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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TELECOMMUNICATIONS COMMISSION
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Review of regulatory framework for wholesale
services and definition of essential service /
Examen du cadre de réglementation concernant les services
de gros et la définition de service essentiel
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
140 Promenade du Portage 140, Promenade du Portage
Gatineau, Quebec Gatineau (Québec)
October 16, 2007 Le 16 octobre 2007
Transcripts
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and staff attending the public hearings, and the Table of
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However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
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Transcription
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
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
Transcript / Transcription
Review of regulatory framework for wholesale
services and definition of essential service /
Examen du cadre de réglementation concernant les services
de gros et la définition de service essentiel
BEFORE / DEVANT:
Konrad von Finckenstein Chairperson / Président
Barbara Cram Commissioner / Conseillère
Andrée Noël Commissioner / Conseillère
Elizabeth Duncan Commissioner / Conseillère
Helen del Val Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Marielle Giroux-Girard Secretary / Secrétaire
Robert Martin Staff Team Leader /
Chef d'équipe du personnel
Peter McCallum Legal Counsel /
Amy Hanley Conseillers juridiques
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
140 Promenade du Portage 140, Promenade du Portage
Gatineau, Quebec Gatineau (Québec)
October 16, 2007 Le 16 octobre 2007
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
SOUS AFFIRMATION SOLENNELLE : DENNIS BÉLAND 1544 /10684
SOUS AFFIRMATION SOLENNELLE : CHRISTOPHER TAYLOR
Cross-examination by The Companies 1545 /10689
Cross-examination by TELUS 1565 /10854
Cross-examination by Primus 1587 /11014
Cross-examination by Cybersurf 1594 /11070
Cross-examination by Xittel 1611 /11191
SOUS AFFIRMATION SOLENNELLE : FRANÇOIS AUDET 1620 /11260
AFFIRMED: DAVID McKEOWN
SOUS AFFIRMATION SOLENNELLE : MICHEL MESSIER
AFFIRMED: DIMITRI STATHIS
SOUS AFFIRMATION SOLENNELLE : ROBIN LAVOIE
Cross-examination by The Companies 1621 /11264
Cross-examination by TELUS 1657 /11495
Cross-examination by Primus 1688 /11638
Cross-examination by Cybersurf 1690 /11652
SWORN: JEAN BRAZEAU 1693 /11674
SWORN: CINDY McCLOCKLIN
SWORN: ESTHER SNOW
Examination-in-chief by Shaw 1693 /11674
Cross-examination by The Companies 1693 /11681
Cross-examination by TELUS 1719 /11864
Cross-examination by Primus 1731 /11951
Cross-examination by Xittel 1734 /11975
- v -
EXHIBITS / PIÈCES JUSTIFICATIVES
No. PAGE / PARA
TELUS-4 Tab 6 of the Compendium 1580 /10961
- vi -
ERRATA / ADDENDA
PAGE / PARA DESCRIPTION
1515 / 10494 "MR. TACIT:" s/b ""MR. WARE:"
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon resuming on Tuesday, October 16, 2007
at 0800 / L'audience reprend le mardi
16 octobre 2007 à 0800
LISTNUM 1 \l 1 \s 106721067 THE SECRETARY: Can you be seated, please. Veuillez vous asseoir, s'il vous plaît.
LISTNUM 1 \l 11068 THE CHAIRPERSON: Good morning.
LISTNUM 1 \l 11069 Madam Secretary, whom do we have today?
LISTNUM 1 \l 11070 LA SECRÉTAIRE : Bonjour, Monsieur le Président.
LISTNUM 1 \l 11071 Le prochain panel, c'est Quebecor Media inc. Je vais demander à monsieur Béland de faire la présentation de ses témoins.
LISTNUM 1 \l 11072 MR. BÉLAND: Good morning, Mr. Chairman, commissioners.
LISTNUM 1 \l 11073 My name is Dennis Béland and I am Director of Regulatory Affairs, Telecommunications at Quebecor Media Inc.
LISTNUM 1 \l 11074 With me this morning is Christopher Taylor, outside counsel for Quebecor for this proceeding.
LISTNUM 1 \l 11075 A brief biographical statement for myself and Mr. Taylor has been provided to the Commission and circulated to the parties.
LISTNUM 1 \l 11076 Quebecor avait indiqué au Conseil que monsieur Gilles Brunet, notre directeur de Services aux transporteurs chez Vidéotron, serait aussi sur le panel avec nous. Malheureusement, monsieur Brunet n'est pas en mesure de participer aujourd'hui à cause de raisons personnelles.
LISTNUM 1 \l 11077 En l'absence de monsieur Brunet, monsieur Taylor et moi allons répondre aux questions du Conseil au meilleur de nos connaissances, et si nécessaire, nous prendrons des engagements pour des réponses additionnelles.
LISTNUM 1 \l 11078 Madame la Secrétaire, si vous voulez faire l'assermentation du panel, nous allons procéder, par la suite, avec l'attestation formelle concernant nos preuves.
LISTNUM 1 \l 11079 LA SECRÉTAIRE : Merci, Monsieur Béland.
SOUS AFFIRMATION SOLENNELLE : DENNIS BÉLAND
SOUS AFFIRMATION SOLENNELLE : CHRISTOPHER TAYLOR
LISTNUM 1 \l 11080 MR. BÉLAND: Mr. Chairman, the evidence and other written submissions of Quebecor were prepared by me or under my direction. I confirm that these materials are accurate and complete.
LISTNUM 1 \l 11081 We would be pleased to now take questions from other parties and from the Commission.
LISTNUM 1 \l 11082 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11083 THE SECRETARY: Counsel on behalf of the Companies, you may proceed with the cross‑examination.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11084 MR. HOFLEY: Thank you very much, Madam Secretary.
LISTNUM 1 \l 11085 Good morning, commissioners. Good morning, panel.
LISTNUM 1 \l 11086 I will have very few questions for you with respect to the definition of essential facilities in your evidence. All I will be referring to is your March 15th evidence. So if you have that handy, that would be great.
LISTNUM 1 \l 11087 And my colleague Mr. Daniels has a few questions for you, following mine.
LISTNUM 1 \l 11088 Now, if I could take you to paragraph 18 of your evidence, which is at page 5, bottom right corner, here you will recall that you indicate your preferred definition and it has three features.
LISTNUM 1 \l 11089 I would like to just go through them because I have a couple of clarificatory questions and then I have one set of questions around an issue raised by them.
LISTNUM 1 \l 11090 The first criterion is:
"...control by one service provider of a service." (As read)
LISTNUM 1 \l 11091 I just wanted to clarify. When you say "a service," do you mean a service or a functional equivalent to that service?
LISTNUM 1 \l 11092 MR. BÉLAND: We mean in fact a service or a facility as defined by the Commission.
LISTNUM 1 \l 11093 MR. HOFLEY: But in other words, does it have to be that particular service or if there is a functional equivalent to that service, something that does the same thing, that would suffice?
LISTNUM 1 \l 11094 MR. BÉLAND: I am not sure I understand the question. We are talking about a service that we control.
LISTNUM 1 \l 11095 MR. HOFLEY: Okay. Well, we will come to it, I think, later on.
LISTNUM 1 \l 11096 Now, your second criterion is:
"...needed by a second service provider to offer services." (As read)
LISTNUM 1 \l 11097 Is that by any single service provider? So it says "a second service provider." Is it just one service provider or is it needed by service providers generally?
LISTNUM 1 \l 11098 MR. BÉLAND: It could be one service provider, yes.
LISTNUM 1 \l 11099 MR. HOFLEY: Just one, okay. Well, we will come back to that.
LISTNUM 1 \l 11100 And when you say "to offer services" ‑‑ "to build or operate a network or offer services," do you mean in the retail market downstream?
LISTNUM 1 \l 11101 MR. BÉLAND: Generally speaking, yes.
LISTNUM 1 \l 11102 MR. HOFLEY: And then your third criterion we all understand, which is the question of duplicability.
LISTNUM 1 \l 11103 If you go to paragraph 25 of your submission, which is over on page 7, you talk about three classes of wholesale services ‑‑ well, that is the title actually but in paragraph 25 you say there are three reasons for requiring a service to be provided on a wholesale basis.
LISTNUM 1 \l 11104 The first one has to do with:
"...to promote the public interest in interconnected, interoperable networks." (As read)
LISTNUM 1 \l 11105 And I am not going to be asking you any questions about that.
LISTNUM 1 \l 11106 The second is:
"...to address a situation where a service provider has SMP in respect of an access service." (As read)
LISTNUM 1 \l 11107 And I will have some questions about that.
LISTNUM 1 \l 11108 And the third is:
"...to promote other social goods such as public safety, public convenience... [et cetera]. (As read)
LISTNUM 1 \l 11109 Now, your test covers all three of the ‑‑ is intended to cover, to be a broad test covering all three of these reasons; is that a fair statement?
LISTNUM 1 \l 11110 MR. BÉLAND: No, the ‑‑ one of the issues we wanted to convey in our initial evidence was our belief that mandated wholesale services should not necessarily be limited to only essential services.
LISTNUM 1 \l 11111 So you need to look at our three categories of mandated wholesale services and our definition of essential service separately.
LISTNUM 1 \l 11112 To give you perhaps the most evident example, there could be services that are not essential, yet fall within the category of public good, and by breaking out these categories, we wanted to ensure that the Commission took into consideration that possibility.
LISTNUM 1 \l 11113 MR. HOFLEY: Okay. So is essential then really ‑‑ when we are talking about the essential services definition, are we talking about the second reason there?
LISTNUM 1 \l 11114 MR. BÉLAND: No. In fact, to be more precise, there could be essential services falling within any of those three categories.
LISTNUM 1 \l 11115 MR. HOFLEY: Okay.
LISTNUM 1 \l 11116 MR. BÉLAND: We just want to make sure that the Commission when looking at those three categories doesn't necessarily limit itself to essential services.
LISTNUM 1 \l 11117 MR. HOFLEY: Okay.
LISTNUM 1 \l 11118 Well, I would like to focus on your second category, the SMP category, if we could.
LISTNUM 1 \l 11119 MR. BÉLAND: Yes.
LISTNUM 1 \l 11120 MR. HOFLEY: At paragraph 53 ‑‑
LISTNUM 1 \l 11121 THE CHAIRPERSON: Before you do that, Mr. Hofley, can I just interject.
LISTNUM 1 \l 11122 So I gather your category 1 and category 3, those are really baskets 5 and 6 in the framework that the Commission sent to you?
LISTNUM 1 \l 11123 MR. BÉLAND: Yes, they would fall well into the Commission's framework in that way.
LISTNUM 1 \l 11124 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11125 I am sorry, go ahead.
LISTNUM 1 \l 11126 MR. HOFLEY: So if I could take you to paragraph 53, which is page 16, and this is where you talk about access services subject to SMP and you discuss this in more detail.
LISTNUM 1 \l 11127 At paragraph 54, you talk about a number of reasons for market power ‑‑ you will recall that ‑‑ and then you make a submission in the middle. It says:
"In any case, QMI submits that the public interest in fostering competition justifies requiring the network operator with SMP to make the relevant access facilities available on a wholesale basis." (As read)
LISTNUM 1 \l 11128 When you are talking about competition there, are you talking about competition at the retail level?
LISTNUM 1 \l 11129 MR. BÉLAND: Yes, generally speaking.
LISTNUM 1 \l 11130 MR. HOFLEY: All right. So if there is no significant market power at the retail level, even assuming there is control over a facility at the wholesale level, would you agree with me that there is no need to mandate access to solve any competition problem downstream?
LISTNUM 1 \l 11131 MR. BÉLAND: That is not the way we have structured our definition, no. We haven't made a linkage in our definition between the upstream and downstream markets.
LISTNUM 1 \l 11132 MR. HOFLEY: I guess I understand you haven't made a linkage, but what I'm asking you is: Given that you have said that there is a public interest in fostering competition downstream and you go on to say:
"The new entrants would then be able to provide retail services to customers." (As read)
LISTNUM 1 \l 11133 What I'm asking you is whether or not there should be that linkage, whether or not what you really are saying is that if there isn't a competition problem downstream then there wouldn't be a need to mandate access to an input used for that retail market.
LISTNUM 1 \l 11134 MR. BÉLAND: Again, we have focused solely on the upstream. If there is a market power issue upstream, that would be sufficient for us ‑‑ in our opinion for the Commission to give consideration to mandating wholesale access.
LISTNUM 1 \l 11135 MR. HOFLEY: Thank you for that.
LISTNUM 1 \l 11136 I don't have any further questions, but my friend Mr. Daniels does.
LISTNUM 1 \l 11137 MR. DANIELS: Madam Secretary, I think I have one exhibit, a prefiled exhibit.
LISTNUM 1 \l 11138 THE SECRETARY: There was a prefiled document that was already distributed.
LISTNUM 1 \l 11139 MR. DANIELS: It has already been distributed?
LISTNUM 1 \l 11140 THE SECRETARY: Yes.
LISTNUM 1 \l 11141 MR. DANIELS: All right.
LISTNUM 1 \l 11142 For those following in the back of the room, I have just one reference to an interrogatory QMI/CRTC 12 April 2007‑107.
LISTNUM 1 \l 11143 In this interrogatory ‑‑ actually I should say, Mr. Chair, the purpose of my cross‑examination at this point is to understand QMI's position on restriction on use. This is a very short interrogatory where their position is outlined.
LISTNUM 1 \l 11144 Mr. Béland, I take it you were here on Friday and heard my discussion about the restriction on use with the Rogers panel?
LISTNUM 1 \l 11145 MR. BÉLAND: Yes, I did.
LISTNUM 1 \l 11146 MR. DANIELS: In light of that I would like to look at your proposed response on this. This was in response to an interrogatory from the Commission asking you for your position on it.
LISTNUM 1 \l 11147 You say here:
"QMI does not agree with Bell Canada's proposal ..."
LISTNUM 1 \l 11148 I'm talking about the restriction on use:
"... as it is reminiscent of the resale versus sharing distinction that the Commission attempted to enforce the late 1980s and early 1990s."
LISTNUM 1 \l 11149 Let's spare everyone from going through what that means, for those of us who studied it and whatever.
LISTNUM 1 \l 11150 MR. BÉLAND: That's agreed.
LISTNUM 1 \l 11151 MR. DANIELS: But that distinction was unenforceable and QMI believes that Bell Canada's proposal would be equally unenforceable. I would like to just ask you about this unenforceability for a moment.
LISTNUM 1 \l 11152 QMI has its own wholesale tariff for wholesale internet called TPIA, Third Party Internet Access.
LISTNUM 1 \l 11153 Is that correct?
LISTNUM 1 \l 11154 MR. BÉLAND: Yes, we do.
LISTNUM 1 \l 11155 MR. DANIELS: Would you agree with me that you, too, like we discussed with Rogers, have restrictions on use in that tariff?
LISTNUM 1 \l 11156 MR. BÉLAND: Yes, we do.
LISTNUM 1 \l 11157 MR. DANIELS: Am I correct in stating that you do not have an enforcement problem with the restrictions in those tariffs?
LISTNUM 1 \l 11158 MR. BÉLAND: No. We haven't seen an enforcement problem to date, no.
LISTNUM 1 \l 11159 MR. DANIELS: Okay. So we can agree, then, that restrictions on use can be enforced through a tariff?
LISTNUM 1 \l 11160 MR. BÉLAND: I would agree with that statement, yes.
LISTNUM 1 \l 11161 MR. DANIELS: Now, I also noticed that ‑‑ I'm not going to ask you to turn to this. There is an interrogatory where QMI states that it purchases CDN from the ILEC ‑‑ which I assume is Bell Canada considering your location ‑‑ but makes little use of those service.
LISTNUM 1 \l 11162 So it is my understanding that you have limited use of CDN, but you do purchase CDN
LISTNUM 1 \l 11163 Is that correct?
LISTNUM 1 \l 11164 MR. BÉLAND: Exactly. We purchase some CDN services from Bell, but very limited quantities.
LISTNUM 1 \l 11165 MR. DANIELS: I take it you also do not perform any simple resale of those circuits. By that, just so I'm clear what I mean, is as I understand CDN, CDN is to be used by a competitor to augment its network, it's not to take strictly a CDN circuit and simply resell it at the low rate in the retail market.
LISTNUM 1 \l 11166 Is that correct?
LISTNUM 1 \l 11167 MR. BÉLAND: That's correct.
LISTNUM 1 \l 11168 If I can perhaps foresee where you are going with this, in fact we signed an affidavit, a senior official of Québecor Media ‑‑ of Vidéotron, excuse me, signs an affidavit once a year affirming that we do not engage in simple resale of those services.
LISTNUM 1 \l 11169 MR. DANIELS: That is because there is a restriction in the tariff on use for the purpose of resale.
LISTNUM 1 \l 11170 Is that correct?
LISTNUM 1 \l 11171 MR. BÉLAND: More precisely I recall it being a Commission directive, but I think we are touching the same thing, yes.
LISTNUM 1 \l 11172 MR. DANIELS: And again, are you aware of any enforcement problems with that restriction?
LISTNUM 1 \l 11173 MR. BÉLAND: It's your service that you are selling to us so it would be you that would be aware of an enforcement problem, but we take the signature of the affidavit very seriously and we produce it once a year as required.
‑‑‑ Pause
LISTNUM 1 \l 11174 MR. DANIELS: One last question, Mr. Béland.
LISTNUM 1 \l 11175 Yesterday we heard some testimony from the Rogers panel about what is involved to get access to come into this building if Rogers wanted to come into this building with their own facility. In light of that I wanted to ask you: Could you confirm that you do provide basic cable service in this building, and specifically ‑‑ I don't know if you are aware right now whether you do, but I assume maybe you can take an undertaking.
LISTNUM 1 \l 11176 MR. BÉLAND: I'm looking at the quantity of televisions in this room and I hope we provide service, but I can't confirm it on the spot.
LISTNUM 1 \l 11177 MR. DANIELS: All right. Well, maybe you could take an undertaking, if you are willing to do that, and you may also want to check with the Le Mirage restaurant right around the corner here which appears to have basic cable.
LISTNUM 1 \l 11178 MR. DANIELS: So to confirm, you would like an undertaking that we provide cable television service to this building and to Le Mirage restaurant ‑‑
LISTNUM 1 \l 11179 MR. DANIELS: Located at ‑‑
LISTNUM 1 \l 11180 MR. BÉLAND: ‑‑ which is in this building as well?
LISTNUM 1 \l 11181 MR. DANIELS: Yes, it is in this building. So basically I'm just suggesting that may be the quickest way for you to confirm that you provide cable television services.
LISTNUM 1 \l 11182 MR. BÉLAND: Okay. Thank you.
LISTNUM 1 \l 11183 MR. DANIELS: Are you prepared to take that undertaking?
LISTNUM 1 \l 11184 MR. BÉLAND: Yes.
LISTNUM 1 \l 11185 MR. DANIELS: Thank you.
LISTNUM 1 \l 11186 That concludes our questions, Mr. Chairman.
LISTNUM 1 \l 11187 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11188 Mr. Béland, can I ask you about your section 25, subparagraph (2) where you say:
"To address the situation where a service provider has significant market power in respect of an access service..." (As read)
LISTNUM 1 \l 11189 Which is really sort of the key rationale you have advanced for mandating ‑‑ you are making no reference at all to upstream or downstream markets, et cetera.
LISTNUM 1 \l 11190 So the significant market power could be as a result of the efficient operation of an operator rather than in any way being connected to its dominance or control of the wholesale market?
LISTNUM 1 \l 11191 So far, for the last three days we have heard everything was because somebody had significant power on the wholesale market he could control the downstream market. We had a lot of argument whether the downstream market you would have to have control, but all ‑‑ so this key ‑‑ you can't get into the system unless you get through the wholesaler, so therefore everything was targeted on wholesale market.
LISTNUM 1 \l 11192 Your definition doesn't at all refer either to upstream or downstream markets or wholesale or retail, whatever you want to call it.
LISTNUM 1 \l 11193 MR. BÉLAND: We are referring to the access service, so we are clearly in the upstream market here.
LISTNUM 1 \l 11194 But you are correct that we don't ‑‑ we expressly avoided bringing in any linkage with the downstream market, any assessment of the service provider's intentions that it might have with regards to limiting or lessening competition in the downstream market. We felt that an efficient proposal would be one that would look at the upstream service in question and assess the market power there.
LISTNUM 1 \l 11195 THE CHAIRPERSON: All right.
LISTNUM 1 \l 11196 Andrée?
LISTNUM 1 \l 11197 CONSEILLERE NOËL : Alors, Monsieur Béland, si je comprends bien, vous nous dites... parce que vous faites une distinction entre les services dits essentiels et les services qui doivent être offerts en vente aux services de gros, wholesale.
LISTNUM 1 \l 11198 Quand vous dites que les services doivent être fournis sur une base de services en gros, vous ne parlez pas nécessairement de services essentiels? C'est bien ce que j'ai compris de votre proposition.
LISTNUM 1 \l 11199 M. BÉLAND : Exactement.
LISTNUM 1 \l 11200 M. BÉLAND : Exactement.
LISTNUM 1 \l 11201 CONSEILLERE NOËL : Vous faites une distinction entre les services qui doivent être offerts, mandated en anglais, sur une base de services offerts en gros, et les services essentiels, qui sont une autre chose.
LISTNUM 1 \l 11202 Alors, pour vous, un service là où le fournisseur de service au niveau du gros a une part de marché significative, SMP, vous dites que le service d'accès doit être offert sur une base obligatoire?
LISTNUM 1 \l 11203 M. BÉLAND : En fait, si je peux revenir à l'origine de notre proposition.
LISTNUM 1 \l 11204 La préoccupation qu'on avait chez QMI en regardant cette question, c'était une préoccupation concernant la possibilité que le Conseil limiterait la définition de services vendus en gros mandatés à des services essentiels uniquement.
LISTNUM 1 \l 11205 Cela nous préoccupait pour deux... on peut parler de deux catégories de services où on voyait que ça ne marcherait pas très.
LISTNUM 1 \l 11206 La première catégorie, c'est les services d'interconnexion, où la notion d'interconnexion et la notion de service essentiel ne se marient pas très bien. C'est possible qu'on peut développer une définition d'essentiel qui englobe les services d'interconnexion, mais pour nous, on voulait que ça soit plus explicite, l'interconnexion, les services d'interconnexion. Que ça tombe dans une définition d'essentiel ou pas, ça mérite d'être mandaté comme tel.
LISTNUM 1 \l 11207 CONSEILLERE NOËL : Au niveau de l'intérêt public?
LISTNUM 1 \l 11208 M. BÉLAND : Au niveau de l'intérêt public.
LISTNUM 1 \l 11209 Deuxième catégorie de services, ce sont les services qu'on a dit ici social goods, de type biens publics. Des exemples, ça serait le réseau 9‑1‑1, l'accès au réseau 9‑1‑1.
LISTNUM 1 \l 11210 On pourrait, j'imagine, avoir un long débat à savoir si le réseau 9‑1‑1 actuel est un service essentiel ou pas, mais à certain point, c'est un débat inutile. La réalité actuelle, c'est que les concurrents ont besoin d'accéder à ce réseau là s'ils veulent offrir un service local ou même un service sans fil ou même un service VoIP sans installation au Canada.
LISTNUM 1 \l 11211 Un autre exemple, ça serait les poteaux. On pourrait...
LISTNUM 1 \l 11212 CONSEILLERE NOËL : Les structures de soutènement.
LISTNUM 1 \l 11213 M. BÉLAND : Des structures de soutènement. On pourrait débattre longtemps la question économique de l'aspect essentiel ou pas, mais en fin de journée, on peut s'entendre qu'il y a un intérêt public à partager les poteaux de téléphone.
LISTNUM 1 \l 11214 CONSEILLERE NOËL : En tout cas, pour les propriétaires sur les terrains desquels les poteaux sont installés, il y a certainement un intérêt visuel...
LISTNUM 1 \l 11215 M. BÉLAND : Oui.
LISTNUM 1 \l 11216 CONSEILLERE NOËL : ...à les partager.
LISTNUM 1 \l 11217 Mais pour ce qui est des services essentiels comme tels, qu'est‑ce que vous qualifiez comme services essentiels?
LISTNUM 1 \l 11218 M. BÉLAND : Mais on a fourni une définition...
LISTNUM 1 \l 11219 CONSEILLERE NOËL : Oui.
LISTNUM 1 \l 11220 M. BÉLAND : ...avec, effectivement, trois éléments.
LISTNUM 1 \l 11221 CONSEILLERE NOËL : Pouvez‑vous me la répéter? Pouvez‑vous me la répéter?
LISTNUM 1 \l 11222 M. BÉLAND : On va le chercher. C'est quel paragraphe?
‑‑‑ Pause
LISTNUM 1 \l 11223 M. BÉLAND : Vous allez le trouver...
LISTNUM 1 \l 11224 CONSEILLERE NOËL : Au paragraphe 2?
LISTNUM 1 \l 11225 M. BÉLAND : ...au paragraphe 20 de notre...
LISTNUM 1 \l 11226 CONSEILLERE NOËL : Vingt.
LISTNUM 1 \l 11227 M. BÉLAND : ...de notre soumission initiale.
LISTNUM 1 \l 11228 Les éléments essentiels de notre définition...
LISTNUM 1 \l 11229 CONSEILLERE NOËL : Mm‑hmm. D'accord.
LISTNUM 1 \l 11230 M. BÉLAND : ...si je peux dire, ce sont le contrôle par un fournisseur du service ou de l'installation en question, le besoin d'un autre fournisseur à utiliser ce service pour lui‑même offrir un service dans le marché, généralement le marché de détail, et finalement, l'idée que le service ou l'installation ne peut pas être dupliqué, d'une perspective objective et pratique.
LISTNUM 1 \l 11231 CONSEILLERE NOËL : D'accord.
LISTNUM 1 \l 11232 Moi, je n'ai pas d'autres questions, Monsieur le Président.
LISTNUM 1 \l 11233 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11234 Commissioner Cram.
LISTNUM 1 \l 11235 COMMISSIONER CRAM: In your interconnection ‑‑ how would you treat access tandem and DC, direct connect? Would you treat it as part of interconnection or under your second ‑‑ the SMP access test?
LISTNUM 1 \l 11236 MR. BÉLAND: A surprisingly complex question and the reason is that ‑‑
LISTNUM 1 \l 11237 COMMISSIONER CRAM: I don't realize it because I don't even know that it is complex.
LISTNUM 1 \l 11238 MR. BÉLAND: I would love to be able to give you a one‑word answer.
LISTNUM 1 \l 11239 The reason is that in fact, QMI, we proposed what I would call a restructuring of that whole notion of direct connect/access tandem.
LISTNUM 1 \l 11240 What we have proposed in our evidence is what I would call a simplification restructuring of interconnection whereby we would effectively do away with this need to distinguish between inter‑exchange carriers and local exchange carriers and say that all interconnection happens at the local interconnection region level, the LIR level.
LISTNUM 1 \l 11241 An inter‑exchange carrier knocking on the door of an ILEC or a CLEC would have a right based on interconnection principles to terminate traffic within the entire LIR that they are looking at.
LISTNUM 1 \l 11242 Any further transport functionality that they would be looking for in the nature of a larger, geographically larger access tandem type of thing would be considered a non‑interconnection service and then you would need to look at whether that particular service was essential in a particular context.
LISTNUM 1 \l 11243 COMMISSIONER CRAM: Under the SMP test? Under your SMP test?
LISTNUM 1 \l 11244 MR. BÉLAND: Yes.
LISTNUM 1 \l 11245 COMMISSIONER CRAM: Okay, thank you.
LISTNUM 1 \l 11246 THE CHAIRPERSON: Okay, thank you very much.
LISTNUM 1 \l 11247 Who is next, Madam Secretary?
LISTNUM 1 \l 11248 THE SECRETARY: I am calling the counsel for TELUS Communications Company, please, to come forward.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11249 MR. SCHMIDT: Good morning, Mr. Chairman. Good morning, commissioners and panel members.
LISTNUM 1 \l 11250 My name is Stephen Schmidt and I am counsel to TELUS in this proceeding.
LISTNUM 1 \l 11251 I am assisted this morning by Mr. Mark Murakami, a Director in TELUS' Wholesale Division.
LISTNUM 1 \l 11252 I will be referring to QMI's 15 March evidence a couple of times this morning, so it would be helpful if you had that at hand.
LISTNUM 1 \l 11253 I will be referring as well to a compendium of documents which we have pre‑filed with the Hearing Secretary and I believe she is distributing it now.
LISTNUM 1 \l 11254 I am going to touch on four topics this morning and I would be surprised if it took more than 30 minutes, Mr. Chairman.
LISTNUM 1 \l 11255 The first topic area relates to QMI's use of and dependency on ILEC facilities, the basic object of this conversation being to explore what QMI needs to deliver their retail telephone service.
LISTNUM 1 \l 11256 To that end, I would ask you to open Tab 1 of the compendium, which contains Interrogatory Response QMI‑Bureau 12Apr‑2, and at paragraph B of that response, QMI states:
"With limited exceptions all of QMI's services other than mobile wireless services are provided over QMI's wholly owned network." (As read)
LISTNUM 1 \l 11257 So I want to explore this statement a little bit with the panel to see what particular classes of ILEC services fall within or outside of your limited exception that you articulated.
LISTNUM 1 \l 11258 So can I take it from your statement at paragraph B there that you provide both business telephone service and residential service over your own network, just as a general proposition?
LISTNUM 1 \l 11259 MR. BÉLAND: As a general proposition, yes.
LISTNUM 1 \l 11260 MR. SCHMIDT: Thank you. Well, I will get a bit more specific then.
LISTNUM 1 \l 11261 Do you use ILEC loops to provide your residential telephone service?
LISTNUM 1 \l 11262 MR. BÉLAND: No.
LISTNUM 1 \l 11263 MR. SCHMIDT: Okay. Do you use ILEC loops to provide your business telephone service?
LISTNUM 1 \l 11264 MR. BÉLAND: In some cases, yes, and perhaps here we should distinguish between the two networks that Vidéotron operates.
LISTNUM 1 \l 11265 Vidéotron operates what is traditionally referred to as a cable network, a hybrid fibre‑optic coaxial cable network over which we provide some business services.
LISTNUM 1 \l 11266 MR. SCHMIDT: Okay.
LISTNUM 1 \l 11267 MR. BÉLAND: We also operate a ‑‑ let's call it a pure fibre network which corresponds to the former Vidéotron Telecom Ltd. ‑‑
LISTNUM 1 \l 11268 MR. SCHMIDT: Okay.
LISTNUM 1 \l 11269 MR. BÉLAND: ‑‑ and Vidéotron Telecom Ltd. generally provides business services over its own end‑to‑end network but, in some circumstances, does make use of ILEC local loops, local services and some other services.
LISTNUM 1 \l 11270 MR. SCHMIDT: And what type of circumstances would those be where you might be using an ILEC loop?
LISTNUM 1 \l 11271 MR. BÉLAND: Probably the classic example would be were Vidéotron business services were to win a multi‑site, larger business service contract. Vidéotron may have connectivity, using its own fibre, to the majority of sites, but may not have connectivity to a couple of sites. In those cases, then we will look at the opportunity to get those connections from an alternative supplier, which will often end up being the ILEC.
LISTNUM 1 \l 11272 MR. SCHMIDT: But could be someone else potentially as well?
LISTNUM 1 \l 11273 MR. BÉLAND: Could be someone else, sure.
LISTNUM 1 \l 11274 MR. SCHMIDT: Okay. So to the extent that you are using business loops I hear it, it is in the exceptional circumstances maybe I will paraphrase, where you are planting a contract that extends beyond your network footprint or whatever?
LISTNUM 1 \l 11275 MR. BÉLAND: The clear preference for Vidéotron business services is to provide services over its own end‑to‑end facilities. But in some circumstances, relatively limited, we make use of other providers' facilities, yes.
LISTNUM 1 \l 11276 MR. SCHMIDT: Okay, thanks. Do you make use of co‑location services from any ILEC to provide residential telephone services?
LISTNUM 1 \l 11277 MR. BÉLAND: No.
LISTNUM 1 \l 11278 MR. SCHMIDT: Okay. And flipping to the business side, do you use co‑location services from any ILEC to provide business telephone services?
LISTNUM 1 \l 11279 MR. BÉLAND: No, and neither were we using the coax network nor were we using our own fibre network.
LISTNUM 1 \l 11280 MR. SCHMIDT: So co‑location is not part of the recipe at all for you to deliver services in the retail market?
LISTNUM 1 \l 11281 MR. BÉLAND: No.
LISTNUM 1 \l 11282 MR. SCHMIDT: I will ask you, would this mean you wouldn't be picked up in Rogers' test, the four co‑locator test? You are in the market, but you are not co‑locating?
LISTNUM 1 \l 11283 MR. BÉLAND: If you will allow me, let me just back‑up one step. Vidéotron itself is not co‑located anywhere, in any ILEC central offices. But if we return to the small number of cases where Vidéotron makes use of another service provider's services to reach a minority of locations, that service provider that we might be purchasing those services from, itself, maybe co‑located.
LISTNUM 1 \l 11284 MR. SCHMIDT: I accept that, but I have asked you about yourself.
LISTNUM 1 \l 11285 MR. BÉLAND: Yes.
LISTNUM 1 \l 11286 MR. SCHMIDT: And you don't co‑locate?
LISTNUM 1 \l 11287 MR. BÉLAND: I just wanted to clarify that. We don't anywhere.
LISTNUM 1 \l 11288 MR. SCHMIDT: And the you wouldn't be picked up in the Rogers' test, another carrier might be?
LISTNUM 1 \l 11289 MR. BÉLAND: I am not sure what you mean by picked up, but I would think, no.
LISTNUM 1 \l 11290 MR. SCHMIDT: Well, the Rogers' test, which is looking at four co‑locatees, if I could invent a word.
LISTNUM 1 \l 11291 MR. BÉLAND: If we are not co‑located we wouldn't be picked up.
LISTNUM 1 \l 11292 MR. SCHMIDT: Yes, that is certainly my impression. Thank you.
LISTNUM 1 \l 11293 Okay, continuing with just a few more questions about how your network works. When one QMI telephone customer is calling another QMI telephone customer, all within the same city, I guess Montreal could be an example, is there any facility you need at all from the ILEC to complete that call between those two customers?
LISTNUM 1 \l 11294 MR. BÉLAND: A QMI telephone customer calls another QMI telephone customer in Montreal ‑‑
LISTNUM 1 \l 11295 MR. SCHMIDT: All in the same city.
LISTNUM 1 \l 11296 MR. BÉLAND: ‑‑ in the same city. Off the top of my head, I don't think we would need any facility of an ILEC.
LISTNUM 1 \l 11297 MR. SCHMIDT: Yes, that would be my suspicion. Okay.
LISTNUM 1 \l 11298 So in that fact situation you can probably route and complete the call entirely over your own network?
LISTNUM 1 \l 11299 MR. BÉLAND: I think that is probably a fair statement, yes.
LISTNUM 1 \l 11300 MR. SCHMIDT: Okay, thank you. And then if I tweak the situation slightly and say one QMI telephone customer calling another QMI telephone customer, but they happen to be in different cities that you serve, would you need any ILEC facility to get the call from that city to that city, all to QMI customers?
LISTNUM 1 \l 11301 MR. BÉLAND: I can't say definitively, but I would suspect that in the majority of cases that that call, again, is carried entirely over QMI's facilities.
LISTNUM 1 \l 11302 MR. SCHMIDT: Okay, thank you.
LISTNUM 1 \l 11303 That is about it on this topic, Mr. Chairman. And in terms of punch lines, I infer from my exchange there that they are substantially able to duplicate the ILEC network and they are able to substantially deliver residential and voice telephone services entirely over their own platform.
LISTNUM 1 \l 11304 The second topic I would like to move onto relates to CDN services and the precise impact that their introduction had on your business. We have heard a lot of people talk about CDN services and what it did or didn't do, whether it is good or whether it is bad, but we haven't talked to you about it. And you have put in evidence.
LISTNUM 1 \l 11305 If you would turn to paragraph 57 of your 15 March evidence. There you say in the last sentence in the paragraph:
"Instead, CDN service prices were set at a level which severely undermined the ability of Vidéotron and other competitors in the market to compete in the market and greatly decreased the incentive for new entrants to build competing facilities." (As Read)
LISTNUM 1 \l 11306 Since that is a pretty brief description, I want to just talk to you for a couple minutes to kind of factually fill out the picture about what this means.
LISTNUM 1 \l 11307 I guess first off, when you say CDN services, what type of services or facilities are you referring to in that passage?
LISTNUM 1 \l 11308 MR. BÉLAND: We would be referring to ILEC access services, DS‑1, DS‑3 and up. We would be referring to the intra‑exchange portion that goes along with those services. We may also be referring to some inter‑exchange services of DS‑1, DS‑3 and up.
LISTNUM 1 \l 11309 MR. SCHMIDT: Okay. And keeping in mind that the service was introduced progressively over a period of about five years, I think beginning in May 2002 and sort of creeping along all the way to the present, there has been a ruling I think even as recently as February of this year, the CDN links ruling for example. So given this sort of five‑year rolling introduction or expansion of CDN, when you are talking about the impact of CDN on your business what kind of timeframe are we talking about?
LISTNUM 1 \l 11310 MR. BÉLAND: I am not sure I would use your language about a rolling introduction. Sure, there were issues being resolved over time, but I think the hit, if you will, the introduction came in a couple pretty large discreet chunks.
LISTNUM 1 \l 11311 MR. SCHMIDT: Yes, I mean, I accept that, I work at a carrier too. All I am trying to say is that it didn't all happen at once, but I accept your characterization.
LISTNUM 1 \l 11312 MR. BÉLAND: Yes. But, if you want me to comment on the impact on the former Vidéotron Telecom, which ‑‑
LISTNUM 1 \l 11313 MR. SCHMIDT: That is my whole object here.
LISTNUM 1 \l 11314 MR. BÉLAND: ‑‑ for the information of everyone, was merged into Vidéotron January 1, 2006, but I will refer to it as Vidéotron Telecom, which it was at the time.
LISTNUM 1 \l 11315 I guess what was maybe particular about our circumstance at that time was that Vidéotron Telecom was a CLEC, it became a CLEC very early on, I think in 1998 or, sorry, maybe even 1996, even prior to Decision 97‑8. And Vidéotron Telecom was focused, to a large extent, on the wholesale market. Vidéotron Telecom's business plan, to a very large extent in those early years, was to be a carrier's carrier. So Vidéotron was selling these CDN equivalent services to people like other wireline CLECs, wireless carriers. That was a very large portion of the company's business.
LISTNUM 1 \l 11316 What happened when the CDN regime was introduced is that suddenly whereas Vidéotron was in the market building facilities and competing against the ILECs' retail rates for those DNA services ‑‑
LISTNUM 1 \l 11317 MR. SCHMIDT: Which were once retail services and CDN is just a new name and a lower price for a retail service.
LISTNUM 1 \l 11318 MR. BÉLAND: To be precise, imagine that there is a wireline CLEC that wants Vidéotron to do some building for it. That was basically the business plan.
LISTNUM 1 \l 11319 You are a wireline CLEC, or a wireless carrier from somewhere else in Canada, and you want us to do some building for you, and we will put some fibre in the ground and we will sell you the CDN equipment and services.
LISTNUM 1 \l 11320 That was a large part of Vidéotron Telecom's business plan.
LISTNUM 1 \l 11321 We would sell these services to these companies at a competitive rate, relative to what the ILEC's rates were in those days.
LISTNUM 1 \l 11322 What happened was that, suddenly, the ILECs were mandated to sell those very same services at much reduced rates.
LISTNUM 1 \l 11323 I won't get into whether those much reduced rates ‑‑ on what basis they were calculated and how appropriate that was. What mattered to Vidéotron Telecom at that time was the dramatic reduction in the price at which our customers could get those services from someone else. As a result of a regulatory decision, and as a result of that, Vidéotron lost a considerable part of its customer revenue base.
LISTNUM 1 \l 11324 MR. SCHMIDT: Yes, I was going to ask you about that.
LISTNUM 1 \l 11325 So we see this dramatic reduction in prices for the service you offer. Did it cause you to lose carrier customers?
LISTNUM 1 \l 11326 In sort of a granular way, what did it do to your business?
LISTNUM 1 \l 11327 Did you lose customers?
LISTNUM 1 \l 11328 MR. BÉLAND: It caused an immediate ‑‑ it caused some customers to leave Vidéotron Telecom immediately. It caused other customers to immediately exert substantial pressure on Vidéotron Telecom to lower its rates in order to retain them.
LISTNUM 1 \l 11329 I might note, as well, that one of the issues at the time that particularly offended Vidéotron Telecom was the fact that when the ILECs were mandated to reduce those rates substantially, those wholesale rates, they were kept whole by receiving subsidies from their deferral accounts. Whereas we just took the hit and had to keep on going.
LISTNUM 1 \l 11330 So that was particularly offensive to the company.
LISTNUM 1 \l 11331 MR. SCHMIDT: Are you still in the wholesale business?
LISTNUM 1 \l 11332 MR. BÉLAND: Yes.
LISTNUM 1 \l 11333 MR. SCHMIDT: Has CDN caused you to change the pace or nature of your facility build‑out?
LISTNUM 1 \l 11334 Is your wholesale network static, or is it growing?
LISTNUM 1 \l 11335 MR. BÉLAND: It's still growing, but I think it's fair to say that it's growing at a much less rapid rate than it was prior to CDN.
LISTNUM 1 \l 11336 MR. SCHMIDT: All right. Thank you. I think that's enough on that topic.
LISTNUM 1 \l 11337 Mr. Chairman, I am going to move on to the third of the four topics.
LISTNUM 1 \l 11338 I am going to chat with you a bit about pricing now.
LISTNUM 1 \l 11339 Mr. Béland, would you agree with me that the Commission prices Category 1 competitor services on the basis of Phase 2 costs, plus a markup to recover fixed and common costs?
LISTNUM 1 \l 11340 MR. BÉLAND: I believe that is the definition of Category 1, yes.
LISTNUM 1 \l 11341 MR. SCHMIDT: That seems to be how it works, yes.
LISTNUM 1 \l 11342 Would you agree that the Commission includes interconnection services in Category 1?
LISTNUM 1 \l 11343 MR. BÉLAND: I believe so, yes.
LISTNUM 1 \l 11344 MR. SCHMIDT: Okay. And these services also have rates which include a markup to recover fixed and common costs?
LISTNUM 1 \l 11345 MR. BÉLAND: Yes.
LISTNUM 1 \l 11346 MR. SCHMIDT: Turning to the parties of the proceeding and away from the Commission for a moment, I would like to focus on what the carriers are saying. My question to you is: Would you agree that most of the service providers in this proceeding, the folks who are buying this stuff, the folks who are selling it, generally agree that the Commission should continue to have a markup as part of the price for mandated services?
LISTNUM 1 \l 11347 MR. BÉLAND: I, frankly, haven't reviewed the other parties' submissions on that precise point, so I can't say.
LISTNUM 1 \l 11348 MR. SCHMIDT: In fact, I am going to help you with that review.
LISTNUM 1 \l 11349 If you turn to Tab 6 of the compendium ‑‑
‑‑‑ Pause
LISTNUM 1 \l 11350 MR. BÉLAND: I'm sorry, could you give me that reference again?
LISTNUM 1 \l 11351 MR. SCHMIDT: Absolutely. It's Tab 6 of the compendium, the black‑covered document you have. Tab 6 is hiding somewhere behind Tab 5.
LISTNUM 1 \l 11352 MR. BÉLAND: Yes.
LISTNUM 1 \l 11353 MR. SCHMIDT: It's the last page of the book.
LISTNUM 1 \l 11354 THE CHAIRPERSON: I presume you are making this an exhibit?
LISTNUM 1 \l 11355 MR. SCHMIDT: Yes, I am. Thank you.
LISTNUM 1 \l 11356 THE SECRETARY: It will be TELUS Exhibit No. 4.
EXHIBIT NO. TELUS‑4: Tab 6 of the Compendium
LISTNUM 1 \l 11357 MR. SCHMIDT: Thank you very much.
LISTNUM 1 \l 11358 In this exhibit, what we have done is, we have excerpted the markup proposals of the major carrier parties and provided paragraph references for them.
LISTNUM 1 \l 11359 I am only interested in ‑‑ would you agree with me, as a general proposition, that the service providers we have set out here ‑‑ they are saying: Gee, my markup proposal is that there ought to be a markup.
LISTNUM 1 \l 11360 MR. BÉLAND: Again, I haven't reviewed the providers' proposals. I would suspect that many of the providers, like QMI, made proposals that distinguished between different categories of services. I would be surprised to see that providers recommended a single markup for all of the services that might be captured by this proceeding.
LISTNUM 1 \l 11361 MR. SCHMIDT: I put it to you that we are not trying to actively misrepresent the record, and you have had this for a couple of days, in any event.
LISTNUM 1 \l 11362 So, subject to check, you would agree that the general view seems to be that there would be a markup for mandated services.
LISTNUM 1 \l 11363 MR. BÉLAND: There seems to be a recommended markup for significant categories of services, yes.
LISTNUM 1 \l 11364 MR. SCHMIDT: Directionally, that seems to be where folks are going.
LISTNUM 1 \l 11365 MR. BÉLAND: Sure.
LISTNUM 1 \l 11366 MR. SCHMIDT: That's fine.
LISTNUM 1 \l 11367 We know what the Commission thinks about markups for mandated services, and we know what a lot of the carriers in this proceeding seem to think about markups for mandated services, but you are not quite there with them. You are not proposing a markup at all, are you, for the large class of services that you call traffic termination services and that I might call interconnection services?
LISTNUM 1 \l 11368 MR. BÉLAND: We have proposed no markup for mandated interconnection services.
LISTNUM 1 \l 11369 MR. SCHMIDT: Okay. I just want to make that clear.
LISTNUM 1 \l 11370 Before I move on, Mr. Chairman, from this topic, in terms of punch lines, all I want to establish is that the Commission has an established and embedded approach to using markups. Most of the folks who sell and buy this stuff for a living say that there should be a markup, subject to check, but QMI holds a different view, at least for interconnection services.
LISTNUM 1 \l 11371 The last thing I want to touch on this morning is your local interconnection region proposal. This is set out at paragraph 40 of your 15 March evidence. It is discussed there briefly.
LISTNUM 1 \l 11372 Commissioner Cram touched on this briefly this morning, and you referred to it in discussing the relationship of AT and DC to your proposal, and you said that this is sort of a restructuring of existing services, if I am characterizing it correctly.
LISTNUM 1 \l 11373 If I open up a Bell Canada or a TELUS tariff book, am I going to find this inter‑LIR service listed in there?
LISTNUM 1 \l 11374 The one you have proposed at paragraph 40 of your evidence.
LISTNUM 1 \l 11375 MR. BÉLAND: Every LEC would have an LIR termination service. We begin with that. And the ILEC would also have a tariffed transport service to non‑competitive LIRs, yes.
LISTNUM 1 \l 11376 MR. SCHMIDT: I have asked you a specific question. If I open up these tariff books, am I going to find a service called "Inter‑LIR Transport"?
LISTNUM 1 \l 11377 Or, is this a proposed service, like a restructure?
LISTNUM 1 \l 11378 It's not the existing services that I see in there.
LISTNUM 1 \l 11379 MR. BÉLAND: No, you don't have that service in your tariff book today, if that's what you are asking.
LISTNUM 1 \l 11380 MR. SCHMIDT: So it's something new that you would like to see as an outcome of this proceeding.
LISTNUM 1 \l 11381 MR. BÉLAND: Yes.
LISTNUM 1 \l 11382 MR. SCHMIDT: And you will recall the Chairman's remarks over the last few days where he said this is a review proceeding to look at existing ‑‑ I underline that word ‑‑ mandated services. Do you remember that?
LISTNUM 1 \l 11383 MR. BÉLAND: Yes.
LISTNUM 1 \l 11384 MR. SCHMIDT: And the public notice is equally clear on this point. You don't have to turn to it, but paragraph 29, looking at services currently provided by the major ILECs?
LISTNUM 1 \l 11385 MR. BÉLAND: Yes, and I think we are running into the preface to my comments to Commissioner Cram, is that this service that we are providing is new, but it is effectively part of a restructuring of access tandem service. In that respect, it is not new.
LISTNUM 1 \l 11386 I am admitting that it is complex. I am admitting that we haven't gone down in a binary fashion, keep that one, get rid of that one, keep that one, get rid of that one. What we have done, because we thought that there was a wish on the part of the Commission to get at first principles, if you allow me, what we have done is we have looked at direct connection access tandem and proposed what amounts to a restructuring of that. Whether you want to categorize that as new or not, I don't think the word really fits. It is a restructuring.
LISTNUM 1 \l 11387 MR. SCHMIDT: I will certainly accept your earlier responses where you twice told me it was new. I won't even sort of get into it with you on the substantive wisdom of the restructure. I might actually agree that this should be done.
LISTNUM 1 \l 11388 But it is new and I don't think, unfortunately, that this is the setting that it can be entertained in.
LISTNUM 1 \l 11389 MR. BÉLAND: I am sure the Commission can resolve that.
LISTNUM 1 \l 11390 MR. SCHMIDT: I am certain they will, in fact.
LISTNUM 1 \l 11391 That concludes my questions, Mr. Chairman.
LISTNUM 1 \l 11392 THE CHAIRPERSON: Thank you very much. I appreciate your brevity in delivering the punch line. That makes it a lot clearer.
LISTNUM 1 \l 11393 Mr. Béland, I just wanted to ask you about your idea of not setting prices and leaving everything subject to negotiation between the parties with ultimate referral to CRTC for arbitration or mediation where necessary.
LISTNUM 1 \l 11394 How do you square that with the reality of when you are trying to sell to the business customer, who is in multiple locations and there is an RFP, there is a time limit, et cetera? Don't you need to, in order to make your bid, know at what prices you are going to buy the services for those territories whom you don't serve but you rely on them?
LISTNUM 1 \l 11395 Just in a concrete way, I don't know how you would do that because your competitor could basically upset your bid by not agreeing to prices and, therefore, make it very difficult for you to speculate.
LISTNUM 1 \l 11396 MR. BÉLAND: Yes. I recall an exchange you had with another party last week, I don't remember which party it was.
LISTNUM 1 \l 11397 Our expectation would not be that these negotiations would happen location by location, facility by facility. We would expect that parties would negotiate what would, in effect, be a standing agreement.
LISTNUM 1 \l 11398 So, if you look at Vidéotron's particular circumstances, we need access on occasion to access facilities, some of which may end up being in the mandated category.
LISTNUM 1 \l 11399 We would not expect to be going off to Bell or TELUS Quebec or Télébec and negotiating with them each time we found a business location at which we need one of these rare accesses. We would expect to have negotiated some form of standing framework agreement with them, which we would employ as required when these situations arise.
LISTNUM 1 \l 11400 THE CHAIRPERSON: So, if I said wonderful, I accept your proposal, it is in place from now on or from whatever target date we take, you would expect there to be a flurry of negotiations to make wholesale framework agreements between yourself and your competitors so you basically have those on a standby basis so you know what they are going to charge you should there be a need to acquire services from them?
LISTNUM 1 \l 11401 MR. BÉLAND: Yes. I think these sorts of negotiations are common in the marketplace. We would have a sense of what quantities we would forecast to need. There would be potentially volume discounts offered on the other side of the table. We would hash that out in negotiations, arrive at a framework agreement, and it would be on standby.
LISTNUM 1 \l 11402 THE CHAIRPERSON: Thank you. If there are no other questions. Thank you very much.
LISTNUM 1 \l 11403 Madam Secretary, who is next?
LISTNUM 1 \l 11404 THE SECRETARY: Thank you very much, gentlemen.
LISTNUM 1 \l 11405 I was just informed that MTS Allstream no longer intends to cross‑examine QMI.
LISTNUM 1 \l 11406 Therefore, we will be moving to Primus Telecommunication, with counsel Ruby.
LISTNUM 1 \l 11407 THE CHAIRPERSON: Good morning, Mr. Ruby.
LISTNUM 1 \l 11408 MR. RUBY: Good morning.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11409 MR. RUBY: Good morning, panel.
LISTNUM 1 \l 11410 If I may, I would like to start by briefly following up on the Chairman's last question with respect to negotiations.
LISTNUM 1 \l 11411 As I understand it, Quebecor's position is that with respect to rates, the parties should have six months to negotiate new rates, and then if they fail to do so, they should have the right to apply to the Commission to set a rate. Do I have your position right?
LISTNUM 1 \l 11412 MR. BÉLAND: No, I don't think that is our position. Where are you taking that from?
LISTNUM 1 \l 11413 MR. RUBY: Mr. Chairman, I apologize. I didn't realize this would be an issue, and I am just following up on your question.
LISTNUM 1 \l 11414 THE CHAIRPERSON: I was referring to paragraphs 53 to 61. They don't mention six months. They just suggest that these prices would be negotiated, and in eventuality that they can't reach agreement, they would go to the Commission for arbitration or mediation.
LISTNUM 1 \l 11415 MR. RUBY: I apologize for not having a copy of it, but what I am thinking of is an interrogatory response, QMI/CRTC 12 April 402, and maybe I can just read the paragraph.
LISTNUM 1 \l 11416 It says:
"As far as rates are concerned, QMI is of the view that wholesale service, which is to be phased out, should transition to negotiated rates within six months. After that date, parties would be required to negotiate rates, and in the event of failed negotiations, they could apply to the CRTC to set a rate." (As read)
LISTNUM 1 \l 11417 It then goes on to talk about how it would work in the transition period.
LISTNUM 1 \l 11418 That is where I take the six months from, Mr. Béland. I apologize for not having a copy but, as I said, I am just following up on the Chairman's question.
LISTNUM 1 \l 11419 MR. BÉLAND: My apologies. You have an accurate quote there.
LISTNUM 1 \l 11420 MR. RUBY: Okay. I just want to get an idea of how this works.
LISTNUM 1 \l 11421 First of all, from QMI's perspective, I gather from what you told Mr. Schmidt, since you don't co‑locate, you both currently and anticipate buying, is it fair to say, relatively few services from the ILEC?
LISTNUM 1 \l 11422 MR. BÉLAND: We don't currently buy many services and we don't anticipate buying many more, that is correct.
LISTNUM 1 \l 11423 MR. RUBY: It is just Bell, when we talk about the ILEC in your case. Right?
LISTNUM 1 \l 11424 MR. BÉLAND: No, in fact our cable territory covers the territories of Bell, Bell Aliant, Télébec and TELUS.
LISTNUM 1 \l 11425 MR. RUBY: Terrific. So, it is those three.
LISTNUM 1 \l 11426 I gather that when you came up with the six months, the way you did it is you figured out what QMI would need to negotiate with those three ILECs for those few services. Is that right? Is that how you did the six months?
LISTNUM 1 \l 11427 MR. BÉLAND: No, not exclusively because we also provide one mandated service, which is TPIA service.
LISTNUM 1 \l 11428 MR. RUBY: So, it is the other way around for that one service?
LISTNUM 1 \l 11429 MR. BÉLAND: This is a general proposition.
LISTNUM 1 \l 11430 MR. RUBY: Let me ask you this. Can you agree with me that with respect to a national carrier, a telecom service provider that operates across the country, it would have to negotiate with each and every ILEC for every service that it buys?
LISTNUM 1 \l 11431 MR. BÉLAND: Yes, I agree.
LISTNUM 1 \l 11432 MR. RUBY: Are we on common ground that six months, in that circumstance, is just not enough for a national operator who uses an extensive amount and different types of currently mandated services to negotiate these agreements?
LISTNUM 1 \l 11433 MR. BÉLAND: Yes, I am not going to argue with you on that point. I can understand that certain providers, based on the quantity of negotiations that they would have to entertain, may require more time. I won't disagree with you on that.
LISTNUM 1 \l 11434 MR. RUBY: A lot more time in fact. Right?
LISTNUM 1 \l 11435 MR. BÉLAND: I won't ‑‑
LISTNUM 1 \l 11436 MR. RUBY: Okay, fair enough. I won't take you any further than that.
LISTNUM 1 \l 11437 Just two other very brief points.
LISTNUM 1 \l 11438 Does Quebecor have many TPIA customers?
LISTNUM 1 \l 11439 MR. BÉLAND: We have a significant and growing base of TPIA customers, yes.
LISTNUM 1 \l 11440 MR. RUBY: I take it that with respect to your internet broadband services and your local telephony, you use the same technology as Rogers roughly. Right? All the cable companies use the same thing so I don't have to go through again some of those issues?
LISTNUM 1 \l 11441 MR. BÉLAND: There are differences between the cable networks. I don't know what conversation you are referring to when you say going through it again, but it depends on what level you are talking about.
LISTNUM 1 \l 11442 MR. RUBY: That is fine. Let me focus you on two things then and see if we can do this quickly.
LISTNUM 1 \l 11443 I take it Quebecor offers no quality of service guarantees to VoIP providers when a VoIP service runs over a Quebecor broadband service. Right?
LISTNUM 1 \l 11444 MR. BÉLAND: We don't even know when a VoIP service ‑‑ an access‑independent VoIP service is running over Quebecor internet service.
LISTNUM 1 \l 11445 MR. RUBY: Will you agree with me that that means that a VoIP provider cannot guarantee the quality of service of the VoIP service to its customer because, of course, it uses your broadband connection?
LISTNUM 1 \l 11446 MR. BÉLAND: The VoIP provider has a lot of factors that it can control in terms of managing the quality of service to its customer, but clearly the access‑independent VoIP provider does not control our underlying internet service, if that is what you are saying.
LISTNUM 1 \l 11447 MR. RUBY: So, it can't make any promises with respect to the quality of the overall service. That is fair, isn't it?
LISTNUM 1 \l 11448 MR. BÉLAND: Any promises that would assume a quality of service beyond which Vidéotron already provides, sure, they can't make those promises.
LISTNUM 1 \l 11449 MR. RUBY: I take it that it is fair, then, to say that access‑independent VoIP, as opposed to the access‑dependent VoIP service that QMI offers, they are not really substitutes for one another. Right?
LISTNUM 1 \l 11450 MR. BÉLAND: They are together in the marketplace and they compete against each other.
LISTNUM 1 \l 11451 MR. RUBY: So, you think that they are just replaceable with their substitutes one for the other? You will agree with me that is not the way you market your products. Right? You don't say, you can choose the other guy's or mine, they are all the same?
LISTNUM 1 \l 11452 MR. BÉLAND: I don't think a lot of people market their products that way, but if you are asking does our marketing team watch what access‑independent VoIP providers are doing in the market and what services they offer and at what prices, of course they do.
LISTNUM 1 \l 11453 MR. RUBY: I will leave it there.
LISTNUM 1 \l 11454 Thank you, Mr. Chairman. Those are my questions.
LISTNUM 1 \l 11455 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11456 Madam Secretary, who is next?
LISTNUM 1 \l 11457 THE SECRETARY: Thank you very much.
LISTNUM 1 \l 11458 Now we will proceed with Cybersurf Corp., counsel Tacit.
LISTNUM 1 \l 11459 MR. TACIT: Thank you.
LISTNUM 1 \l 11460 THE CHAIRPERSON: Good morning, Mr. Tacit.
LISTNUM 1 \l 11461 MR. TACIT: Good morning, Mr. Chairman.
LISTNUM 1 \l 11462 I have handed out a small stack of interrogatory responses from the record, which I would appreciate if we could have circulated, to begin with.
‑‑‑ Pause
LISTNUM 1 \l 11463 THE CHAIRPERSON: Okay, let's go.
LISTNUM 1 \l 11464 MR. TACIT: Thank you.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11465 MR. TACIT: I am curious as to whether Vidéotron has any plans to put in place a resale offer for its retail telephone service at any time, again looking at the competitive landscape on the retail side. Are there any such plans contemplated?
LISTNUM 1 \l 11466 MR. BÉLAND: I am not aware of any.
LISTNUM 1 \l 11467 MR. TACIT: I am curious about the conditions under which this might in fact occur. If we look at the first interrogatory in that package that I just handed out, which is QMI/The Companies 12 April 07‑17. In part C, The Companies say:
"Vidéotron provides retail telephone services, but does not currently have any resellers for these services. Any proposal to do so would need to be evaluated in terms of the business opportunity it presented and its coherence with QMI's business priorities." (As read)
LISTNUM 1 \l 11468 What I would like you to focus on are the words "and its coherence with QMI's business priorities." What do you mean by that?
LISTNUM 1 \l 11469 MR. BÉLAND: It means that any party that would be wishing to resell ‑‑ to purchase via resale the retail telephone service of Vidéotron would need to bring a value proposition to the table, to Vidéotron.
LISTNUM 1 \l 11470 MR. TACIT: I guess what you would take into account is whether or not there would be too much competition or not with the retail side of Vidéotron's own operations, is that fair, if wholesale was granted?
LISTNUM 1 \l 11471 MR. BÉLAND: I think the value proposition would be looked at on its merits when it is made.
LISTNUM 1 \l 11472 MR. TACIT: We will leave it at that.
LISTNUM 1 \l 11473 Now, my understanding is ‑‑ I am just going to explore for a bit your negotiated regime for setting access prices for SMP access services and the implications of that for pricing. So, I just want to take you through that briefly.
LISTNUM 1 \l 11474 As I understand it, QMI has adopted the definition of SMP contained in the TPRP report. Is that correct?
LISTNUM 1 \l 11475 MR. BÉLAND: That is correct.
LISTNUM 1 \l 11476 MR. TACIT: And that definition, which is at page 3‑19 ‑‑ you don't need to turn to it, but I am just going to read it out so we can discuss it ‑‑ says:
"A service provider with SMP has an incentive to keep prices higher and produce lower quantities than those that would normally prevail in a competitive market. As a result, customers who would have purchased some extra units at competitive prices will not be able to do so. This is a waste from the point of view of society as a whole and, hence, economic efficiency. Such pricing also leads to an income redistribution from customers to the service provider since the price for the quantity of service that is produced and purchased is higher than it otherwise would be in a competitive market." (As read)
LISTNUM 1 \l 11477 That is the passage you are talking about when you talk about the definition of SMP in the TPRP report. Is that correct?
LISTNUM 1 \l 11478 MR. BÉLAND: I don't think that is precisely their definition, but it is a characterization of what they would see as happening when there is significant market power.
LISTNUM 1 \l 11479 MR. TACIT: Sorry, are you saying this is not an accurate quote?
LISTNUM 1 \l 11480 MR. BÉLAND: No, that is an accurate quote, but I don't think it is a definition, but it is a characterization of what is going on.
LISTNUM 1 \l 11481 MR. TACIT: I believe that is the reference you gave in QMI/TELUS 6. It is not part of this package where you were referring to the TPRP report.
LISTNUM 1 \l 11482 MR. BÉLAND: It is an accurate quote.
LISTNUM 1 \l 11483 MR. TACIT: If we look at that as being the concept that QMI has adopted, I would like you now to turn to your evidence, specifically paragraph 55 of your March 15th evidence, if you could.
LISTNUM 1 \l 11484 MR. BÉLAND: Yes, we have it.
LISTNUM 1 \l 11485 MR. TACIT: You say there:
"According to the TPRP, regulatory intervention in interconnection arrangements is required ..." (As read)
LISTNUM 1 \l 11486 I am sorry, I am looking at the wrong ‑‑ I am looking at Cogeco's submission. That is not going to help us very much.
"While QMI believes that SMP access services must be made available on a mandated wholesale basis, QMI is also of the view that the rates for such services should be subject to negotiation rather than tariffing." (As read)
LISTNUM 1 \l 11487 That is the company's evidence still. Correct?
LISTNUM 1 \l 11488 MR. BÉLAND: That is true.
LISTNUM 1 \l 11489 MR. TACIT: I guess what I would like to ask you is this: If, by definition, significant market power means that a price for a service is above competitive levels, isn't leaving rates subject to negotiation going to ensure that the ultimate price at which the service is sold will reflect that significant market power and end up being set at a level that is higher than would occur either in a regulated or competitive market?
LISTNUM 1 \l 11490 MR. BÉLAND: I think that an access provider that would be taking that approach is going to be running into some resistance from the party at the other side of the table. What constrains the access provider, if you will, in terms of negotiating reasonably is the threat of seeing this go to the Commission if they are not negotiating in a reasonable manner.
LISTNUM 1 \l 11491 MR. TACIT: I guess reasonable is a matter of degree. Right? Because the significant market power may be slight, it may be greater. In an ex post scenario the degree of scrutiny might not be as great on a specific kind of rate dispute as it would be when somebody is filing a tariff that is going to be used by potentially a large base of powers.
LISTNUM 1 \l 11492 So it is conceivable that that significant market power would be translated into the rates for the end service, isn't it?
LISTNUM 1 \l 11493 MR. BÉLAND: Well, we believe there are cleared advantages in negotiation that should ‑‑
LISTNUM 1 \l 11494 MR. TACIT: No, I understand that.
LISTNUM 1 \l 11495 MR. BÉLAND: ‑‑ that should not be discarded by going immediately to the Commission.
LISTNUM 1 \l 11496 So we believe that there is a rationale for giving negotiation a chance and that the knowledge that the issue can be brought to the Commission if one or the other party is not acting reasonably is an important discipline.
LISTNUM 1 \l 11497 MR. TACIT: So you don't think it could ever be the case that significant market power could end up being translated into the rates for these services if it is under a negotiated regime?
LISTNUM 1 \l 11498 MR. BÉLAND: Again, I think if there is a party that is entering consistently into negotiations with the rates that are excessive, I think that party would find itself eventually in front of the Commission.
LISTNUM 1 \l 11499 MR. TACIT: All right.
LISTNUM 1 \l 11500 Let's assume for a moment ‑‑ and I know we disagree on this point ‑‑
LISTNUM 1 \l 11501 THE CHAIRPERSON: Let's wait for a moment. Commissioner Cram needs a break.
LISTNUM 1 \l 11502 We will take a 5‑minute break.
‑‑‑ Recessed at 0915 / Suspension à 0915
‑‑‑ Resumed at 0920 / Reprise à 0920
LISTNUM 1 \l 11503 THE CHAIRPERSON: All right, Mr. Tacit. Sorry for the interruption. We have Commissioner Cram with us again, so go ahead.
LISTNUM 1 \l 11504 MR. TACIT: That's fine. I didn't think it was the kind of testimony you would get all choked up about.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11505 THE CHAIRPERSON: Lovely.
LISTNUM 1 \l 11506 MR. TACIT: Before the short break I guess we agreed to disagree about whether the negotiated regime would lead to rates for services that inherently imported or contained some significant market power, in other words were priced above competitive rates, but let's assume for a moment that turns out to be the case.
LISTNUM 1 \l 11507 Would you agree with me that where there is that sort of significant market power according to the very definition the demand for the service would be dampened somewhat?
LISTNUM 1 \l 11508 MR. BÉLAND: I'm sorry, I didn't understand when you said let's assume that to be the case, what is ‑‑
LISTNUM 1 \l 11509 MR. TACIT: That the prices are above competitive levels. Through the negotiation process we end up with prices that are some ‑‑ just take my assumption for a minute and work with it. I know you don't agree with it, but ‑‑
LISTNUM 1 \l 11510 MR. BÉLAND: Sure. So we have had negotiations and we have somehow ‑‑
LISTNUM 1 \l 11511 MR. TACIT: Somehow I have ended up with ‑‑
LISTNUM 1 \l 11512 MR. BÉLAND: You somehow managed to convince this purchaser to pay higher than market prices and the purchaser has not found it in their interest to bring that to the Commission?
LISTNUM 1 \l 11513 MR. BÉLAND: Well, it doesn't matter what the reason is. I don't want to argue about the basis for the assumption. We can do that in final argument.
LISTNUM 1 \l 11514 Just take the assumption for the purpose of the ‑‑
LISTNUM 1 \l 11515 MR. BÉLAND: Okay.
LISTNUM 1 \l 11516 MR. TACIT: So would you agree with me that as a general proposition, according to the very definition of "significant market power", such a situation reduces a reduction in the demand for wholesale services, just by definition?
LISTNUM 1 \l 11517 MR. BÉLAND: The demand ‑‑ yes, the demand from that particular purchaser for those particular wholesale services. I guess if the supply and demand curve slope the way they should, yes, that would be a conclusion.
LISTNUM 1 \l 11518 MR. TACIT: That would certainly hamper, it might even marginalize competitors?
LISTNUM 1 \l 11519 Would you agree with that?
LISTNUM 1 \l 11520 MR. BÉLAND: You are laying on a lot of assumptions here. I mean now we are ‑‑ you have asked me to assume that this competitor is a pretty poor negotiator and you are now asking me to assume that this competitor is such a poor negotiator on a manner on which its business depends.
LISTNUM 1 \l 11521 I can follow with your assumptions ‑‑
LISTNUM 1 \l 11522 MR. TACIT: Again, I don't want to argue with you, but for example there could be a situation where because of an RFP deadline or whatever there just isn't time. I know you said people try to have wholesale agreements in place, but there may be circumstances where this occurs.
‑‑‑ Pause
LISTNUM 1 \l 11523 MR. BÉLAND: Sorry. What is your question?
LISTNUM 1 \l 11524 MR. TACIT: I'm just asking whether that couldn't end up detrimentally affecting the competitors and even marginalizing them?
LISTNUM 1 \l 11525 MR. BÉLAND: I guess all sorts of things could happen, the competitor could reduce the volumes of services that it sells; the competitor could reduce ‑‑ keep the volumes but reduce its margins. I guess there are all sorts of possibilities.
LISTNUM 1 \l 11526 MR. TACIT: Let's talk about the investment incentives.
LISTNUM 1 \l 11527 One of the benefits that QMI states of a negotiated regime is that it provides an ongoing incentive for new entrants to build their own facilities.
LISTNUM 1 \l 11528 Correct?
LISTNUM 1 \l 11529 MR. BÉLAND: Yes.
LISTNUM 1 \l 11530 MR. TACIT: Okay. But we want those incentives to be based on competitive prices, not supernormal prices.
LISTNUM 1 \l 11531 Wouldn't you agree with that? Because otherwise the investment would be inefficient.
LISTNUM 1 \l 11532 MR. BÉLAND: The best incentives would be based on competitive prices, yes.
LISTNUM 1 \l 11533 MR. TACIT: Thank you.
LISTNUM 1 \l 11534 Now, you used the CDN example and we have been through that before as an example of how incentives can be dampened by regulated price changes, but as I understand it QMI or Vidéotron makes very limited use of ILEC CND services.
LISTNUM 1 \l 11535 Is that right?
LISTNUM 1 \l 11536 MR. BÉLAND: That's true.
LISTNUM 1 \l 11537 MR. BÉLAND: Okay. On the other hand, Vidéotron has a pretty good business providing CDN‑type services of its own.
LISTNUM 1 \l 11538 Correct?
LISTNUM 1 \l 11539 MR. BÉLAND: The business was better before the CDN decisions, but yes, it is a continuing business and we are trying to grow it, yes.
LISTNUM 1 \l 11540 MR. TACIT: So I guess what I would suggest to you is, if my premise bears out that overall prices that are set through negotiations only will be somewhat higher for access services that have SMP, could it not be the case that it would give QMI a price umbrella under which it could price its own CDN services relative to competitive rates?
‑‑‑ Pause
LISTNUM 1 \l 11541 MR. BÉLAND: I'm having difficulty assuming a price umbrella because there would be presumably other competitors as well that are constraining Vidéotron's prices.
LISTNUM 1 \l 11542 MR. TACIT: Well, then what I'm saying is, if Vidéotron is so sensitive to what the ILEC pricing is in terms of its own ability to sell CDN services, then what I'm suggesting to you is that if somehow through a negotiated regime the Bell prices get set at prices that are above competitive levels, that also provides a bit of extra headroom for Vidéotron in terms of its pricing of its CDN services.
LISTNUM 1 \l 11543 It has to work both ways.
LISTNUM 1 \l 11544 MR. BÉLAND: Again, it has to depend on the ‑‑ I'm sorry.
LISTNUM 1 \l 11545 MR. TACIT: If a price drop for the ILECs is harming your business, then presumably a price increase above competitive levels would benefit your business.
LISTNUM 1 \l 11546 Right?
LISTNUM 1 \l 11547 MR. BÉLAND: But, as I said, it depends on the overall competitive conditions in the market as well.
LISTNUM 1 \l 11548 MR. TACIT: But it could have that effect, could it not?
LISTNUM 1 \l 11549 MR. BÉLAND: Under your narrow set of assumptions it could, yes.
LISTNUM 1 \l 11550 MR. TACIT: The other part ‑‑
LISTNUM 1 \l 11551 MR. TAYLOR: I would just like to add something.
LISTNUM 1 \l 11552 Your assumption on this seems to be that the price that the ILEC is going to be setting for its services is somehow untouched by the activity of competitors such as Vidéotron in the market and it's not. It's not being mandated by the Commission. This would be a negotiated price.
LISTNUM 1 \l 11553 So the purchaser who goes to the ILEC and says "I want that service" and the ILEC says "Well, I have significant market power, you have to pay this much", that purchaser could then go to Vidéotron and say "Well, they are telling me that I have to pay that much", and Vidéotron could go "Well, I will do it lower" and the ILEC could be aware of that and therefore may not sent its price so high.
LISTNUM 1 \l 11554 So where is competition what are you likely to end up with? Competitive rates.