ARCHIVÉ - Transcription, Audience 25 octobre 2011

Volume 2, 25 octobre 2011

TRANSCRIPTION DES AUDIENCES DEVANT LE CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUJET:

Instance en vue d’examiner les questions liées à l’interconnexion des réseaux

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

25 octobre 2011

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.

Conseil de la radiodiffusion et des télécommunications canadiennes

Transcription

Instance en vue d’examiner les questions liées à l’interconnexion des réseaux

DEVANT:

AUSSI PRÉSENTS:

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

25 octobre 2011

- iv -

TABLE DES MATIÈRES

PAGE / PARA

ARTICLES AVEC COMPARUTION

PHASE I

PRÉSENTATIONS

COMPARUTIONS INDIVIDUELLES

- v -

ENGAGEMENTS

PAGE / PARA

Gatineau (Québec)

--- L'audience reprend le mardi 25 octobre 2011 à 0900

1423   LE PRÉSIDENT : O.K., Madame la Secrétaire, commençons.

1424   LA SECRÉTAIRE : Merci, Monsieur le Président. Bonjour à tous.

1425   We will begin today with the presentation by MTS Allstream Inc.

1426   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Thank you.

PRÉSENTATION

1427   MS GRIFFIN-MUIR: Thank you.

1428   Good morning, Mr. Chairman, Commissioners. My name is Teresa Griffin-Muir. I'm the Vice-President, Regulatory Affairs, at MTS Allstream.

1429   With me today is Mike Strople, our Chief Technology Officer.

1430   You have asked us to address the role of the Commission and regulation with respect to network interconnection for wireline and wireless carriers in light of the increased use of IP-based technologies.

1431   In our view, the regulatory regime should encourage effective and efficient deployment of new technology and competitive business models. This will be facilitated through an interconnection regime that:

1432   - prevents discrimination;

1433   - eliminates artificial barriers to interconnection created by distinctions as to the type of services carriers offer; and

1434   - neither forces nor prevents deployment of newer technology.

1435   Such a regime will ensure that regulation is keeping pace with technology and technological innovation is not impeded by a carrier or carriers who possess market power.

1436   With respect to IP interconnection, we are moving along the continuum from circuit-switched to IP-based networks. However, we are not at a point where it is appropriate to broadly mandate IP-based network interconnection.

1437   Rather, what is needed at this stage in the evolution of Canadian networks is an efficient transitional framework that will adapt to the way in which carriers are choosing to interconnect their networks. This transitional framework would eliminate the differential and inefficient treatment of different carrier types, including wireless carriers.

1438   MTS Allstream is proposing a transitional point-of-interconnection, or POI, regime designed to reflect where we are in the development of carriers' networks in Canada and the interconnection experience of the marketplace.

1439   Under MTS Allstream's proposal:

1440   - all carriers -- LECs, WSPs and IXCs -- will be able to deploy POIs for the exchange of traffic; and

1441   - as with the current POI regime, each carrier will absorb all costs on its own side of an agreed "meet me" point and exchange all traffic under a bill and keep arrangement.

1442   To be clear:

1443   - no new investment will be required in order to deploy these POIs; and

1444   - no existing investment in WAS facilities or access tandems will be stranded as these facilities would be grandfathered.

1445   Our proposal would require only a minor adjustment to the current interconnection regime, which will increase the framework's efficiency and technological and competitive neutrality. But this adjustment will assist the migration of networks from TDM to IP-based technologies, and further down the road these arrangements will also facilitate the transition to broadly mandated, non-discriminatory IP-to-IP interconnection arrangements, when appropriate.

1446   MR. STROPLE: Your first two questions are:

1447   - Does the natural evolution from circuit-switched to IP interconnection facilities require regulatory intervention?

1448   And:

1449   - Should the Commission mandate IP-based network interconnection and establish basic rules or should it be commercially driven?

1450   Since these questions are closely interrelated, I will address them jointly.

1451   MTS Allstream believes regulatory intervention is ultimately necessary in order to ensure non-discriminatory and efficient IP-to-IP interconnection.

1452   However, we believe it is premature to mandate broad-based IP interconnection now. Accordingly, for the time being, we believe the evolution towards these facilities should remain commercially driven.

1453   The increasing use of IP technology represents a continuum. Like other carriers, we are gradually replacing circuit-switched facilities with IP-enabled equipment as we push fibre from the core of our network outward, towards the edges and last-mile facilities.

1454   This trend is being driven by technological change and customer demand. Carriers invest in new technology when there is a business plan that can justify the necessary capital outlay. At this time the demand for new services does not justify the complete conversion of our TDM interconnection facilities at a cost in the tens if not hundreds of millions of dollars.

1455   It is important to emphasize that there will not be a "flash-cut" from circuit-switched to IP technology. Like the digitization of transport which began in the 1960s and the digitization of switching in the 1970s, there is likely to be a considerable time period during which both legacy and next generation networks will co-exist.

1456   During this period, carriers, both ILECs and competitors, will balance the need to offer their customers innovative services with the requirement to justify capital investments in new technology. While it is true that cost savings are ultimately anticipated for new IP equipment, in many cases revenue opportunities have yet to be defined.

1457   Accordingly, we believe the Commission has to ensure that the regulatory framework does not get ahead of the marketplace. The regulatory regime should facilitate, not drive, the migration of traffic from one platform to another.

1458   MTS Allstream's proposal does not draw distinctions between carriers or the different origins of traffic. We believe this approach will create a more efficient, higher-capacity infrastructure that will in turn facilitate the conversion to IP technology. It will improve the business case for conversion in terms of the costs of that conversion and the potential efficiency gains of making that change.

1459   It is preferred over a drastic decision to mandate IP-to-IP voice interconnection at what remains a relatively early stage in the evolution to IP-based technologies. At this stage, mandating IP-to-IP voice interconnection across the board would strand substantial investment in existing TDM infrastructure by competitors and incumbents.

1460   MS GRIFFIN-MUIR: Your third question deals with forbearance and it is our view that it would not be appropriate for the Commission to forbear from regulating the rates, terms and conditions of network interconnection for voice services.

1461   The Act does not permit full or partial forbearance from oversight of carrier interconnection under Section 40.

1462   Furthermore, nothing is more fundamental to competition in a network industry than the ability of all carriers to exchange traffic to and from their respective customers as efficiently as possible on a non-discriminatory basis.

1463   Obviously, the incumbents having the most ubiquitous TDM networks and the greatest number of connections possess the greatest market power. Forbearing from regulating network interconnection for voice services would likely impair unduly the establishment or continuance of a competitive retail market.

1464   As is the case with TDM today, there will be a requirement for mandated, non-discriminatory IP interconnections. No persuasive rationale has been put before this Commission as to why ILECs will cease to play a central role in our industry as networks gradually evolve from their existing TDM architecture to increasing reliance on IP technology.

1465   Therefore, while the transition to IP-based networks itself should be commercially driven, mandated technologically-neutral interconnection arrangements will continue to be required.

1466   Where an ILEC chooses to offer IP-to-IP interconnection to one carrier in its operating territory, it should be mandated to offer interconnection on the same basis to other carriers on the same terms and conditions.

1467   Ultimately, once network architecture has further evolved, a broad-based mandatory IP-to-IP interconnection regime will be in the public interest. In time, mandatory interconnection arrangements using TDM can be naturally phased-out through a grandfathering process.

1468   MR. STROPLE: You have asked specific questions regarding the wireless carrier network interconnection regime.

1469   MTS Allstream is proposing a transitional POI regime that allows all carriers, wireless included, to interconnect via a POI using shared-cost facilities. This is the most efficient interconnection arrangement available, but today is currently restricted to local exchange carriers.

1470   So if we use your exhibits 2a) and 2b) we are proposing that a wireless provider already having a connection under 2a) could continue to use that connection. Alternatively, that wireless carrier could directly connect to the ILEC switch without the CLEC intermediary shown in 2b).

1471   The Commission and the government's policies have consistently sought to increase competition for the benefit of users by maximizing the efficiency of the regulatory regime. The goal for the interconnection regime should be no different.

1472   Indeed, the last time the Commission reviewed the interconnection framework you did exactly that: You recognized the need for more efficient and effective interconnection arrangements in order to facilitate competition from cable operators. Accordingly, you modified the regime to reflect technology and efficient use of cable networks.

1473   That change was seven years ago. Today the Canadian telecommunications industry is characterized by technologically biased obligations first imposed in a dramatically different technological and market environment from that of today.

1474   The discrete interconnection regimes were created, respectively, in the 1990s for toll traffic and as far back as the early 1980s for wireless traffic. In the intervening years, the lines between wireline voice and other services have been blurred.

1475   Eliminating distinctions will increase efficiency by reducing interconnection costs for all service providers. This will broadly enhance competition and benefit consumers.

1476   It is the necessary first step to increase the efficiency of telecommunications markets. It will enhance carriers' ability to compete on the basis of their service offerings rather than the applicable regulatory regime and will facilitate the transition towards interconnection in an IP-based environment.

1477   As we have said, under MTS Allstream's proposed POI regime all carriers will be permitted to deploy new interconnection arrangements using a POI over shared-cost facilities. Experience has shown us that this is the most efficient arrangement.

1478   Witness the fact that wireless service providers have incurred CLEC obligations to avail themselves of this regime. Indeed, in many cases they took on these obligations specifically to take advantage of the benefits of these interconnection arrangements.

1479   MTS Allstream has also been able to reach interconnection arrangements based on shared-cost POIs with other similarly situated competitive carriers. These arrangements can serve as the prototype for a newly efficient interconnection regime that would facilitate the evolution towards greater use of IP technology.

1480   While the ability of co-carriers to have their respective networks meet at a POI over shared-cost facilities marks a change for toll carriers and WSPs, it does not represent a change to the existing network architecture.

1481   The current toll and WSP regimes require these types of carriers to purchase services from the ILECs to bring their customers' traffic to a point within the ILEC network -- generally inside an ILEC central office. From this point, traffic can then be routed onward over the ILEC's network to the ILEC's customer. The ILEC identifies where the toll carrier or WSP can interconnect with it, for example, by identifying the access tandem.

1482   By contrast, under a POI arrangement, the two co-carriers' networks meet each other at a mutually convenient point, and while the competing carrier may, it is not required to, purchase services from the ILEC. As is the case under the local interconnection regime, facility costs would be shared.

1483   Significantly, our proposal would not require any carrier to alter the existing configuration of its network as the transitional POI regime will not require new network investment nor will it strand investment in the existing infrastructure of either ILECs or competitors that was driven by the current regime.

1484   This would be an appropriate time to address your question relating to wireless forbearance.

1485   In our view, the pricing, terms and conditions of the wireless access service should not be forborne. Under our proposal, competitors would be permitted to continue to use existing interconnection arrangements in order to exchange traffic with the ILEC, and even to expand the capacity of these arrangements if circumstances so require.

1486   Accordingly, the price for these arrangements should continue to be regulated so as not to cause existing investment -- whether by ILECs or competitors -- to be stranded.

1487   MS GRIFFIN-MUIR: We believe distinct improvements can be made today to the interconnection framework that would increase the efficiency of TDM interconnection and facilitate evolution towards a broad-based deployment of IP technology and IP-to-IP interconnection.

1488   Thank you.

1489   THE CHAIRPERSON: Thank you for your submission. I am trying to get my head around it. Your solution seems to be so simple and straightforward, and yes, you're the only one who sort of advocates this.

1490   Let me start with who would be the loser if we adopted your submission?

1491   MS GRIFFIN-MUIR: I'm not sure anybody would be the loser actually.

1492   Really, what we looked at is how the industry is trending in terms of how we interconnect with one another on a TDM basis, and so, as Mike was saying as part of our comments, wireless service providers have actually used either a CLEC affiliate or taken on CLEC obligations.

1493   So we're just watching this happen and we're saying we all understand that having a "meet me" point is the most efficient way. The majority of the interconnections are done that way. We're not going to take away something that already exists, but we're going to move the industry towards that POI interconnection.

1494   THE CHAIRPERSON: You were here yesterday. We talked a lot about this, that the WSPs cannot connect with the ILECs directly unless they become CLECs and they work around other arrangements or they go by as a CLEC in order to avoid that.

1495   Now, your proposal, if I understand it, that problem would no longer exist. So in effect they no longer have to make an arrangement with a CLEC in order to get to an ILEC nor do they have to pay the WAS, they could just directly interconnect.

1496   So clearly, the wireless guys would be the winners. And if you have a winner in this business, presumably you have a loser too.

1497   MS GRIFFIN-MUIR: Well, that's true if that's the case, but we're really talking about very small wireless carriers at this point. The majority of the other wireless carriers offer wireline and wireless voice service. So most of them actually interconnect that way today or are moving their interconnection regimes.

1498   So all we're really saying is at the time in the 80s when this was created, the wireless regime or the wireless access tariff, the industry looked entirely different. And so now that we've actually got interconnection kind of at the local level on a shared-cost basis, we're just reflecting really what's been happening in the industry for the last 20 years probably.

1499   THE CHAIRPERSON: Am I missing something here? You suggest if we do this, you say everybody can interconnect at a mutually convenient point of interconnection and at the same time you say don't give up WAS.

1500   You don't need WAS anymore. You know, right now, you are a wireless carrier, you can interconnect anywhere. So why do we need a WAS? What am I missing here?

1501   MS GRIFFIN-MUIR: Well, I think what we are saying is if you already have a WAS, we're not suggesting you take it down.

1502   So if it doesn't remain regulated, what happens for those carriers who have already interconnected using that regime?

1503   They don't actually have to dismantle and move to a shared point of interconnection. But we're suggesting it would be grandfathered. So for the next new point of interconnection that you establish as a wireless carrier, that would be on a shared-cost basis.

1504   THE CHAIRPERSON: Just on a shared cost, we would not have to set a tariff or anything like that?

1505   MS GRIFFIN-MUIR: Well, the tariffs that exist, yes.

1506   MR. STROPLE: I would expect any new WSP would connect on a shared-cost basis, but I wouldn't presume to tell them. They could do it on a shared cost or if they preferred to rely on the WAS and the old interconnection regime because it worked better for them, I don't think we should change that.

1507   THE CHAIRPERSON: The real reason why you want that is so it gives them some leverage presumably?

1508   MR. STROPLE: The proposal to change the POI really reflects what we've observed already happening through using a CLEC.

1509   THE CHAIRPERSON: And you say they would meet each other at a mutually convenient point. How do you determine a mutually convenient point and what if there's disagreement on what is a mutually convenient point?

1510   MS GRIFFIN-MUIR: I mean today we do that and we have local interconnection anyway. So I mean we're just talking about a continuation of the same regime.

1511   There are defined interconnection areas and depending on where the interconnecting carrier, if I can call them that, into the ILEC facilities is situated, there's usually not a lot of difficulty coming to some sort of agreement as to where that interconnection point would be. So I wouldn't anticipate we would have -- suddenly have disagreement on that issue.

1512   THE CHAIRPERSON: And if I say, MTS, this is brilliant, we'll do it, what exactly would we have to do?

1513   MS GRIFFIN-MUIR: Well, I guess we can modify the tariffs to grandfather them and remove the -- so the WAS tariff as an example --

1514   THE CHAIRPERSON: It wouldn't apply to future, it's only for existing arrangements?

1515   MS GRIFFIN-MUIR: Right.

1516   THE CHAIRPERSON: Okay.

1517   MS GRIFFIN-MUIR: Then it would simply be a question of eliminating the restrictions on the wireless service providers, what obligations they would have to meet to interconnect on a shared-cost basis or using the POI, because today it's actually restricted to local voice service providers.

1518   THE CHAIRPERSON: What about the long-distance ones, you wouldn't --

1519   MS GRIFFIN-MUIR: No, they would be included too.

1520   THE CHAIRPERSON: So would we have to do anything there, on that side?

1521   MS GRIFFIN-MUIR: I guess the same thing for the access tandem tariff, that it would be grandfathered. So if you have existing connections, they would remain in place and you could expand the capacity, the minutes that flow through them, but they could also interconnect directly through shared cost.

1522   I don't know how many standalone long-distance service providers there are in the market anymore.

1523   THE CHAIRPERSON: And when it comes to IP, you basically say evolution rather than force anything. I read your previous submission last night and you're not quite as -- you're a bit ambiguous. On one point you say sort of mandating; on the other point you say let it develop in an evolutionary way.

1524   What would we be mandating? That's what I didn't quite understand.

1525   MS GRIFFIN-MUIR: I guess the way we looked at it was on one element it's the way the networks are evolving. So what we're looking for you not to mandate is how quickly or slowly our network evolves.

1526   But on the other hand, to the extent there is IP and IP interconnection, we would want it to be done on a non-discriminatory basis so that, for example, an ILEC could not enter into an interconnection arrangement with another large ILEC, IP-to-IP, and exclude other carriers. So it's actually the non-discriminatory element.

1527   THE CHAIRPERSON: That is really the only part that you see as mandating or are you also talking about technical standards or, you know, taking the results that come out of CISC and making those as standards or something?

1528   I wasn't quite clear what it is exactly you want us -- you want us to encourage with smart mandating and I didn't quite understand what that involves.

1529   MS GRIFFIN-MUIR: At the outset --

1530   THE CHAIRPERSON: Yes.

1531   MS GRIFFIN-MUIR: -- today it would just be that it be non-discriminatory.

1532   So as we said in our submission, if an ILEC were to introduce IP-to-IP interconnection in that area where their network has been converted to IP, they could not discriminate.

1533   Mike can talk more to where the network is in terms of actually being able to develop standards, et cetera.

1534   THE CHAIRPERSON: So let's say, for argument's sake, if they did it on a province-wide basis, if they said -- if Bell said, as an example, we are willing to do it in the Province of Quebec, then they would have to offer this to everybody, that's what you're saying?

1535   MS GRIFFIN-MUIR: Yes.

1536   THE CHAIRPERSON: Not only to Bell Mobility but for anybody who wants to do it?

1537   MS GRIFFIN-MUIR: That's correct, yes.

1538   THE CHAIRPERSON: What about on the technical side?

1539   MS GRIFFIN-MUIR: Well, I think I'll let Mike talk to the technical side.

1540   THE CHAIRPERSON: Okay.

1541   MS GRIFFIN-MUIR: I'm just -- our feeling is that the industry is not at a point where enough IP has been deployed that we can establish technical specifications, but I think Mike's better --

1542   MR. STROPLE: We do believe that CISC should develop those standards, but at this time we're not ready yet and I think we would distinctly benefit by seeing some of those commercial arrangements and then ultimately over time define a sort of common denominator of interconnect or "meet me" standards.

1543   THE CHAIRPERSON: I read it out twice yesterday, I won't do it again, but some people suggest that the ongoing trials and experiences that are clearly being conducted by the ILECs on IP interconnection should be shared and should be made public, so that others can learn from it, so there is a body of experience that, hopefully, leads toward a common usage or common accepted standard, et cetera.

1544   Are you, for instance, MTS, conducting IP interconnection trials or experiments right now?

1545   MR. STROPLE: No, we are not. Not with other carriers, no.

1546   THE CHAIRPERSON: So your interconnection between MTS and MTS Mobility is done on a TDM basis?

1547   MR. STROPLE: Yes.

1548   THE CHAIRPERSON: And you have no plans to go to IP?

1549   MR. STROPLE: We do expect to go to IP, and the connection between MTS Mobility and MTS is done on traditional TDM, but we have other parts of the network where we will interconnect in hand traffic, voice traffic, IP, inside of our network, whether it is to a voicemail platform or to some other service platform.

1550   So we are doing IP interconnection in that sense, or voice interconnection on IP inside of our network, but right now we are not running any carrier-to-carrier interconnection trials.

1551   THE CHAIRPERSON: Is MTS Mobility a subsidiary of yours, or is it a separate company, or just a division?

1552   MR. STROPLE: We have one operating company, MTS Allstream.

1553   THE CHAIRPERSON: The Mobility arm, then, does it interconnect with other wireless carriers on IP?

1554   MR. STROPLE: No, all TDM.

1555   THE CHAIRPERSON: All TDM.

1556   Coming back to my question, do you think it's a good idea -- to make sure that whatever information is gained, experience is gained by various trials and arrangements -- that they should be made available, at least to CISC, et cetera, in order to foment and accelerate the adoption of IP to IP interconnection?

1557   MR. STROPLE: I do believe so, and I believe that CISC needs that information to effectively get to -- I'll call it the next level of detail in terms of how IP interconnection is best done.

1558   THE CHAIRPERSON: Okay. Now, I heard yesterday a lot about what people call "other arrangements". The wireless carriers, they can do WAS, they can have an arrangement with a CLEC, or they can have other arrangements.

1559   What are these other arrangements? Can somebody put some flesh on the bones and explain to me how they work and what we are talking about?

1560   It would appear that most of the wireless interconnection is done through these other arrangements, whatever they are.

1561   Being a carrier in Manitoba, you must be making these other arrangements with wireless carriers.

1562   MS GRIFFIN-MUIR: I guess we have roaming arrangements, but in terms of the exchange of traffic, that is either through the trunk side access, the WAS tariff, or through some meet-me points within the network.

1563   And, over time, some of the carriers that started as solely wireless carriers, and then became CLECs -- I mean, you are migrating some of your traffic --

1564   THE CHAIRPERSON: There is only one, as far as I know.

1565   MS GRIFFIN-MUIR: Right, but...

1566   MR. STROPLE: I am going to presume that what the "other" probably means is -- the two avenues are the WAS tariff or the connection through a CLEC. I am going to guess that the other option is when the incumbent and the wireless carrier agree and say: We won't do WAS, we won't make you go through the CLEC like you are supposed to for the tariff, we will just agree to do exactly what we are advocating, let's just do the point of interconnect and do it shared cost, as if you are the CLEC, even though we acknowledge that, technically, you are not.

1567   That's a presumption on my part.

1568   THE CHAIRPERSON: Yes. I remember distinctly TELUS talking about these three different categories, so I am trying to figure -- I should have asked them. I will do that on reply.

1569   Your proposal this morning, if we adopted it, would effectively give the wireless carriers what they want. They would get interconnection without having to do equal access.

1570   MS GRIFFIN-MUIR: Yes, that is effectively what --

1571   THE CHAIRPERSON: That is effectively --

1572   MR. STROPLE: I think we give them what they are doing today, without going through what I might suggest is an onerous regulatory hurdle that doesn't provide any net benefit.

1573   THE CHAIRPERSON: Yes, as you say, as they are doing today, because the actual amount, according to our data, that is collected through WAS is not a very -- it cannot possibly be the interconnection for all the wireless out there.

1574   MS GRIFFIN-MUIR: No, and you would see, if you watched the revenues over time for that tariff, that they have obviously come down because more wireless carriers are using a shared point of interconnection.

1575   THE CHAIRPERSON: On forbearance, you finished by saying that we shouldn't be doing it, and, frankly, I don't quite understand why. Explain to me why you think this would cause -- if we forbore interconnection of voice.

1576   Because we don't have a regime for data. It works for data. It works very well, et cetera.

1577   So why is it so necessary to have it for voice?

1578   MS GRIFFIN-MUIR: I guess we can speak to data interconnection and whether we always think it works well, but I think, really, what happens is, all carriers have to interconnect and exchange traffic. So, obviously, if you are the smaller carrier, there is less advantage.

1579   Even when Mr. Daniels was speaking yesterday on the bill-and-keep arrangement -- and we can talk about whether the level of compensation is right, but obviously, if you are the smaller carrier, there is very little motivation for the larger carrier, the incumbent carrier, to interconnect with you.

1580   You have no customers, or very few, and we know that the imbalance will be in the smaller carrier's favour.

1581   So if you don't have those kinds of regulatory rules, if you actually forbear from that, what will happen is, carriers who are not of like size or who don't feel there is a need, will just choose not to interconnect, or to interconnect on terms that are much more strident for the --

1582   THE CHAIRPERSON: Is that happening on the data side right now?

1583   That's my point. You say that, if there is forbearance, in effect, the small guy will be pushed around and will have to connect on terms that are extremely onerous, et cetera. That would suggest that that is already happening right now on the data side.

1584   MR. STROPLE: The data side -- I wouldn't describe it as perfect, I would describe it as, maybe, imperfect.

1585   So, to some extent, it is happening, and the lowest common denominator, absent of regulation, ends up being global data interconnection carriers.

1586   So that, ultimately, if you can't come to an arrangement for direct interconnection, which is the most efficient and cost-effective, you end up routing through an international data carrier to get that traffic, and because of the way the internet is designed, you ultimately can get to any of those endpoints; less so on voice.

1587   THE CHAIRPERSON: That is happening in data right now?

1588   MR. STROPLE: Yes.

1589   THE CHAIRPERSON: You heard my colleague Mr. Katz talking about equal access, and he is very impassioned on this point because of the fact that we don't have equal access on wireless. The consumer, effectively, pays a higher rate on long distance than they pay on wireline long distance calls, et cetera.

1590   (a) Do you agree with it? (b) Would it be a very consumer-friendly gesture if we suggested that wireless carriers -- all of them, regardless of whether they are owned by an ILEC like you or whether they are independent -- should offer equal access?

1591   MS GRIFFIN-MUIR: It's a different --

1592   THE CHAIRPERSON: Obviously we can't do it in this hearing, I understand that, but we need a follow-up proceeding. I am not wanting to get anybody excited, just, intellectually speaking, I hear this argument over and over again, and I don't know whether it's valid or not.

1593   MS GRIFFIN-MUIR: The way we would look at it is simply that, at the time equal access was established for local exchange carriers, the market looked different, and the services were sold differently.

1594   It is less clear now, when you pull out a base schedule for long distance wireline and long distance wireless, how many customers are actually paying those rates. The more competitive the wireless industry becomes, we believe that the rates for those services will start to come in line with one another.

1595   So it is a question, really, of whether forcing the wireless service providers to have equal access, and the cost of that, and all of the arrangements associated with it, will actually deliver the results of lower toll prices better than leaving the wireless market to become more competitive and have services offered through a fixed number of minutes or special packages that deliver that pricing.

1596   THE CHAIRPERSON: I asked you in sort of a general way what it would take to implement your proposal. I wonder if, for next week, when we have rebuttal, you could, on one page or two, set out the exact steps that it would take to implement your proposal.

1597   Conceptually I understand it, but I would like to see what actually would be the work. Then it would be much easier to identify the consequences thereof.

1598   MS GRIFFIN-MUIR: Certainly.

Engagement

1599   THE CHAIRPERSON: Thank you. Those are my questions.

1600   Len...

1601   COMMISSIONER KATZ: Thank you.

1602   Good morning. I am going to continue with the notion of the regulatory bargain that was struck by the CRTC back some ten years ago with regard to the bill-and-keep regime and the other obligations that went with it.

1603   I would like to refer you to paragraph 30 of your opening remarks this morning, where you actually touch on it, as well, in an indirect manner. You talk about the MTS Allstream proposed POI regime, and then later you say:

"Witness the fact that WSPs have incurred CLEC obligations to avail themselves of this regime. Indeed, in many cases they took on these obligations specifically to take advantage of the benefits of these interconnection arrangements."

1604   It is in that context, I guess, that the Commission, a number of years ago, created that regulatory bargain, with all of the obligations inherent in the CLEC, including some of the benefits that went with it, like the bill-and-keep, which people have figured out a fix for by using independent CLECs to provide the bill-and-keep regime and reduce the operating costs, without the consumer getting the benefit of the reduced long distance, without regulating it.

1605   The intention here is not to regulate it, but there was an indirect regulatory bargain that said: If there is a reduction in your operating costs, then there would be a commensurate, hopefully, reduction in long distance, as well.

1606   And equal access was the stimulus to try and do that. I am not suggesting -- and I agree with you, Ms Griffin-Muir, that times have changed and the equal access benefits that were seen back then may not be as prevalent today, but it still is an issue, and I understand that there is packaging and everything else out there.

1607   The reality is that many consumers, when they open up their bill and have two or three minutes of long distance, suddenly have $2 or $3 associated with those two or three minutes. That is where they sort of get upset.

1608   Let me ask you folks, do you have a different rate for your unbundled, unpackaged, one-minute-long distance call on your wireless network versus your wireline network?

1609   MS GRIFFIN-MUIR: We do have a slightly different rate, but it appears that the basic rate for wireline is higher than wireless.

1610   COMMISSIONER KATZ: So a one-minute call from Winnipeg to Brandon, Manitoba, on wireline is more expensive than on wireless?

1611   MS GRIFFIN-MUIR: If I am reading this correctly, yes. Not significantly -- well, I guess significantly, but -- depending on whether the call is peak or off-peak.

1612   If the call is off-peak, it is significantly less, and if the call is peak, it is more.

1613   COMMISSIONER KATZ: Can you quote those numbers? They are probably public numbers.

1614   MS GRIFFIN-MUIR: I can, sure.

1615   A basic toll call, with no plan, for wireline, would be 40 cents a minute, peak, and 20 cents a minute off-peak, so evenings and weekends.

1616   And for wireless, no calling plan again, the rate would be 35 cents a minute, irrespective.

1617   So there is not, other than the off-peak, a huge difference. But, having said that, as I was saying to the Chairman, most of the time customers who realize they are going to use long distance have a plan available to them, so that the majority of the customers making long distance calls actually don't pay those rates.

1618   COMMISSIONER KATZ: What percentage of your customers have a plan, wireline and wireless?

1619   MS GRIFFIN-MUIR: I don't know that off the top of my head.

1620   COMMISSIONER KATZ: Could you try to find that out, and if you think it's confidential, you can file it confidentially. If not, it would be nice to have for next week.

1621   MS GRIFFIN-MUIR: Okay.

Engagement

1622   COMMISSIONER KATZ: Great.

1623   Those are my questions. Thank you.

1624   THE CHAIRPERSON: Candice...

1625   COMMISSIONER MOLNAR: Thank you.

1626   I would like your help, since you are the Chief Technology Officer, Mr. Strople, to understand. As you pointed out, WSPs have, essentially, taken the path of either going through an affiliate LEC or CLEC, or partnering with a CLEC, and are not using the WAS tariff.

1627   What I would like to understand is just the consequence. The effect is that they are acting somewhat like a co-carrier and, as has just been noted, without the obligations, but there is an implication of having to go through the intermediate step, if you will, and I would like to understand, from a technical perspective, from a cost perspective or a network efficiency perspective, what are the implications of that sort of intermediate step being placed in there.

1628   MR. STROPLE: The most obvious is that you have driven your cost up. If you look at Exhibits 2A and 2B, the difference in 2B is that you have routed traffic through the blue CLEC switch. By putting every minute through that blue CLEC switch, simply, you have taken up two extra ports that you don't need on the other switch, and every port costs.

1629   So you have now put two extra ports in your network that you don't need under Exhibit 2A.

1630   So you have driven your cost up by routing the traffic through that CLEC.

1631   COMMISSIONER MOLNAR: Right, I understood that it drove the cost up. What I don't understand is the magnitude of that. Is it a material cost impact for the industry, or is this a relatively insignificant cost impact?

1632   You are saying the cost of two ports. What does that mean?

1633   MR. STROPLE: Obviously, based on experience, that cost is significantly less than complying with the WAS tariff, so it is materially cheaper than doing WAS.

1634   Is it significant? I guess it's all kind of relative. Relative to what? Compared to WAS, it is definitely cheaper to do it that way.

1635   COMMISSIONER MOLNAR: Not compared to WAS. We know that nobody is using WAS. What I am saying is, everyone, it appears -- virtually everyone has gone through a CLEC versus the WAS. So, given that there is sort of indirect interconnection that way, without having taken on the obligations, as talked about by Commissioner Katz, if we acknowledge that and say -- okay, so what is the cost of that?

1636   What is the cost of going through the intermediate CLEC instead of just directly interconnecting?

1637   Can you help me understand that? I know it's cheaper than WAS, I am just wondering, given the outcome that we have today, what have we added as cost, simply for regulatory purposes here, versus direct connection.

--- Pause

1638   COMMISSIONER MOLNAR: If you are not able to answer at this time, perhaps you could come back to me after, but I would like to get a sense. I mean, we know what is happening in the industry, and I am just trying to understand if we have added significant costs by making them go through the intermediate CLEC or not.

1639   Is this a big issue or a small issue from a cost perspective?

1640   Also, my other question would be about network efficiency. Is there anything that is impacted by the fact that they are going through this intermediate versus directly interconnecting?

1641   MR. STROPLE: We will give an undertaking on the cost side. In terms of --

1642   COMMISSIONER MOLNAR: It doesn't have to be perfect, but I want some sense.

1643   MR. STROPLE: Sure.

Engagement

1644   COMMISSIONER MOLNAR: Thank you.

1645   I have one other question. Do you folks, where you are operating as a CLEC, provide interconnection services to any WSPs?

1646   MR. STROPLE: Yes, we do.

1647   COMMISSIONER MOLNAR: I am wondering if you could share with us the details of those arrangements.

1648   I am going to read this, so I get it exact here for you.

1649   Could you please provide, before the rebuttal phase, the 2010 revenues derived from your CLEC arrangements made available to WSPs, as well as a full description of the arrangements in question?

1650   THE CHAIRPERSON: And we would ask that not only of you, but for all CLECs who appear before us, because it seems to us that we are only seeing part of the picture, because we don't know about those arrangements.

1651   MS GRIFFIN-MUIR: I'm sorry, could you repeat that? You want us to provide our 2010 revenues for...?

1652   COMMISSIONER MOLNAR: The 2010 revenues that you have derived from your CLEC arrangements with WSPs, and, also, a full description of what those arrangements are.

1653   I anticipate that that information will be filed with us in confidence, so you can provide full details.

1654   MS GRIFFIN-MUIR: Yes.

Engagement

1655   COMMISSIONER MOLNAR: Thank you very much.

1656   Those are my questions.

1657   THE CHAIRPERSON: Thank you. As I said, that undertaking does not apply only to MTS, but to everybody, and if you want clarification, speak to Madam Secretary, she has the text.

1658   Thank you.

1659   Suzanne...

1660   COMMISSIONER LAMARRE: I only have one question. I want to take advantage of the fact that we have a CTO here today.

1661   Speaking of the specifications for IP and IP interconnection, in answering the Chair you said that we weren't there yet, and that CISC should be looking after getting there.

1662   Could you be more specific and tell me what will need to be done, so that we get, eventually, to that point?

1663   MR. STROPLE: CISC is working on this already and has developed -- I am going to characterize them as high-level interconnection specifications or standards. Those need to be further evolved and developed.

1664   One of the challenges with IP interconnection -- we have interconnected on TDM for decades, and the experience over time has got us to the point where, between all of the equipment manufacturers and carriers, interconnecting on TDM is extremely well understood.

1665   Interconnecting on IP -- I call it new. IP is not exactly a brand new technology, but the standards are still evolving, and literally any time you connect two voice IP devices together, sometimes even from the same manufacturer, you run into a number of little intricacies about exactly how they need to be configured.

1666   It gets even more complicated when you interconnect between two different manufacturers' pieces of equipment, and then layer on top of that complexity with how the MTS Allstream network may be configured compared to the other interconnecting carrier.

1667   So there is still a significant body of work that would be undertaken by CISC to define that lowest common denominator of "These are the standards that need to be agreed upon and adhered to," to ensure that that interconnection properly facilitates -- I mean, the termination of calls is obvious: Can I route one call from the other? Does it stop and start at the right time? Will the billing stop and start at the right time?

1668   We are probably okay on that, kind of the basics, but as you get into all sorts of nuances related to call forwarding, some of the advanced features -- and, of course, to ensure that 9-1-1 properly transits across all of those interconnections -- fully developing that and making sure that everyone has those correct and tested is work that still has to be finalized.

1669   COMMISSIONER LAMARRE: Would you be willing to go as far as saying that it is an issue of equipment interoperability?

1670   MR. STROPLE: That is one aspect, equipment interoperability, yes.

1671   COMMISSIONER LAMARRE: Okay. So it is the manufacturing issue that's behind all this?

1672   MR. STROPLE: There is a standard. The interconnection protocol is standardized so there is a reference ITU standard.

1673   COMMISSIONER LAMARRE: Okay.

1674   MR. STROPLE: But no manufacturer actually completely and the same way implements that same standard so there is effectively a variation on that standard and you have to kind of work your way through each one of them.

1675   COMMISSIONER LAMARRE: Okay. Thank you.

1676   Those are my questions.

1677   THE CHAIRPERSON: One more question. When you -- in your proposal on page 8, you say this should apply to "All carriers, LECs, WSPs and IXCs" and then you say:

"As with the current POI regime, each carrier will absorb all costs on its own side of an agreed 'meet me' point and exchange all traffic under a 'bill and keep' arrangement."

1678   I'm not quite sure how this would apply with IXEs. After all, their traffic is one way and can be imbalanced and they don't necessarily terminate directly to a customer.

1679   So how do you apply this concept that you layout in the second point of point 8 to IXE's?

1680   MS GRIFFIN-MUIR: I think it could apply. There could be a "meet me" point. But I also think --

1681   THE CHAIRPERSON: You suggest we do apply it to IXCs so that's why I wanted to --

1682   MS GRIFFIN-MUIR: Yeah, going forward, yes. But I think really how we looked at it was more there are very few literally standalone IXCs. So today typically you offer local voice and long distance service, so just voice service.

1683   So we weren't envisioning a standalone IXE.

1684   THE CHAIRPERSON: Yes.

1685   MS GRIFFIN-MUIR: It probably could work for a standalone IXE but that's not --

1686   THE CHAIRPERSON: That wasn't on your minds.

1687   MS GRIFFIN-MUIR: How we thought of it, yes.

1688   THE CHAIRPERSON: Okay. Shall we say your regime is really meant for LECs and WSPs. The IXCs -- we could leave the IXC regime as it is?

1689   MS GRIFFIN-MUIR: Well, we would suggest for what exists you would leave it as it is anyway.

1690   THE CHAIRPERSON: Yes.

1691   MS GRIFFIN-MUIR: So it would just be a question of going forward would there be somebody who offered only long distance voice service. Because the way we look at the voice market now is more as a service either giving you further geographic regions you can reach or just a local calling area.

1692   THE CHAIRPERSON: You suggested there would not be any extra costs and no extra engineering. So we said the MTS proposal if we apply it as of, let's say, April 1st, 2012, et cetera there is no -- other than basically putting into place the necessary regulatory measures, there is nothing that you as carriers would have to do in terms of re-engineering or extra costs of being imposed upon you or anything?

1693   MS GRIFFIN-MUIR: Not incremental to today, no.

1694   MR. STROPLE: And not obligated, but it does open the opportunity for someone who wants to take advantage of the new opportunity to transition from their existing to the other, if they so choose.

1695   THE CHAIRPERSON: Okay. Well, thank you very much.

1696   Oh, sorry, Tim. I thought you had no questions. Go ahead.

1697   COMMISSIONER DENTON: Just to -- for my edification, you mention at page 21 that there would ultimately be:

"...a broad-based mandatory IP-to-IP interconnection broad based mandatory IP to-IP interconnection regime will be in the public interest."

1698   Do you envisage in that future that really there would need to be any kind of special regime for voice or whether there even could be a special regime for voice on an all IP infrastructure?

1699   MR. STROPLE: I think maybe separating the interconnection regime for voice, today being TDM, what we are saying is that interconnection regime for voice will need to continue and at some point, including IP in addition to TDM inside that voice regulatory envelope, will be in the public interest.

1700   COMMISSIONER DENTON: So you do envisage that in an all-internet protocol future there would still be a special regime for voice?

1701   MR. STROPLE: Yes.

1702   COMMISSIONER DENTON: Even though it's all just packets?

1703   MR. STROPLE: Yes.

1704   COMMISSIONER DENTON: Okay, thank you.

1705   THE CHAIRPERSON: Okay. Thank you very much.

1706   Let's take a five-minute break before we will deal with the next intervenor.

--- Suspension à 0953

--- Reprise à 1005

1707   THE CHAIRPERSON: Okay, commençons.

1708   THE SECRETARY: Order, please. À l'ordre, s'il vous plaît.

1709   We will now proceed with the presentation by Bragg Communications Inc., carrying on business as EastLink.

1710   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Thank you.

PRÉSENTATION

1711   MS MacDONALD: Good morning, Chairman, Commissioners, Commission staff. I am Natalie MacDonald, VP Regulatory for EastLink.

1712   And with me here today, to my right, is Denise Heckbert, Regulatory.

1713   To my immediate left is Claude Leduc, Director, Telephone, Engineering and Operations and to his left, Jim Bower, Senior Infrastructure Planner for EastLink.

1714   Our comments today reflect EastLink's expectation that Canada's interconnection regime will convert to a fully IP-based system in the near future, bringing with it the associated benefits of reduced regulation and a more efficient telecommunications infrastructure.

1715   At the same time, the move toward an IP-based interconnection regime should progress with an awareness of the requirements and limitations of the current interconnection regime, so that the transition is smooth and fair to all telecommunications service providers.

1716   We will address the seven topics outlined by the Commission, but first I would like to note that all of EastLink's comments today will be governed by three overriding principles that we believe should, together, guide any decision related to the interconnection regime.

1717   The first principle is that of fairness. EastLink notes that the idea of fairness has been a governing principle since the beginning of local competition in the telephone service markets. For example, to date, all local phone service providers willing to meet CLEC obligations are entitled to be treated as equals, or co-carriers, of the ILECs under the interconnection regime to ensure that all LECs are able to provide services comparable to those offered by ILECs through a mandated regime.

1718   Second, EastLink submits that regulations should aim to establish the most efficient interconnection regime. This has long been a practice of the Commission, as seen in Telecom Decision 2004-46, which established Local Interconnection Regions in response to the decreasing costs of backhauling traffic.

1719   Similar decisions have established local calling areas as the default interconnection region for wireless service providers and have made it possible for LECs to negotiate efficient alternative interconnection arrangements that may result in fewer OIs.

1720   These efficient practices should continue to be allowed under any future regime and should further be encouraged by the Commission wherever possible.

1721   Finally, EastLink believes that the principle of promoting competition should govern all decisions related to regulating the interconnection arrangements between carriers.

1722   For example, when it is technically possible under an IP-based interconnection regime to have only two POIs per province, it should be encouraged as this would dramatically improve carriers' ability to launch telecommunications services.

1723   EastLink firmly believes that all Canadian communities should have access to competition where a competitive service provider has shown interest. EastLink further submits that the competitive entry process should aim to be as simple and efficient as possible.

1724   We will now turn to the specific topics that the Commission has asked us to address. And I also note that attached to the submission is just a two-page appendix which has short answers to the questions.

1725   On the IP topics, it is EastLink's view that the evolution of circuit-switched to IP-based interconnection facilities requires regulatory intervention. The majority of the ILECs have acknowledged that the circuit-switched interconnection regime will gradually fade as IP-based technology becomes more cost effective and as their fibre-to-the-home (FTTH) customer base grows.

1726   However, EastLink notes that IP technology is already pervasive in the Canadian telecommunications market, and the ILECs have yet to adjust and to begin supporting IP-to-IP interconnection.

1727   Consider some toll traffic is already IP-based. Some of Canada's largest CLECs have indicated they are heavily or completely IP-based. Wireless telecommunications services are based on an IP technology core and even the Bell Companies and TELUS have begun building their fibre-to-the-home infrastructure, over which they will likely soon offer phone service.

1728   Despite this pervasiveness of IP technology for voice networks, the default interconnection technology for all service providers, and the only mandated interconnection technology, continues to be circuit-switched.

1729   Mere pervasiveness of IP-technology is not enough to turn the tide, and a clear mandate from the Commission is necessary to move Canada's interconnection regime forward to IP-based facilities.

1730   Not only is regulatory intervention needed but it would be in line with the three principles EastLink suggested. It is not fair that toll, wireless and CLEC service providers must all connect using a technology different from that which forms the core of their operations.

1731   Furthermore, allowing the circuit-switched interconnection regime to languish indefinitely, while many service providers are eager for IP-based interconnection, delays access to the network efficiency benefits of IP, such as a diminished need for POIs.

1732   Finally, it would be decidedly pro-competition to relieve toll, wireless and CLEC service providers of the unnecessary costs related to circuit-switched interconnection, such as interconnection on a per-LIR basis, gateway purchases and higher trunk costs.

1733   As a result, EastLink submits that the Commission should mandate IP-based network interconnection and establish basic rules.

1734   EastLink generally believes that existing circuit-switched interconnections should be grandfathered under the new IP-based regime, with conversions done on a negotiated basis, and that for new interconnections carriers should have the right to interconnect on an IP-to-IP basis.

1735   At the same time, in the early days of mandated IP-to-IP interconnection, EastLink strongly supports regulations that would see ILECs, CLECs, WSPs and IXCs maintain their current respective obligations and privileges. The conversion to a fully IP-based interconnection regime will take time and will, at first, consist largely of a technology change.

1736   In the interest of ensuring that Canadian consumers continue to receive the services they expect and rely on during the early days of this transition to IP-based interconnection, it makes sense to generally maintain current ILEC, CLEC, WSP and IXC obligations as they are today. This includes continuing to require that ILECs provide transit services in the mandated IP interconnection world.

1737   In addition to regulating IP-to-IP interconnection, EastLink agrees with Rogers that all LECs should be required to convert voice IP traffic destined to their end-users to TDM format at the LEC's own cost.

1738   EastLink originally suggested that LECs share the cost of installing a gateway to convert IP-based traffic to TDM format, as the arrangement seemed consistent with the existing shared-cost regime. However, further investigations have led EastLink to conclude that such an arrangement would be impractical in terms of allocating costs and determining responsibilities for maintaining the gateway.

1739   When circuit-switched was the dominant technology and IP-based technology was only emerging, it made sense for the IP-based LEC to pay to convert its traffic to the more widely used circuit-switched format.

1740   However, now that IP-based technology is becoming the more commonly used format, it is fair for LECs wishing to terminate traffic using increasingly uncommon circuit-switched technology to pay to convert the traffic to TDM format.

1741   A decision that would tie the cost of the gateway to the circuit-switched network would also more fairly reflect the cost of maintaining a legacy technology, rather than having those costs artificially applied to developing advanced IP-based networks. This is the most efficient arrangement because it will require that fewer gateways need to be installed as IP-technology adoption continues to grow.

1742   Finally, this proposal is pro-competition in that it supports and encourages the use of more advanced IP technology that most carriers' services are now being built on.

1743   EastLink submits that mandated IP-to-IP interconnection should be based on the shared-cost, bill-and-keep mechanisms in place today, and further submits that there is no need to measure traffic imbalances over IP-based interconnections after fully transitioning to IP. Generally, where both carriers are operating fairly, one would expect comparable traffic volumes.

1744   Under the current regime, significant imbalances would generally be experienced where something unusual is taking place, such as in a scenario where a carrier may be trying to avoid toll terminating fees. In these cases imposing an imbalance mechanism may be justified. The cost efficiencies of IP-based interconnection are such that there will be little risk that one service provider or another would be saddled with a very imbalanced arrangement.

1745   In any case, EastLink has recommended that existing regulations should remain in place during the early days of mandated IP-interconnection and that would include the imbalance mechanism.

1746   EastLink does not support a consolidation of WSP, LEC and IXC interconnection regimes in the early days of mandated IP-based interconnection. However, we may support an eventual consolidation of those regimes when Canada has converted fully to an IP-based interconnection regime, and when ILECs are no longer terminating traffic on their circuit-switched network.

1747   With regard to interconnection regions, EastLink strongly supports a move toward a reduction in the number of POIs for new interconnections. We expect that when Canada's interconnection regime has transitioned to a fully IP-based system, the reduced traffic carriage costs will allow for just one or two POIs per province.

1748   This will be a more efficient arrangement without unnecessary and expensive per-LIR joint facilities builds and will also allow for speedy competitive entry into new territories as competitive entrants will be able to offer service throughout a province by connecting at two POIs.

1749   Before moving on to a discussion of EastLink's position on the wireless interconnection regime, EastLink submits that the Commission should not forbear from regulating either the TDM-based interconnection regime or the newly mandated IP-based interconnection regime at this time.

1750   EastLink acknowledges that there will come a time when IP-based interconnection is widespread and there are only a few remaining grandfathered TDM-based interconnections. At that time, it may make sense to forbear from regulation of TDM-based interconnection.

1751   In the meantime, a substantial amount of traffic will continue to be terminated over the ILECs' existing circuit-switched networks and other service providers will have no alternative to this arrangement. It is fair to grandfather existing interconnection builds so that ILECs do not need to rebuild their networks overnight, and so that CLECs, WSPs and IXCs do not see existing investments stranded.

1752   Given that it will take time to retire this grandfathered network, the related obligations and privileges of LECs, WSPs and IXCs should remain as they are in the early days of mandated IP interconnection. It is the most efficient to keep the legacy regime in place while the legacy network is still widely used.

1753   I will now address the Commission's questions regarding the wireless interconnection regime.

1754   EastLink agrees with Bell, Rogers, Telus and Quebecor that there is no need to alter the wireless interconnection regime to allow wireless service providers to access bill and keep or shared-cost interconnection without registering as a CLEC. EastLink believes that our position is consistent with all three of our proposed principles.

1755   The current regime is fair in that all telecommunications service providers wishing to be considered as equal carriers with the ILECs can do so by becoming CLECs and meeting the CLEC obligations, while those not wishing to have that consideration can remain as wireless service providers.

1756   It is efficient to maintain the existing regime while we begin to operate in a mandated IP-based interconnection regime. Most parties commenting under this proceeding have acknowledged that circuit-switched interconnection will be replaced by IP interconnection largely over the next five to 10 years.

1757   This new IP-based regime will carry with it significant changes such as reduced POIs and a possible eventual shift in service providers' obligations, among others.

1758   It is inefficient to make major changes to the WSP interconnect rules during this transition. WSPs today do have a fair and pro-competitive wireless regime.

1759   In EastLink's view, it would be more efficient to leave in place the wireless interconnection framework that is working well and supporting the entry of a variety of new wireless carriers and to consider the merits of consolidating this regime only when IP based interconnection has been more fully implemented.

1760   EastLink submits that the current wireless interconnection regime is also pro-competition. While it allows companies with LEC operations to deploy service in new areas using their existing infrastructure, it also allows new entrants without LEC wireline operations to choose a business model that suits their needs best.

1761   For example, a new entrant wireless service provider can either pay the wireless access fees and deploy quickly through new territories, or can opt to become a CLEC, in which case deployment would require it meet additional obligations but it would have the access to shared cost interconnection.

1762   As a result, there are no measures necessary to ensure that wireless carriers have the same interconnection benefits and obligations, regardless of whether they are independent or part of an integrated entity.

1763   It is true that a wireless service provider that is integrated with CLEC operations has the option to take advantage of its wireline CLEC operations, while wireless service providers without wireline CLEC operations must pay wireless access service rates to the ILECs or alternatively negotiate with the CLECs. However, this is only part of the story.

1764   In every LIR where an integrated wireless service provider is able to take advantage of bill and keep arrangements, it will always already be registered as a CLEC. That entity will have made significant investments in its CLEC network and will have to meet all the CLEC obligations in every LIR where it operates. An integrated wireless carrier can take advantage of its wireline investments but it still had to make these investments.

1765   We offer an example illustrating that the current regime is equitable. Consider a LIR where EastLink wireless owns spectrum and would like to offer service but where EastLink wireline is not yet operating as a wireline CLEC. Our wireless operations would face the exact same choice as a carrier without wireline operations: We could either remain as a wireless service provider and pay the ILEC's wireless access service fees or we could register as a wireless CLEC, meet the CLEC obligations and enjoy bill and keep arrangements.

1766   It is true that we have a third option whereby we could launch wireline services in the LIR, meet the CLEC obligations as a wireline carrier, and then connect with our wireless operations. However, this would require substantial new investments in our wireline operations and is hardly a significant advantage over other wireless service providers who could also launch wireline operations if it made sense for their businesses.

1767   The fact that an integrated wireless service provider may already have made the investment in CLEC operations before wireless launch does not change the fact that investments had to be made.

1768   In short, an integrated wireless service provider has had to meet CLEC obligations in every exchange where it enjoys shared-cost interconnection. It is fair, efficient and pro-competition to expect all other carriers to do the same. As a result, no changes and no further protections are needed for wireless service providers.

1769   However, existing protections should remain in place, including the regulation of wireless access services. Wireless service providers require wireless access services from the ILECs to be guaranteed the ability to offer service to their customers.

1770   As EastLink has said there should be no consolidation of wireless interconnection regimes until IP-based interconnection has been more fully implemented, it is also fair that wireless service providers continue to have regulated access to wireless access services during this transition period to an IP-based regime.

1771   Turning now to the Commission's final question, EastLink submits that wireless service providers should not have to directly interconnect with small ILECs to offer service in the small ILEC territories. A decision imposing such a requirement on wireless service providers would not be fair, efficient or pro-competition.

1772   EastLink is not clear on the JTF's rationale for this request. There is no current obligation for wireless service providers to interconnect with the SILEC or ILEC in the LIR today. To impose new rules on wireless service providers in a regime that is soon to be phased out, is unnecessary and unfair to wireless service providers. Imposing new interconnection obligations on any carriers at this time is not warranted.

1773   As discussed earlier, EastLink strongly supports a move toward a two-POI-per-province interconnection regime. A decision that would require wireless service providers to establish additional interconnections in each small ILEC LIR, just as we are beginning to move toward a more efficient interconnection arrangement, would be inherently inefficient.

1774   Finally, the current regime is decidedly pro-competition and any unnecessary move toward direct interconnection between small ILECs and wireless service providers would serve only to reduce the wireless services available to consumers in those territories.

1775   EastLink notes that even in a regime for local wireline interconnection, where the rules are well established and have been applied in practice among LECS in all areas, ongoing and unnecessary delays in SILEC entry has been our experience. The SILECs propose they will freely negotiate direct interconnection with the wireless service providers and yet they also propose that the timeline will be at least 180 days. Since wireless service providers are already free to operate in these territories today, imposing new rules on them in order to operate in SILEC territories will only add unfairly to the delays.

1776   And this concludes our presentation. Thank you.

1777   THE CHAIRPERSON: Well, thank you for your presentation.

1778   Now, you suggest we should mandate IP interconnection.

1779   You heard yesterday both Bell and SaskTel saying unequivocally, "We'll do it if there's benefit for the consumers, but right now it will make absolutely no difference to the consumer whether he gets his voice over or circuit over IP. It's exactly the same".

1780   So why make this massive investment in replacing when the net benefit to the consumer is exactly the same?

1781   MS. MacDONALD: Well, first of all, what our position is saying is we're mandating IP interconnect and that the gateway costs be paid by the incumbents or the party that is operating under the TDM-based network.

1782   That's actually happening today anyway in that an IP-based LEC approaching an incumbent who's TDM based and what's IP-based interconnection, they have to pay the gateway costs. So what we're really saying is that when it comes to an IP-based LEC interconnecting with a TDM-based LEC, the TDM-based LEC should be paying those gateway costs.

1783   THE CHAIRPERSON: I know. I understand what you're saying. But you're shifting the cost, and you're shifting the cost effectively -- take Bell, who came up with -- Bell has an IP-based LEC. You want to interconnect, they actually, in effect, have to do the conversion and they say, "What for? It doesn't benefit my customers on iota".

1784   MS. MacDONALD: And I think Bell's position, it doesn't really bear out the circumstances in the market, which is that most carriers are migrating to IP.

1785   And as we've said, in the early days of competitive entry, maybe --

1786   THE CHAIRPERSON: I understand that. And they will do it at their own speed, as they say, et cetera, because they see that it is a technology trend which is mandated at this point in time. Why make me incur those costs?

1787   MS. MacDONALD: They should incur the costs because they are continuing to support a legacy technology. And there are -- contrary to what Bell has suggested yesterday, it would appear that Bell is wanting to wait until all of its systems are in place so that they can offer the competitive IP-based service when, in fact, two LECs may be able to interconnect in a way to provide IP -- the advantages of an IP-based service today.

1788   And so we don't necessarily believe that Bell should be the one to dictate the timing of that conversion.

1789   THE CHAIRPERSON: Yes. Put yourself in our position.

1790   If I take your -- adopt your position and mandate it, I've got to say why am I doing it. Why am I forcing the TDM-based carrier to -- at the request of an IP-based carrier to convert and make that interconnection and make that cost when there is no benefit to the consumer?

1791   I mean, everything we do is purely, surely, in the end to benefit Canadians and benefit the Canadian economy, et cetera.

1792   MS. MacDONALD: And I would say that there definitely is a benefit to the consumer in the near future because by mandating the incumbent to interconnect on an IP basis, it encourages the incumbent to make the decision.

1793   So, for example, today, if we as a LEC want to interconnect on an IP basis with Bell and they have a TDM network in place, then we are paying for those gateway costs while Bell can retain its legacy network and delay the process of IP conversion. However, if the obligation is on Bell to pay those gateway costs at the time of interconnection, we don't know what their plans are.

1794   It may be that in that particular region they have already been planning two years out to migrate to IP. We know that they're aggressively building fibre to the home, et cetera.

1795   So then they have the opportunity to improve their efficiencies by saying, okay, are we going to pay the conversion costs now or perhaps we'll apply those costs toward speeding up our implementation of our IP network build.

1796   THE CHAIRPERSON: No, of course. They'll say let Bragg pay for the conversion costs, if they can do it, or whoever is there. That's obvious.

1797   I'm still not quite sure where I see the benefit to the consumer.

1798   But anyway, the second one is you're noticeably vague on dates. You talk about early days, you talk about eventually, et cetera. And I can understand that because this whole thing is -- depends, obviously, on the technological development and the speed of adaptation, et cetera.

1799   But rather than speaking of early days, et cetera, couldn't we have some triggers suggesting when that -- you say in the early days rely on the IP-based interconnection. That's just one expression.

1800   When would we no longer do that? What would be the trigger? Rather than trying to predict a time period that could be all wrong, why wouldn't -- shouldn't one tie it to certain events, and what would be the events?

1801   MS. MacDONALD: And I think in response to that, we would say our reference to early days is a recognition that there are TDM-based networks out there and we certainly don't think an overhaul to a regime that's going to incur some stranded investment costs to some of those carriers is reasonable.

1802   THE CHAIRPERSON: Right.

1803   MS. MacDONALD: Whether there should be a timeline to mandate conversion, I think that that kind of a discussion would probably include consideration of where everyone is in the marketplace.

1804   THE CHAIRPERSON: That's not what I'm asking. And again, I appreciate the difficulty of a timeline, so I said should one say, well, it should be when 40 percent of the market is IP based or something like that?

1805   Should we have a trigger or an event rather than trying to do a timeline because some timeline inherently is arbitrary and may suit some people and not others?

1806   MS. MacDONALD: Yeah. So we would probably be open to considerations of that, but obviously there would have to be a critical turning point when it makes more sense to migrate over.

1807   I don't, I don't think that we're against setting a threshold after which IP base would occur, but we think the starting points at this point is to at least mandate IP interconnection with the gateway being --

1808   THE CHAIRPERSON: But I think coupled with it with a trigger, you might want to reflect on that and be ready to answer that question when you come for reply.

1809   MS. MacDONALD: Sure.

1810   THE CHAIRPERSON: Candice, I believe you have some questions?

1811   COMMISSIONER MOLNAR: Yes, I do.

1812   You know, we're in Day 2 and we hear about mandating IP interconnect, but I wondered if you could give me some views as to what you would see being the Commission's involvement? To what extent do you see us having to establish rates, terms and conditions of this IP interconnection, or are you suggesting we simply state they need to be made available?

1813   MS. MacDONALD: So at this stage, our position is that when we approach an ILEC, the ILEC is paying for those gateway costs. And I think that would be a fairly simple decision to make because then the ILEC is best equipped to establish which gateway and what costs and try to minimize its costs.

1814   And I think that's fairly simple.

1815   With regard to moving toward a full IP conversion, we would see that there probably would need to be some further consultations in an environment where we're fully converted to IP, how do those roles work and, you know, how would traffic be compensated, et cetera.

1816   Our initial expectation would be because the traffic costs would be lower that there would be far more efficiencies in the future and, therefore, perhaps a need for less regulation in terms of the types of interconnection and how traffic is compensated, et cetera.

1817   COMMISSIONER MOLNAR: I want to make sure I understood what you just said to me.

1818   At this point, you're suggesting all we need -- all you're asking of us is mandate IP interconnection and move the costs of TDM -- the TDM conversion to the ILEC. That is your step one. That's what you would say is required.

1819   And what might be required for a more full IP interconnection regime is something to be worked out later; is that what you're saying?

1820   Like I'm just not sure when -- you know, you're not the first party to say, well, mandate TDM now and later it will be IP. And yet, I'm not sure what all people are suggesting we, as a regulator, should be defining.

1821   Is it simply the form of interconnection or is it something bigger?

1822   MS. MacDONALD: Well, I think it is something bigger. And as we've heard from many carriers over the last day and in the submissions, that there is still some work to do at CISC to define specific standards, et cetera.

1823   That being said, and we fully support that CISC needs to do that work, there may be situations where IP interconnection can occur between parties where they have mutual interests. And we -- you know, we think the regime should allow for creating those efficiencies for full IP interconnection between, you know, any time leading up to full implementation with all standards established, et cetera.

1824   And so where two parties are capable of doing that -- and we've heard yesterday, in fact, that certain WSPs are interconnecting on an IP basis, and other parties may be as well -- that that may make sense, too.

1825   So definitely, it will be an evolution with some fine tuning through the CISC process, but where it makes sense and where parties are able to do so, certainly we would encourage and have the Commission encourage that type of interconnection to happen.

1826   COMMISSIONER MOLNAR: Is there anything that you know of within the Regulations today that would prohibit those arrangements from proceeding when it makes commercial sense to both parties?

1827   MS. MacDONALD: I, personally, don't think -- I can't think of anything that would prohibit parties from trying to work out commercial arrangements to do that provided that the parties are still complying with their underlying requirements to provision service as a LEC or as a carrier.

1828   I heard yesterday that there may be some issues around the tariffs that -- you know, with regard to wireless access, et cetera, but on the IP basis, I think parties should be free and I don't -- I'm not aware of anything that would preclude that today.

1829   COMMISSIONER MOLNAR: And is there anything that would preclude moving to a larger -- you're suggesting one of the benefits in the longer term would be reducing the number of POIs and so on, so on a commercially agreed-to basis, is there anything that would prohibit that from occurring under the Regulations that exist today?

1830   MS. MacDONALD: Well, there are provisions in the Regulations dealing with the compensation mechanisms for toll, et cetera, and there are rules in place for that. But the Commission has encouraged and, through some previous Commission decisions, recognized that where efficiencies can be gained through traffic consolidation and POI consolidation, that may be supported.

1831   And so certainly, I think if carriers are able to work out those arrangements, then they should be encouraged to do so as well.

1832   COMMISSIONER MOLNAR: Okay. So where it's mutually beneficial, things can move forward without regulatory intervention.

1833   So your suggestion that we mandate IP interconnection is because it is not mutually beneficial?

1834   MS. MacDONALD: It is our understanding that there's no real incentive or reason for the TDM operator to agree to IP interconnect and to initiate the -- incur the costs associated with that. And so yes.

1835   COMMISSIONER MOLNAR: Yes, okay.

1836   MS. MacDONALD: Agreed.

1837   COMMISSIONER MOLNAR: Very good.

1838   Just a question. You are predominantly IP based --

1839   MS. MacDONALD: We've provided --

1840   COMMISSIONER MOLNAR: -- or fully IP based.

1841   MS. MacDONALD: -- information confidentially to the Commission, but we initiated our telephone CLEC service as a TDM circuit switch operator because we were one of the first in the market as a competitor. But we do have IP in our network as well, so we're a mixed.

1842   COMMISSIONER MOLNAR: And have you sought to make any arrangements? You don't need to give me details here on the public record --

1843   MS. MacDONALD: Sure.

1844   COMMISSIONER MOLNAR: -- but have you sought to make any interconnection arrangements on an IP basis with any party?

1845   MS. MacDONALD: No, we haven't specifically sought to do so, although we would welcome the opportunity to do that.

1846   But it's in an environment where we wouldn't be expecting to receive, you know, a response of support for that kind of request, so we've just continued to operate under the current regime.

1847   COMMISSIONER MOLNAR: Okay. You welcome the opportunity to do that, but the opportunity is available to you; correct?

1848   We just talked about the fact that those types of arrangements, it is available to you. There's nothing prohibiting you today from seeking out those commercial arrangements?

1849   MS. MacDONALD: Well, we would, we would be open to discussing, but certainly with the incumbent's position and particularly -- like we've incurred significant costs on the gateway, as an example, over the last three years and we certainly have no expectation whatsoever about approaching an incumbent and having them agree to pay those costs of the transition.

1850   And we understand that that's probably a consistent experience in the marketplace among other LECs as well.

1851   COMMISSIONER MOLNAR: Yeah, and fair enough.

1852   I guess what I'm thinking of, and you pointed out within your own statements, that there is increasingly large amounts of traffic that is IP based. I mean traffic with your network, with other, alternate local exchange carriers, the -- as well as some of the wireless traffic or the bulk of the wireless traffic is now IP.

1853   So as traffic volumes increase, we don't necessarily have to talk about a conversion, do we? We can talk about IP interconnection to carry IP traffic.

1854   MS. MacDONALD: Well, when we were listening even yesterday to some of the submissions of the other parties, who are IP based, there is definitely reasons to encourage it even if the ILEC -- you know, the ILEC would say, "Well, we're not there yet and we will go there and we will negotiate it".

1855   But certainly there's other reasons that were raised in relation to ILEC transiting arrangements and to CLECs who are both IP based and wanting those benefits.

1856   So you know, I guess my answer to that is while there may not be technically anything stopping it, it's not happening other than at the ILEC's choice and timeline to transition it. So we think that encouragement through mandating that interconnection is a logical step for the Commission to make.

1857   COMMISSIONER MOLNAR: I'll just repeat a comment I made yesterday in speaking to CNOC.

1858   If you're taking advantage of the transit arrangement, it might be something -- there are parties in this proceeding who have suggested that that could be forborne, and you may want to address that in your next stage of this proceeding.

1859   One other thing I wanted to discuss with you is your position on wireless service providers. You suggest leave everything as is.

1860   Do you, yourself, as a CLEC, provide services to any wireless service providers?

1861   MS. MacDONALD: Yes, we do. In fact, I noted earlier in the proceeding that the Commission had asked for all parties to provide information with regard to what arrangements they have in place.

1862   We actually did provide that information in response to a CRTC interrogatory 30th of June, 2011-1, and it was filed confidentially. But we do have in place arrangements with wireless service providers as between our CLEC operations, and that has been filed with the Commission.

1863   COMMISSIONER MOLNAR: Okay, thanks.

1864   And because I haven't seen that interrog, can I just confirm that it provides details as to the amount of revenue and details as to the specific arrangements you have with WSPs?

1865   MS. MacDONALD: It certainly does include details with regard to who the WSPs are and the revenues, but in terms of specific arrangements, we can update that information.

1866   COMMISSIONER MOLNAR: Thank you. Please do that.

Engagement

1867   COMMISSIONER MOLNAR: Okay, thank you. Those are my questions.

1868   THE CHAIRPERSON: Tim?

1869   COMMISSIONER DENTON: Good morning.

1870   I'm trying to understand the relationship of some of the things inside your brief to each other, and I confess I don't, so that's why I'm going to ask you questions.

1871   I'm at a loss to understand the relationship of your one proposal, which is that we ought to mandate an IP to IP interconnection regime, with some of the other proposals that you make regarding the grandfathering of existing arrangements.

1872   So let's just go to paragraph 8. You notice -- you note that the default interconnection technology is TDM, Time Division Multiplexing. And you protest its unfairness.

1873   Then, at paragraph 11, you note that all new interconnections should have the right to interconnect on an IP to IP basis.

1874   So is it the thrust of your point that you're making is that new arrangements should have the -- there should be a right to establish new arrangements on an IP to IP basis without going through TDM?

1875   MS. MacDONALD: Yes, that's right.

1876   It's really just about -- our position is about trying to streamline as we move toward a new technology regime, and that would be how we would propose getting there.

1877   COMMISSIONER DENTON: So then the cost of conversion to TDM, therefore, is appropriate to say should be borne by the LEC, Local Exchange Carrier.

1878   MS. MacDONALD: The LEC who is operating the TDM network would bear that responsibility.

1879   COMMISSIONER DENTON: So that is this for now or for going forward?

1880   MS. MacDONALD: Going forward. And I think, just to clarify, we pointed out in the oral presentation that, you know, in the early days it made sense for the new entrant, I think, to pay those conversion costs because the entire networks were primarily TDM based. But we've sort of hit a tipping point where now networks are being built on an IP basis and, therefore, it makes sense to step ahead with the times and to recognize the newer technology.

1881   So it's really just about realigning where those cost responsibilities should be.

1882   COMMISSIONER DENTON: Yes. And so the end of paragraph 12, you say:

"It makes sense to generally maintain current ILEC, CLEC, WSP and IXC, Inter-Exchange Carrier, obligations as they are today."

1883   Right? This is the second-to-last sentence of paragraph 12, "It makes sense to generally maintain current"...

1884   MS. MacDONALD: Yes. So under the current regime, any carrier as listed that is seeking to provide service would do so as they do today.

1885   So what I -- what we referred to there is although moving forward on an interconnection basis, but the current arrangements for a WSP, for example, where it has the choice of becoming a WSP or a CLEC or interconnecting with an ILEC or a CLEC, those arrangements would continue as well until we get to that point where, you know, the networks are all primarily -- entirely, I guess, fully IP based.

1886   COMMISSIONER DENTON: Right. So that what we're -- what I hear you saying is it will establish the standards whereby IP to IP interconnection can take place, will mandate them for the future, but that the nature of the three regimes of interconnection would stay the same.

1887   It makes sense to generally maintain the current so and so obligations as they are today.

1888   MS. MacDONALD: That's right.

1889   COMMISSIONER DENTON: Okay. Now, I'm being very dense here, and I just don't get how you're going to help me explain and understand why that sentence is compatible with mandating an IP to IP regime.

1890   MS. MacDONALD: So today, a LEC entering a market could approach an incumbent that's TDM based and say, "Hey, I want to interconnect with you". The incumbent would, under the current regime, say, okay, here's our point of interconnection in the LIR.

1891   The advantage that the LEC would have is it would say, "Well, I'm IP based. I want to interconnect on an IP basis", and that would happen.

1892   The existing arrangements that would take place would be under the current rules until such time as all networks are substantially IP based where there's less TDM technology being relied upon by carriers, in which case there's more efficiencies to gain and maybe change the current mechanism.

1893   So in other words, we would still have Bill and Keep regime. There may be, as permitted by the Commission, opportunities to treat traffic, consolidate trunk groups to some extent, but there would still be a toll regime as well. WSPs would still interconnect or have opportunities to operate either as CLEC or WSP, so under the same regime as well.

1894   We're really just saying that the Commission would mandate that the interconnection mechanism be on an IP basis.

1895   COMMISSIONER DENTON: Okay. So you're basically saying it's like we're moving from Latin to English, and English will now be the new official language of telecommunications. IP will be the new official language, so it's the translation costs alone is really what you're talking about, it seems to me.

1896   MS. MacDONALD: At the initial stage if that's necessary, yes.

1897   COMMISSIONER DENTON: Okay, good. Thank you.

1898   Now, in paragraph 14, towards the end, you note that:

"This is the most efficient arrangement because it will require that fewer gateways need to be installed as IP technology adoption continues to grow."

1899   Can you explain -- unpack that sentence for me?

1900   MS. MacDONALD: Okay. So although today, in the current regime, the Commission has established as the minimum interconnection point the LIR, the Local Interconnection Region, we continue to support, you know, some of those proposals that reduced points of interconnection serving expanded areas makes sense, and certainly makes sense in an IP regime.

1901   So although today the minimum interconnection point may be a LIR, we would support where two parties are operating in multiple LIRs and as they change out their network, so for example, they may have switches and points of interconnection on an older or TDM legacy basis, as things change, they have the freedom under the existing regime to say, okay, let's work on interconnecting and reducing the number of POIs we have since we're both in these areas. That makes sense.

1902   Over time, as all networks are IP, there's no need to have as many points of interconnection, so we would see as the evolution that there would be fewer POIs.

1903   COMMISSIONER DENTON: Just the -- it may be -- my question may be much simpler than that.

1904   Why is there a need for fewer points of interconnection in an IP based regime rather than circuit switch?

1905   MS. MacDONALD: Well, the position would be that under the IP-based network infrastructure the costs of carrying that traffic are significantly reduced as compared to in the traditional circuit switch regime.

1906   COMMISSIONER DENTON: Okay. Now, normally when IP to IP interconnection is made, it's -- at least in the data side, it's fully -- if you have roughly equal amounts of traffic, it's a peer to peer, and if it's unequal, then there's a payment made.

1907   And you seem to be proposing something different here in paragraph 15, that there might be imbalances in the traffic.

1908   Why should these not just be negotiated between parties?

1909   MS. MacDONALD: Actually, the whole issue of imbalance, I would say, has been one of those topics that comes up from time to time, year to year, and it's been addressed through different Commission proceedings.

1910   But our experience has been that it's -- typically, when two carriers are operating in a market, you know, and they're operating appropriately and fairly and there's not something unusual happening that you're going to have a fairly balanced traffic going each way, in which case there really isn't a need to have any kind of regime for payment from balances.

1911   And therefore, other than in extreme situations, we wouldn't really see an imbalance mechanism or the repayment required.

1912   Certainly in those unusual situations, we don't -- you know, we would say that it isn't necessarily fair that one party is faced with terminating more calls and maybe there should be a payment.

1913   But our experience has been that that would typically be rare unless the circumstances were unusual and, therefore, we would support saying, look, for us, it's actually administratively more frustrating to deal with the mechanism than to simply just make it a wash and say, "Look, it's not worth measuring any more".

1914   We heard Bell yesterday indicate that their position is that they're actually paying more, which comes as a surprise as well because I think it was Bell that was looking to have the imbalance thresholds reduced from 20 percent to 10 percent.

1915   So we certainly would support Bell in saying, you know what, increase the thresholds so that you're only paying for higher imbalances or in an IP regime we see that may even be unnecessary because the way traffic is transported, there would be a balance and not likely an imbalance and payment would be required.

1916   COMMISSIONER DENTON: Okay, thank you.

1917   I think that those are my questions.

1918   THE CHAIRPERSON: Okay. Those are our questions for you. Thank you very much.

1919   MS. MacDONALD: Thank you.

1920   THE CHAIRPERSON: We'll take a 10-minute break.

--- Suspension à 1051

--- Reprise à 1109

1921   THE SECRETARY: Order, please. À l'ordre, s'il vous plait.

1922   THE CHAIRPERSON: Okay, commençons.

1923   LE SECRÉTAIRE: Merci, Monsieur le Président.

1924   We will now proceed with the presentation by Rogers Communications Partnership.

1925   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation.

1926   Thank you.

PRÉSENTATION

1927   MR. WATT: Thank you.

1928   Good morning, Mr. Chairman, Commissioners, Commission Staff. My name is David Watt and I am Vice-President, Regulatory Telecommunications for Rogers.

1929   With me today are, starting on my immediate left, Alexander Adeyinka, Senior Regulatory Counsel and Associate Privacy Officer, and Simon-Pierre Olivier, Director, Regulations and Economics, Fido. To my immediate right is Bogdan Tanasie, Manager, Facilities Planning and Traffic in our Engineering Department. And beside Bogdan is Brenda Stevens, Director, Regulatory CLEC Affairs.

1930   Rogers welcomes this opportunity to discuss network interconnection issues. We have considered closely the submissions of other parties in the Commission's October 12th hearing issues letter. As a result, we will be supplementing and, in some cases, amending our earlier written submission in these remarks.

1931   We will start by briefly summarizing our fundamental positions and then move on to specifically address the seven issues identified in the Commission's letter.

1932   We submit there is near unanimous consensus that the existing intricate system that has evolved over the past quarter century works well and does not need substantial change.

1933   Multiple LECs, WSPs and IXCs interconnect successfully today and have made significant investment in this system. Any new arrangements that are introduced should supplement and not replace the existing network interconnection arrangements.

1934   For example, any WSP should have the choice of using any new arrangement or existing arrangements.

1935   It is now appropriate, in our view, to modify the current rules so as to permit WSPs to interconnect with LECs on a shared-cost and bill-and-keep basis.

1936   Such new arrangement should not require WSPs to implement equal access. Wireless access services remain interconnection services and should not be forborne.

1937   With respect to IP interconnection issues, Rogers has proposed that the Commission establish certain basic default rules which will facilitate interconnection with minimal regulatory intervention.

1938   As circuit-switched or TDM operators transition their voice networks to IP, the basic rules will ensure that they permit IP to IP interconnection on their networks at least wherever they themselves have rolled out IP voice functionality.

1939   During the period when legacy TDM networks are being converted to IP, the basic rules will ensure that both networks remain interconnected with each operator bearing the cost of terminating traffic and the appropriate protocol to its end-users, a true co-carrier regime.

1940   The commercial details of voice IP interconnection arrangements will be left to bilateral negotiation with parties having the right to apply to the Commission if negotiations fail.

1941   The interests of consumers in the SILEC's operating territories should be paramount. A new direct WSP interconnect requirement would be consumer unfriendly. WSPs have adopted the most cost-effective arrangements available to bring wireless choice to consumers in the SILEC's monopoly territories.

1942   Turning now to the seven issues identified by the Commission for this hearing.

1943   In our view regulatory intervention to facilitate interconnection between voice networks is no less necessary today than when all voice networks used circuit-switched technology. Indeed, the need for regulatory intervention is increased by the fact that there are now two parallel platforms, TDM and IP, that are distinct, yet must interoperate.

1944   Incumbent operators of legacy voice TDM networks and competitors who have entered the market using IP networks have different incentives with respect to IP interconnection. In short, there is market failure.

1945   But unless all networks are interconnected efficiently, competition will be curtailed, innovation stifled, and consumer benefits delayed. For this very reason, for the past 25 years, regulators worldwide, including the Commission, have regulated PSTN interconnection even when all networks are TDM based.

1946   The evidence in this proceeding shows that the ILECs and SILECs are actively deploying IP technology in their own traditional operating territories, and in their CLEC, WSP and fibre-to-the-home activities. However, to our knowledge, the ILECs have not interconnected with any other carrier on an IP to IP basis for voice services.

1947   In addition, the ILECs have indicated in their intervention that they will not voluntarily share interconnection and interoperability costs with competitors by bearing the responsibility to convert inbound IP traffic to TDM on their side of the network.

1948   The ILECs take this position despite the fact there is an order for their IP and TDM platforms to interoperate. They must have deployed already the technologies that support the conversion of IP to TDM and vice versa. The ILECs' position on protocol conversion is inconsistent with the shared cost principle. Each co-carrier should be responsible for protocol conversion on its terminating traffic.

1949   In our view, without some measure of regulatory intervention, it is highly unlikely that IP to IP voice interconnection will occur or that equitable IP to TDM conversion arrangements will be struck in a reasonable timeframe.

1950   We turn now to the nature of that regulatory intervention. Rogers has proposed a minimal regulatory intervention approach. Our basic default rules can be summarized as follows:

1951   It should be mandatory for all carriers to accept IP-based network interconnection requests. Parties should be free to then negotiate the commercial and technical terms of the interconnection.

1952   If the interconnection is between the respective voice IP networks of two LECs, or a WSP and a CLEC under our proposal, they will interconnect on a shared-cost basis and terminate traffic to each other on a bill-and-keep basis, subject to agreement regarding traffic imbalance.

1953   If the interconnection is between a LEC's IP network and another LEC's TDM network consistent with the shared cost to practice, each party shall be responsible for converting the traffic to its own protocol for termination to its end-users.

1954   We believe that large interconnection areas, possibly as large as a province, will be negotiated between the parties for IP interconnection. The Commission should not mandate interconnection regions smaller than the local interconnection region.

1955   Some parties argue that the Commission should not make IP to IP voice interconnection mandatory, but they have not demonstrated why IP to IP voice interconnection should be treated differently in this respect than TDM network interconnection.

1956   There is no evidence that the ILECs will be more willing to voluntarily engage in timely IP to IP interconnection than they would have been for TDM interconnection in the absence of a regulatory obligation.

1957   We believe that our proposal is consistent with the government's policy direction. It reasonably balances the need to foster IP to IP voice interconnection while leaving the market to determine the economic terms of interconnection.

1958   We turn now to the matter of forbearance. Alex.

1959   MR. ADEYINKA: So the Commission has explained in its October 18th letter that the question of forbearance is forward-looking. Therefore, the question is not about whether or not a forbearance determination should be made in this proceeding, but rather under what circumstances can it be made in the future.

1960   Section 34 of the Telecommunications Act requires that the Commission exercise its forbearance power only "where the Commission finds as a question of fact" that to forbear would be consistent with the Canadian telecommunications policy objectives and that there is competition sufficient to protect the interest of users.

1961   With regard to voice IP interconnection, the question of forbearance does not arise as voice IP interconnection is currently not regulated. However, there is unanimous acknowledgement that there is very little voice IP interconnection today.

1962   Because interconnection of networks is crucial to the achievement of the Canadian telecommunications policy objectives, Rogers has proposed a minimal regulation approach. In the future, when there is evidence that market forces can be relied upon for voice IP interconnection, the Commission may remove even these basic rules and rely entirely on bilateral negotiation.

1963   With respect to the future forbearance of existing TDM voice interconnection regimes, parties in this proceeding agree that these arrangements are the primary means of exchanging voice traffic today and will remain so for sometime. Again, there must be clear evidence of competitive alternatives to these TDM regimes prior to forbearance.

1964   Bell has argued that if voice IP interconnection is mandated, then certain interconnection services should immediately be forborne; namely WAS, EAS and transiting.

1965   Bell's proposal is fundamentally inconsistent with the Act, in that it requires the Commission to forbear without regard to the competitive conditions of the interconnection service.

1966   Contrary to its own evidence in this proceeding, Bell assumes that voice IP interconnection will supplant TD interconnection overnight. Rogers submits that the Commission should not consider forbearance for these services in this proceeding, as Bell has failed to provide evidence that market forces will protect users, as required by the Act.

1967   Dave.

1968   MR. WATT: Turning now to the wireless network interconnection issues. We submitted in our intervention that WSPs should be treated as co-carriers of LECs only if they have the same obligations as LECs.

1969   Rogers had reviewed carefully the arguments made by the new wireless carriers concerning the costs of equal access in the absence of any real incremental consumer benefits from imposing equal access on WSPs.

1970   Rogers is agreeable to a modification to the current rules, which will give all WSPs a fourth interconnection option, in addition to the existing three options of becoming a full-fledged CLEC, using an affiliated CLEC or using the WAS tariff.

1971   This new option would permit any WSP to interconnect with LECs within and LIR on a shared-cost basis with bill-and-keep without having the obligation to provide equal access.

1972   In reaching this position, Rogers has very carefully considered the symmetry issue raised by next by the Commission.

1973   Several WSPs have undertaken expansive and complex network optimization and, indeed, corporate reorganization to either become a CLEC or to integrate vertically with a CLEC in order to exchange wireless traffic over shared-cost bill-and-keep arrangements.

1974   While these arrangements remain conceptually available to any WSP, Rogers is sensitive to the arguments made by the new wireless providers that such complex and cost-intensive optimization and reorganization may not be viable in all instances.

1975   Accordingly, Rogers submits that the current rule should be modified such that any WSP may interconnect with a LEC on a shared-cost and bill-and-keep basis without implementing equal access.

1976   Equal access was a concept that made sense in the early 1990s when long-distance competition was first introduced. Equal access was to provide new long-distance carriers, who were then not vertically integrated with a local service operation, an even playing field to compete against the vertically-integrated monopoly ILECs.

1977   In Decision 97-8 the Commission, noting that the IX market was still dominated by the ILECs, decided to extent equal access requirements to CLECs because, "exclusive arrangements between CLECs and IXC service providers would reduce consumer choice." The focus in 1997 was still on the competitiveness of the long-distance market.

1978   Today, 14 years later, there are no longer any dominant long-distance service providers. Consumers of long-distance services have a myriad of end-to-end wireline and wireless offers as well as calling card and over-the-top Skype-like services in addition to existing equal access primary selection and casual calling options.

1979   It would be poor public policy, and contrary to the policy direction, to impose equal access costs on the wireless industry given the competitive marketplace of today. There would be no consumer benefit. There is clear evidence that there would be minimal demand for this service based on Fido's experience with equal access as a wireless CLEC.

1980   Moreover, imposing equal access on WSPs could lead to higher prices, as the costs of implementation would have to be recovered from the base of subscribers.

1981   As described earlier, wireless interconnection with bill-and-keep should remain on an LIR basis with segregated trunk groups for bill-and-keep, transit, and EAS. Commercial agreements for different arrangements would of course be permitted.

1982   In order to maintain symmetry the modified regime should be an option to all WSPs. Any WSP should be able to use the WAS tariff or anyone of the three bill-and-keep options in any market based on its business plan and the relative cost effectiveness of each option.

1983   We turn now to the matter of WAS forbearance. Simon-Pierre is going to address these issues, and he will be speaking in French.

1984   M. OLIVIER : Selon Rogers, il serait inapproprié pour le Conseil de s'abstenir de réglementer l'accès au service sans fil.

1985   Tel qu'expliqué dans notre réponse à TELUS le 30 juin 2011-4, en vertu de la Décision 2008-17 le Conseil a correctement classé les services d'interconnexion dans une catégorie distincte qui n'est pas sujette aux périodes d'élimination graduelle, et ce, en fonction des principes de compétitivité.

1986   De surcroît, l'article 34 de la Loi sur les télécommunications requiert que le Conseil s'abstienne d'exercer ses pouvoirs s'il conclut, dans les faits, que les forces du marché sont suffisantes afin de protéger les intérêts des usagers. Rogers soumet qu'il n'existe aucune preuve en ce sens dans la présente instance.

1987   En ce qui concerne les ententes directes d'interconnexion avec les petites ESLT, les entreprises de services sans fil ne devraient pas être forcées de déployer des interconnexions directes avec ces petites entreprises. Si les entreprises de services sans fil étaient obligées d'utiliser des arrangements plus coûteux, l'entrée en concurrence et le déploiement à l'intérieur des territoires des petites ESLT pourraient, dans certains cas, tout simplement être freinés.

1988   De surcroît, dans la mesure où les entreprises de services sans fil devraient récupérer des coûts plus élevés, les consommateurs dans les territoires des petites ESLT pourraient faire face à des choix restreints de services ainsi qu'à des prix plus élevés. Selon Rogers, les bénéfices de la concurrence pour les consommateurs devraient constituer l'élément prépondérant devant guider les délibérations du Conseil.

1989   MR. WATT: This concludes our opening remarks and we would be pleased to respond to any questions you may have.

1990   THE CHAIRPERSON: Thank you for your submission. I'm delighted you're here.

1991   Fido, I understand you're the only CLEC, the only wireless one who's also a CLEC, and by doing that, that means you're offering equal access now.

1992   You said there's minimal demand for it, but it seems to me it also means that there is no technical problem in doing it on the wireless side, offering equal access?

1993   MR. WATT: There is no technical problem. The problem exists in the information systems' IT side, where there's extensive work that has to be done.

1994   To give you the context, Fido implemented -- established itself as a CLEC back in 1999-2000 and established the equal access capability. At that time Fido was a fledgling wireless operator.

1995   The systems that were put in place were in large part manual. They were extremely cumbersome and required considerable labour. Over the years they have been updated.

1996   When Rogers acquired Fido in 2004, Rogers made the decision to continue on with Fido as a separate brand and continue on with Fido as a wireless CLEC.

1997   The decision -- at that point the penetration or the use of equal access was in the order of about 1 percent of the long-distance traffic carried by Fido. That was the incidence -- well actually, it was even -- it was --

1998   So then Rogers did not -- sort of bandaid-solutioned the systems over the years.

1999   But the problem is the following. In the wireless industry Rogers in total had something in the order of about 5,000 wireless price plans. For each of those price plans you would have to have the ability to suppress the billing to the customer when the long-distance choice of the customer is to go with an alternative supplier.

2000   It is a complex operation. It's not the equivalent of implementing wireless local number portability, but it is a very significant IT operation to do that.

2001   We have to -- the call record keeps track of the minutes because on the local side we have to keep track of those minutes. Then on the long-distance side we have to suppress and not charge that and so on.

2002   So technically it can be done, but I don't want to minimize the difficulty in doing it. I think a very good explanation of the steps and the requirements was provided in the WIND -- in the Mobilicity interrogatory responses and --

2003   THE CHAIRPERSON: The fact that the -- sorry, go ahead.

2004   MR. WATT: I was just going to say that in our experience today -- and we did put this information and you placed it on the public record -- that, again, Fido's experience is 1 percent of the minutes goes to the equal access option, about a quarter of that through primary selection and three-quarters of it actually through casual calling, which is enabled by equal access.

2005   THE CHAIRPERSON: Fido certainly has not marketed equal access with any vigour and I presume from your -- would it be fair to take the conclusion from your comments that you really came to the conclusion that it doesn't give you a business advantage having equal access and the cost of actually implementing it and operating it does not warrant the additional customers you might gain by publicizing your equal access facility?

2006   MR. WATT: I totally agree. It's a bit of a complex answer because it's really the long-distance providers who should be advertising the couple of carriers that do have connection with Fido to provide long distance on an equal access basis. They are the people who really should be heavily promoting the service to get people, get Fido customers to select their long-distance service.

2007   If I look at it from Rogers' perspective, for us to go out and try and encourage more IXCs to sign up with Fido on an equal access basis, you're absolutely right, the cost of connecting the person and implementing that, in our view, based on the experience, we would never recover the cost of that exercise.

2008   THE CHAIRPERSON: And if your proposal of today we adopted that, what would be the implication for Fido? Would Fido then stop offering equal access?

2009   MR. WATT: I can't give a definitive answer to that question today.

2010   Again, it's a complex situation in that we would have to weigh off what would be best for us. The fact is having implemented it, there would be certainly no rush to decommission it.

2011   We use all the options today. As you know, we go through -- we have Rogers wireless go through Fido as a CLEC, through Rogers Home Service as a CLEC.

2012   We still make substantial use of the WAS tariff because in not all cases does it make sense to either build a shared-cost facility or to lease circuit.

2013   So we have a mix and match. We have really carefully optimized our network to lead to the best economics. So I can't give you a definitive answer.

2014   THE CHAIRPERSON: The proposal that you put forward today, so basically wherever you offer IP interconnection, you also have to offer it to anybody who wants to interconnect on IP.

2015   Let me just make sure I understand it. You're saying -- let's take Bell as an example -- Bell, you have the ability to connect on IP and you do it with your own Bell Mobility. Wherever you do that, in those locations, you would also have to offer it to anybody who asks for it.

2016   So basically it would -- if Bell makes a decision, in my example, where to offer IP interconnection for their own benefit, for their customers, for Bell Mobility or whatever, but once you do that, it's available to everybody. That's the nub of your proposal?

2017   MR. WATT: That really is the nub of our proposal in principle. We recognize that there then would be significant negotiation to be undertaken between the parties.

2018   But that is the nub of our proposal, that the principle is where IP exists that there should be interconnection and then, as I say, substantial work would be needed then.

2019   THE CHAIRPERSON: And it would be then left up to the market to decide that interconnection, to be negotiated.

2020   So if it's Rogers, obviously you have some clout and some experience.

2021   But for the small guy, he will then have to fall back on the existing arrangements -- we wouldn't change those -- the existing arrangements, whether it be become a CLEC, pay WAS or make what's called alternative arrangements through a CLEC or something. It would still be the average of the cost of conversion being on --

2022   MR. WATT: Under our proposal, yes, the existing --

2023   THE CHAIRPERSON: I just want to make sure so I understand.

2024   MR. WATT: Yes. The existing TDM arrangements would be a fallback, absolutely.

2025   THE CHAIRPERSON: As a failsafe, yes. Okay, thank you.

2026   MR. WATT: Yes, because as we said -- just to emphasize it, everything we're putting forward here today, in our view, is to supplement the existing regime, which we think works well. It's not to replace it.

2027   Yes, ultimately, out many, many years, TDM will disappear, but that's going to be a very significant time from --

2028   THE CHAIRPERSON: But where IP is available, it is available to everybody; that's really what it boils down to?

2029   MR. WATT: Yes.

2030   THE CHAIRPERSON: Okay, thank you.

2031   Tim?

2032   COMMISSIONER DENTON: Good morning, lady and gentlemen. I find, by the way, this is a very clear presentation, so thank you. It's self-explanatory in many respects.

2033   At the beginning of your major points you say:

"During the period when legacy TDM networks are being converted to IP, the basic rules will ensure that both networks remain interconnected, with each operator bearing the cost of terminating traffic in the appropriate protocol..."

2034   Which I have sort of labelled each translating to the others its own language.

2035   Is that really the essence of what you see the IP-to-IP -- is this the nub of the proposal, that the cost of translation be shifted?

2036   MR. WATT: This is -- I just responded to the Chairman that the nub of the proposal was where IP existed, both parties, that there would then be IP-to-IP interconnection and then the details be worked out. That is the principal thrust of our position.

2037   The second principal thrust is that during the interim period where one party doesn't have IP that then the parties should bear the cost of conversion to terminate traffic to their end users.

2038   The reason for that, I can't express them any more clearly than EastLink did earlier this morning. We view that as then being a truly co-carrier regime. They explained the economics of it and they explained as well how we do see this as we -- let me back up.

2039   We recognize that this imposes costs on the ILECs that they wouldn't otherwise bear, but we do see it as a motivation to them to move more quickly to the IP world, where they do have this choice if they are going to move in short order. Faced with the costs of conversion, they might move more quickly.

2040   COMMISSIONER DENTON: Thank you.

2041   I see in your summary of your presentation in the submission that you made of the 2nd of June there's some things that were in there, and I'll just read them to you, that did not make it to your final submissions today.

2042   As one of your points as to what this interconnection regime should look like, you basically said:

"...all Canadian carriers must adopt ... [to be brief] [the] SIP Protocol and [another standard for the] IP to IP Interconnection Guidelines..."

2043   Now, it's the first I've seen anyone mention SIP in this proceeding. Perhaps you can explain the benefits of that standard and why it would assist the process.

2044   MR. WATT: Yes. I think I will pass that off to Bogdan. I'm not really the person who should speak to that. We're going to let an engineer deal with it.

2045   MR. TANASIE: Good morning, and thank you for the question.

2046   The reason we mentioned SIP is in our experience we've interconnected already for the purpose of exchanging toll traffic with several carriers, some in Canada, some in the United States, some internationally, and it's been our experience that every time we've done this there's been no question about what to use in terms of protocol, signalling protocol. It's always been SIP. There's never been any doubt as to what to use.

2047   Further to that, even though we only have a few of these arrangements in place, we've had discussions with other carriers, again, Canadian and international, and, again, it's been -- the outcome of that has always been SIP should be what we should be using going forward.

2048   And just to add to that, it's also been I think the conclusion of the CISC work done so far that SIP is the way to go forward when we interconnect over IP for voice traffic.

2049   COMMISSIONER DENTON: You're just trying to get a plug-in for SIP here, so it's okay.

2050   And the next one, "IP to IP Interconnection," what does that mean, what does it signify, why is it important?

2051   This is the second portion of the -- you said the Canadian carriers should adopt these standards and the second one that you mentioned after SIP was "IP to IP Interconnection Guidelines."

2052   MR. WATT: Now, Commissioner Denton, you are looking at the list that's provided in the interrogatory Rogers-CRTC number 6?

2053   COMMISSIONER DENTON: Maybe so, but I'm reading on page 3 of your submission of June the 2nd.

2054   MR. WATT: Okay.

2055   COMMISSIONER DENTON: And you mention two standards.

2056   You've discussed SIP. Good.

2057   And there was something called "NTRE046 (IP to IP Interconnection Guidelines)."

2058   MR. WATT: Yes. Those were the -- these latter two documents were guidelines produced out of the CISC exercise. So we thought they produced the foundation that the industry could go forward from.

2059   There's been discussion as well here that there are more updated versions of various specifications, and we certainly recognize that the most updated version would have to be used, but we didn't think there was any need to go back and address issues that had already been addressed in CISC.

2060   COMMISSIONER DENTON: So basically you're saying, as much as possible this is settled territory, the engineers have concluded that these are the best available?

2061   MR. WATT: Yes.

2062   COMMISSIONER DENTON: Mr. Chairman, those conclude my questions. Thank you.

2063   THE CHAIRPERSON: Thank you.

2064   Suzanne.

2065   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

2066   First, let's turn to paragraph 10 of your submission this morning, where in the last paragraph, after explaining your submission, you conclude that:

"It reasonably balances the need to foster IP-IP voice interconnection while leaving the market to determine the economic terms of interconnection."

2067   Now, on this premise that there's a need to foster IP-to-IP voice interconnection, let's assume I don't agree, I don't think that there's a need to foster it, as an hypothesis, and if your discussion with Mr. Denton you did say that this was an incentive to get incumbents to replace TDM equipment faster than they would otherwise do so.

2068   So let me test with you the reverse side of this. The system is working, the equipment is still working, it's not yet at the end of its life span. Let's think green here for a while.

2069   Why would we want to throw away equipment or replace equipment faster than it needs to be replaced? Why is there this need for voice -- we're really talking about voice -- to replace this -- to commence this IP-to-IP interconnection faster than it would naturally go to?

2070   MR. WATT: I take your points.

2071   Well, first off, we've heard that the TDM equipment is going to face lack of support or be non-supported, I think, at the end of 2015. So we are going to move to IP.

2072   IP brings a lot of efficiencies. Instead of tying up a circuit with all sorts of gaps and silences in it, in an IP world, it's all packets and you intersperse the voice packets with the data packets, the video packets. There are substantial economies of transmission that can be realized.

2073   I think in the narrow interconnection terms there can be many fewer POIs. Then you do not have to incur those switching and port costs. We send traffic, we bring it back down to centralized locations, we send it back up to locations, we pass it off. All of these things can be done in a more centralized fashion that would reduce costs.

2074   In terms of the additional functionality of services, there are services that people will be able to realize in an all-IP world. We talked about some that may not seem too exciting: high-definition audio, calling video.

2075   But there are other services. We have things in mind in terms of making life easier for consumers. I don't want to go into them today. But the functionality will exist in an all-IP world.

2076   COMMISSIONER LAMARRE: Okay, but we're talking about voice here. So if the functionalities are not voice, we're really talking about expanding market needs or marketing strategies? That's what we're talking about here, is it?

2077   MR. WATT: Well, I do think that it is a -- the cost component is a critical component of it because it's not segregated. I know we're talking about voice interconnection, but it will ride on the transmission facilities and reduce costs. I know that it ultimately gets separated out for the voice interconnection, but I don't think you should lose sight of the cost benefits.

2078   COMMISSIONER LAMARRE: To the overall IP system, that includes other services than voice?

2079   MR. WATT: Correct.

2080   COMMISSIONER LAMARRE: Okay, that's a fair answer.

2081   You said 2015 is when you see TDM phasing out --

2082   MR. WATT: Well, I --

2083   COMMISSIONER LAMARRE: -- naturally. So my question is: If that's how you see it phasing out naturally, 2015 is not that far down the road, so why should we try and speed it up in any way, shape or form?

2084   MR. WATT: Okay, I really shouldn't speak for the ILECs and what their vendor support will be.

2085   COMMISSIONER LAMARRE: Okay.

2086   MR. WATT: I think I heard towards the end of 2015, but that doesn't necessarily mean that that's a hard date. I know that arrangements and after-markets and so on can be made. That equipment may have a longer life.

2087   I think what we're trying to do though is move things along more quickly than they otherwise would. We're not, in our view, asking for a lot here. We're asking to establish the principle that where IP exists there should be an onus to have IP-to-IP interconnection and have the details worked out on a commercial basis.

2088   We were encouraged to hear Bell say yesterday that they were open to discussions with respect to WSP, the WSP IP, where, quite frankly, the networks will go IP more quickly than the wireline TDM networks, and as well that consideration could be given to IP interconnection where they are going fibre-to-the-home and IP will be the technology of choice there.

2089   So we think there's opportunity now to move IP-to-IP interconnection forward. So we really -- we don't want to wait.

2090   COMMISSIONER LAMARRE: Okay. You don't want to pass up this opportunity to make it easier for yourself?

--- Rires

2091   COMMISSIONER LAMARRE: Okay. I will take that as a yes.

2092   Now, on page 16, I want to clarify the -- I understand like the fourth way you're basically offering that WSPs may interconnect on a shared-cost bill and keep basis without implementing equal access.

2093   The way you figure it out -- and I apologize if I didn't understand it if you explained it already -- would that be up to the wireless service provider to decide how they want to interconnect and the LEC would have to go along with this choice?

2094   MR. WATT: Yes. The way we see it is that the wireless service provider would have this option available to it. It would come to the LEC. They would have to put in place either the shared cost facility or the lease facility and then they would receive a bill and keep arrangement over those facilities.

2095   COMMISSIONER LAMARRE: Okay. So we would be -- if we were to adopt this way forward, we would be asking LECs to actually offer more flexibility to wireless service providers.

2096   MR. WATT: That would be correct.

2097   COMMISSIONER LAMARRE: That would be -- okay. Okay. And you feel you don't --

2098   MR. WATT: Now these -- sorry to interrupt.

2099   I think with the WAS tariff there is a facility between a WSP and the ILEC, the LEC, so that you know that facility -- it may be as simple as that facility remains on whatever the cost basis was before.

2100   Because I understand it now you lease a facility and then you pay the WAS tariff on top of the cost of that lease facility. So the lease facility could stay in place but now you would not be paying the WAS tariff.

2101   COMMISSIONER LAMARRE: What you would be doing is?

2102   MR. WATT: You would have the billing. You would be subject to the imbalance and you would be subject to, just as LECs are today, the segregation of traffic between what is bill and keep traffic, EAS traffic and any transit traffic.

2103   COMMISSIONER LAMARRE: Okay. Now, let's go -- I kept the best for last. Let's go to back talking about interests of consumer and SILECs' operating territories.

2104   In the third paragraph of your long third paragraph of your presentation, when you are talking about the -- let me get it straight here.

2105   Basically, you are summarizing point by bullet point your submission. On the last bullet point you say that:

"The interests of consumers in the SILECs' operating territories should be paramount."

2106   I guess you mean the Commission's deliberation and whatever we put in place.

2107   Now, as the Commission, would you agree that we should expand a little bit this sentence to say that "The interests of all consumers, wireline or wireless clients alike in the SILECs' operating territories should be paramount"?

2108   MR. WATT: Yes, we would have no trouble with that change.

2109   COMMISSIONER LAMARRE: Okay.

2110   Then you go on to say -- well, you disagree with the proposal by the SILECs that there be a new direct WSP interconnection requirement. But I don't want to talk about that at this point.

2111   What I want to know is when you say that WSPs have adopted the most cost-effective arrangement available to bring wireless choices to consumers in the SILECs' monopoly territories, I wish you could give me details on that and explain to me how it works.

2112   Like, for instance, let's say I'm a Rogers' wireless customer and, you know, I want to make a phone call while I'm here in Gatineau to a dear friend that lives in Upton, Quebec and who has a wireline. How does it work?

2113   MR. WATT: Simon-Pierre?

2114   MR. OLIVIER: Yeah. No problem.

2115   So you are -- let's say you are a Rogers' wireless customer. That call will go through -- presently, it will go through Fido, the CLEC. Fido, the CLEC will use his transit trunks via Bell Canada and Bell Canada will terminate that call through the small ILEC based on the interconnection arrangement that they have today.

2116   So there are 36 small ILECs, I think. With most of them we are using the ILEC transiting service. In a few cases, I think 10 -- 6 we have direct interconnection with the small ILEC within their territory.

2117   So we are using two -- let's say two types of arrangements to terminate calls to the small ILEC.

2118   COMMISSIONER LAMARRE: Okay. That is what you referred to as a cost-effective arrangement.

2119   Okay. So it's cost-effective for Rogers' wireless. How is it cost-effective also for the SILEC?

2120   MR. WATT: Well, it's cost-effective for the SILEC because in the alternative with the direct connect, you are going to have to -- and it depends how this works. If you're talking about a direct connect it would be a type of -- under our proposal now, bill and keep, there would have to be a shared cost facility. We would have to build to each of these 36 SILECs.

2121   It's actually worse than that because not all their exchanges are contiguous. We calculated we would have to build or lease facilities into 100 exchanges. Some of these systems are of, well, a fairly small size.

2122   So the economics of doing that simply would not make sense. If that was the only way we could do it we wouldn't want to provide service there.

2123   You know, frankly, in this situation and the example that you gave, we generally would think that your friend would then return the call to you. So we really do see this as a bit of a bill-and-keep arrangement where there is reciprocal work being done on the part of both parties.

2124   We originate the call here in Ottawa. Yes, we recognize the SILEC terminates it in its territory but odds are that person then returns a call at some later date. The SILEC originates the call and we terminate it here in Ottawa so that the work is equivalent.

2125   COMMISSIONER LAMARRE: So is your assumption that in any event there wouldn't be an extreme imbalance between the calls that are terminated within the SILECs' territories and the calls that are terminated with the wireless?

2126   MR. WATT: No, on average it's pretty -- it's pretty equal.

2127   COMMISSIONER LAMARRE: And that's your experience so far?

2128   MR. WATT: Yes.

2129   COMMISSIONER LAMARRE: Okay.

2130   Okay, thank you. Those are all my questions.

2131   THE CHAIRPERSON: Len?

2132   COMMISSIONER KATZ: Thank you. I think it's still morning. Good morning.

2133   I have got a couple of questions on the same topic of equal access that I guess the Chairman posed to you before. If I take you to paragraphs 17 and 18 of your remarks this morning, it's where I am going to be referring to.

2134   You talk about the fact that back in the nineties there seemed to be a need to have equal access in order to provide consumers with long distance competition. It was from that perspective, I guess, that the CRTC then went ahead and created the CLEC obligations and the regulatory bargain that is referred to as bill and keep and the equal provisions as well.

2135   You are saying in paragraph 18 that that's different today and it's now, "poor public policy and contrary to the Policy Direction to impose equal access". You say it on the wireless industry here, but I ask you to question it in the broader sense.

2136   Are you saying in light of what has happened in the long distance market and the Canadian telecom market there should no longer be equal access provisions at all, particularly given the fact that all we are seeing now is wireless is now a substitute for wireline?

2137   So why would we have an asymmetric situation where there is an equal access obligation on the wireline side but not on the wireless?

2138   MR. WATT: I think the reason you would have that asymmetric obligation -- and I have some sympathy for the position Bell put forward yesterday that it might not be required today to have the equal access obligation on the wireline side.

2139   But leaving that aside, the reason you would have the asymmetry is if the equal access obligation was put in on the wireline side when there was an obvious need for it without equal access back in 1992 -- well, it came in '93 -- there would have been no role for long distance competition. You would have had to dial all the extra digits and dial around, et cetera.

2140   So that it had to be applied in the wireline world, was not applied in the wireless world as it evolved because there weren't that many long distance calls being placed. It was a fledgling industry.

2141   So if you're going to try and if you feel a need, and I don't think there is -- clearly don't think there is a need -- you would remove the equal access obligation from the wireline side.

2142   I think this was mentioned today. There are very few standalone long distance companies that make their business plan work off equal access. I'm not sure there are actually really any.

2143   As you know, the long distance market has been contracting for years and the prices have been falling. There are just so many options. Almost everyone takes not -- I exaggerate -- most people take long distance service of their local service provider in an integrated package.

2144   COMMISSIONER KATZ: So when I heard you respond to the Chairman that the costs of equal access on the wireless side is significant with regard to IT and all the price plans and everything else as well, can one not make the same conclusion that those costs are just as high on the wireline side as well and if we got rid of equal access everywhere, then the networks would be far more efficient and far cheaper to operate?

2145   MR. WATT: Well, I think the issue there is we are dealing with an issue, not completely but in large part, with a matter of sunk costs on the wireline side where the system has been put in place.

2146   Yes, there were substantial costs to put that in place back in the nineties and I don't think there is any reason to impose those costs in today's environment on the wireless industry.

2147   COMMISSIONER KATZ: Okay. I am staring -- well, first of all, what is your unpacked rate for a wireless service today on Rogers Cantel?

2148   MR. WATT: It's 35 cents a minute.

2149   COMMISSIONER KATZ: It's 35 cents a minute.

2150   And I'm looking at a Fido website here in front of me that has two different rates. One is Canadian and U.S. long distance at 35 cents a minute and then it says 25 cents for City Fido customers.

2151   What is the distinction between a City Fido customer and a Fido customer?

2152   MR. WATT: If I could pass that to Simon-Pierre?

2153   MR. OLIVIER: So when we launched City Fido -- I think it was in early 2000 -- the idea was to replace the wireline services.

2154   So with City Fido you have access to a zone and within that area is unlimited calling. If you go outside of the zone then you pay a definite rate for roaming presently.

2155   COMMISSIONER KATZ: So you pay 25 cents outside of the City Fido rate?

2156   MR. OLIVIER: No, the 25 cents I think, if I understand correctly, it's the long distance rate that you pay when you are within that zone, you know, to reach --

2157   COMMISSIONER KATZ: To call outside.

2158   MR. OLIVIER: Yes. Obviously, if you look further down there are other plans or bundles where a City Fido customer, for example -- I think it's $10 per month -- they can have unlimited calling.

2159   COMMISSIONER KATZ: Yeah, I know there is bundles. Everywhere there is bundles. I'm looking at the unbundled rate, though.

2160   MR. OLIVIER: It's 25 cents.

2161   COMMISSIONER KATZ: So there is a 35-cent difference versus 25 cents, depending on whether you are -- when you signed up, I guess, and where it is.

2162   MR. OLIVIER: Yeah, but Dave --

2163   MR. WATT: And the -- sorry to interrupt -- City Fido is not offered ubiquitously.

2164   COMMISSIONER KATZ: Okay.

2165   MR. WATT: The other thing I would add, and it might be helpful, is that you know we took a look at what our average rate -- so we took all our long distance revenue. We divided it by all our long distance minutes and our average wireless rate is in the order of 11 cents a minute.

2166   We compare that to -- I think the latest CRTC monitoring report, the average rate per minute for long distance and wireline was something in the order of 8.5 cents. I'm going from memory here.

2167   So, yes, the average wireless long distance minute rate is say about 20 percent more expensive than the average wireless long distance minute rate but they are not staggering charges, certainly by historical measures, by any means. And there is the added flexibility and utility of the mobility feature with the mobile service.

2168   COMMISSIONER KATZ: Okay.

2169   My last question and I think you may have answered this already. I wasn't sure.

2170   Do you have separate trunks interconnecting to the phone company as to whether it's a Fido service or a Rogers Cantel service?

2171   MR. WATT: No, we do not.

2172   COMMISSIONER KATZ: So you put them all through the same set of trunks, okay.

2173   Those are my questions.

2174   THE CHAIRPERSON: Candice?

2175   COMMISSIONER MOLNAR: Thank you. I want to move back to the issue of IP interconnection.

2176   While we speak IP interconnection, in my mind at least we are talking about two separate issues. One is the interconnection of two IP networks and the other is an interconnection of an IP to a TDM network and that ultimately becomes a discussion of who bears the cost of translation.

2177   So I want to talk first about the interconnection of pure IP networks. You mentioned that you were pleased with the discussion yesterday that Bell might be open.

2178   Do I take from that that you have had no discussions with any parties as it regards IP interconnection today?

2179   MR. WATT: As Bogdan said, we have some IP-to-IP interconnection arrangements principally for toll traffic with Canadian entities and American.

2180   With respect to local and WSP we have not had any formal discussions. We had very preliminary discussions with one carrier in terms of discussing a particular shared cost facility. But it would be unfair to characterize those as formal discussions. They were not.

2181   So the answer is no.

2182   COMMISSIONER MOLNAR: Is that because you felt that there were some regulatory hurdles to having those discussions or is it for commercial reasons or why is it that that has not occurred?

2183   MR. WATT: Well, I said they were not formal discussions. The strong impression we got in our informal discussion was that now wasn't the time, so that we didn't go forward.

2184   COMMISSIONER MOLNAR: Do you believe you need us to intervene so that now is the time or do you believe -- I mean you know you are certainly a large carrier within this country and I have to think you have some negotiating powers.

2185   MR. WATT: We are a large carrier. We do have some negotiating powers but, frankly, we do think it would be of assistance if the principle was established by the CRTC. We think things would move along more smoothly.

2186   COMMISSIONER MOLNAR: Okay. Fair enough.

2187   I want to move to the issue of the IP-to-TDM interconnection. Can you tell me, I mean essentially what I'm hearing is we are having a debate as to who should incur the costs of translation if translation is -- or conversion.

2188   Is there any benefit to the system as a whole from transferring the costs from the IP carriers where it essentially exists today to the TDM-based carriers?

2189   MR. WATT: We don't see any significant reduction in the costs, no. As I said earlier, we think it is more a matter of speeding along the conversion to IP-to-IP interconnection. The costs -- I think the aggregate total of costs would not be dissimilar.

2190   COMMISSIONER MOLNAR: Okay, thank you.

2191   Just to follow up on that, if the responsibility for that was to be changed in the future versus at this point, would that change at all be overall system-wide costs of this? I mean I think at this point you have some sunk costs related to the equipment required for this conversion.

2192   MR. WATT: We do. No, our proposal would not be to take those sunk costs and then in any way share those. This would be a going forward -- going forward position.

2193   COMMISSIONER MOLNAR: So, if we were to do it now or we were to do it in four or five years when a greater amount of traffic had been shifted to IP, would that change as you can see in any way the overall cost to the system? Like is there any urgency for us to do this today?

2194   MR. WATT: Yes. We prefer --

2195   COMMISSIONER MOLNAR: I would say you prefer. That's why I am asking about system-wide costs.

2196   MR. WATT: Even from our -- you know, our broader public policy perspective of believing that there are advantages coming from sooner IP-to-IP interconnection than later, that it would end up there sooner if the conversion costs were borne by the terminating parties, by each terminating party sooner rather than waiting three or four years.

2197   I think, frankly, if you wait three or four years to impose something like this then probably there wouldn't be much point in doing it.

2198   COMMISSIONER MOLNAR: Let me just re-phrase this.

2199   If we accept that because of consumer demand and, you know, the obsolescence of DMS and so on, that there is going to be a transition to IP and so the Commission does not have to intervene to advance this technological change, does that change these costs?

2200   You know, we're not -- if we don't need to make a change to this policy in order to advance the evolution to IP, does it matter when we deal with this cost conversion?

2201   MR. WATT: Well, I guess if I accept your premise that there would be no additional incentive or no motivation that would lead to sooner IP deployment by the ILECs then I think you are correct. There would be no change.

2202   We think there would be motivation in there for -- you know we would propose a change. But I think with your premise, then I think what you said is correct.

2203   COMMISSIONER MOLNAR: Thank you. Those are my questions.

2204   THE CHAIRPERSON: Following up on that point, because your main point is it will be considerable incentive. If we adopt the role that you suggest right now, it will be considerable incentive for not only for you but also for the big ILECs to move to IP.

2205   MR. WATT: That is correct.

2206   THE CHAIRPERSON: And this of course would have a nation-wide benefit. The sooner we do it the whole nation -- given that the future is clearly IP everybody will benefit?

2207   MR. WATT: Yes, that is our argument.

2208   THE CHAIRPERSON: Now, like my colleague Mr. Denton said, your proposal is very clear and very simple regarding the attractiveness. I just want to make sure. I also see the downside.

2209   So if I only see the upside it's clear. You are basically saying let people decide when to go to IP, but if they do it they have to share and can't only do it for themselves, et cetera.

2210   And the second one is you say that as the WSPs can't interconnect at any point in time you need to keep them as co-carriers and no longer have this archaic provision of equal access which is no longer applicable in any event given that everybody has multiple plans, et cetera.

2211   And then thirdly, you are saying that the costs of interconnection and translation, whatever you call it, from TDM to IP should be shared rather than being borne by the IP which would clearly be a loss for the ILECs.

2212   MR. WATT: That's an excellent summary.

2213   THE CHAIRPERSON: Okay, thank you. I just want to make sure I understood.

2214   MR. WATT: No, it was absolutely accurate.

2215   THE CHAIRPERSON: Okay, thanks very much. Those were our questions. We look forward to hearing what others have to say about your proposal.

2216   We'll meet again at quarter to 2:00. Thank you.

2217   Sorry, no, it was one hour -- 1:30, sorry.

--- Suspension à 1211

--- Reprise à 1335

2218   THE CHAIRPERSON: Madam Secretary, let's begin.

2219   THE SECRETARY: Thank you, Mr. Chair.

2220   Before beginning, I would like to reiterate for the record the wording of the undertaking referred to by Commissioner Molnar and the Chairman earlier this morning. This undertaking applies to all parties at the hearing that have CLEC operations.

2221   The response to the following question is to be filed by noon, Eastern Time, Friday, October 28, and served on all parties. Where they are filed in confidence, abridged versions must be served on the parties.

2222   The question: Please provide, before the rebuttal phase, the 2010 revenues derived from your CLEC arrangements made available to WSPs, broken down as between affiliated and non-affiliated WSPs, as well as a full description of the arrangements in question.

2223   I have copies of the question. Please come and see me at the end of the day, should you want a copy.

Engagement

2224   THE CHAIRPERSON: Just one small correction: It is LECs, not CLECs.

2225   Just in case there are any other LECs.

2226   When you read the question you said CLEC -- C-L-E-C -- and it should be LEC -- L-E-C.

2227   THE SECRETARY: Thank you. I apologize.

2228   We will now proceed with the presentation by the Canadian Independent Telephone Company Joint Task Force, Association des Companies de téléphone du Québec, ACTQ, Ontario Telecommunications Association, OTA, Tbaytel.

2229   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation.

2230   Thank you.

PRÉSENTATION

2231   MR. HOLMES: Good afternoon, Mr. Chairman, and good afternoon to the other members of the Commission panel.

2232   We are very pleased to have this opportunity to present our views to you on the issues central to this important proceeding.

2233   We would like to introduce ourselves to you.

2234   My name is Jonathan Holmes, and I am the Executive Director of the Ontario Telecommunications Association.

2235   To my far right is Mr. Rick Banks, General Manager of Mornington Communications Co-op. Mornington has 2,300 NAS.

2236   To my immediate right is Mrs. Isis Thiago de Souza. Isis is Vice President of Technical Services of Sogetel, headquartered in Nicolet, Quebec. She is also representing Téléphone Milot, which is held by Sogetel. Together, both companies serve about 32,000 NAS.

2237   To my far left is Mr. Robert Olenick, Regulatory Analyst at Tbaytel. Tbaytel serves about 67,000 NAS.

2238   To my immediate left is Mr. Ian Stevens. Ian is the Chief Executive Officer of Execulink Telecom, which has 5,300 NAS.

2239   In this proceeding, the Canadian Independent Telephone Company Joint Task Force is representing 30 small incumbent telephone companies from Quebec and Ontario, who together serve approximately 225,000 NAS. The JTF is representing the SILEC operations of these companies and not the CLEC operations.

2240   Our presentation will be shared by the members of our panel, who will each present a segment of it to you without further introductions.

2241   Before we discuss the evidence we have filed in this proceeding, we feel that it is important to provide you with a brief overview of the SILECs' networks and how they are interconnected with the wider PSTN.

2242   Each SILEC operating territory is distinct and separate from the networks of the large ILECs, and functions independently, using its own switching and other network infrastructure.

2243   SILEC operating territories are generally landlocked by the neighbouring large ILEC. Over the years, and in order to meet the needs of our customers, SILECs have entered into bilateral agreements with the ILEC to establish interconnection facilities and exchange local calls within EAS areas.

2244   Separate agreements and interconnection tariffs have also been established between the SILECs and the large ILECs for toll traffic, pursuant to various Commission decisions. SILEC customers can typically choose between the SILECs' toll service offerings and those of the large ILECs.

2245   Other IXCs are free to directly interconnect for these purposes via the approved SILEC interconnection model, or, if they choose not to compete in the SILEC's operating territories, they are able to terminate toll traffic over the toll interconnection facilities established between the SILECs and the large ILECs, and pay a direct connection charge. The mark-ups generated by these charges go to assist the SILECs in maintaining their obligation to serve.

2246   Wireless interconnection is also available from the SILECs. Although it has never been explicitly imposed by the Commission, some SILECs provide Wireless Access Service in their territories, and others are also willing to do so upon request.

2247   MRS. de SOUSA: In our initial evidence, we proposed three key Network Interconnection Principles that must govern interconnection with SILEC networks by all Telecommunications Service Providers.

2248   Principle No. 1: The incumbent Local Exchange Carrier is the lynchpin of the network-of-networks. As the owners and operators of their networks, SILECs have two key responsibilities. First, they must maintain the integrity of their networks; and second, they must ensure that their networks interoperate with the wider network-of-networks for the smooth flow of traffic in and out of their territories. SILECs must be able to police their own networks and must also be compensated for the costs that they incur for facilitating interconnection.

2249   Principle No. 2: SILEC operating territories are interconnection areas in their own right. They are not part of the ILECs' system of Local Interconnection Regions, nor should they be considered to be automatically included in wireless Local Calling Areas. If a TSP wants to originate traffic in a SILEC's operating territory or offer services to SILEC end customers, it must be required to interconnect with that SILEC. TSPs outside SILEC territories may terminate traffic to a SILEC through another carrier that already has recognized service-specific interconnection in place with the SILEC, such as the toll regime we described earlier.

2250   Principle No. 3: Interconnection technologies must be chosen on a rational basis. Simply stated, the primary question is the volume of traffic forecasted to be exchanged between the SILEC and interconnecting carriers. The choices to be made between copper or fibre, TDM or IP, must also take into account available human and material resources and the service lives of the equipment of both carriers. A particular technology should not be mandated by the Commission, but should be agreed to between the two carriers. Like many other parties to this proceeding, the JTF also believes that the evolution from circuit switched to IP interconnection facilities will occur naturally and requires no regulatory intervention. However, there is a role for the CISC and the Commission in establishing and approving industry standards for IP interconnection.

2251   One of the big questions in this proceeding is whether the Commission's three existing interconnection regimes should be simplified or consolidated in some fashion. Insofar as they relate to SILEC operating territories, the JTF sees no compelling need for consolidation of these regimes. If it ain't broke, don't fix it. We are concerned that a one size fits all comprehensive regime will lead to possible unintended consequences and the elimination of specific and long-standing regulatory regimes that are critical to our companies' operations.

2252   The more pressing need from the perspective of the 30 companies this panel represents is a review of the three regimes in order to ensure that they are being enforced in SILEC territories in a symmetric and/or competitively neutral fashion when compared to large ILEC territories. In the past, this Commission has also acknowledged that SILECs need special recognition in certain areas. We will now point out a few areas where this recognition continues to be needed.

2253   MR. BANKS: The JTF considers that this proceeding represents the best opportunity of the past 15 years to correct the nagging issues that the SILECs have had with the Commission's three interconnection regimes.

2254   The SILEC toll regime is first. It is well known that rates for toll interconnection with SILECs or toll termination into SILEC operating territories are above prevailing industry rates. These higher rates have been approved by the Commission. They are critical to subsidizing the SILECs' obligation to serve in high-cost serving territories. We believe that this will be an important topic of conversation in the next SILEC regulatory framework proceeding. As stated by Bell Canada yesterday, there is some interest in the industry to address this issue. Every toll minute sent to a SILEC should comply with this regime.

2255   However, over the years these rate levels have created an incentive on the part of TSPs to bypass the established SILEC toll regime in favour of less expensive options. For this reason, we characterize the SILEC toll regime as "leaky".

2256   Our initial evidence identified several concerns relating to toll interconnection, all involving toll bypass.

2257   One concern was the routing of CLEC toll traffic over local transit trunks. We are pleased that in Decision 2010-908 the Commission addressed this issue and is moving toward closing that loophole.

2258   Another major concern is that toll service providers have been leveraging EAS patterns to terminate toll calls into SILEC operating territories -- without any compensation to the SILECs. By doing so, they are using the SILECs' facilities without paying for them, as if they were merely extensions of the ILECs' networks, in violation of our Principle No. 2.

2259   As discussed in our evidence, the 1996 reporting regime under which toll service providers were to provide traffic statistics to SILECs has long since ground to a halt. It is a failed self-reporting regime and any proposals to resurrect a similar regime should be rejected by the Commission as inefficient and disproportionate under the policy direction.

2260   We would like to propose a far simpler solution that actually builds on the approach chosen by the Commission in Telecom Decision 2010-908.

2261   The Commission should impose a condition of service on Canadian carriers that terminate toll traffic in SILEC operating territories. In the absence of direct interconnection with the SILEC -- which should remain an option -- the Canadian carrier should be required to route toll traffic to the ILEC in a way that would enable the ILEC, in turn, to route this traffic in accordance with the SILEC toll regime.

2262   Once this condition has been imposed, if a SILEC believes that toll bypass is still occurring, it must be able to request a traffic report from the ILEC. If one or more telecom service providers continue to bypass the regime, the Commission would be notified and offending companies would be ordered to remit any subsidy amounts owing and, of course, pay the costs associated with the report. On the other hand, if no evidence is uncovered that the calls originated outside the SILEC's EAS area, the SILEC should reimburse the ILEC for the costs associated with the report.

2263   Enforcing the SILEC toll regime equally on all TSPs will have the two-fold benefit of ensuring that all industry players will be treated in exactly the same fashion and SILECs will finally receive all of the compensation they are entitled to.

2264   MR. OLENICK: Our third concern is with the Commission's Wireless Interconnection/Wireless Number Portability Regime.

2265   The Commission's regime for wireless interconnection with ILECs' networks and the right to offer services to ILEC customers requires a Wireless Service Provider to provide the interconnecting facility between its network and an ILEC's network and lease telephone numbers from the ILEC.

2266   There are only a few instances of WSP interconnection with SILECs. This has not, however, stopped WSPs from offering wireless services to SILEC end customers. Unlike the regime applicable to large ILECs, WSPs can completely avoid interconnecting with a SILEC, yet still serve SILEC end customers.

2267   This bypass arrangement violates the policy direction's requirement that network interconnection measures be completely neutral.

2268   WSPs have always been required to interconnect with large ILECs networks in order to offer their services in ILEC territories. There's no corresponding requirement in SILEC territories.

2269   At the very least, WSPs should be required to interconnect with the SILECs. WSPs should no longer enjoy their free ride they have experienced in the past via the ILECs local calling areas.

2270   There was a discussion yesterday, Mr. Chairman, between yourself and Mr. Daniels of Bell relating to Bell's opening statement at paragraphs 32 through 35. At that point, Bell argues against adding any requirements on WSP and SILEC territories to establish direct interconnection with the SILECs.

2271   There are two points we would like to make in relation to that discussion.

2272   First, if you read Bell's response carefully, you will realize that Bell had not answered the Commission's question because they do not talk about WSP actually operating within SILEC territories.

2273   Instead, they discuss the termination of WSP local calls originated within Bell's LCA and terminated into our territories. For this type of traffic, our position is clear. The WSP has a choice to interconnect directly with a SILEC or they can use the already in place ILEC-SILEC local interconnection arrangements.

2274   For this type of traffic, we have never insisted that the WSP needs to establish direct interconnection simply to terminate their wireless traffic into our territories.

2275   But what the Commission asked in Question 7 is different. Mr. Chairman, you asked about a WSP operating within our territories, not Bell Canada's territories.

2276   And in that case, our position is quite different, but also very clear. In that case, the WSP must follow the same regime as they currently do when they provide their services within the large ILEC territories.

2277   That is what anyone would call a symmetrical and competitively neutral regulatory regime.

2278   The second point relates to some doubts that you and Mr. Daniels seemed to have about costs borne by the SILEC associated with the carriage of that traffic. There certainly are costs we bear in relation to this traffic, and the Commission has recognized these costs in prior decisions relating to WSP interconnection.

2279   In Order CRTC 2003-95, the Commission factored into the rates for WAS services the ILEC's costs of originating and terminating WSP traffic, which are the same costs that we bear today, but for which we, unlike Bell, receive no compensation.

2280   In addition, Wireless Number Portability should not be imposed on a SILEC unless the WSP requesting portability is actually interconnected with the SILEC. This is the approach adopted by the Commission for the ILECs where portability was added to existing wireless interconnection.

2281   However, in Telecom Decision CRTC 2008-122, which established the framework for wireless number portability in SILEC operating territories, the Commission directed the SILECs to implement WNP over SILEC-ILEC circuits which have nothing to do with wireless traffic.

2282   If the Commission carries on with its approach, wireless portability could be imposed on a SILEC where there is no WSP interconnection whatsoever.

2283   MR. STEVENS: We turn finally to the Commission's SILEC local network interconnection regime. Before we address the specific points raised in our evidence, the JTF would like to state its view that it certainly supports forbearance from the regulation of interconnection for voice services in principle.

2284   We would note, however, that under the statutory conditions for forbearance, and under the test suggested by Bell yesterday, the circumstances at present within our SILEC operating territories would not meet the thresholds under these tests.

2285   In Decision 2006-14, the Commission stated that SILEC local competition implementation plans should be guided by the interconnection framework in large ILECs' territories.

2286   SILEC toll interconnection revenue is critically important to the financial wellbeing of our companies, and the Commission has recently taken specific steps to ensure that SILECs receive this toll revenue. CLEC entry into SILEC operating territories is no reason to deviate from this toll regime.

2287   However, in the large ILEC framework, CLECs are permitted to deliver toll traffic from outside an ILEC Local Interconnection Region to the ILEC for termination in the LIR across Bill and Keep trunks. If the large ILEC interconnection regime is simply transferred to SILEC operating territories, it would result in increased toll bypass in our territories. There would be no requirement for CLECs to pay the tariffed, Commission-approved, SILEC toll interconnection rates.

2288   The symmetry requirement of the Policy Direction must take a back seat where, as in this case, the Commission itself has recently considered and reinforced the SILEC toll regime and affirmed the importance of toll subsidy to SILECs. To permit CLECs and other telecom service providers to bypass the toll regime via Bill and Keep trunks would be completely inconsistent with the CRTC's 2010 decision.

2289   It is the JTF's position that all toll traffic, regardless of the source or the network configuration, must be terminated in accordance with the SILEC toll regime described earlier in this intervention.

2290   Local traffic in our EAS areas with the ILECs also raises an additional concern for the JTF in relation to our first and second Network Interconnection Principles.

2291   CLECs and WSPs operate in many of the ILEC's local interconnection regions that surround our operating territories, and customers of those CLECs and WSPs make local calls to our end customers. These calls are currently routed to the ILEC, which then forwards them to us over SILEC-ILEC local trunks.

2292   This approach is problematic for three reasons.

2293   First, it fails to recognize that SILEC operating territories are interconnection areas in their own right. Second, it impairs the ability of SILECs to police their own networks. And third, SILECs receive no compensation for the switching and aggregation costs associated with terminating local traffic on behalf of these companies on our networks.

2294   CLECs and WSPs are, of course, free to approach SILECs and negotiate direct interconnection agreements for the termination of this traffic on SILEC networks. However, experience has taught us that this is not their preferred option.

2295   JTF member companies are open to exploring other alternatives; however, some of these will require modifications to the SILEC-ILEC interconnection agreements and involve negotiations with our ILEC partners.

2296   We will now turn to the third of our Network Interconnection Principles; namely, that interconnection technologies must be chosen on a rational basis.

2297   Canadian carriers come in all shapes and sizes. From the perspective of the smaller companies, Bell Canada's or Rogers' choice for efficient and cost-effective interconnection technologies may be completely out of reach for smaller carriers.

2298   Newer technologies such as Internet Protocol come in many variations. To force simplification and consolidation of interconnection solutions solely to acknowledge the increased proliferation of IP technology is a solution in search of a problem.

2299   As the evolution of interconnection options continues, new options should pass the tests of improved sustainability and efficiency and should level the playing field in agreement negotiations to ensure the interests of the very smallest and the very largest companies are equally balanced.

2300   The SILECs believe that the volume of traffic forecasted to be exchanged between the SILEC and the interconnecting carrier should drive the technology choice for that particular interconnection. There should be no requirement to upgrade to fibre connections if copper infrastructure can accommodate forecasted traffic demand in the short to medium term. This matter should be left to negotiation between the carriers.

2301   MR. HOLMES: As we near the end of our presentation, we would like to summarize our proposals as follows.

2302   You should take the opportunity presented by this proceeding to plug the long-time "leaks" in the SILEC toll regime by imposing a condition of service on all TSPs that requires them to comply with the regime and give SILECs the tools to pursue any persistent offenders.

2303   You should ensure that WSPs wanting to offer services to SILEC end customers actually interconnect with the SILECs in the same way that they had to with the ILECs in order to access ILEC end customers.

2304   You should make wireless interconnection a prerequisite for wireless number portability.

2305   You should follow through on your recent efforts to ensure the integrity of the SILEC toll regime by prohibiting CLEC toll traffic from being routed to the SILEC's operating territories over Bill and Keep trunks.

2306   And finally, you should ensure that industry works together to ensure that CLEC and WSP local traffic is routed to our companies in a manner acceptable to the SILECs.

2307   Mr. Chairman and Commissioners, that constitutes the presentation by our panel on behalf of the 30 companies represented by the Canadian Independent Telephone Company Joint Task Force. Thank you very much.

2308   THE CHAIRPERSON: Thank you for your questions.

2309   You're referring to my discussion with Mr. Daniels yesterday, so can we look at that graph that I handed out yesterday? I think it's No. 2B. It's entitled the "JTF Proposal".

2310   If not, Madam Secretary, can you give them copies, please?

--- Pause

2311   MR. HOLMES: Yes, we have those.

2312   THE CHAIRPERSON: I think this is the situation we were discussing and with which you referred to in your opening submissions.

2313   And if I understand it correctly, the issue is that little wireless carrier in the small ILEC territory. He -- if he sets himself -- if the wireless gets a customer in that territory and that customer makes a call to somebody else in this ILEC territory, the way it would go right now, it goes to the wireless carrier switch and to the large ILEC, comes up to the small ILEC and then goes to its customer -- to the small ILEC's customer.

2314   And that's what you're -- now, if this -- and if I understand it, the real issue -- sorry. You're looking at the question. Did I go too fast?

2315   MR. HOLMES: It's 2B.

2316   THE CHAIRPERSON: 2B, yeah. Right. Sorry, no.

2317   It's 3B, then. My apologies. I'm looking at the wrong -- it helps if we look at the right one. It looks like this.

2318   It's entitled "JTF Proposal" in the top right-hand corner.

2319   MR. HOLMES: Okay, 3B. Okay.

2320   THE CHAIRPERSON: What number does it carry?

2321   THE SECRETARY: 3B.

2322   THE CHAIRPERSON: 3B. Sorry. Okay. Let me start again. 3B.

2323   We are now on the right page, at least.

2324   We'll look, and on the right-hand side you have a small ILEC territory and you have there a -- it's a cellular customer located -- obviously living in the small ILEC exchange.

2325   If he calls another person in the small ILEC area, if I understand it, what happens is the call goes from him to the wireless carrier switch to the ILEC -- large ILEC, then back to the small ILEC and then to the landline customer of the small ILEC.

2326   MR. HOLMES: That's correct.

2327   THE CHAIRPERSON: Right. And your problem is that if there's number portability and this small -- this wireless customer who used to be, before, a customer of the small ILEC, in effect, you have the cost of incurring this number portability, the wireless carrier takes advantage of it. He has now a customer in this area.

2328   But when there are any calls to that area, it goes through the large ILEC switch. There's no direct connection between the wireless carrier switch and the small ILEC switch and, in effect, you are -- have to bear the cost of number portability without getting anything out of it.

2329   That was my -- is my understanding of your issue here. If I got it wrong, here's your chance to correct it.

2330   MR. HOLMES: Thank you for the question.

2331   It actually goes back a step further than that, but in most instances in SILEC operating territories today SILEC -- or, sorry, WSPs have not even taken the initial step to interconnect to lease numbers and -- from our customers or from us to serve customers in our operating territory, so what happens most of the time is that WSPs get local numbers off the ILEC that work like local numbers in our operating territory and are able to effectively compete on that basis with us without having to interconnect with us.

2332   Now, when you talk about wireless number portability, that's a separate application process, but that kind of compounds the problem that there's no wireless interconnection initially in most cases and then we would have to implement WMP on top of that, so there would be no WMP without wireless network interconnection, which is different than how this has been applied in the large ILEC operating territories.

2333   THE CHAIRPERSON: You say in paragraph 41:

"In addition, Wireless Number Portability should not be imposed on a SILEC unless the WSP requesting portability is actually interconnected to the SILEC."

2334   So you do have an issue with number portability.

2335   MR. HOLMES: Yes, we do.

2336   It's about -- but it's half the picture.

2337   THE CHAIRPERSON: It's only half the picture.

2338   The main picture is that a wireless person can come in your territory, sell to persons located in your territory and serve them without going through you at all.

2339   MR. HOLMES: That's correct.

2340   THE CHAIRPERSON: And what is your proposed fix for this?

2341   MR. HOLMES: Our proposed fix is that if a wireless service provider wants to offer wireless services to our end customers, they should have to come and interconnect with us in exactly the same way that they had to in the large ILEC territory, so we're really looking for the WSPs to respect the sovereignty of our operating territories and we're looking for them to take a symmetrical approach with regards to how they had to do it in large ILEC territories.

2342   THE CHAIRPERSON: And assuming I buy your idea and we implement it, does that mean you actually have to establish a line or that just -- is this just an accounting so that you get compensated?

2343   I mean, is there some physical engineering required?

2344   MRS. de SOUSA: Mr. Chairman, I'd like, first of all, to make a point here.

2345   There are two situations for this -- the problem we are bringing to your attention.

2346   First of all, they are calls terminating to us, so they are calls from those either SILECs or wireless service providers terminating to our territories. In those cases, we are proposing that they either interconnect with us or they go through already established facilities that we have with the ILECs.

2347   Second problem is when they come --

2348   THE CHAIRPERSON: Stop. Stop right there.

2349   MRS. de SOUSA: On that graph here, they already have -- you already have something established for the ILECs. Why wouldn't they be going through --

2350   MRS. de SOUSA: It's a choice. They have the choice to either direct interconnect to us, the big red line you see there, or they could use the interconnection that's still there, already there between the large ILEC and the small ILEC and go through these facilities.

2351   THE CHAIRPERSON: But you do not want is that they go directly from their own wireless switch to the end customer. Is that the idea?

2352   In this ILEC territory.

2353   MRS. de SOUSA: Okay. The other --

2354   THE CHAIRPERSON: No, just help me out by looking at this --

2355   MRS. de SOUSA: Yeah, I'm trying to.

2356   THE CHAIRPERSON: -- at this diagram.

2357   MRS. de SOUSA: I'm trying to.

2358   THE CHAIRPERSON: If it's the wrong diagram, you tell me.

2359   If I understand it, you're worried about the line that goes from what's called wireless carrier switch to the little antenna that's located in the small ILEC territory. And that's the direct connection you don't like.

2360   You want them to go either through the red line or via the ILEC.

2361   MRS. de SOUSA: Exactly.

2362   THE CHAIRPERSON: Okay. Thank you.

2363   MRS. de SOUSA: Exactly.

2364   And the other question I was going to bring to your attention is that if a carrier wants to come and compete in our territory, we would like them not to ignore us as being an ILEC having their own territories. We have our switching, we have our network. And what we would like to have them is to treat us as an incumbent local exchange carrier.

2365   So in those cases, then they -- when they come and compete with us, we are asking them to interconnect with our cells at the same way they do with the large ILECs.

2366   So they have two choices. One, if they want to compete without local number portability, they would have access to us, services.

2367   If they want to compete with us and implement wireless number portability, they would then interconnect with us over Bill and Keep and fulfil all the SILEC obligations as per the 97-8 Decision.

2368   THE CHAIRPERSON: And presumably, the WSPs say why bother doing this; I can serve anybody in your cell territory going through the neighbouring ILEC.

2369   MR. HOLMES: Yes, they --

2370   THE CHAIRPERSON: So you're basically asking me to -- speaking as a WSP, you're asking the WSP to obtain additional -- incur additional costs which they don't need to in order to serve customers in your territory. That's really what it boils down to.

2371   From their point of view, obviously.

2372   MR. HOLMES: From their point of view, we actually heard this morning that -- I think it was Rogers said that there would have to be around 100 direct interconnections to facilitate this.

2373   As far as we can tell to reach out to all the SILECs in Canada, you'd be looking in the range of 40, so 100 was vastly over-stated.

2374   But yes, we would -- because we are ILECs, because we are responsible for running the networks that we have in our operating territories in ways that we can see the traffic flowing through them and police our networks, we would like to be respected as incumbent service providers in our own right. And if you want access to our end customers, then just in the same way it was applied to the large ILECs, they should come in and interconnect with us if they want to compete in our territories for our customers.

2375   THE CHAIRPERSON: But wouldn't the net result of this be that wireless customers in a small ILEC territory pay more than wireless customers in ILEC territory because there's an additional cost imposed?

2376   MR. HOLMES: That's a retail, I think, decision on the part of the WSP, so whether they absorb those costs because they're, you know, significantly larger, I think that would be up to them.

2377   THE CHAIRPERSON: So bottom line is you want to be treated like an ILEC.

2378   MR. HOLMES: That's correct.

2379   THE CHAIRPERSON: Take away the S, and you're happy.

2380   MR. HOLMES: Pardon me?

2381   THE CHAIRPERSON: Take away the S from SILECs and you're happy.

2382   MR. HOLMES: No. We like the fact we're small.

--- Rires

2383   THE CHAIRPERSON: Suzanne, you have some questions?

2384   COMMISSIONER LAMARRE: Yes, I have some questions, and thank you for getting through the chart instead of me having to do it. That makes it easier for me now.

2385   When you talk about -- a few points of clarification and then I'll move on with the questions of the regimes.

2386   When you talk about policing your network, what, exactly, do you mean? Do you actually mean monitoring it and knowing the traffic you have, being able to plan your expansion of networks, what?

2387   MR. HOLMES: I'll ask Ian to comment on that.

2388   MR. STEVENS: One of our concerns, and we highlight it several times, is toll bypass, so something we want to police for is carriers sending toll down local trunk groups into our network so that we can get the revenue that we deserve or that we're entitled to under our current toll regime so that as an example of why we want to police our networks to make sure things are routed to us properly so we can get the revenue that the regime provides for us.

2389   COMMISSIONER LAMARRE: Okay. So you want to be able to monitor it.

2390   But as far as you're giving the example of toll calls, but I get the feeling from your presentation you feel that we fixed that with the 2010 decision, or not.

2391   MR. HOLMES: I think it was a partial fix. I think you dealt with the issue of CLEC toll traffic coming over local transit trunks.

2392   There are examples of other types of traffic that are still coming over the DSA trunks, toll calls, that we think still need to be addressed and treated as toll calls.

2393   COMMISSIONER LAMARRE: Okay. And when you're talking about the WSP operating out of your territory in a position to calls being terminated in your territory, you're really talking about calls being -- originating from your territory. Is that what you're talking about when you say "operate from our territory"?

2394   MRS. de SOUSA: That means that the call is originated outside our territories. When they terminate to our territories.

2395   COMMISSIONER LAMARRE: But when you say that a WSP operates within your territory --

2396   MRS. de SOUSA: They are originating in our territories.

2397   COMMISSIONER LAMARRE: Okay. So physically, the person with the handset is within your territory.

2398   MRS. de SOUSA: Exactly.

2399   COMMISSIONER LAMARRE: Okay. So I get the point that you want -- the reasons why you want the interconnection and why it may happen. And I get your point that if WSP wants to interconnect with the SILECs so that they compete with the SILECs for the clients that it's not 100; it's a little bit over 40. I get that, too.

2400   But there's more than WSP in Canada, so if -- take an example that, you know, I know could happen in Quebec which you could -- you may have Vidéotron, you may have TELUS as a WSP. You may have another new entrant that comes in.

2401   So that means that all three would need to interconnect, times 40 if they want to deal with all the territories.

2402   So correct me if I'm wrong, but the way I see this is really a question of managing the traffic within your territory and making sure you get compensated correctly for it. Is that it?

2403   MR. HOLMES: That would solve a couple of the problems.

2404   One -- the other problem, of course, is recognition, so we don't have any separate interconnection agreements with these companies, recognized agreements between the two. We think that would need to be in place as well.

2405   COMMISSIONER LAMARRE: Okay. So to follow up on what the Chairman was saying is that there are technical solutions to what you're asking. If an accounting solution was cheaper and could achieve the same thing, would you be agreeable to it?

2406   MRS. de SOUSA: We have discussed about this, and we would agree that we should maybe provide a way to have consolidated POIs, but that we are willing to sit with those companies and think about solutions in order to achieve this.

2407   COMMISSIONER LAMARRE: Okay. But basically, what you are saying also, and it goes to the wireless number portability, is that you have the responsibility for the obligation to serve within that territory and, therefore, it comes with responsibilities, but also with the right for being compensated for what comes into your and comes out of your territory?

2408   MR. HOLMES: That is right, compensation, cost recovery, yes.

2409   COMMISSIONER LAMARRE: Okay.

2410   Now, on a couple of other points. You have mentioned that a few of the companies that you represent have agreements with WSPs. Have you filed that as part of the interrogatories?

2411   MR. HOLMES: I believe our initial evidence identified I think there is six SILECs who have --

2412   COMMISSIONER LAMARRE: Okay. I seem to remember reading it also, but I just wanted to make sure.

2413   Now, when you are talking about fixing the leak, about the toll regime. And you are talking about the SILEC, if the SILECs believe that the toll bypass is still occurring, then you would be able to ask a report from the ILEC.

2414   Now, believing that there may be toll by pass, that is a small burden. So how would we get to that? Like, shouldn't there be a criteria for you to initiate that since you are talking about the conditions of service here?

2415   MR. HOLMES: If I understand your question, so you would be looking like a certain level --

2416   COMMISSIONER LAMARRE: Yes, something like that.

2417   MR. HOLMES: -- certain number of minutes of toll bypass?

2418   COMMISSIONER LAMARRE: Because here you are talking about suspicions, correct?

2419   MR. HOLMES: Yes.

2420   COMMISSIONER LAMARRE: So what would make you suspect that there is bypass?

2421   MRS. de SOUSA: It could be a drop on the minutes that are being terminated. Now, a very big drop of minutes being terminated in those trunk groups could be a sign that maybe there is toll bypass happening.

2422   COMMISSIONER LAMARRE: Okay.

2423   MR. BANKS: Another example, for instance, is receiving a telephone call say from the Ottawa/Gatineau area that appears on my call display as a local phone call, that is kind of an indication that it is happening.

2424   COMMISSIONER LAMARRE: Okay.

2425   And then if you were to ask the report and, in the end, the suspicions were unfounded, then you would agree to the conditions that you incur the cost of producing that report?

2426   MR. HOLMES: That is right, yes. Yes, that is reasonable. You know, if we ask and there is nothing there, then we would be willing to pay for the report. We haven't discussed creation of the report or ordering the report with Bell yet, but we thought amongst ourselves that this would be one way to address the situation.

2427   COMMISSIONER LAMARRE: Okay. Let me just make sure. Okay.

2428   In paragraph 51 of your presentation you say that:

"CLECs and WSPs are free to approach SILECs and negotiate direct interconnection agreements for determination of this traffic on SILECs' networks. However, experience has taught us that this is not a preferred option." (As Read)

2429   You say you are open to exploring other alternatives.

2430   And then you go on to say that:

"Those alternatives would require modification to the SILEC/ILEC interconnection agreement." (As Read)

2431   So what alternatives are we talking about here and what modifications are we talking about?

2432   MR. HOLMES: If I could just clarify exactly what kind of traffic we are talking about here. We are not talking about toll traffic, we are talking about --

2433   COMMISSIONER LAMARRE: Local?

2434   MR. HOLMES: -- local traffic --

2435   COMMISSIONER LAMARRE: Okay.

2436   MR. HOLMES: -- in EAS area, in our operating territories that are -- it is currently being sent to us over the SILEC/ILEC interconnection trunks that we have. So in terms of modification --

2437   COMMISSIONER LAMARRE: Within the local exchange?

2438   MR. HOLMES: Within the local calling area, the EAS area.

2439   COMMISSIONER LAMARRE: Within the local calling area, okay.

2440   MR. HOLMES: So in terms of the modification, right now the agreements that we have with the ILECs don't contemplate this type of traffic, from third-party service providers. We would be interested in and willing to begin talking with the ILEC to accommodate that kind of traffic and to ensure it is routed in a recognized manner.

2441   COMMISSIONER LAMARRE: And how would that be done?

2442   MRS. de SOUSA: It would be done by establishing different trunk groups. For instance, inside those physical facilities.

2443   COMMISSIONER LAMARRE: Okay, thank you for that.

2444   Those are all my questions. Thank you.

2445   THE CHAIRPERSON: Candice?

2446   COMMISSIONER MOLNAR: Yes, thanks.

2447   I want to make sure I understand this issue on wireless interconnection.

2448   I am anticipating wireless services have been available in your territories for what, 15 plus years? Would that be true?

2449   So is this issue a new issue, a growing issue? I mean, for the last 15 years have they been transiting the traffic to you through the ILEC's connection or has something changed?

2450   MR. STEVENS: I don't think anything has changed, they have been doing it for 15 years.

2451   I think in terms of how the traffic flows, one change that has happened is we have been ordered or a decision came out to say that for wireless number portability the wire search provider did not have to interconnect with us, that they could interconnect with Bell and port numbers in and out of our territories.

2452   And this has raised a really big red flag for us and has brought this issue forward and we have thought long and hard, and it is just not the right thing to do in our networks and to recognize our territory.

2453   THE CHAIRPERSON: You are asking us to review and vary that decision?

2454   MR. HOLMES: Yes --

2455   THE CHAIRPERSON: Obviously you are asking us here today, here, to reverse a decision, in that effect. Did you at that time ask -- file a review and vary?

2456   MR. HOLMES: No, we haven't done it. We have been thinking about this, and this proceeding represents probably the first and best opportunity that we have had to address it.

2457   Oh, pardon me, I think we raised it in the obligation to serve proceeding last year. But you concluded that there wasn't enough evidence on the record to address it. So we thought we would include it in this proceeding.

2458   COMMISSIONER MOLNAR: I have one more question.

2459   You know, when you were talking to the Chair, the Chair said, "Well, you want to be treated like an ILEC and not a SILEC." And you said, "No, I want to be a SILEC." You know, there are special considerations made available to you as it regards local competition; cost recovery as it regards subsidy and so on.

2460   So, to me, you need to pick a ditch. So which one do you want to be? Do you want to be treated like a SILEC or an ILEC?

2461   MR. HOLMES: Depends.

2462   COMMISSIONER MOLNAR: Well, but -- I know.

--- Pause

2463   MR. HOLMES: I think the answer to that is, we want to be treated as SILECs. We offer service in rural areas and high-cost serving areas. And we need recognition of the fact that our networks are distinct and not just merely extensions of the ILEC networks.

2464   So the fact that we are asking for symmetry in terms of how interconnection regimes are applied doesn't necessarily, I don't think, mean that we want to be ILECs, but we are looking for -- and it gets down to the question of competitive advantage too.

2465   We sense that, in relation to the problems we have discussed with you, the ILECs have a competitive advantage in that, you know, the WSPs have to directly interconnect with them, there is opportunity for cost recovery that we haven't had. So --

2466   COMMISSIONER MOLNAR: Okay. Just so I am sure, what is the competitive advantage? So you are not competing with the ILECs, while you said here you are not representing your CLEC operations, you are simply going to look at yourself as an ILEC. So what competitive advantage are you discussing here?

2467   MR. HOLMES: I think it's the comparison between how wireless interconnection was mandated in the large ILEC territories, versus the fact that it hasn't been mandated in our territory.

2468   So Bell, or the ILECs, are recognized as incumbent carriers whose networks the WSPs have to interconnect with and contribute to cost recovery for handling that traffic. We haven't been recognized as that and we haven't had the opportunity for cost recovery either.

2469   COMMISSIONER MOLNAR: Those are my questions.

2470   THE CHAIRPERSON: Let me ask you a couple of clean-up questions. You have now twice said that, and it says so in paragraph 36, saying, "WSPs have always been required to interconnect with large ILEC networks in order to offer services in their ILEC territories."

2471   My staff sends me a note, there is no such obligation.

2472   MR. HOLMES: Pardon me? Could you repeat the question?

2473   THE CHAIRPERSON: Paragraph 36 --

2474   MR. HOLMES: Thirty-six?

2475   THE CHAIRPERSON: -- 36, second sentence, "WSPS have always been required to interconnect with large ILEC networks in order to offer their services in ILEC territories."

2476   And I have a note here from staff saying there is no such requirements.

2477   I mean, they do it obviously for commercial reasons. But you are saying in 36 that obligation exists vis à vis ILECs, it should exist vis à vis SILECS. My staff tells me there is no such obligation.

2478   MR. HOLMES: I think if you go back to the original decisions back in the 1980s that setup wireless interconnection, that was how WSPs could interconnect with the ILECs if they wanted to compete.

2479   So the WSPs would say to the ILECs, of course I want your end-customers. And the ILECs filed the tariffs for WAS service that wireless carriers had to subscribe to if they wanted access.

2480   So I guess, you know, in terms of a requirement, the Commission is saying to the WSPs, you have to interconnect with them, I agree with you. It has never been a mandate. But it's been a condition, that if the WSPs want access to ILEC customers they have had to interconnect and subscribe to the tariffs.

2481   THE CHAIRPERSON: And you want that same condition applied to customers and SILECs?

2482   MR. HOLMES: If they want to compete for our customers and in our service territories, yes.

2483   THE CHAIRPERSON: Well, then explain to me what paragraph 27 says. I have read it now a couple of times and I am not quite sure I know what you are getting at.

2484   MR. HOLMES: That was paragraph 37?

2485   THE CHAIRPERSON: Twenty-seven.

2486   MR. HOLMES: Twenty-seven.

2487   THE CHAIRPERSON: "Leveraging EAS and determining toll calls in SILEC operating territories without any compensation to SILECs."

2488   How do you do that?

2489   MR. STEVENS: An example of how would be by a PRI in a neighbouring ILEC exchange, put a computer on it and hook it over the network to maybe Vancouver and you build a little private network that you can take a call from Vancouver and dump it over the EAS pattern of the neighbouring incumbent into our territories.

2490   It is a toll bypass technology.

2491   THE CHAIRPERSON: Madam Secretary, I have a drawing here which explains what EAS transports are and local transits...

2492   I am going to give it to you and, maybe with the help of this diagram, you can explain how this works.

2493   This will be now I guess Exhibit No. 4.

--- Pause

2494   THE CHAIRPERSON: Obviously, you have to add the SILECs to this diagram somewhere. Do that and tell me where you do it, and then explain to me how this works.

2495   MR. STEVENS: So in this diagram I would suggest the SILEC is the cloud to the bottom left. The dotted area, the LIR, would be an incumbent LIR. We are not part of their LIRs.

2496   THE CHAIRPERSON: Right, right.

2497   MR. STEVENS: So, as you see, there are ways to get phone calls over -- between the ILEC switches and our territories, the black lines.

2498   THE CHAIRPERSON: M'hmm.

2499   MR. HOLMES: So we are suggesting in 27 there are toll calls coming across those black lines, and that can be achieved -- previously to 2010-9-08 the SILEC was able to take a toll call from their network, push it to the ILEC switch through either the transit or transport trunks. And then send the call to the SILEC over the black line, our ILEC/LEC -- ILEC/SILEC EAS trunks.

2500   Since --

2501   THE CHAIRPERSON: Rather than going directly to you, that is --

2502   MR. STEVENS: Rather than going directly to us.

2503   THE CHAIRPERSON: So that is what you are talking about.

2504   MR. STEVENS: Yes.

2505   THE CHAIRPERSON: And you have no ability to stop that right now?

2506   MR. STEVENS: We have no ability to stop that right now. We believe, in our networks, Bell is the only people that have the ability to police that, and they have been restricted from doing so.

2507   THE CHAIRPERSON: Bell has been restricted from doing so?

2508   MR. STEVENS: Yes. They can't block calls.

2509   THE CHAIRPERSON: Right. So who is the villain here? It is not Bell, it is not you, it is the interexchange carrier?

2510   MR. STEVENS: It is TSPs who have found a way to avoid paying our toll interconnection rates.

2511   THE CHAIRPERSON: And how do you suggest -- I mean, assuming this exists and let's say for argument's sake Bell verifies it does exist, what is the cure that you are suggesting?

2512   MR. HOLMES: We would be looking to you to make an order to all TSPs, so that would be carriers and resellers, that if they don't want to come and interconnect with us to terminate traffic, that you basically carryon the approach that you took in 2010-9-08 and order them or direct them to subscribe to a Bell Canada toll service, which compensates us appropriately for toll purposes and route the traffic though Bell to us.

2513   THE CHAIRPERSON: And have you established this? Do you know it is happening? Do you know the quantity or something or you assume or have you statistically figured out this must be happening or what is the state of evidentiary proof here?

2514   MR. BANKS: I guess, again, I could say that we have seen the calls come through, appearing as local numbers, knowing that the originator was not a local call, that it was a toll call. So you can see it on call display, it comes in as a local number and, surprisingly enough, the person is not in an area that would be a local call.

2515   THE CHAIRPERSON: And as to the quantum?

2516   MR. BANKS: The quantity would be something that we would look for this report to develop and show us what it is.

2517   MR. HOLMES: We don't know what the quantity is right now.

2518   THE CHAIRPERSON: And lastly, before you was Rogers and Rogers put a very straightforward proposal on the table, especially in terms of IP interconnection, and suggesting basically, you know, leave it up to the ILECs to decide when they want to convert to IP, but when they do that they make it available to everybody, et cetera.

2519   What did you think of their proposal?

2520   MRS. de SOUSA: Yes, the JTF thinks that this conversion will happen naturally as the market evolves. I think some of the parties have come with this announcement of GENBAND, announcing the end of support of all the DMS and DCO platforms by end of 2016.

2521   So we believe that as this will happen not all, but most of the companies, will migrate to IP technologies. Although, we strongly believe that the use of TDM to IP or IP to TDM conversion will still be needed.

2522   So as we migrate to those platforms we will then be able to provide IP interconnection, but we will also make sure that TDM conversion will be still available because we don't believe that in a short-time future the TDM will be erased from the networks.

2523   THE CHAIRPERSON: I am not too sure of what the answer is. Are you in favour of us adopting the Roger's proposal or not?

2524   MRS. de SOUSA: We are not in favour of the Commission mandating IP to IP interconnection.

2525   THE CHAIRPERSON: Okay, but Roger's proposal is slightly different from mandating, it just says when it is there you have to share it. And what is the downside that you see with Roger's proposal?

2526   MR. BANKS: I don't think they defined exactly what they meant by IP is there. So it would be interesting to see exactly what they were meaning by that.

2527   Did they mean IP is available in the switching platform? Is it available --

2528   THE CHAIRPERSON: It is where you offer it. Will you please ask them that question on Monday? But I thought I heard them very clearly say where they have an IP interconnection arrangement with some other party, then you must make it available to everybody. So that seemed, to me, pretty clear.

2529   So if you offer IP interconnection let's say to a foreign carrier or to a SILEC or something or maybe even to your own wireless arm, then you have to offer it to others too. And their argument being, you know, you are doing it anyway, do it in an indiscriminative basis and this would sort of accelerate and hopefully...

2530   The adoption of IP without it being mandatory, you make the decision on your own business case or something if you are the ILECs, whether you want to do it. But you realize when you do it, you have to do it for everybody.

2531   And I don't see what would be the downside for the SILECs, that is why I am asking you the questions.

2532   MR. STEVENS: I guess in terms of where the interconnection looks the same, it makes sense. We heard earlier that some carriers are doing -- wireless carriers have the same technology in place and it makes it fairly easy to happen.

2533   Our own experience with IP in terms of my company is, you know, SIP from one provider to another provider doesn't work. If you get SIP working between two different vendors, you bring a third one in, it won't always work.

2534   So to say that once IP is in place, you have to make it work across every vendor's platform, I think it is a bit hasty when you might not be able to make it work between a vendor that you haven't worked with in the past.

2535   THE CHAIRPERSON: Okay. I guess we are going to have more questions on that in the rebuttal phase.

2536   Thank you very much, those are all our questions.

2537   I think that is it for today, Madame le Secrétaire?

2538   THE SECRETARY: Yes, Mr. Chairman.

2539   THE CHAIRPERSON: And we start tomorrow morning at..?

2540   THE SECRETARY: 9:00 a.m.

--- L'audience est ajournée à 1435, pour reprendre le mercredi 26 octobre 2011 à 0900

STÉNOGRAPHES

Johanne Morin

Karen Paré

Jennifer Cheslock

Monique Mahoney

Date de modification :

2011-10-25