NorthwesTel is going to have to have to justify the rates it charges competitors for access to its fibre-optic network.
In a ruling this week, the Canadian Radio-television Telecommunications Commission ordered the telco to produce a cost study for its V-Connect service.
That service provides a raw fibre-optic link to the south. It’s the only one in the North.
This is the second time that the commission has ordered this same cost study to be done. The first time was back in January
Prompted by a request from SSi Micro, a Yellowknife-based Internet provider, the CRTC, after months collecting comments and deliberations, ordered NorthwesTel to do the cost study.
In its filings to the commission, SSi argued that NorthwesTel was abusing its monopoly position and stifling competition by charging exorbitant rates for wholesale Internet services.
SSi was confident that NorthwesTel would have a difficult time proving its rates were reasonable, said Dean Proctor, the chief development officer for SSi.
“When your rates are 30 times higher than what they are in the South, how could that possibly be backed up by any cost study?” he said at the time.
SSi wasn’t alone in urging the commission to look into the rates.
“Yukon customers are being disadvantaged now, and will suffer further in the future through the lack of innovation and choice,” the Yukon government said in its submission to the CRTC. It also noted that in 1997 there were 19 different Internet providers operating in the territory. Today there is only one, NorthwesTel.
That lack of competition was a direct result of NorthwesTel’s pricing structure, said Proctor.
NorthwesTel appealed that decision, arguing that in a previous decision the CRTC had exempted data packet services like V-Connect from regulation.
Bell Canada, SaskTel and Telus all made submissions to the regulator in support of NorthwesTel’s appeal. The telcos were concerned that the commission’s decision to regulate V-Connect could be used to regulate their own data packet services.
Instead of providing a cost study, NorthwesTel proposed a new wholesale Internet transport service as an alternative to V-Connect.
That initial proposal was rebuked by SSi. The new service was only available as a link from Yellowknife to Edmonton and it didn’t offer any quality-of-service guarantees, something vital to transferring voice traffic.
“It’s not what we asked for and it’s not what the commission asked for them to provide,” said Proctor at the time. “They made this up out of nowhere.”
NorthwesTel went back to the drawing board, consulted with SSi and came up with a new service, Wholesale Connect.
While Wholesale Connect did meet SSi’s technical needs, the rates NorthwesTel wants to charge for it remain an issue.
They still have yet to be approved by the commission, but Proctor said NorthwesTel’s proposed rates for Wholesale connect are five to six times higher than what it’s charging for retail service.
But NorthwesTel disputes that figure.
“Our rates are nowhere near that high,” said Curtis Shaw, NorthwesTel’s vice-president of marketing.
Without reasonable rates for backbone connectivity, competition in the North wont happen, said Proctor.
Internet providers like SSi Micro and cellphone carriers like Ice Wireless need to be able to get information out of the North. Right now the only way to so that is through NorthwesTel’s fibre-optic network or by through even more expensive satellite connections.
The CRTC is has yet to make a ruling on the rates for Wholesale Connect. But now it’s a moot point anyway, said the CRTC in its decision this week.
“The commission is not persuaded at this time that Wholesale Connect service will enable competition sufficient to forbear from the regulation of V-Connect service.”
That means that it doesn’t matter how good Wholesale Connect is, NorthwesTel has to comply with the original ruling and come up with a cost study for it’s V-Connect service.
The CRTC gave the telco 30 days to comply with its decision.
NorthwesTel is working on putting the cost study together, said Curtis.
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