
90 1) the availability of economically feasible and practical substitutes;
91 2) the costs to customers of switching suppliers; and
92 3) whether the product is an essential input into the customer's production process.
93 Supply conditions relate to the ability of TSPs to offer services in a market. Factors that should be assessed include:
94 1) a competitor's capacity and expected future capacity to provide service;
95 2) the likelihood of entry into a market; and
96 3) the presence of any barriers to entry affecting the market.
97 A qualitative assessment of the nature of innovation and technological change evident in the marketplace should be included as part of this analysis.
98 In order to assist in this qualitative assessment of demand and supply conditions, the companies recommend that the Commission ask TSPs to report their assessment of the demand and supply conditions. For instance, TSPs can report on the markets which they serve and the number of customers available to them in these markets.
99 In assessing the state of competition, it is also important to determine if there are any significant barriers to entry. In Canada, in establishing a competitive framework, the Commission has put in place a number of regulatory mechanisms and consumer safeguards to lower barriers and thereby encourage competitive entry. The list of these mechanisms and safeguards is fairly long and is included in our submission.
100 Although the presence or absence of the appropriate safeguards and mechanisms can be broadly evaluated by the Commission, the ILECs can also provide data, on an exception basis, where a component has not been made available pursuant to regulatory requirements. This would be an efficient means of collecting information regarding these key components that represent the means to allow potential competitors to enter the market and that facilitate ongoing competitive market development.
101 Evidence of rivalrous behaviour is also important in assessing the state of competition. Rivalrous behaviour can be exhibited in many ways that include both pricing and non-pricing elements. Aggressive price competition in the pursuit of customers is an element that can be monitored.
102 Given the variety of pricing offers in the market, precise price tracking can be difficult, however, each TSP can be expected to provide information regarding pricing trends for its own services. Further, non-pricing factors, such as the expansion of the scope of a TSP's activities in relation to its geographic coverage and product portfolio, either directly or using alternate distribution channels, and the addition of innovative products and technology are other key factors that indicate the level of competitive intensity in a market.
103 In keeping with the principle of relying upon information already collected or available, the companies recommend that the Commission use, in its assessment, the following information:
104 i) monthly local exchange carrier data filed with the Central Fund Administrator;
105 ii) the registrations of CLECs, IXCs, resellers, high speed Internet access service providers, DSL service providers and payphone providers. This information identifies competitors poised to enter a market;
106 iii) filings of CLECs requesting approval to operate in new territories. This information indicates the parties intending to serve and, through their service maps, the areas they intend to cover.
107 iv) submissions of carriers and interested parties that form part of major proceedings, such as filings of market information;
108 v) lists of operational interexchange private line routes filed by competitors of ILECs in April and October of each year; and, finally,
109 vi) information filed as part of forbearance applications.
110 We hope that the suggestions we have made here today will be of assistance to the Commission in carrying out its mandate to assess the state of competition.
111 That concludes our comments.
112 MR. MACRI: Thank you, Mr. Farmer.
113 The next party is Action Réseau Consomateur.
PRESENTATION / PRÉSENTATION
114 M. SÉBASTIEN: Bonjour, j'ai préparé des copies du document que je peux faire circuler autour de la table, de part et d'autre, si les gens veulent suivre. Ç'a été aussi, bien sûr, envoyé au CRTC -- donc le document est disponible ou sera disponible sur le site du CRTC.
115 Mon nom est Jean Sébastien et je représente aujourd'hui Action Réseau Consommateur ainsi que la Fédération des Associations.
116 MR. MACRI: Mr. Sébastien, I'm sorry. I guess you came into the room a little bit late. We were unaware that you were going to make a presentation in French, so some people will need hearing devices. For those people that will need devices, we will just take a short five-minute break. For those that came in late, the Commissionnaire outside has the listening devices. You will need to show some ID to get those devices.
117 So we will just take a short break.
118 I'm sorry, Mr. Sébastien.
119 M. SÉBASTIEN: Pas de problème.
120 MR. MACRI: I am told that the listening devices -- I am told that Channel 2 is for English and Channel 4 is for French.
121 Sorry, Mr. Sébastien. Please continue.
122 M. SÉBASTIEN: Donc, rebonjour tout le monde, je m'appelle Jean Sébastien. Je représente aujourd'hui Action Réseau Consommateur et la Fédération des Associations coopératives d'économie familiale. Ce sont deux associations consommateurs représentant des abonnés du téléphone répartis à la grandeur du Québec.
123 Le Conseil est appelé pendant les cinq prochaines années à faire des rapports à la Gouverneur en Conseil sur deux questions, l'état de la concurrence et le déploiement et l'accessibilité dans les zones urbaines rurales du Canada d'une infrastructure de communication et de services évolués.
124 Nous interviendrons surtout sur le premier aspect, soit l'état de la concurrence dans les marchés de télécommunications et particulièrement sur l'effet de la concurrence sur les services offerts aux consommateurs.
125 L'intérêt démontré par le Conseil dans cet avis public à colliger des données sur l'ensemble de l'industrie des télécommunications nous semble opportun dans cette période où la compétition est déjà bien développée dans la fourniture de services d'appels interurbains et balbutiante, à peine, dans l'offre de service local.
126 Comprendre dans ses différents aspects l'effet sur les consommateurs de la mise en place de la compétition dans l'offre de services interurbains pourrait permettre une amélioration des pratiques commerciales des entreprises titulaires et compétitrices lors du développement du service local.
127 Dans l'avis public 2000-175, le Conseil indique que les services d'un consultant ont été retenus. Le rapport documentaire déposé par la firme Lemay-Yates le 21 mars dernier recommande au Conseil différents mécanismes de surveillance. Nous évaluerons la portée de la surveillance que le Conseil devrait mettre en place.
128 Le rapport documentaire déposé par la firme Lemay-Yates fait état de 17 paramètres permettant d'évaluer l'état de la concurrence. Une poignée d'entre eux vise à étudier l'effet de la concurrence sur les consommateurs. C'est à ceux-ci que nous nous arrêterons plus particulièrement.
129 En ce qui a trait aux enjeux propres à la propriété de l'industrie, nous discuterons le projet de mise en place d'une mesure dite du surplus des consommateurs.
130 Par ailleurs, il nous apparaît qu'il n'est peut-être pas utile au Conseil pour atteindre ses objectifs d'évaluer l'ensemble des services des entreprises de télécommunications. A tout le moins en ce qui a trait aux effets de la concurrence sur les consommateurs, il est particulièrement pertinent d'étudier parmi les 28 produits et service dont fait état le rapport documentaire. Ceux-ci : le service local, les services d'appels interurbains, les services d'assistance aux abonnés, les fonctions d'appel et les lignes des téléphones publics.
131 Parmi les 17 paramètres, en voici donc un premier : l'élasticité de la demande. Dans la première année, une étude de l'élasticité de la demande devrait porter sur la demande de services d'appels interurbains. Mais au cours des cinq ans pour lesquels le Conseil sera appelé à faire rapport, il est probable que la compétition dans le service local prenne son essor. L'élasticité de la demande deviendra un enjeu pour le service local.
132 Les fluctuations dans la demande devront être corrélées avec les tarifs. Les données quant aux tarifs ne sont pas colligées de façon systématique et complète. En effet, l'indice des prix des services de téléphone que prépare Statistique Canada se limite aux données obtenus de Bell Canada, de TELUS et d'AT&T Canada.
133 Comme le fait la Federal Communications Commission aux États-Unis, et bien qu'elle ne réglemente plus les prix des appels interurbains, il est utile de continuer à en surveiller l'évolution.
134 En ce qui a trait à une éventuelle mesure de l'innovation, il faudrait préciser ce qu'on veut y inclure. La liste d'items proposés dans le rapport documentaire de Lemay-Yates énumère sans distinctions les éléments disparates. L'effet sur les consommateurs de l'introduction de nouveaux services n'est en rien comparable à l'effet d'un regroupement de produits.
135 Les consommateurs placés devant un éventail de nouveaux services, souvent rendus possibles par des développements technologiques, peuvent s'en prévaloir ou pas. Par le refus éventuel des consommateurs de se prévaloir d'un nouveau service, la demande sanctionne l'offre de produits et de services. Mais le regroupement de services peut conduire les consommateurs dans de nouveaux dédales administratifs.
136 L'offre groupée de services ouvre de nombreuses questions en ce qui a trait aux contrats et aux pratiques de recouvrement. Ainsi, même si les modalités de services précisent que l'interruption du service local par une entreprise de télécommunications ne peut être l'effet du non paiement des frais non tarifés, il arrive que les services de recouvrement des entreprises menacent les abonnés de coupures lorsqu'un dû important est reporté depuis quelques temps.
137 Le regroupement des services n'est pas une innovation que sanctionne aussi clairement la loi de l'offre et de la demande et ne devrait pas être évalué dans un même indicateur.
138 La proposition du rapport des consultants à l'effet de demander aux entreprises de rapporter les taux de roulement de leur clientèle est pertinente en vue de mesurer la qualité de l'offre concurrentielle.
139 Ensuite il y a plusieurs paramètres liés aux relations avec les consommateurs. Je les prends en bloc.
140 En ce qui a trait à la disponibilité de l'information aux consommateurs, des obstacles au changement de fournisseurs, et de la satisfaction des consommateurs, le Conseil a déjà imposé aux entreprises de téléphone une mécanique de rapport des indicateurs de la qualité du service.
141 Les décisions 1997-16, 2000-24 et 2001-217 ordonnent aux compagnies de téléphone de produire des rapports réguliers sur leurs rapports avec la clientèle. Ces données pourraient effectivement permettre de faire un portrait en ce qui a trait au service local, mais des données comparables sur les pratique commerciales dans l'offre de services interurbains manquent
142 D'autre part, il ne nous apparaît pas certain qu'il soit suffisant d'imposer aux compagnies la production de rapport sur ces questions. Des indicateurs de qualité du service pour l'interurbain donneraient des indications précieuses en vue de l'amélioration du service. Deux aspects, notamment, pourraient être évalués. D'abord, le délai entre l'acceptation par un consommateur des services offerts par une entreprise de télécommunications et l'entrée en vigueur du service. Ensuite, la durée du contrat pour les différentes offres de services et tarifs proposés par les entreprises offrant l'interurbain.
143 Il importe à la fois de mesurer le délai et tout écart entre le délai annoncé au moment de la vente du service et le délai effectif. A plusieurs reprises, depuis l'autorisation de la compétition dans les services interurbains, nos associations membres ont dû porter plaint devant l'Ombudsman des télécommunications des cas où des consommateurs avaient payé d'importantes sommes à l'ESLT parce qu'un vendeur d'une entreprise concurrente avait promis une date erronée d'entrée en vigueur du service.
144 En ce qui a trait à la durée du contrat, il faudrait identifier les cas où l'offre en précise les termes -- peu nombreux.
145 Dans les autres cas, il faudrait évaluer les délais accordés aux consommateurs lorsqu'une entreprise modifie ses tarifs. A cet égard, les pratiques commerciales en vigueur dans le marché de l'interurbain nous semblent médiocres. Nous avons récemment demandé à la cour d'autoriser un recours collectif contre Bell qui a modifié l'un de ses plans d'interurbain. Nous alléguons que Bell a donné à ses abonnés une notification a posteriori, même s'il ne s'agit que de quelques jours, d'une modification de leur base tarifaire.
146 Le développement d'indicateurs de la qualité du service peut poser problème s'il ne repose que sur des données déposées par les entreprises elles-mêmes. Il est utile pour ce type de données de s'assurer d'une vérification indépendante.
La Commission des services publics de l'État de New York a commandé aux syndiqués de la New York Telephone -- syndiqués à la Communication Workers of America -- un rapport sur les normes de service en vigueur.
147 Un sondage a démontré des pratiques inquiétantes qui visent toutes à améliorer les indicateurs de la qualité du service de l'entreprise. Ainsi, 54 pour des employés sondés ont indiqué que la direction leur a demandé de modifier les registres pour indiquer une complétion plus rapide des travaux. Trente pour cent ont indiqué avoir vu un responsable modifier les registres.
148 En ce qui a trait à la réalisation des obligations de services universels, il ne fait aucun doute qu'il est essentiel d'en mesurer l'atteinte. Les entreprises de service local titulaires se sont vues demander la préparation de plans d'extension du service dans le cadre du processus institué par les avis publics sur le plafonnement des prix.
149 D'autre part, l'ordonnance 2000-393 impose aux entreprises de faire rapport sur la pénétration du service local de base. L'une et l'autre démarche entreprise par le Conseil impose de se doter d'outils efficaces de mesure.
150 Dans le premier cas, l'enjeu est d'étudier la disponibilité du service en fonction des particularités du territoire. Dans l'autre, d'étudier sa disponibilité dans le contexte où les tarifs du service local sont de plus en plus alignés sur les coûts. Dans le premier cas, notons qu'il sera important de développer des données par petites unités de territoires.
151 Le rapport documentaire de Lemay-Yates propose plusieurs modes de découpages des territoires -- ceux qu'utilisent les ESLT, ceux de la poste, ceux de Statistique Canada, et cetera.
152 Dans le second cas, le problème est au contraire de se doter de données nationales fiables.
153 Le rapport déposé en janvier de cette année par les entreprises de télécommunications montre que la taille des échantillons que retient Statistique Canada ne permet pas d'identifier un nombre suffisant de répondants qui n'ont pas le téléphone pour que des comparaisons pluriannuelles ou des projections soient statistiquement valides.
154 Nous pensons qu'il est pertinent et utile de mesurer le comportement des acteurs de l'industrie en examinant divers éléments tels que les politiques d'établissement des prix, les partenariats et les alliances, ainsi que les stratégies visant à adapter la réglementation aux besoins de l'industrie.
155 Les consommateurs ne profiteront certainement pas de la concurrence si le comportement des entreprises visait à briser la concurrence ou au contraire à agir en cartel.
156 Parmi les enjeux propres à la propriété de l'industrie, le rapport documentaire propose la prise en compte du surplus des consommateurs, c'est-à-dire la différence entre les tarifs que les consommateurs ont à payer et ce qu'ils seraient prêts à payer.
157 Une telle étude suppose la construction théorique d'un consommateur moyen, maître d'un pouvoir d'achat moyen et met de côté ceux des abonnés dont les moyens sont plus faibles. Compte tenu que la force du réseau tient dans sa relative universalité, la Loi sur les télécommunications maintient l'objectif d'abordabilité du service téléphonique de base. L'intérêt du Conseil n'est pas donc de mesurer la capacité de payer d'un consommateur moyen, mais bien de tenir compte de la capacité de payer de tous les consommateurs.
158 Les études déposées en janvier dernier par les entreprises de télécommunications sur la pénétration du service local à la suite de l'ordonnance 2000-393 font d'ailleurs état du fait que l'incapacité de payer, même si elle est peu répandue, constitue une des raisons expliquant que des personnes ne prennent pas le service téléphonique.
159 En résumé donc, la Fédération des ACEF du Québec et Action Réseau Consommateur approuvent la démarche du Conseil visant à développer de nouveaux mécanismes de surveillance de l'industrie des télécommunications, en particulier en ce qui a trait à l'effet de la concurrence sur les consommateurs.
160 Le rapport documentaire déposé par les consultants ouvre des pistes d'études pour la surveillance de l'industrie dont certaines semblent moins nécessaires au suivi de la concurrence, notamment dans l'établissement des produits et services dont il faut documenter le développement, la mise en marché et l'offre de service.
161 Si la production des données peut être une responsabilité des entreprises de télécommunications dans plusieurs cas, certaines situations appellent une vérification indépendante des données. D'ailleurs, les organismes réglementaires de différents pays n'utilisent pas nécessairement la même approche. Le rapport documentaire déposé par le consultant fait remarquer que la FCC aux États-Unis impose aux entreprises la production de données.
162 Au contraire, l'Office of Telecommunications britannique recourt davantage à des enquêtes téléphoniques auprès des entreprises et des consommateurs et aux études comparatives.
163 Dans le cas où les entreprises peuvent être en conflit d'intérêt, il ne fait aucun doute que la cueillette indépendante de données en assure la qualité.
164 Par ailleurs, les méthodes de sondage propres à la cueillette indépendante de données garantissent aussi la confidentialité des données ce qui dans un contexte concurrentiel est souvent nécessaire.
166 MR. MACRI: The next party will be AOL Canada Inc.
PRESENTATION / PRÉSENTATION
167 MR. HEMBERY: Good morning, Ms Soehn and Commission staff members.
168 My name is Ian Hembery. I am the Vice-President, Government Relations and Communications for AOL Canada Inc.
169 I would first like to introduce my fellow panellists seated to my right. With me this morning as panellist is our counsel, Greg Kane, from the firm Stikeman Elliott in Ottawa. Also present, seated to my left, at the consultation is Jonathan Blakey, who is also a lawyer with Stikeman Elliott.
170 I would like to thank the Commission for granting us the opportunity to appear in person before you in this important consultation proceeding.
171 Consistent with the Commission's procedural requirements, you will have by now received our written comments on the Lemay-Yates Associates March 21st Background Report which we filed and served on interested parties this morning in advance of the opening of this consultation. Twenty copies of these Oral Comments have been made available.
172 In our allotted time I will briefly describe AOL Canada and its service offerings. I will then outline AOL Canada's views on the Lemay-Yates Associates Background report. We will then look forward to answering any of your questions.
173 Turning first to who we are, AOL Canada is an 80/20 Strategic Partnership between AOL Time Warner Inc. and the Royal Bank Financial Group. AOL Canada provides subscription on-line dial-up services to Canadian consumers, including Canadian small businesses under the AOL Canada and CompuServe brand names respectively. We also operate the AOL.CA portal, which I operates as a host for content produced by AOL Canada's partners and provides links to websites of third parties.
174 AOL Canada recently began providing branded high-speed on-line services to subscribers on a limited technical and market trial basis. We intend to use this informatIon when we roll out our high-speed service on a mass scale once third party Internet access service and other higher speed access services are made available.
175 The above description is helpful because it defines what AOL Canada is not for CRTC regulatory purposes. We do not own or operate "transmission facilities" and we do not provide "basic telecommunications service". So, in the parlance of the Telecommunications Act, we are not a "telecommunications common carrier", nor are we a "telecommunications service provider." To the extent any of our services constitute broadcasting, we are exempt from regulation under the Broadcasting Act under the New Media Exemption Order.
176 Turning to the Lemay-Yates Associates Report, AOL Canada wishes to make two key comments.
177 The first is that the recommendation that non-facilities-based ISPs be subject to detailed reporting requirements should be rejected. This proposal suffers from several flaws and the Commission's jurisdiction to implement this recommendation has not been demonstrated.
178 Second, AOL Canada supports the adoption of the proposed reporting by carriers on the deployment and availability of advanced broadband infrastructure and services.
179 I wish to elaborate briefly on both these points.
180 There are several flaws in the report which underlie AOL Canada's concerns with the recommended reporting requirements for ISPs.
181 First, the Commission has repeatedly found the retail segment of the Internet service market to be highly competitive. Between April 1997 and June 1999 the Commission forbore from the regulation of retail IS services by carriers on six separate occasions. The report fails to take into account these Commission findings and the extensive factual records on which they are based. There is no need for detailed reports on the state of competition in the retail market and none can be justified since the Commission already has all of the information it requires to report to Cabinet on this market.
182 A great deal of additional information confirming the highly competitive state of the retail Internet market is also readily available to the Commission from outside sources, including from StatsCan surveys such as Pulse of a Nascent Industry and from private consulting firms. The upcoming report of the National Broadband Task Force initiative, whose initial findings are due to be released later this spring, is yet a further example of readily accessible data on this market.
183 A second flaw associated with the recommended reporting requirements for ISPs on the retail IS market is the report's failure to prioritize amongst the recommended subjects for reporting. Two obvious examples are the "innovation measure" and the "quality of competitive service offerings." These subjective indexes will be of little, if any, benefit to the Commission in assessing competition.
184 A third flaw is the failure to consider the underlying costs of implementing the Internet market reporting proposals. The potential costs are significant and wide-ranging. The costs to ISPs of implementing the proposed reporting mechanism include the costs of hiring staff to complete the recommended reports. The report failed to consider that the proposed reporting requirements would necessitate the hiring of staff by ISPs, previously not subject to reporting requirements.
185 If imposed, these costs will be borne, at least in part, by consumers. Resulting increased subscription fees would adversely affect the industry in several ways.
186 The adverse impacts would potentially be felt in terms of declining penetration, particularly if lower income users cancel service in the face of price increases. This, in turn, would widen the so-called "digital divide" between higher and lower income Canadians.
187 The ISP industry could be adversely affected through lower returns on investment. The absence of benefits and the high costs associated with the recommended reports for the retail ISP industry are magnified when considered against the Commission's policy of seeking streamlined regulation. The adoption of such reporting clearly runs counter to the Commission's stated objective of imposing the minimum burden necessary while properly fulfilling its mandate under the Telecommunications Act.
188 A further deficiency is the report's failure to provide the basis for Commission jurisdiction to require unlicensed, non-facilities-based retail ISPs to file the recommended reports. Sub-section 37(2) of the Telecommunications Act provides a limited power for the CRTC to require non-carriers to submit information to the Commission. This power is contingent, however, on the information being necessary to the Commission's administration of the Act.
189 A request by the Governor in Council for a CRTC report on "any matter within the Commission's jurisdiction" cannot, of itself, provide the Commission with jurisdiction otherwise absent under the Telecommunications Act. The report fails to demonstrate any link between subjecting unlicensed, non-facilities-based entities, such as AOL Canada, to the proposed reporting requirements and the administration of the Act.
190 Finally, given the circumstances relating to ISPs and the competitiveness of the retail Internet service market, these recommendations would contravene several of the telecommunications policy objectives prescribed in section 7 of the Telecommunications Act. The particular policy objectives are addressed in our written brief and I won't repeat them.
191 For all of these reasons, the CRTC should reject the recommended reporting requirements for non-facilities-based Internet service providers.
192 AOL Canada's endorsement of the recommendations for reporting by carriers on the deployment and availability of advanced broadband infrastructure and services is based on the following three points.
193 First, these recommendations respond to the overarching objective of Cabinet Directive 2000-163, which is that the CRTC report on the deployment and accessibility of advanced telecommunications infrastructure in urban and rural areas in all regions of Canada, including promising means for accelerating investment in rural broadband infrastructure.
194 The following recommendations in the Lemay-Yates Associates Report are consistent with this Cabinet directive:
195 1) The availability and take-up of wholesale services;
196 2) Network-based competition and availability of competitive capacity;
197 3) Geographic infrastructure availability, DSL and cable modem access specifically;
198 The reach of fibre networks, backbones and community networks; and
199 5) Availability of wholesale services and third party access.
200 Such reporting is also consistent with the Federal Government's "Connectedness Agenda", which, as per the 2001 Throne Speech, has as its stated goal, the rollout of high-speed broadband access to all communities in Canada by 2004.
201 Second, the recommended reporting by carriers on the deployment and availability of broadband facilities is consistent with prior CRTC decisions.
202 The CRTC's general policy has been to foster access by ISPs to cable carriers' underlying high speed networks as soon as possible and to promote regulatory symmetry in the regulation of facilities-based high speed access providers.
203 In Order 2000-983, the Commission repeated its concerns regarding the limited availability of broadband Internet access services stating:
"The Commission notes that facilities to provide broadband Internet and other data access are not particularly widespread. ILEC tariffs are in place to allow DSL service providers to provide asymmetric digital subscriber line (ADSL), but this is only a small subset of other DSL services that customers want. Under current rules, CLECs have the option to resell loops and connecting links they have leased from ILECs to DSL service providers. This has not occurred to any great degree and it is unlikely to happen in the near term as CLECs have not seen this as being in their interest so far.
Broadband Internet access services are available for cable companies for resale, but the take rate has been limited. As yet, resellers cannot interconnect to cable company networks to obtain underlying broadband facilities for provision of broadband data access. In short, supply of facilities needed for provision of broadband data access continues to be limited."
204 It therefore makes sense for the Commission to monitor the ongoing deployment and availability of higher speed access services in the context of this scarcity of broadband facilities. In doing so, the information to permit monitoring should be provided by carriers and not ISPs.
205 TPIA service tariffs for the largest incumbent cable carriers only received final approval from the Commission in August 2000 with the issuance of Order CRTC 2000-789. Included among the CRTC's directives in Order 2000-789 was a requirement that each carrier (i.e. Cogeco, Rogers, Shaw and Videotron) be required to maintain a current list of points of interconnection for the TPIA service in their tariffs. Thus, the recommendations, as they apply to cable carriers, are more than justified in view of relevant policies, the numerous TPIA provisioning promises made and missed by the cable carriers and the fact that TPIA service is still not expected to be commercially available until at least the fall of 2001.
206 Finally, in stark contrast with the recommended reporting requirements for the ISP industry, the recommended reporting on broadband facilities deployment and access by carriers is clearly within the CRTC's jurisdiction and consistent with a number of telecommunications policy objectives, set out in section 7 of the Telecommunications Act.
207 Based on the foregoing, AOL Canada agrees with the recommended reporting requirements applicable to carriers pertaining to the deployment and availability of broadband facilities and services. AOL Canada submits these recommendations should be adopted by the Commission.
208 Our conclusion. AOL Canada appreciates the opportunity to appear at this consultation. To summarize AOL Canada's position: the reporting requirements proposed for ISPs are flawed. There is no benefit from implementing these recommendations, given that the competitiveness of the retail Internet market has been repeatedly confirmed by the Commission. Moreover the report failed to consider, let alone analyze, the high costs of providing the information. Further, the CRTC's jurisdiction to implement such recommendations relative to ISPs has not been demonstrated.
209 In contrast, the reporting requirements proposed for carriers on the deployment of and access to broadband infrastructure and services are appropriate and should be adopted. Such reporting would respond to the underlying objectives of the Cabinet's request for CRTC reports, government policy, CRTC decisions intended to accelerate the availability of broadband services and Canada's telecommunications policy.
210 We look forward to responding to any of your questions.
211 Thank you.
212 MR. MACRI: Thank you, Mr. Hembrey.
213 The next party is AT&T Canada.
PRESENTATION / PRÉSENTATION
214 MR. PEIRCE: Thank you, John, and thank you to the Commission for this opportunity to participate in this consultation. My name is Chris Peirce. I'm Vice President, Regulatory and Government Affairs with AT&T Canada. With me today is Teresa Muir who is Vice President, Regulatory Affairs and Pierre Michaud who is Director of Regulatory.
215 The presentation is just the written document.
216 We are pleased to be here today believing that the effort that the CRTC is embarking upon to monitor the state of competition in the telecommunications industry in Canada is an important one. Of course, the genesis of this proceeding is the request from Cabinet to monitor and report on the progress of the telecom industry toward sustainable competition, providing an assessment as well of what, if any, measures are needed to achieve the objectives of the Act.
217 We think that that is an important point to remember that this process should not be seen as merely a data collection process but one that can be used to better determine effect of measures previously taken by the CRTC or point to measures that should be taken.
218 The CRTC, of course, has initiated this public process and has specifically referenced the need to gather information to monitor competition and the deployment of advanced technologies and ensure industry compliance and successful achievement of objectives listed in the Telecommunications Act. Of course, the Lemay-Yates Background Report was the first step in this process.
219 We believe that the role of the CRTC, and this role is currently undertaken to monitor the state of competition, is critical to the achievement of sustainable competition in telecommunication in Canada.
220 The CRTC has the challenge of establishing a regulatory framework that will achieve the government's policy objectives, most notably with respect to this proceeding and as set forth in the Order In Council: to ensure reliable affordable services; to enhance the efficiency and competitiveness of the market; to foster increased reliance on market forces; and to stimulate research and development.
221 The current regulatory framework that telecommunications in Canada operates on is, of course, based on certain assumptions. We think it's important to note that in arriving at the regime we are currently in and as we look to change that regime with proceedings like the Price Caps proceedings, it's important to remember that it's impossible for the Commission or any individual participant in the industry to anticipate at the front end how industry or consumers will behave in response to a given regulatory regime.
222 Hence, the importance of monitoring as we go forward to see how the regime experientially is balancing the interests. It's difficult for the Commission at the outset to ensure that what it is endeavouring to do to balance the interests of competitors, incumbents and consumers will actually achieve that balance.
223 AT&T Canada certainly takes the view that where we have come to in terms of the Price Cap regime, most notably now, has achieved a measure of imbalance that again, not through any means that could have necessarily been predicted at the outset of the regime, the effect has been, experientially again, that some stakeholder interests are being represented in a state of imbalance.
224 So with the CRTC currently embarking on revisiting and modifying certain aspects of the regulatory framework, this monitoring process offers a timely opportunity to evaluate market evolution and ensure effective course correction as Canada continues to pursue the policy objectives set forth in the Telecommunications Act.
225 We see real opportunity in this process, both for the industry and for the Commission as regulator.
226 Firstly, the opportunity is to provide the CRTC with useable and actionable information resulting in a comprehensive view of the industry. Related to that, we believe, is the opportunity to create a shared and consistent perspective and understanding as to the competitive landscape that is shared and consistent not only within the Commission but between and among those who come before the Commission or who would look to the Commission for decisions. This point relates to a theme I will come back later in the presentation relating to transparency.
227 That this proceeding offers an opportunity, we believe, to enable the industry to assist the CRTC more constructively in assessing the evolving landscape. To state more directly, if those coming before the CRTC are all on the same page with the CRTC as to the measures around the current state of competition, then all can better participate and assist as the Commission looks to modify or to further change the regulatory regime.
228 Having this type of ongoing monitoring, will facilitate midstream realignment and correction of regulatory direction through the analysis and use of appropriate market indicators and critical data points.
229 So that is the opportunity. Of course, there are challenges in front of the Commission and the industry in realizing those opportunities.
230 The first challenge that has been alluded to by previous speakers as well is the process.
231 The challenge is to develop a meaningful monitoring process focused on factors that truly are indicative of workable competition. The Commission and members of the industry obviously want to avoid unnecessarily burdensome reporting requirements. We want to eliminate any possibility of collection of data for data's sake. This process should be about collecting data in order to better guide the Commission in its decision-making.
232 We think it's important that the process create a standardized and transparent monitoring mechanism that will support the regulator in terms of rationales for its actions and thereby minimize criticism from without. One could make a crude allusion to the current debate going on around the FTAA and negotiations in Québec City -- the more -- and how international trade negotiations are conducted these days.
233 The more that the regulator can be transparent in terms of the information it is looking at and it's decision-making process, the better for it in terms of defending those decisions and the better for all stakeholders in terms of believing that their perspectives are appropriately considered in arriving at regulatory decisions. Industry participants, as well, are better enabled to constructively participate in those regulatory proceedings if they are speaking clearly the same language and from the same information.
234 A transparent process will treat all players as equals with uniform and equal access to information, and eliminate the appearance of secrecy in the decision-making process.
235 The next challenge is relevant data. Clearly the indicators that the CRTC is to look to monitor the state of competition need to be essential indicators and we think they fall under several broad categories, a number of which are completely in line with Bell Canada's comments coming out of 94-19.
236 Clearly defined market share, overall and in key segments we think are important. Demand conditions affecting customer response to service offerings and price changes. Supply and bottleneck conditions affecting competitors' ability to respond to customer demand.
237 We also believe that financial performance, however, is an important essential indicator. It is not the CRTC's role to ensure profitability for any participant in the industry, but a general and essential knowledge of the state of play in terms of the industry generally, the financial performance in categories that I will go over later in the presentation, when interwoven with the other indicators that the CRTC will be looking at, are an essential aid in determining the state of competition, both now and for the future.
238 In terms of that challenge of finding key financial data, we believe that some types of financial performance that are relevant to determining the state of competition, especially as between competitors and incumbents, would be found within consolidated and non-consolidated financial statements; information related to return on equity, including reporting on utility and competitive segment earnings for ILECs; free cash flow available to incumbents, competitors; debt/equity ratio experienced by participants in the industry; interest coverage, ability to meet ongoing and expected obligations; and capital expenditures of players in the industry.
239 All of these go directly to the ability of participants in the industry to work towards providing competitive choice to consumers and doing so on a sustainable basis.
240 The challenge in terms of competitive market analysis. Market share is obviously an important element. We understand that it is not the only element, but in the transition from a monopoly to a sustainably competitive framework, clearly the redistribution of market share is fundamental. And so we believe that market share measured on both a regional and national basis is crucial.
241 Local access, split by residential and business, both urban and rural; Centrex, because of the characteristics of Centrex in terms of being an inhibitor to competitive entry; other access; long distance, both national and regionally again; IX private line and data network services; Internet access, we believe both dial-up and high speed for the purposes of this monitoring exercise; wireless access; pay phones; and optional feature penetration, both expressed in terms of overall market share and as a percentage of access are important elements in terms of a relevant consideration of market share relating to the state of competition.
242 The challenge, in terms of demand conditions, goes beyond simple pricing. We think that retail pricing, both for basic residential, basic business service, are relevant, Centrex services, Internet, and especially optional calling features are important pricing areas to review in the context of accurately assessing demand conditions; promotions and how promotions are related to market share, to financial performance, to the real onset of competition: targeted service promotions, the duration and timing of promotions, frequency and what target market competitiveness is like; pricing changes in period of reporting, obviously; contract terms and extensions; and, as well, quality of service, that demand conditions do not just relate to pricing.
243 The challenge, in terms of supply conditions, relate to the network reach and capacity of participants in the industry, matters like collocation, number and location of POPs, exchanges in service, intra-city fibre routes, lines served through resale or through unbundled loops; DSL, how new technology is being rolled out, in terms of infrastructure: number and location of loops, whole service from ILEC to ILEC affiliate. Reliance on unbundled components and mandated services, this is a matter that relate specifically to supply conditions, it also relates to financial performance of members of the industry: how the competitive side of the industry, especially, is relying on the unbundled components and mandated service to the incumbents, what their expenditures are for matters like that and how those expenditures relate to their overall revenues and ability to compete, EAS transport and transiting, unbundled loops, direct connect/access tandems, 800 database queries; what reliance on non-mandated services there is by the competitive side of the industry, in terms of total expenditures and, again, expenditures as a per cent of revenue; and quality of service from the supply side, as well.
244 We believe that an effective and rigorous collection of information that is necessary, not surplusage, as much as possible directly and not from secondary sources, will help to ensure a common understanding of the state of competition in the market, as much as possible to be treated transparently, to assist all to have the same understanding and work better together to achieve the policy objectives set forth in the Telecommunications Act.
245 The next steps: ensuring common understanding of the objectives of the monitoring process; the CRTC selecting the essential market indicators and data points to be evaluated; determining what financial performance objectives the Commission sees as being relevant; and to finalize the data collection process that offers maximum transparency, a user friendly collection process and the greatest degree of success we can have in achieving the policy goals in the Telecommunications Act.
246 Thank you.
247 MR. MACRI: Thank you, Mr. Peirce.
248 It is probably a good time to take our regularly scheduled mid-morning break. Why don't we return at 10:40 a.m.
--- Upon recessing at 1025 / Suspension à 1025
--- Upon resuming at 1045 / Suspension à 1045
249 MR. MACRI: Okay, could we please continue in a couple of minutes. Thank you.
250 MR. MACRI: We will continue now with the presentations. The next party is the Canadian Cable Television Association.
PRESENTATION / PRÉSENTATION
251 MR. HENNESSY: Thank you, John.
252 My name is Michael Hennessy and I am the Vice-President, Policy and Planning for the CCTA. Along with me is Susanne Blackwell, who is the Vice-President of Economics.
253 I am not going to read from the text. We filed that from the record. I do have some slides that may be helpful to follow along with, although I will skip over a lot of those, too, and start by talking about things not on the slides just to totally confuse you.
254 As a general principle, we would like to make it clear that the CCTA supports the CRTC's initiative and the government's initiative. I think the idea of collecting data to get a better idea of the status of competition and the deployment of advanced infrastructure are both really useful endeavours.
255 Having said that, there are a few principles before we get into CCTA's specific issues I would just like to hit on. One, I think it is very important, both for the industries and for the Commission, that in collecting data we are pretty controlled. I think we want to control the regulatory burden of an industry and on the Commission's resources, which we recognize are tight.
256 And that takes me to point number two, that I think it is really critical that we collect only that which is required to meet those objectives. And those objectives are: one, to assess the status of competition; and two, to look at the deployment and accessibility of advanced infrastructure.
257 And that suggests a third point: that in doing this we should really focus on markets where the state of competition is a concern. There is a concern about competition in the local market and the long-distance market. I don't think there are concerns about competition in the retail Internet market or in the wireless business, and it would seem, therefore, that the emphasis of the Commission's collection activities should be on where there are arguments that competition is not effective, not where it has already been proved it is.
258 Fourth point, I think you have to scale your information requirements to the size of entities, whether they are small cable system or, in the case of Internet service providers, where information is critically required, say, to look at the state, you know, accessibility to advanced infrastructure. But, again, only to the extent that it's necessary.
259 As much as possible, I think we need to rely on publicly available information for transparency. Collecting too much confidential information that nobody else can look at, I don't think really will ever lead to a situation where people have faith in the data that is ultimately produced. And I think that we have to focus on data that's objective and comparable. What we are trying to do here, one, is assess the state of competition, and you can't do that if information is incomparable because it doesn't have as much meaning. And also, I think, if we are trying to benchmark against other countries to really see whether regulation is ultimately necessary, you have to have a basis in this country that we all agree on.
260 And that suggests to me that one of the things we have to do, through this process, is work with the industry in a very informal and ex parti basis to actually devise ways to collect information. This is not a policy proceeding. There is not a high requirement for sort of tests of fairness that you have in a policy proceeding. And if you want good information, I think it is important that you sit down with all the companies that are going to be required to file to really understand what their limitations are, what they can produce.
261 There is always at the end of the day, as you start to get closer to the kind of format you are going to produce, opportunities for people to comment as to whether or not that is biased, effective or otherwise. But don't rely on formal process for large working groups to try to conclude what data is necessary or we will never get there.
262 And finally, let me get to what the CCTA specifically wants to address in terms of their own industry. The first thing, as I said, is we do support the Commission's initiative. We think that emphasis should be on data that's objective and simple to collect. And that would suggest that some of the proposals in the Lemay-Yates thing we should probably avoid -- and I am thinking in particular of things like consumer surplus, innovation index, absence of collusion or anti-competitive behaviour. I don't think you can ever get to a point where everybody is going to agree on some sort of objective criteria, that they can then use in a report to the government.
263 So I think that what we want to do, also, is rely on existing reports, if only to avoid redundancy. You will find in our submission we have set out a lot of areas where we already, as an industry, provide extensive reports to the Commission. And we would certainly be prepared to sit down with the Commission and take what we file with Stats Canada, at the same time that we will with the Commission, and modify that so that it achieves whatever you want to do, in terms of your telecom objectives. But I think it is important for the Commission to recognize that our members don't see a difference between the CRTC, on the broadcasting side, and the CRTC on the telecom side. When they have to report, it's a requirement. CRTC is the name at the top of the letterhead and I think it is incumbent on the CRTC -- and I think the point was made by Lemay-Yates -- that you want to avoid redundancy. If you have collected the information, let's work together to decide where it is and make sure that it fits into your new format.
264 The other area I really want to touch on is advanced network. The Broadband Task Force is moving now towards a process of identifying communities that they see as unserved or under served and it is putting into place processes that will lead to bidding and information collection with respect to these communities. So there's a high likelihood that without a lot of work between the Commission and Industry Canada that we are going to end up with a lot of redundant reporting and that the reports that the Commission could collect if they are not working with Industry Canada may not be what Industry Canada needs, in terms of information to ultimately award the subsidies to people through the various bidding processes that they are looking for.
265 All that to suggest that until the task force has really defined what it is they are looking for, I think it's premature -- recognizing that the Commission has been asked to file things with the government -- but I think it's still premature, given where the government has since gone, to request the industry to file information that won't be consistent with what the task force is doing.
266 Smaller cable companies should be subject to minimal reporting requirements. At our convention last year, the Commission got up and suggested that they had to look at ways to minimize the burden on small systems. As some of the numbers we provide you suggest, the four largest cable companies make up over 86 per cent of the industry. And if we look at some of the numbers for our systems, Class 3 systems, that is systems with less than 2,000 subscribers, there are currently 1,757 separate systems because of the way the Commission's licensing regime is set up. There is a certain amount of information that's filed on it, but I would suggest that, given the Commission's commitment to reduce regulation, the number of filings we have before the Commission to formalize that, and the real requirement -- you know, what the objective is here -- that any new reporting requirements should really be limited to the larger companies.
267 And finally, I would like to touch on quality of service. Some people have suggested that quality of service measurements are part of this process. I don't believe that. I believe that the Commission has always taken the position in competitive markets that the measurement of quality of service is not something they should be doing. For one thing, it's very difficult to measure quality across companies that are providing different bundles, different mixes of services, and do not easily fit into sort of simple, monopoly company definitions. So to go there, I think, is a mistake.
268 And also, if you are going there, taking the Internet as an example, where, clearly, there is extensive competition, I think you will find it very difficult, even in the high-speed business, to really collect comparable measurements.
269 Let me give you an example. The cable systems are shared networks. So it is very difficult today to try to collect information that you could really look at on an individual subscriber basis, in terms of up stream and down stream.
270 Similarly, I would think, in the telephone company situation for DSL, where service will vary depending on the distance from a central office, that, again, to collect information on an individual subscriber basis, really doesn't give you very much credible information, doesn't really contribute to the two objectives of this process, which is monitoring the state of competition and the deployment of facilities, and doesn't give you a lot of information when you are in the middle of an infrastructure build and companies are building nodes further out into the network and, therefore, changing, you know, the speeds even as we speak.
271 I think that's probably, for our purposes today, sufficient. I don't want to take up any more time. We have provided enough detail, I think, in our report.
272 So, John, thank you very much for the opportunity to present here.
273 MR. MACRI: Thank you, Mr. Hennessy.
274 The next party will be TELUS Communications.
PRESENTATION / PRÉSENTATION
275 MR. KOLESAR: Thank you.
276 By way of introduction and for the record, I should point out that I am not Willie Grieve. However, Mr. Grieve sends his regards and his sincere apologies. He had hoped to attend this proceeding but is, unfortunately, unable to be here.
277 My name is Mark Kolesar and I am the Assistant Vice President, Regulatory and Public Policy for TELUS. I am joined today by Pamela Jones, a Senior Regulatory Advisor who was instrumental in developing the TELUS submission.
278 TELUS welcomes the opportunity to express our views in this public consultation to determine the future of monitoring of the Canadian telecommunications industry. My appearance today represents the views of both TELUS Communications Inc. and TELUS-Québec.
279 I don't need to tell you that the telecommunications industry in this country is in a state of constant change and certainly the changes in the industry have impacted and continue to affect the Commission's approach to regulation. My own company provides a good example of this.
280 When I began my career with what was then AGT, we were essentially a specialized branch of government. But over the last ten years we have experienced competition, privatization, acquisitions, mergers and now expansion into national markets where we can compete with some of our former partners.
281 Regulation has changed dramatically over this time. As some of you may recall, I was part of the team that laid bare the operations of AGT to the CRTC in the company's first ever rate case. The scope of review was exhaustive, including rates, services, tariffs, capital, investment, financing, corporate structure and the relationship among our newly created subsidiaries.
282 There was no need to list the parameters or define the areas for which the Commission should monitor the company's activities. The scope was unlimited and the examination by Commission staff was very thorough. We had no alternative but to provide whatever information was requested, even the stuff in the sealed envelope, as those of us who were there might recall. I'm sure you do, John.
283 Since the company could not legally charge customers for any of its services without approval of tariffs by the Commission -- how things have changed -- today, I'm here to recommend to the Commission what aspects of our business should be monitored by the Commission on an ongoing basis. And I include this personal, historical reference to illustrate what I believe is a necessary and appropriate change in the way the Commission regulates and because this change also points the way to defining what TELUS believes should be the primary purpose of monitoring the competitiveness of the telecommunications industry.
284 Monitoring of competition in the industry should be primarily to determine whether markets are sufficiently competitive and whether regulations should be forborne. The need for the Commission to comprehensively monitor telecommunications companies and finely sift through massive quantities of data to determine if rates are just and reasonable or that services are unfairly discriminatory has long since past.
285 By adopting pro-competitive policies and enabling the transition to competitive markets, the Commission is now able to increasingly rely on the marketplace to discipline competitors as to their prices and their treatment of customers.
286 TELUS believes that the Commission should be vigilant in guarding against the adoption of monitoring mechanisms that harken back to the days of the revenue requirement review. Don't be mistaken, however, TELUS fully supports industry monitoring.
287 TELUS proposed in its submission to the last price cap proceeding, Telecom Public Notice CRTC 96-8, that the Commission undertake a review of the status of competition in the Canadian telecommunications industry prior to the upcoming price cap review. In the absence of adequate monitoring of objective indicators, the Commission is left with nothing more than innuendo, supposition and anecdotal evidence upon which to determine whether its mandate is being achieved.
288 TELUS comments on the issues defined in the public notice or contained in the written submission that the company has filed yesterday. Our written submission includes specific comments on particular elements of the background report prepared for the Commission by Lemay-Yates and Associates. Today I intend to briefly speak to the following: recommended guidelines for a monitoring mechanism, TELUS proposals for monitoring competition and the deployment of advanced infrastructure and our recommendations for a monitoring mechanism.
289 Once I have reviewed the highlights of our position, I am prepared to respond to any questions you may have.
290 TELUS recognizes the advantage of monitoring telecommunication markets. However, monitoring will be most effective if it is clearly focused and the purposes of monitoring are well understood. We believe it would be of assistance in designing the monitoring mechanism and the reporting requirements if the Commission were to establish some guidelines for monitoring the industry. TELUS suggests that these guidelines should be the following.
291 First, monitoring of the industry should be consistent with the mandate of the Commission. This mandate is best summed up in the policy objectives set out in section 7 of the Act. TELUS believes that the policy objectives set out in section 7 of the Act can best be achieved in markets open to competition.
292 This leads to our second recommended guideline for monitoring. The primary purpose for monitoring non-forborne services should be to assess whether or not there is indeed sufficient competition to allow the Commission to exercise its statutory obligation to forebear.
293 TELUS notes that the Commission has the jurisdiction and indeed a statutory obligation to forebear from regulation when the Commission finds as a question of fact that a telecommunication service or class of services provided by Canadian carrier is subject to competition sufficient to protect the interests of users. The Commission has established a set of criteria in Decision 94-19 to measure the competitiveness of markets.
294 The objective for monitoring non-forborne services should be to assess whether or not effective competition exists, and generally speaking, this is achieved when no single telecommunications carrier can sustain a unilateral price increase. The monitoring of competition will help the Commission to know when its forbearance test is met and dominant telecommunications carriers are unable to sustain price increases.
295 So what if markets are not yet sufficiently competitive. TELUS' third recommended guideline is that where markets are not sufficiently competitive to forebear, monitoring should also be done to determine whether regulation and the framework for competitive entry are enabling the development of efficient competition. For example, monitoring should measure the degree to which facilities-based competitive entry is occurring in non-forborne markets.
296 What then, if any, is the role of monitoring in markets that are already forborne? TELUS' fourth recommended guideline is that monitoring of services that have been forborne should be minimal.
297 In our view, the Commission should not in general monitor forborne markets. The only exception should be where a forborne service and a non-forborne service are substitutes for each other. This is happening more and more as competitors in previously distinct markets are finding themselves competing for the same customers. For example, university students are increasingly abandoning wired local access in favour of wireless alternatives. TELUS recommends that monitoring of forborne services should only be for the purposes of determining the extent to which they may be becoming substitutes for non-forborne services.
298 TELUS' fifth recommended monitoring guideline is that monitoring should not impose burdensome administrative and financial requirements on the industry and should avoid asymmetric obligations.
299 This means that industry monitoring should take into account the different types of data that are already collected by the Commission, Statistics Canada and Industry Canada and seek to augment that information as required. TELUS believes that neither the Commission nor the industry will benefit from a superfluous process. The costs of regulation must ultimately be borne by customers and the cost of additional reporting obligations amounts to a tax on the industry.
300 Some service providers in the telecommunications industry are subject to the jurisdiction of the Commission and others are not. Furthermore, as a result of transitional regulation, there are differing obligations for incumbents and entrants. We strongly recommend that care be taken to avoid imposing asymmetric, regulatory reporting requirements on any service provider.
301 TELUS' sixth guideline is that monitoring should make use only of objective indicators. Monitoring should seek to accumulate objective measures, not subjective opinions. Meaningful and useful information can only be collected by measuring actions and behaviours. TELUS therefore recommends that any monitoring of the experience of consumers or service providers be limited to objective measures such as market share.
302 TELUS' final recommended guideline is that monitoring should avoid the release of confidential information. TELUS notes that the Commission's action plan for 2000 to 2003 identifies the industry monitoring initiative under the objective of enhancing public knowledge and increasing dialogue with Canadians.
303 Given this objective, the use of confidential information sources would seem to impede public knowledge and dialogue. That is why TELUS recommends that wherever possible the Commission should look to public source data for monitoring purposes. However, where data is provided to the Commission in confidence, it is critical that confidentiality be protected.
304 TELUS has set out in its comments filed yesterday, specific recommendations for monitoring competition in the telecommunications industry consistent with the guidelines we have outlined here today. The specific areas for which TELUS recommends that information be collected are those related to the forbearance criteria established by the Commission in Decision 94-19. We do not have the time today to review them in detail.
305 Briefly, however, TELUS recommends that as a minimum the Commission's monitoring regime should collect and compile the following information:
(a) requests for interconnection that each competitor receives and fills in each market area;
(b) customers that can be served by more than one facilities-based service provider per market area;
(c) the number of lines and trunks that can be served by more than one facilities-based service provider per market area;
(d) existing network capacity of each competitor in each market area;
(e) planned network capacity of each competitor in each market area;
(f) the number and location of rights-of-way requested by each competitor in each market area;
(g) data comparing the product lines offered by the incumbent and each competitor in each market area; and finally
(h) average prices that incumbents and competitors charge for these services disaggregated by market area.
306 I urge you to carefully consider and to adopt each and every recommendation we have put forth for monitoring competition in the industry.
307 Let's now turn to the monitoring of broadband deployment.
308 The need to monitor deployment of advanced infrastructure and services was identified to the Commission in the Order In Council and it is necessary to acknowledge that there is a national task force charged with addressing the issue of how to deploy broadband in all parts of the country.
309 We take the view that the Commission has a role to play in monitoring the results of network deployment, but it should not engage in monitoring with respect to issues of affordability, service quality or subsidies as part of the ongoing monitoring of the industry.
310 TELUS therefore recommends that the Commission employ network monitoring to collect information on indicators, such as the types of facilities deployed, including the wire line, cable, terrestrial wireless and satellite, the available capacity of those facilities, the services made available on them, the average prices for these services, the number and types of service providers, the market share of each service provider and penetration rates.
311 Let me now share our views on the mechanisms for collecting information about the industry. TELUS supports the proposition that existing mechanisms be utilized wherever possible and that they be improved to capture information that is currently not covered.
312 By using agencies like Statistics Canada, limitations in the jurisdiction of the Commission to gather data can be minimized. The Lemay-Yates report recommends the adoption of four different monitoring mechanisms. Of these, it seems that topical periodic reporting is the mechanism of choice in the Lemay-Yates report.
313 TELUS agrees that this mechanism can be useful if targeted correctly. We would be concerned, however, that this type of monitoring mechanism is not turned into a vessel from which to conduct periodic fishing expeditions on any particular topic of current interest. There should be harmonization of reporting requirements to improve efficiency and prevent asymmetric obligations on incumbents. Reporting requirements should be clearly established and understood at the outset and the obligations on industry participants minimized through use of a single reporting form filed on an annual basis.
314 With respect to surveys of both service providers and consumers, we support the idea of getting information from customers who are the ultimate arbiters of the success or failure of competitive policies and, of course, information must be collected from service providers. However, as detailed in our written submission, TELUS believes it is critical that survey information be collected on their specific actions and behaviours rather than on their opinions.
315 TELUS has serious reservations about the recommendation to use external bench marking to monitor the Canadian industry, other than on the broadest basis. For example, it may be interesting to know how Canada's penetration rates stack up against other countries. But it would not be meaningful to monitor, for instance, how quickly a particular technology is deployed in another country. There are more points of difference than there are of comparison between Canadian and other markets. Therefore bench marking would be of little relevance at best and potentially misleading at worst.
316 Let me conclude by saying that the shift from regulatory control over the industry to a system of monitoring arises from a national progression towards increased competition and deregulation. The role of the CRTC continues to change as the extent of deregulation increases and the monitoring mechanisms established in this proceeding should be consistent with the goal of increasing reliance on market forces to achieve the objectives of the Telecommunications Act.
317 The purposes of industry monitoring must be clearly defined and the reporting requirements must focus on those factors that are understood as significant in achieving the policy objectives of the Commission and the government. TELUS' proposals in this proceeding are squarely aimed at the achievement of those policy objectives. We encourage you to adopt them.
318 Thank you for listening and I invite any questions you may have.
319 MR. MACRI: Thanks, Mr. Kolesar.
320 The next party will be PIAC.
PRESENTATION / PRÉSENTATION
321 MR. JANIGAN: Yes, thank you, Mr. Chair.
322 My name is Michael Janigan. I appear today as counsel on behalf of the Consumers Association of Canada, as well as BCOAPO et al, the traditional groups that have been represented through the auspices of BCPIAC.
323 With me today is John Todd, our consultant, who, I believe, is familiar to most of you.
324 We appreciate the opportunity to address this topic today in this proceeding. We will state from the outset that we support this initiative and believe that the consultant Lemay-Yates has fairly and reasonably canvassed the data sources that may assist the CRTC and other policy-makers in determining the shape of competition in the industry.
325 I think it's important from the outset to look at the ambit of this proceeding as set out in the public notice, and, in particular, want to address some of the implications of the statements of the submissions before me that the ambit of this proceeding is somehow limited to either the issues that are at play in the Order in Council or the issues that may be in play with respect to decisions of the CRTC regarding forbearance from regulation.
326 The public notice makes it clear that the ambit of this proceeding is much broader. It is looking at monitoring the telecommunications industry that will allow the Commission, among other things, to determine more effectively the state of competition, the effect of competition on services to consumers, and the service provider's compliance with legal and regulatory requirements. It notes in the second paragraph that this information will also be used to assist the Commission to fulfil its requirements under the Order in Council.
327 So that it's very important, in our view, to recognize that this proceeding goes beyond simply looking at what is necessary for the purpose of the preparation of the report and looks to what is required, in general, for the CRTC to fulfil its mandate and the objectives of the Telecommunications Act. And we believe that the relevant objectives under the Telecommunications Act that are to be touched upon by this policy include: to render reliable and affordable telecommunication services of high quality, accessible to Canadians in both urban and rural areas in all regions of Canada, and, as well, to respond to the economic and social requirements of users of telecommunication services. And it is very difficult to figure out how we would be able to assess whether or not we are meeting the objective under (f), "to foster increased reliance on market forces for the provision of telecommunication services and to ensure that regulation, where required, is efficient and effective," without a framework of monitoring the delivery of telecommunication services and competition in telecommunication services and collecting data appropriately.
328 However, it's also important to note that this is not an exercise to assist in the preparation of an academic treatise or to be used in telecommunication almanacs or any other kind of use, it has a specific and direct relevance. And, in our view, a key result must be that appropriate information will be available and disclosed with no confidentiality claim to enable participants in CRTC policy proceedings to participate without undue disadvantage. At a minimum, industry data should be provided for addressing policy issues, such as future price cap reviews -- unfortunately it will be too late for this one -- and, as well, future forbearance proceedings.
329 And it's important to ensure that the level of detail and scope of the information obtained is adequate to assess the competitiveness of the market and to make findings of fact based on public information and regulatory proceedings. Preparatory to this, we should develop a list of future decisions that will draw on this information and ensure that the scope of information collected is sufficient for all anticipated decisions.
330 However, I would note a very important point that was brought up in the submission of AT&T today that anticipated results of regulatory and industry behaviour do not always eventuate. And if we collect merely based on those assumptions and our past findings, we were likely to be surprised and our information sources will be deficient. We would reject, categorically, the notion that this is a kind of red light/green light exercise, similar to a forbearance decision. We should not stop monitoring important telecommunications markets simply because competition now exists. If problems develop in the future, you will not have a baseline of information in order to assess current results and measure against past conditions where competition existed.
331 We find particular relevance, and wish to support, those data collection measures that will assess the state of competition from the standpoint of market dominance, ease of entry and, in general, measuring whether or not effective competition exists. It is no secret that consumer advocates have expressed the view that the onset of deregulation and restructuring of telecommunications markets has been leading to more merging and market dominance than it has been to competition itself. And from our standpoint it is essential that these measures exist and can be referenced. At a minimum -- and seeming to contradict my earlier point -- this kind of measurements will be extremely useful to the CRTC in making forbearance decisions with respect to individual telecommunications services. It certainly would be preferable than the rather opaque method that is currently used to assess rivalrous behaviour.
332 Similarly, those measures that would involve a more forensic and strategic analysis of access and affordability issues, as well as customer satisfaction and service quality, will be welcome.
333 Let me also make some observations concerning information itself in the telecommunications industry. The public domain -- and I sort of separate this from the public record -- seems to be a frequent repository of partial and misleading information about this industry. I think an objective of this process extends beyond regulatory busy work and should be to enable the construction of a reliable and accessible consistent source of information about the telecommunications, and the state of competition in telecommunications, in Canada to enable the appropriate policy and regulatory decisions to be made, as well as to have an informed comment about that in the public domain.
334 Secondly, the regulatory information currently provided is kind of a patch-work quilt. There is information on the public record that is freely available, there is information on the public record that is confidential and there is information on the public record that may be difficult to access or to obtain information as to whether or not it exists. These kind of difficulties can be remedied in the context of the collection of the data in a transparent and comprehensive manner.
335 As well, I would note from experience there is a difference, a key difference, between information obtained from consumers by their perception particularly of consumption patterns or their perception of the way in which they consume telecommunication services, as opposed to information from the industry itself. An example of this, years ago, was when we were attempting to determine the patterns of consumption for long distance services by consumers. We found that the survey data from consumers themselves differed widely from the information available from the telcos. And it was largely because the perceptions of consumers differed, in fact, from the reality. So not that we would discourage the collection of information on consumption from consumers, but it should not take the place of other, potentially more reliable, data that may be available from the providers themselves.
336 Fourthly, in the construction of such a record, it will be useful to have confidential information, and the ambit of what is "confidential", better defined and, presumably, for the purpose of collection of this information, all disputes ironed out in advance. Currently, it seems that some industry sources believe that confidentiality extends to any information, if known, might help a competitor, rather than anything proprietary to their particular domain. And as I indicated, this effort should establish a data framework that is free from ongoing wrangles concerning confidentiality.
337 We would also note it's preferable to have information collected by an independent body that has appropriate expertise, such as Statistics Canada. We have two concerns. Stats Can's turnaround time from data collection to publishing results can be quite lengthy. Waiting years for the production of data may mean that information may be out of date by the time it's available. We would require a commitment from Stats Canada to have the work done on a contract basis, or something like this, in order to get better service. And as well, Stats Canada may not have the adequate authority to ensure compliance and to verify data. The CRTC may be responsible for collecting the information to pass on to Stats Can for analysis, and the CRTC can obviously make the filings mandatory when they have the right to audit the files' info.
338 We also believe that this may be an opportunity to address the idea of delivering information requirements in the public domain on a web-based format. This may require the identification of information that will be useful to consumers in making their telecom choices and may assist in the advancement of the competitive market.
339 With respect to the question of cost, obviously, this exercise has to be cost-effective. We believe, however, the standard reporting formats will reduce costs and industry-wide requirements will eliminate the conferring of any competitive advantage by having some, but not all, industry providers having to report. It's certainly unclear at the moment that the information that has been suggested to be provided is not something that doesn't exist within the companies at the moment. It may well require a repackaging of that information, but it's unclear to us that the kinds and scope of the information that's suggested in the consultant's report is something that companies don't have.
340 So in our conclusion, we urge an approach that is complementary to the objectives of the Telecommunications Act, and the mandate of the CRTC as a whole, and is not constricted, necessarily, by past assumptions and/or specifically by the idea that we are constructing something solely for the purpose of the Order in Council or for the purpose of forbearance decisions. And we would be pleased to address any questions that may arise in the Q. and A. session. Thank you.
341 MR. MACRI: Thank you, Mr. Janigan.
342 The next presenter is Ms Cara Stephens.
PRESENTATION / PRÉSENTATION
343 MS STEPHENS: Before I get started, I'm just going to sort of give you a little bit of a background on myself. I am here today on behalf of my own resources as a concerned citizen. I am speaking today on behalf of Public Access Television as a recommendation for the CRTC to look into mandating public access for community channels.
344 I believe we have a global responsibility to correctly facilitate the communication infrastructure in Canada. And I do believe that my background in television as a video producer with CHUM Limited Canada, working at Canadian Learning Television, the New VR, which is also a local television, I also work in social services and education. I bring sort of all of my knowledge and background in front of the CRTC today because I do believe the community channels are at risk.
345 I will cite one of the letters that was sent from John Grogan, Citizen. He has made a number of references to specifically children's programming, advertising, violence, vulgarity on television. These are the things that I am specifically interested in.
346 To give you an example of what I am saying, I will cite a Bell ExpressVu commercial from a couple of years ago.
347 Mike Bullard, a Canadian celebrity who is very well known and very well thought of, I would say, in the public eye, was driving through a drive-through service for Bell ExpressVu and the comment that he made was "You watch what we serve." And I do believe that this is exactly the problem today in Canada is that our children, our youth, more specifically are watching what you serve. Unfortunately, this is a passive activity that is not supported by the education and training in production and in telecommunications.
348 I believe that public access to community channels mandating air time, for example, 10 per cent to seniors, 10 per cent to school boards would translate into 2 hours and 40 minutes of programming a day that these boards are responsible for. By handing over air time like this through community services, I do believe that those regulatory bodies would then be responsible for a more public voice, a more public view that would also give a good -- would give a good example of what our communities really do look like, what our local tourism is like, what are -- the state of our Canadian education system.
349 This morning on the radio, here in Québec, they cited public school or private school systems, sorry, as having the best education -- the best quality of education. That is very interesting to me because most of our youth today are not in private school systems and to advocate on behalf of a system that is wholly dependent on income, I would say defeats the purpose of having a democratic society.
350 I believe public access to these community channels cited in the background report, there was about 700 channels, would enable production to begin, would enable training to start. To take the monies that have been previously donated or used for maintaining these community services and develop training programs for the community to use those tools of communication.
351 And I'm speaking -- when I speak in tools of communication, I'm specifically speaking to the microphones, the cameras, the actual broadcast tools that we have available in those community stations and to mandate that into education, and then you will have the voice of your community.
352 I don't believe that corporations, specifically the ones that are running our community channels today -- Rogers I will indicate -- I don't believe that they have the best interests of our communities at hand. I think that they are a corporation and that competition in broadcasting absolutely needs to be there but I believe that the telecommunications systems have been developed for the people to communicate with the people and we are not seeing that. What we are seeing is a glamorized perspective of what life maybe should be.
353 Sir, I have really gotten off of what I have written but ---
354 MR. MACRI: Ms Stephens. I'm sorry to interrupt.
355 MS STEPHENS: Yes.
356 MR. MACRI: Not to minimize what you are here to talk about, I guess, but the purpose of this consultation is to talk about information that we want to collect or possibly collect from the telecommunication service providers, and I am just wondering if your comments are going to lead to a discussion of that.
357 MR. JANIGAN: What is going on next door here in the Outaouais Room?
358 MR. ROSENZVEIG: We are looking at renewing the licences of Global and CTV stations. Were you intending to speak there?
359 MS STEPHENS: Next door?
360 MR. ROSENZVEIG: Yes, next door in the other hearing room.
361 MS STEPHENS: No, I was not.
362 MR. ROSENZVEIG: Okay.
363 MS STEPHENS: Actually the reason why I'm here today is because I have been following the CRTC for a number of years, since I was in the television industry, and I sort of have never had the opportunity to speak in front of the CRTC on behalf of children, people with disabilities and seniors and those who would not get in their car and travel to Hull to listen to the media corporate players who are actually controlling our system.
364 MR. MACRI: Okay. We are actually not the Commissioners that you probably would like your comments to be addressed to. We are just Commission staff and the people in here are with the telecommunications industry focusing on, I guess, a very narrow and, as I said, probably maybe not as important an issue as you are bringing forward. But to us it is dealing with information that we are collecting, statistics we are going to possibly collect from the telecommunications industry. So it is a very narrow focus for this consultation.
365 MS STEPHENS: In the background report though it is indicated several times that under the provisions of the Broadcasting Distribution Regulations, the Commission no longer requires cable companies to operate a community channel, and a Public Notice 2001-19.
366 MR. HENNESSY: John, there is a proceeding before the Commission right now on the community channel under the broadcasting mandate and that is probably where Cara's comments should be filed with. It's an ongoing -- we certainly don't have any objection to that.
367 MS STEPHENS: I'm sorry. Is that happening today?
368 MR. MACRI: I'm not sure what the process is for that proceeding?
369 MR. HENNESSY: It's a paper process.
370 MR. MACRI: It's a paper process right now.
371 MS STEPHENS: Okay. So in my communications with procedure.ca and sort of everybody I have talked to about this conference, then it is kind of -- I guess something has been --
372 MR. MACRI: I think there has been maybe some miscommunication.
373 MS STEPHENS: Is it the policy of the CRTC to ask for public comment on their hearings?
374 MR. MACRI: Sometimes that is the case. Maybe we can talk off line and we can get you into the right procedure rather than continue it. As I said, the comments -- you could continue with your comments but they wouldn't be part of this process.
375 MR. HENNESSY: There is an ongoing processing in the deadline for filing comments on that hasn't come yet. So there is that. There is that opportunity to file public comment.
376 MR. ROSENZVEIG: We can speak to you off line about how best to submit your written comments in that proceeding. We welcome public input from anyone, but it has to be relevant to the particular proceeding. You are commenting on the wrong topic today. There is another proceeding in which you can comment on what you want to speak to.
377 MS STEPHENS: Okay. I'm sorry. I was under the impression that monitoring the broadcast industry would include creating an infrastructure to -- which would include essentially community channels.
378 MR. ROSENZVEIG: We are here today looking at monitoring the telecommunications industry, not the broadcast industry. I'm sorry. There may have been some misunderstanding in that regard.
379 MS STEPHENS: Okay. I apologize. Thank you.
380 MR. MACRI: Thank you for taking the time.
381 The next party scheduled is Mr. François Ménard. He has informed us that he will not be available until 1:30 this afternoon. So this is probably a good time to take a lunch break, unless there are any questions.
382 MR. KOLESAR: I just wanted to be clear from a procedural perspective, are there going to be questions from the staff? I guess I was under the impression that those would occur, if there were going to be questions, after each individual presentation or are there going to be sort of group questions at the end or is there going to be basically an open round table discussion planned after you have heard all the individual presentations?
383 MR. MACRI: I think at this point if there are any questions from the participants or staff, we will likely do them after the final presentation.
384 MR. FARMER: Mr. Chairman, I wonder if I could also ask by way of clarification, is it your intention to initiate the questioning and have individual companies respond or are you looking for us to question each other? I apologize. I'm just not clear on how we are proposing to go.
385 MR. MACRI: I think it will be likely both, a very informal discussion. And if people have questions, we can put some sort of order together and take it from there. But I think the discussion will be somewhat informal. There won't be any specific order.
386 Okay. So we will take a lunch break now and we will return at 1:30.
--- Upon recessing at 1150 / Suspension à 1150
--- Upon resuming at 1335 / Reprise à 1335
387 MR. MACRI: Okay, I would like to return to our consultation.
388 The first thing is I don't see the next presenter in the room, Mr. François Ménard. No. He's the last scheduled presenter. Seeing that he's not here, I guess what we can do is then go to the next phase for questions.
389 And what I will do is I will maybe outline just a very small process that we can maybe try and follow, in terms of any questions that we have of the parties' presentations.
390 What I would suggest we do is have questions for the presenters in the order that they presented. For example, we would start with the panel that represented the companies of Aliant, Bell Canada, MTS, SaskTel and Télébec and ask if there are any questions with respect to either their presentation or the documents that they filed and proceed down the list like that. At the very end, after all of those questions, we can then open it up for an open discussion, as far as questions of clarifications or comments that need to be made.
391 If there is anybody who is in the back who would like to participate in your asking questions or in the discussion, you are more than welcome to come up to any of the empty seats or use some of the microphones that have been placed around the room.
392 Are there any questions with that?
393 Okay. So we will start with the first party that made a presentation. Were there any questions that anyone has with respect to the Aliant company: Aliant, Bell Canada, MTS, SaskTel and Télébec?
394 This could be a short afternoon!
--- Laughter / Rires
395 MR. MACRI: We will go to, I guess, the second party. Were there any questions for the presentation or documents filed by Action Réseau Consommateur?
396 On to the next one. Were there any questions for the presentation or documents filed by AOL Canada?
397 Are there any questions for anyone who has filed presentations?
--- Laughter / Rires
398 MR. MACRI: Does anybody want to say anything before we call it a day?
--- Laughter / Rires
399 MR. MACRI: Yes, Michael.
400 MR. HENNESSY: I never pass up an opportunity to saying anything.
401 One of the things I wouldn't mind hearing from people is the issue of timing. We file reports with the Commission on the broadcasting side and with Stats Can, I believe around the same sort of April --
402 MS ROSENZVEIG: The capacity reports are April and October.
403 MR. HENNESSY: -- April, October time frame that the Bell Alliance was talking to. And, again, it would be, I think, useful, if there is a lot of information already being filed and there are sort of particular time frames for that, to try to respect that as much as possible in the filings that we do have to make, just, again, to avoid redundancy or to inadvertently double up the amount of reporting and data collection that companies have to do.
404 I don't know if that's a problem for anybody else, but it could be a problem for us if we are pushed off the reporting dates we now have.
405 MR. ROSENZVEIG: I can address that, in part, and see if there's any questions of clarification.
406 Obviously, we all share a desire to reduce the amount of unnecessary duplication to the maximum extent possible. So the Commission and Statistics Canada are discussing ways of them sharing the information they do collect for the past, past information, and in the future, and we are working on details of how to do that. It may be that the parties who have filed information in the past with Stats Can will be asked by Stats Can to be able to share it with the Commission. And if people agree to share it, it won't be necessary for us to obtain the information separately, which we can do under the Telecommunications Act.
407 As well, we are working on how best to obtain information in the future when they send surveys out to the telecom industry so that the information we provide to Stats Can, who can share it with us, it will be collected by Stats Can on behalf of both parties, if that's possible, working with Stats Can on that now and we haven't concluded anything yet.
408 In addition, as was mentioned earlier today, the Commission will need, on an ongoing basis, additional information that Stats Can doesn't collect. And one of the reasons we are here today -- it's not the only reason -- is to provide annual reports to the Cabinet starting at the end of this September. If there's a September 30 deadline, clearly, we are going to need to determine, having had this consultation, what information we need, send the survey forms out, probably in May, and get responses back quickly in order to meet that fall deadline. So if there's a 30 September deadline, you are going to be asked for information this spring, by definition, because that's the time frame we are marching on.
409 I don't know, Mike, if that answers your question or if you had other questions.
410 MR. HENNESSY: I guess I had two points. My understanding right now is that when we file the information for cable companies with Stats Canada that's immediately filed with the Commission at the same time. So I think the process for doing that, I don't think there's any big deal involved in that. If it's sounding to you like there are problems with Stats Can, maybe they are just not talking to the same people.
411 MR. ROSENZVEIG: No, perhaps I should clarify, we are talking about the information we are going to obtain under the Telecom Act.
412 MR. HENNESSY: Yes.
413 MR. ROSENZVEIG: We already have information-sharing agreements with regard to the Broadcasting Act information, and it's covered by our regulations on the broadcasting side, as well.
414 MR. HENNESSY: Yes, I guess I was just suggesting it shouldn't be a major problem. But, then, again, I haven't been in government for a few years, so....
415 The second point, Allan, just to reiterate, we don't object to filing the information we do with the Commission. And we recognize that there's probably a requirement for information that isn't filed. And that's fair enough. But it is of serious concern that if the dates for this process don't line up with the dates where most of the information that you already get is filed, that one or the other date takes precedence. The idea, for instance, that because of this you would start to file information, you file either on an annual or semi-annual basis, you would file quarterly just because the Commission has different reporting requirements for this than what they normally do, I mean, it strikes me that's where you are just layering on work. You pick the best date for you, in terms of the information you need, and keep the reporting that people generally do to the same minimum: shift one date or another, don't just say, "Well, now you have to report quarterly because we have new uses for the information," respectfully requested.
416 MR. MACRI: I think that's something that we will definitely have to look forward to co-ordinate better in the future. I think this year we are working towards a deadline, which may not necessarily line up properly with other reporting dates and requirements, but once this process is over, we will, hopefully, be able to put together something that will minimize the burden and make sure that it is done in a streamlined fashion, in an orderly fashion, that there isn't any overlapping requirements that cause any serious concerns. But it is always open, as you are probably well aware, that if it does get to the point where something has to give, we might be able to accommodate a delay in the filing of certain information, whether it be in this process or in another process.
417 Sorry. Mr. Kolesar?
418 MR. KOLESAR: Yes, I have changed my flight to 6:25 p.m., so now I have got time to ask a few questions, so I figure I might as well ask them.
419 Let's see, I just wanted to ask a couple of questions of AT&T. In your presentation, you referred to the "elimination of the appearance of secrecy in decision-making".
420 Can you just explain what that refers to? I wasn't clear about what that was intended to mean.
421 MS GRIFFIN-MUIR: You don't know about all the secret decisions, Mark? No, it was more to --
422 MR. KOLESAR: Clearly not.
423 MS GRIFFIN-MUIR: Actually, all we are referring to is to have a more transparent record, so I guess the whole focus of that particular point was that sometimes there's information that goes into reaching a decision and the easiest example for me is information that relies on costs that the telcos have that we don't see, so we are never sure exactly how the conclusion is reached, except that we know there are costs there that have to be recovered.
424 In this process, we just think it's better if more of the information is on the public record, in fact, to the extent possible, all of the information, so that everybody can buy into the view because everybody understands what's there.
425 MR. KOLESAR: Does that mean you are prepared to put all of your costs out onto the public --
426 MS GRIFFIN-MUIR: Well, to the extent that --
427 MR. KOLESAR: -- record, as well, for us to see?
428 MS GRIFFIN-MUIR: Yes, anything we are -- whatever they are collecting, I mean, that we would make public, yes. I mean, we are not suggesting that we are going to do something different from everybody else, that our information is confidential and yours is public record. Is that what you are concerned about?
429 MR. KOLESAR: Well, it just appears from what you just said that you have no concerns about confidentiality, just sort of let's have all the information out there so that everybody gets to see everybody else's, what would be determined to be from the Commission's perspective, as well as, probably, the perspective of many of the parties at this table, information that, for competitive purposes, they would want to keep confidential.
430 MS GRIFFIN-MUIR: I guess, the level of detail that we suggested you look for, we would be prepared to disclose.
431 MR. KOLESAR: Well, I guess I would have to go and look and see what you put into your submission with respect to the degree of detail that you are prepared to disclose. I think we would still have some serious concerns, and I expect you would, as well, with respect to the confidentiality of competitively sensitive things that you may not want the entire world to see.
432 MR. ROSENZVEIG: There's probably two different things you are talking about. One is whether the information is public or not. And you indicated earlier, Mark, that you don't want asymmetric information requirements. The incumbents often file information that the entrants don't because they are not justifying tariffs or certain types of services. That's the other issue that's been raised today. But whether all the same information should be collected from all parties, you have put that on the table.
433 MS GRIFFIN-MUIR: I'm not sure that's what he was referring to. I think he was just asking us why we think some of the information we are suggesting be collected and made public.
434 MR. ROSENZVEIG: And Mark is saying he's got confidential costing information and would you care to put that on the public record, but the point is you don't file that information in the first place, so they are probably two different levels in that debate.
435 MR. KOLESAR: Just on that same theme, I was wondering -- you say that you think that the incumbent should continue to report both utility and competitive segments returns. So I'm assuming that you would like the Commission to require the incumbents to continue to file split rate-base. Can I just ask you what the intention of that would be? What would the usefulness of that information be in a regime where the Commission has moved away from Phase III costing to a regime based on Phase II costs? I just wonder what you think that would be useful for.
436 MS GRIFFIN-MUIR: Well, to the extent that that continues after price caps, to the extent there still is a split rate base, that we are looking only at regulating certain of the incumbent services, I still think it's relevant because it speaks to where the incumbent makes money. To the extent that that doesn't exist any more, I guess we could revisit it, but at this particular point in time, that is how regulation works. And it would just demonstrate the extent that perhaps there is cross-subsidization or the way things are packaged or where the earnings come from to look at which parts of the industry make money.
437 MR. KOLESAR: Okay, I don't want to get into any kind of a debate on that. I will just move on to my next question, which is: you also suggest -- and I wasn't sure for whom, I'm assuming you mean for all participants in the market -- that they should be reporting on quality. What form do you think that reporting should be in and why do you think everybody should be reporting on quality?
438 MS GRIFFIN-MUIR: Well, I guess the way that we looked at it was this: that quality indicates two things. From a demand perspective, or end-customer perspective, there's two reasons to look at quality. Maybe because all our pricing could be similar enough that that's what distinguishes or gets customers to move or not, as well as perhaps there's not sufficient competition in certain areas where you can degradate quality because there's no real choice for the customer. So that's from a demand perspective of how can the customer respond, and quality is one of the qualitative, if you will, indicators of what it is the customer looks for when they are trying to decide who their supplier of service should be and whether or not the customer really does have a choice to change supplier. Then, I guess from the suppliers' perspective, because there is a heavy reliance on the incumbent for service, if the service quality of the incumbent to the competitive carrier -- and I know we are all competitive carriers -- is such that it's not the same or better than the quality they give to their retail customer, it would have an impact on the competitor to supply service, so it would have an impact or be an indicator as to where we are, in terms of competition and how easily -- like what barriers there are on the supply side.
439 MR. KOLESAR: The incumbents are already required to file a fairly extensive set of quality of service indicators, including quality of service provided to competitors. Are you suggesting that there's something more than that that should be required?
440 And you have also told us that you don't want the reporting to be asymmetric. Does that mean that everybody ought to be reporting those kinds of quality -- the same kinds of quality of service indicators that the incumbents have to report?
441 MS GRIFFIN-MUIR: Yes, I would have no objection -- like on the demand side, I don't know, and even on the supply side like in terms of our wholesale customers -- to filing certain indicators that are relevant to the service we provide.
442 Also on your point, I'm not suggesting the Commission recreate the reporting requirement for quality of service, for example. I'm suggesting they can use that information as part of this exercise.
443 MR. KOLESAR: And my last question for you was one of the things I thought I heard said was that you thought or believed that the new entrants should be reporting expenditures for unbundled components as a percentage of total revenue or some other kind of a figure of that sort.
444 What do you think the Commission should do with that information?
445 MS GRIFFIN-MUIR: Well, if I look at what we are trying to determine here -- and that's a state of competition and we are looking at supply conditions -- the dependency that the entrant or competitor has on the ILECs in terms of how much money they spend versus how much money they get for their retail services, give some indication of what kind of margins they can have over the longer term.
446 So as there is more and more price competition, if all the money is going to the incumbent -- or a goodly portion of that -- there is very little you can do with your margin at a certain point, if you are dependent on the incumbent. It would be indicative then of what the retail pricing on the market could look like if you want long-term competition.
447 MR. KOLESAR: Okay, that's fine.
448 Then I just had a question for PIAC, if I might.
449 MR. TODD: Sure, go ahead.
450 MR. KOLESAR: I think I also heard from your side that you would like reporting on quality and I just wondered what sort of reporting you would be looking for and what the purpose of that would be.
451 MR. TODD: Answering that question right now is difficult because quality of service is being addressed in the price cap review proceeding, and I think as in the previous responses what might be said today is a bit different than what would be said after the price cap proceeding.
452 PIAC, on behalf of its clients, has argued over a number of years for quality service indicators. There are some that exist. There will probably be some proposals with regard to rejigging those as we proceed through this year.
453 For today's discussion, I think the umbrella would be that there should be an appropriate reporting of quality service indicators. The existing ones should be continued and there may be some revisions coming out of future proceedings.
454 Does that sort of cover what you want to know or is there anything more specific?
455 MR. KOLESAR: I guess I'm wondering whether you are suggesting that everybody -- both incumbents and new entrants -- should have to report on at least some elements of quality.
456 MR. TODD: When it comes to quality of service indicators in reporting there are two dimensions to that reporting potentially. One is strictly within the regulatory context where the question being looked is our so-called productivity improvements being gained by simply cutting quality and, therefore, it's almost an enforcement of maintaining quality so you don't have a hidden price increase.
457 The other aspect that comes up from the customer groups is really consumer information and from that perspective certainly reporting on quality would provide an information base which would help customers in making decisions and would help with an awareness of the marketplace.
458 One of the areas of that kind of reporting brought out in the Lemay-Yates report is consumer information and if you look at the tables of what is done in some of the states in the U.S., and so on, there is discussion of that as an aspect of information collecting and reporting.
459 MR. KOLESAR: Kind of on that same theme, the Lemay-Yates report also at least suggested that there may be some value in monitoring customer satisfaction.
460 Is that something that PIAC would support?
461 MR. TODD: I think PIAC, on behalf of its clients, is on record as supporting customer satisfaction surveys and in fact there are -- I think perhaps it was your comment earlier saying that the views of customers should be restricted to their actions.
462 Mike in his earlier comments was saying you have to be careful in surveying customers because you are asking them things like: How much long distance calling do you make? They don't keep as accurate records as the companies do, therefore if you are asking customers about their sort of factual information, they may not actually be the best source for that information.
463 What you can get from customers reliably is their perceptions of the marketplace: Are you satisfied with service? Consumer groups often do point out that if the bottom line on the marketplace, particularly where there is some absence of competition, is satisfied customers -- one of the objectives of competitors in a competitive market is to have happy customers, however you get there, and it's the bottom line objective measure of success.
464 It may be appropriate in looking at the competitive market to ask the question how happy, how comfortable are the customers, which is a pure measure of sort of perception, aggregating them together, and that may well be the most relevant question to ask customers in evaluating the success of the move to a competitive environment.
465 MR. KOLESAR: That was one area that, to be honest with you, we sort of waffled back and forth on, so I was just really interested to hear your thoughts as to whether or not that would be something that would be worthwhile to do.
466 I think those are all the questions I have -- for now anyway -- but I am good until five.
--- Laughter / Rires
467 MR. MACRI: Thank you.
468 Monsieur Sébastien.
469 M. SÉBASTIEN: Donc peut-être sur la question des indicateurs de qualité de services, un aspect intéressant de la discussion était à savoir la symétrie entre ce que demande -- ce que le Conseil demande aux ESLT et ce que les autres entreprises de télécommunications pourraient être appelées à faire, et même si les autres entreprises ne sont pas réglementées au même titre il y a, je pense, un intérêt en terme de production de rapports et de connaissances de l'industrie que de faire une étude d'indicateurs de qualité de services.
470 Par exemple dans l'interurbain -- je mentionnais deux aspects dans ma présentation ce matin -- mais il y aurait certainement des aspects de l'offre de services interurbains pour les différents fournisseurs de services interurbains. Il y a des offres comparables pour lesquelles on peut développer des indicateurs de qualité de services, et je pense que ce serait utile, effectivement, pas en terme de réglementation de cette industrie, mais en terme d'informations données aux consommateurs.
471 La réglementation qui joue du moment où cette information est disponible aux consommateurs, c'est la loi de l'offre et de la demande. A partir de l'information que les consommateurs ont, ils peuvent ou non choisir une entreprise ou ne pas la choisir.
472 C'est la sanction qui est prévue par la loi du marché et je pense que le fait de rendre un type d'informations en terme de qualité de services disponibles serait tout à fait positif, et je suis très content d'entendre les gens de AT&T dire que -- ça ne serait peut-être pas les mêmes modalités que pour les compagnies titulaires, mais de dire qu'ils sont ouverts à ce type de démarche me semble être quelque chose de tout à fait positif et j'espère que le Conseil pourra, dans le cadre de l'avis public 2000-175, identifier quels types d'indicateurs de qualité de services seraient pertinents à étudier pour le cas des entreprises de télécommunications qui ne sont pas réglementées.
473 M. MACRI: Merci.
474 Are there any other questions or comments?
475 Ms MacDonald.
476 MS MacDONALD: Thanks, John.
477 Mairi MacDonald. I'm here on behalf of Microcell as well as on my own behalf. I'm on the list for this proceeding as well.
478 I just wanted to pick up on the conversation that Mike Hennessy and Allan were having about the degree to which the Commission is exploring better access and perhaps more focused access to existing sources of information and I am wondering if that consultation process, Allan, that you were talking about going on with Stats Canada extends to Industry Canada as well.
479 Obviously the reason for that is, as the Lemay-Yates report points out, wireless companies currently -- or at least the PCS and cellular licences are required as condition of licence to produce an annual report to Industry Canada on the achievement of the conditions set for their licence.
480 That can be a fairly onerous process and, as with the concerns expressed by Michael on behalf of the CCTA, I think the wireless companies would also be concerned if the result of this process were to focus or not on a major increase in the amount of reporting that needs to be done.
481 So in other words, are you getting that as a baseline of information -- the information that is already filed with Industry Canada, is that part of your baseline as you go on to look at what other information you might need to meet these requirements?
482 MR. ROSENZVEIG: At this point it is not a baseline. We are pursuing with StatsCan getting old information as a baseline and obtaining future information automatically. That's something we are working on, but we don't have any information with Industry Canada at this point in time.
483 MS MacDONALD: Thank you.
484 MR. MACRI: Yes, Mr. Hennessy.
485 MR. HENNESSY: I have a question.
486 Could I just follow up to Mairi's point?
487 It seems to me the Commission -- through not fault of their own because directives are directives and dates on directives are the dates that they have to comply by -- is in a bind particularly this year in terms of producing information, and not to take away from what Michael was saying elsewhere that it's not necessarily limited to that, but there is, for instance as I said with cable companies file a considerable about of information on telecommunications-related activities with the Commission, with Statistics Canada.
488 Industry Canada has collected a significant amount of information on the broadband roll-out and will be producing that soon, and as Mairi pointed out, the wireless companies file significant amounts of information.
489 It strikes me that you need, if you really want to provide meaningful information the first time around and have something that works with the cooperation of the industry.
490 You may need to use the information that government, through the CRTC, StatsCan, Industry, can collect today as your base case. If that is your starting point in your survey, at least you know that there is some basis for the numbers that are provided, and then indicate to the industry on the longer term what else you need because given your short timeframes if you start looking for information that is not the information that is collected or reported on today, and you are looking for that on a short timeframe, particularly from smaller companies -- whether smaller cable companies, ISPs or whatever -- you are not going to get anything of value. You will be able to meet your requirement to file something with the government, but it will be garbage in, garbage out.
491 So I think it's incumbent for somebody in the process to recognize the burden that this potentially has and to accept the fact that there is information already on the table that goes a long way towards meeting the government's requirements and that the problem now is to take that information and reformat it in some way.
492 As I suggested earlier, we are certainly prepared to help the Commission in terms of what we have and respond quickly and timely in an informal fashion if that is helpful, and I am sure that other people around the room would be willing to do that, but to just ignore the copious amounts of information that is already collected from the industry I think does nobody any service.
493 MR. McCARRELL: Hi, Haig McCarrell, Stats Canada. Just to address that question and that concern.
494 One thing we will be doing with our annual survey mail out is to include waivers so that we can indeed share information with the Commission of historical information. Under the Stats Act we are required to maintain that information and keep that confidential and we can only release that to the Commission if the companies who have responded in the past actually sign a waiver. So we would ask for your cooperation in that area in that when you see these waivers that you sign those and return those as quickly as possible.
495 MR. HENNESSY: Thank you. And as I suggested, I think we already do that in terms of the cable industry.
496 MR. McCARRELL: Yes, the cable industry but this is for the telecommunication industry.
497 MR. HENNESSY: Well, including the -- that covers, I assume, the telecom information that we are filing as well. The internet stuff.
498 MR. McCARRELL: It would cover internet questions on the cable survey but it would not cover any telecommunications reports to date.
499 MR. ROSENZVEIG: As I mentioned earlier, for the past if people fill out the waivers, StatsCan can automatically share the information from the past. And we are probably going to ask you to share information back to 1995 that you filed with Stats Canada. That is easy. And if there isn't a waiver, then we would have to get it directly.
500 For the future, we are thinking of entering into an agreement with Stats Canada pursuant to section 12 where you won't need waivers, where automatically it would be collected by StatsCan on its own behalf and on behalf of the Commission. And you would know that when you see the survey form, it would say that on the face of it. These sorts of logistical things haven't been done yet, but we hope to resolve this soon.
501 MR. HENNESSY: Allan, that covers maybe half of what I had said. But I would suggest also that there is a lot of information that we file on a regular basis and we, I mean not just the cable companies, but the telephone companies as well now. And I don't think that that information should be ignored. I think we have to find ways to massage or work that in because there are already people with expertise with handling that information in the Commission.
502 I know you are under a tight time frame but we have a lot of small companies and tight time frames sometimes suggest that the same survey that Bell or Rogers gets to a company that may have 2000 customers.
503 MR. MACRI: Mr. Todd.
504 MR. TODD: I think my question may be more for Commission staff.
505 There is a date a week tomorrow for reply comments and I just want to be clear on what we are replying to.
506 A lot of the discussion today has been at a fairly high level. The Lemay-Yates is cast as here are some ideas, although they do finish up with some recommendations which again are at a high level. Are you looking for things like there are the lists of relevant product services in section 18.104.22.168 and a list of relevant geographic markets in 22.214.171.124? Are you looking for comments on a checklist basis of here are specific things that would be in it?
507 In other words, are we replying to Lemay-Yates in more detail than you got today? Or are we replying to the comments that have been put on the record today?
508 MR. MACRI: It would be both.
509 MR. TODD: Okay. Are you looking for a lot more specificity than you go so far?
510 MR. MACRI: I leave that to your discretion. I mean if there is some specific recommendations that you can put forward with respect to either the recommendations that have been put forward in the background report or in the comments or the submissions that have been made, yes, we would welcome that.
511 MR. TODD: I think that in the time frame and where we are going, to give you principles, it is just where things have gone so far, I think, is certainly straightforward.
512 One of the concerns I have is when we get down to lower level specificity, and I guess I sort of thought we might get to that today, is getting some reactions of and specific details, yes, that is doable, no that is not, from the companies in terms of, you know, a key underlying principle is let's not make this burdensome. And there may need to be some problem solving in terms of "Gee, this is important information. It may be difficult to get. How do we get around that. How do we deal with that trade-off."
513 And frankly we may have some views on that but, you know, as of now I think that our sense is we are flying a little bit blind as to where the problem areas are in terms of practicality versus desirability. So we may be able to go through and from the PIAC perspective say we think these things are important. But it may be that next week you will be hearing from others saying these things are very onerous, and you know, there may not be much opportunity to try to reconcile those conflicting comments. Do you have any help in that regard?
514 MR. ROSENZVEIG: We are all on a very tight time frame. It will be our job to try and reconcile what we hear. You have another opportunity next week to say whatever you like on the topic of what information should be collected from whom, how often, with what degree of confidentiality, et cetera. Those are the issues that we are grappling with.
515 It will be ongoing monitoring. What we require this year may not be what we require next year, both in terms of the very short time frame between now and the fall and otherwise. But for this year, you know, the process ends next week with your reply comments as to what you think we should be collecting now and in the future.
516 MR. TODD: Okay. So particularly for this year probably feasibility may be the priority and one of the issues is that companies may have trouble reporting things in an efficient way and with a short time frame. But if we are talking a year or two down the road, like outcomes perhaps from the price cap review, that they would have time to modify their systems and do it efficiently. So our comments may be a bit different in terms of meeting the September 30th 2001 deadline versus what become required on an ongoing basis starting a year or two down the road. Is that fair?
517 MR. ROSENZVEIG: Yes, and you would make your comments now about what you think should be done this year versus next year if you think there is a dichotomy. Certainly. Don't just talk about this year. Talk about what should be required on an ongoing basis, some of which may not be possible in the tight time frames this year.
518 MR. TODD: Yes, and from the PIAC perspective you probably don't know what is going to be a problem, difficult-wise, so we will probably say whatever, you know, do what you can this year and here is what we think should be done in the long run.
519 MR MACRI: But I think as well we might discover that as we go through this we might request some information and realize that it is just not doable within the time frames and we are not going to be able -- I think we realize we are not going to be able to get perfect information through any process, no matter how much time we have.
520 But we are going to use the time we have to get the best possible information through the sources we have available to us, as well as additional information that we will require, and again, not only to meet the objectives of the report that we have to finish for September, but also for our objectives vis-à-vis regulating the industry and monitoring the industry.
521 Yes -- sorry -- Mr. Kolesar.
522 MR. KOLESAR: Gee, I thought for a minute there you were going to say Mr. Grieve.
523 MR. MACRI: From this distance, no, I don't think so.
524 MR. KOLESAR: It's a hair thing.
525 Just so that we are a bit more clear as to sort of what our expectations in terms of the next steps might be, what I believe I have heard is that we file reply comments on whatever we choose to reply to on the 26th.
526 And then I believe what happens is there is an update to the Lemay-Yates report that will be done that will essentially say, based on everything we have heard and all the input that we have gotten and all the reply and all that stuff, this is what we recommend the Commission do. And then after that, I am assuming the Commission will issue some sort of an order pursuant to the PN saying we accept all of the recommendations in the Lemay-Yates report, or we don't and here is the ones that we do accept and here is the ones that we don't. And then after that we move to implementation.
527 Is that a fair representation of what we can expect?
528 MR. ROSENZVEIG: Next week there will be reply comments and we will determine what information is required and we will transmit the survey form with whatever else is attached. We will then require certain information be provided. That is the two next steps. Reply comments from you. We will work with the Lemay-Yates group and then the Commission will issue it's requirement for information.
529 MR. KOLESAR: Has there been any thoughts about sort of a quick CISC kind of approach to the thing to say, well, this is what we would like to do from a process perspective and implementation perspective. This is what is workable and this is what isn't and maybe have CISC give it a quick look and say, yes, this will work and this won't work so how about this. Because I guess that was a question that we sort of wrestled with too.
530 MR. ROSENZVEIG: I mean CISC is largely confining itself to technical implementation issues, not policy issues. My sense in the room is there are people who want a lot of information, people who don't want a lot of information, those who want it public, those who want it confidential. I am not sure that if there was time, which there isn't much between now and the fall, that we would be successful in a CISC process and secondly there isn't the time really.
531 I mean we have put out a draft report. You have filed comments if you wished. You spoke today. You will have reply comments. I don't think there would be the time nor am I sure it would work if there was to actually have another round, around a table or otherwise. I think the Commission is going to have to make the hard call and in the long run the monitoring this year won't be identical to what it will be in future years.
532 MR. KOLESAR: So at the risk of sounding somewhat argumentative, what if the Commission kicks out a form and a bunch of people get it and we go, "Gee, I just can't respond to this thing." Then what happens?
533 MR. ROSENZVEIG: You will tell us that at the time and we will see where we go from there.
534 MR. KOLESAR: Okay. Fair enough.
535 MR. HENNESSY: Just to pick up on a point that John Todd made and I think it's a good one and it demonstrates again the problems that you, the Commission, have been put under in terms of timing.
536 It's very hard to really add much value in the reply stage next week if nobody really knows what the survey, what the questionnaire is going to look like or to whom it applies, because you don't know what kind of issues, constraints, confidentiality issues, ability of small companies to report, whatever, are.
537 Just for the record here, would it be of any value for people in the industry to suggest to the Commission that we would certainly be willing to write to the government to suggest that maybe their time frame that they have placed on you is unreasonable given the scope of what, I think, we are trying to do here. Because it strikes me -- and I know Allan is in the room, maybe he can help with that answer.
538 But it strikes me that you have been put in an impossible position, and the problem with impossible positions is they just tend to get traded around. So if the monkey on the back perhaps is the deadline that you are under, then maybe that is the thing we address so that ultimately the survey forms that we do produce add value rather than just meet directives. And we would certainly be willing to write a letter in your support if that would be helpful.
539 MR. MACRI: Thank you for that comment.
540 Ms MacDonald.
541 MS MacDONALD: I'm just wondering if I could go back to the beginning of this comment stage and ask the Aliant group a question.
542 MR. MACRI: Sure. Go ahead.
543 MS MacDONALD: My question is to ask you if you could explore what you mean by the degree of aggregation that you think would be appropriate for the disclosure of this information. And this also comes out of the last sets of rounds of comments about what information were requested.
544 It would seem to me that the Commission in order to be able to make sure that they don't just get garbage in are going to need to give us some guidance on, in what form they expect to publish this information, how far it's going to get disseminated and is it going to be aggregated to the point where an individual company is not going to be so reluctant to provide confidential details of its own company's operations, that it will just simply refuse to fill out the form.
545 So one of the elements of your proposal this morning was that you deal with aggregation. I wondered if the level of aggregation you were talking about was the six industry segments or whether there was another cut at that you hadn't thought about?
546 MR. FARMER: I can maybe take it part of the way. It is like so many things until you actually start looking at specifics, it's a little bit difficult to actually give a comprehensive answer.
547 But I didn't mean it by just the six segments. That is a starting point. But it may be well worthwhile, for instance, to come up with a finding that indicates that -- take the local market as an example -- that in fact in very large urban areas there does appear to be competition happening at a certain pace but lagging behind by a year or two in smaller areas. So you certainly don't want to just limit it as a matter of practice to just those large market, six segments that we talked about.
548 I guess some of the information that we tend to hold close to our vests in terms of market share information is specific market shares and specific areas identified to individual companies. So in producing its report our request really is of the Commission that they do it in such a way where that information isn't provided, where companies can be -- aren't specified individually, if I can put it that way. So that is an example.
549 There may be any number of other ones, Ms MacDonald. Frankly I haven't turned my mind to it that much to know just exactly how one could go about doing it. I suspect, however, when it comes time to producing the report the Commission has had lots of experience in wrestling with these issues of confidentiality that they can turn their mind to it and know which would be acceptable and which wouldn't be acceptable.
550 MS MacDONALD: I guess my concern about that is that the Commission's experience in dealing -- in wrestling with issues of confidentiality, and I agree with you, it has many, many years of it, have all been in really quite specific contexts. They have been dealing with the context of a specific proceeding to deal with a specific issue. And always when it makes a call about confidentiality, it's dealing with relevance.
551 I mean the fundamental question is, is it valuable on the public record of the proceeding on this particular issue to require the company to disclose its information. It seems to me that we are dealing here with a completely different output, which is a general report on the state of competition in the industry or a general report on the state of broadband rollout.
552 And I don't know -- I guess I'm asking whether you have given any thought to what guidance we could, as an industry, give the Commission on making those kinds of calls because their rules don't fit this circumstance. I mean StatsCan obviously has rules that fit this sort of circumstance and those are rules that have been developed by the legislature over the years and by StatsCan I guess in administrative processes. But we haven't got any of that sort of thing for the Commission and it seems to me to be a real concern.
553 MR. FARMER: Well, you are right in that it's different because now the Commission is being asked to put together information. And it is not just a question of is this information that comes from this particular party something that has to be disclosed. It is a different kind of question. It might be a statistic that is drawn from all of that information but no one party actually disclosed it and in fact couldn't disclose it because all of the pertinent information wasn't available to all the parties.
554 I suppose the test that could be used is the following. The Commission can just ask itself this question now. This information that we are considering disclosing in this report would it be information that -- how can I put it? Well, let's use market share as an example.
555 Will it provide information about market share specific to a company which we would feel important enough to require a particular company had had that information to disclose it? That is a very roundabout way of saying use the same sorts of tests only now you are going to have to test information that didn't come from a particular party but in fact came from itself, came from the Commission in pulling together the various pieces of information.
556 But in terms of -- I guess that is kind of about as close to a general rule or a general test that I would ask them to follow. I just -- I can't come up with anything more specific at this stage. It's not -- it's a good question and we should probably turn our mind to it when we write our reply.
557 MR. ROSENZVEIG: You will have two opportunities: when you write your reply and when you file the information. When you file the information presumably to the extent you consider it confidential, you will designate as such pursuant to the Act and that is your second opportunity. But certainly it would be helpful tomorrow -- next week, in the reply to address confidentiality. It has come out today. It has come out in some of the written comments as well. But there will be another opportunity when you do file the information.
558 And the Act does provide tests. It's information designated as confidential. There is a distinction when it is in the course of proceeding or not, but in each case there are tests and there is a balancing, which we would do, which is not dissimilar to the balancing we have done before.
559 MS MacDONALD: But I guess on that issue for us to get any sort of sense -- for any of the members of the industry to get any kind of a sense of how the Commission might approach that balancing exercise, because at the end of the day the Act does give you a good deal of guidance but it doesn't direct you to disclose or not. It would be really helpful to have a sense of what kind of product the Commission is looking at putting out. In other words, what degree of aggregation of data we are looking at.
560 Because if what you are talking about, if, for example, what you are looking at is market share, that is a statistic that the Commission could generate based on information provided by everyone who is in the relevant market, however that is defined. If you are looking at, for example, some of the financial information that AT&T and Call-Net suggested is relevant to your objective of coming out with a report on the state of competition, it seems to me that it is going to be (a) more difficult to aggregate that and (b) more critical for the Commission to identify how aggregated or not aggregated its reports on those sorts of things are going to be.
561 So in other words, I agree that confidentiality is a key issue and certainly I will take back to my client that it's something that they need to think about pretty heavily for the next week or so. But I think it's also related to the kind of output that the Commission is expecting to produce based on this information.
562 And again it goes back to the requests that have been made and it was sort of a veiled request and I don't want to put words into Mr. Janigan's mouth, but one of the ideas that has been floating around today has been the notion of creating a public base of information that can be used in specific proceedings. Well, that seems to me to be -- to imply a whole lot less aggregation than a general report to the Governor in Council on the state of competition.
563 MR. MACRI: Thank you, Ms MacDonald.
564 Ms Angus, I notice you have come forward to the table. Do you have comments or questions?
565 MS ANGUS: I just wanted to make a couple of comments following out of listening to everyone this morning and particularly the discussion now about where we are -- what we will come now.
566 It was fairly clear to me this morning that although everyone said, yes, we agree the Commission needs to monitor the state of competition, not only for the report to Cabinet but for in order to conduct its own business, but there seems to be quite a difference and quite a distance between the views of what it was the Commission should be monitoring and what it needed to know in order to monitor the status of competition.
567 The TELUS group seemed to have a much more limited view. So that the purpose of monitoring was to see when particular services or classes of service were ready for forbearance, and that certainly there would be no need to monitor most forborne services unless they competed with non-forborne services.
568 On the other side we see AT&T's position which is the Commission needs to know if the competitive parts of the industry are in such distress that there is a danger that they would go under. Those are quite different views on what it is that the Commission needs to know. And I think the Commission itself is going to have to decide the level of detail it requires. And those are two quite different views of the objectives.
569 I am wondering if the next way we are going to learn what the Commission thinks on those questions is the issuance of a survey. It seems to me that it would be good if there was some declaration in the course of this proceeding. I don't know if there will be a decision before the report or something. But it seems to me that people need to understand some sense of where the Commission stands on that question. What is -- what does monitoring the state of competition mean in the Commission's view.
570 MR. MACRI: Okay. Thank you, Ms Angus.
571 Are there any other questions or comments?
572 MR. DODD: Just to respond to the comment about the words in the mouth.
573 To clarify, I think a lot of hearings recently have been policy hearings that are generic. And in those hearings one of the difficulties for intervenors is that questions may be asked of individual parties if their individual information is confidential. If that is all put together for the different parties into an aggregate information, there would be some information on the record for intervenors to comment on rather than just saying, if you do the numbers, CRTC staff, we think what you will come up with is "X", but we are guessing.
574 So it is really within the context of those policy proceedings where you are dealing with aggregate information which has the potential of this getting around a certain amount of the problems that confidentiality raises.
575 MR. MACRI: Yes, Mr. Kolesar.
576 MR. KOLESAR: I think I certainly don't disagree with what I have heard Mr. Dodd say. We would certainly want to see confidential reports that we would provide only released in some aggregated form in order to maintain the confidentiality of the information from individual companies.
577 My one caution is often aggregated information doesn't really tell you much of anything. Because there are such distinct differences between the individual parties providing that information that once you aggregate it up, it may give you a broad-gauge industry measure but it is not particularly useful in drawing any conclusions necessarily about individual firms. So when you go into a hearing or a proceeding of some kind, one would need to be very cautious about what one did with that aggregated information.
578 MR. DODD: I would agree, and intervenors do find aggregated numbers more useful than asterisks.
579 MR. MACRI: Are there any other questions or comments at this time?
580 I understand Mr. François Ménard is in the room now. If you would like to come forward, Mr. Ménard, and make your presentation and we will conclude with that.
581 It looks like Mr. Ménard needs a little time to set up here. So why don't we take a ten minute break. We will take a short break.
--- Upon recessing / Suspension
--- Upon resuming / Reprise
582 MR. MACRI: Mr. Ménard, are you ready with your presentation? Go ahead.
PRESENTATION / PRÉSENTATION
583 MR. MÉNARD: Thank you, everybody.
584 My contribution to this file is the idea that there are other definitions of QoS which are more prevalent in today's networks than -- well, depending upon your point of view, obviously, but on the internet the definition of QoS is vastly differently.
585 So the idea is that in order for the monitoring of the industry report to reflect the current status of the network, it would probably need to reflect QoS, as in quality of service, in terms of bandwidth. And not only this traditional definition of QoS that seem to be called QoS indicators of which there are 16.
586 So on the next slide -- not that these aren't relevant, but these are complicated mechanisms which only are specific to a certain extent to public switch telephony, whereas the industry is not just about public switch telephony but encompasses a lot of other services.
587 So the next slide is the definition of QoS but what it's meant to be or how it's expressed on the internet. And we see QoS on the internet in terms of throughput, delayed jitter, the assymetricity of relative speeds of downloads to uploads, the redundancy that you can have on your connection in comparison to service repair time.
588 For example, if you can have redundancy to begin with, even if it goes down, you are still on line. The ability to multi-home your network, meaning that if your primary provider goes down, you can dynamically shift all of your address base to another provider. So monitoring for the ability of customers to be able to multi-home easily is a metric which is entirely relevant that could be monitored for. Direct and transit peering relationships between service providers.
589 Those may be a bunch of terms which are not well entrenched in people minds but I thought I would make a contribution which would bring up these issues so as to let people see an important portion of quality of service indicators which are not really well presented or mentioned in the background report.
590 Another one which I think is also extremely important is the level of standardization and the openness of the various protocol interfaces which the internet is made of, or actually the underlying infrastructure upon which the internet is operating over.
591 So how do you actually -- how can you actually monitor. It's difficult enough to monitor one network for quality of service. How do you measure the quality of service on a network which is comprised of many networks. I think that is the only thing that people seem to agree upon is that the internet is not a network. It's a network of networks. So trying to measure QoS in an explicit fashion on a network of networks is going to be quite difficult.
592 But it is possible to monitor the underlying infrastructures upon which the internet relies upon to transfer information. And the monitoring of these infrastructures spans various network technologies from PSTN to cable to wireless to satellite.
593 And there is no current mechanism right now in the industry to consider all of these various technologies as an integral part of something that needs to be monitored as one entity for the purpose of monitoring the health of the internet.
594 When there is a satellite link that goes up to the north or when there is a microwave link that reaches a faraway community or when there is only DSL service or only one high speed technology which is available to a customer because he is ten kilometres from the central office and DSL is not available but cable modem is. So those are issues where the definition of QoS becomes extremely important.
595 I for one would like to see a report on, for example, market share. People were talking about market share a little bit earlier and to me it would not be of any use to see a market share of let's say the phone companies versus the cable companies if such a market share report would not detail the market share five kilometres away from the central office, ten kilometres away from a central office. Because the values of this market share may be entirely different depending on how further away you get from a central office, meaning that DSL service is only provided within a five kilometre radius of a central office. Out of that the only high-speed access service on a wireline infrastructure is cable modem service. The market share for cable modem service, ten kilometres on the outside of a CO may be much greater.
596 So those are the kind of issues which I think that the report would miss on unless it -- unless we attempted to comment on each of the quality of service indicators, including the ones which I am proposing in my contribution and make detailed comments as to the relevance of monitoring for such issues and the pros and cons. The background report goes into a lot of -- well, not into a lot but still in some substantial details about these issues. And I think that the industry ought to comment on these issues in much greater detail than what are provided in the background report.
597 I think that a lot of the quality of service indicators is also greatly influenced by the ability of the current regulatory regime to force to a certain extent the aggregation of demand. People are talking about the aggregation of reporting results, which I think are proportional to market share but I think also the aggregation has another meaning in terms of how can you actually justify buying a million dollar Class 5 PSTN switch to service a new neighbourhood.
598 In one example which I have been working with, a brand new neighbourhood of 25 houses and 64 apartments and then the phone company has to come in and fork a million dollars to build a new telecom hut for that new neighbourhood. Well, it needs to force demand aggregation to a great extent in order to justify making these investments.
599 And the regulatory regime is built to a certain extent and the deregulation and the local competition, the way it has been happening since 1997, it's still not -- it's still very much forcing the aggregation of demand in order to justify buying such expensive infrastructure and equipment.
600 So to a certain extent, I think that the monitoring should capture the level of market aggregation which is commanded by certain regulatory regimes or certain regulatory decisions. And I think that a good example of that is, for example, the aggregation of demand for internet access on top of the telephone switch infrastructure on top of copper lines.
601 Today, we could probably believe that if phone companies were denied the right, for example, to do DSL on the copper loops which have been funded for voice service, for example, just speculating, then it would be impossible to justify building or making new investments in the plant, which is basically everything is being made on the hypothesis that you can actually do a high speed internet access on this infrastructure.
602 This has some impacts. For example, new infrastructure, especially with the new regulation on sunset rules, it is very difficult for somebody else to come up with a business plan to build a new infrastructure when you can face strong competition from unbundled elements at regulated prices.
603 So the whole concept of demand aggregation I think is quite relevant to monitor for and to a certain extent this demand aggregation would probably also serve to monitor the transition to content-oriented business models as opposed to -- the transition from connectivity to content is a big issue right now. And people are defining their new business models, probably we have seen the industry consolidate to a large degree towards a content-oriented model.
604 And this completely changes the dynamics of demand aggregation because now the demand is being funnelled through, for example, higher penetration rates which are just -- which are necessary, for example, to justify higher advertising fees.
605 The only way then you can really raise this market penetration then is to probably give away high speed internet access. And we have seen some people which have made public disclosures as to that was their strategy to give away high speed internet access in order to raise market penetration, increase the level of aggregation in order to justify giving away high speed internet access.
606 So it is a vague concept which probably needs a lot of tweak in order to become clearer to everybody. But this is how I chose to define it. It encompasses many of the monitoring items which I have submitted in my contribution.
607 So just to give you -- also an important that I find is that there is a different regulatory principle which applies to different support structures. And the quality of service of attachment to public support structures varies from the telephone pole to telephone pole quite extensively on such things as five years build-out plans when the cap X expenditures of company are pretty much near to zero or six months in the future today and the government allows the telcos to make a five year plan to say, "Well, you can't really attach on this pole because five years from now I will build a super duper big cable on that telephone pole and there won't be enough room for me any more." And whereas we know that it is very difficult for any company today to make a two year plan, let alone a five year plan.
608 So on that basis the quality of service of being able to attach to public structures is a concept which is quite provocative but is very relevant in the day-to-day life of somebody which is interested in facilities-based competition. People are running out of support structures and how -- what is the level of service that you get in requesting attachment to a support structure. And all these issues are not captured in the current quality of service indicators that the Commission is requesting but definitely could be.
609 So in my view I see the current regulatory regime which has been advocating facilities-based competition since Decision 97-8 as being -- as changing to a certain extent. It's been -- well, you can probably guess that I have not been at this for the last ten years and I have always questioned myself as to why the Commission made a statement in Decision 97-8 that a facilities-less competition was the only way that viable competition could happen in the marketplace. And that statement in that decision has been made without referencing it or substantializing it. It's just a two-liner statement. Everybody has been running with it for quite a long time.
610 And now we find five years later that it is necessary to extend sunset rules in order to see competition develop and it is necessary to make, what I have always been calling facilities-less competition, something a bit more prevalent which it is important to recognize that competitors with a lesser amount of facilities than the incumbents are going to be given a fair chance to compete. But there are drawbacks to that.
611 So either you allow your hard core facilities-based competition only or then you recognize this is not going to happen and you make a long-term policy decision to allow the new facilities build to happen without the regulatory regime acting as a weight preventing the build out of new infrastructure.
612 So I think that there could be quality of service indicators indicating to the Commission that -- or how could the Commission quantify that there is new builds going on out there. People are just still not going to rent copper loops from the incumbent telcos for the next ten years and that they will indeed go out and build new copper loops. Nobody is going to do that.
613 But still they could have like feedback from the industry that somebody is going to overbuild the incumbent telcos and with what facilities and it ties very much into the next slide, which is how you end up regulating or monitoring the quality of facilities-less competition.
614 And I think that I have always found it to be quite interesting to see that the telco guys were not sending their people to the table of everything surrounding 2007, '08, '09, which is the work which is undergoing to define third party access to a high speed infrastructure.
615 What we are seeing is a very different policy environment for third party access to the DSL infrastructure of the telcos and the cable modem infrastructure of the carriers. I know this for a fact because I am very much interested in my professional life in the development of fibre to the home environments and how do you actually define facilities less competition and third party access in a fibre-to-the-home environment.
616 I am seeing the repercussions of what is going on today five or ten years from now, for example, when the telcos go for passive optical networking rather than dedicated plant infrastructure for fibre-to-the-home scenarios.
617 Well, this is my personal example as to why I think that it is important to act today on developing for the Commission an understanding on these issues and on developing monitoring reports which assess these issues in a detailed manner.
618 I know that the Commission intends to issue a public notice later this spring on understanding or something that has to do with new interconnection regimes for new networks, but that would still boil down to what we are here to discuss today: How do you actually monitor for this stuff? How do you quantify it?
619 In my contribution you will find -- in an appendix to it a contribution which was filed by people who I respect very much in the States, the FCC, on a mechanism that could be developed for monitoring the network for quality of service.
620 Also, by the way, the National Broadband Task Force is mandating open access for any new funding infrastructure -- any funding of new infrastructure.
621 So how will the Commission assess, through a monitoring of the industry, that there is indeed a certain commitment to the openness of the open access being provided on this infrastructure.
622 So the rates of carriers need to show QoS. A major important issue in that contribution is that one calls for mandatory disclosure -- the APPC folks call for mandatory disclosure of quality of service.
623 This is just beyond just allowing the Commission to monitor QoS but actually requiring that QoS being provided by underlying infrastructure is actually detailed in the rates being approved by the Commission. The fact that it is not is creating some severe market distortions right now in the development of third party access regulation, in my view, and to that extent could only get worse over the next five years.
624 So I think it is quite important that the rates of carriers show how their service functions in terms of quality of service.
625 On that note, the effort around 2007, '08, '09 has started on a bad note, I think. There may be time to recover from that, but I would think that we should be very careful about ensuring that this happens.
626 Next, please.
627 Also, something that tickled me a little bit in the Background Report is that the definition of wholesale and third party access is used -- or the term wholesale and third party access is used interchangeably in the Background Report.
628 I would think that a lot of the monitoring aspects have to do with how people interpret wholesales versus how they interpret third party access.
629 To different people those issues mean entirely different things, but the main difference between wholesale and third party access means that competitors are allowed to define the services which are provided on the network through third party access, whereas in a wholesale environment they are pretty much subjected to the definition of service that the incumbent carriers have chosen to define with their infrastructure.
630 So I would think that this is an omnipresent type of issue which needs to be always kept in mind when developing monitoring for QoS questions.
631 Next, please.
632 So, in conclusion, as you can see, I am very much in favour of monitoring the industry for QoS and I would say that the mandatory disclosure of high speed quality as well as quality of service and QoS is the surest path towards realizing the goal of a coherent national policy framework with equitable regulatory obligations for all high speed access services and that this monitoring should include quality of service as in the data sense for QoS and not just quality of service indicators.
633 Thank you.
634 MR. MACRI: Thank you, Mr. Ménard.
635 Do you have extra copies of your presentation here today with you?
636 MR. MÉNARD: The PowerPoint I will circulate on the list when I get back home.
637 MR. MACRI: Okay, thank you.
638 Does anybody have any questions with respect to Mr. Ménard's presentation or questions of clarification or comments? No?
639 Thank you very much.
640 Are there any other comments before we conclude this phase of the process? No?
641 On behalf of the staff that is here today, thank you very much for your participation. It was very useful, I think, to bring everybody together and get the different views back and forth. We will take those back with us and hopefully come forward with our usual balanced and timely decision.
642 I would remind parties that the deadline for written reply submissions is the 26th of April.
643 With that, that concludes the consultation.
644 Thank you very much.
--- Whereupon the consultation concluded at 1505 /
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