Intervention: TekSavvy Solutions Inc.

Document Name: 2015-134.224036.2397989.Intervention(1f#@t01!).doc
(
TekSavvy Solutions Inc
800 **** Street
TELEPHONE
+1
519
360
-
1575
FAX
*-***-***-****
Chatham ON *** ***
TOLL FREE
877-779-
1575
teksavvy.com
)
[bookmark: _GoBack]
Filed via My CRTC Account
Mr. John Traversy, Secretary General
Canadian Radio-television and Telecommunications Commission
1 Promenade du Portage
Gatineau, Quebec *** ***
14 July 2015
RE: Review of basic telecommunications services, Telecom Notice of Consultation CRTC 2015-134, 9 **** 2015 (“TNC 2015-134” or the “Notice”)
**** Mr. Traversy:
TekSavvy Solutions Inc. (“TekSavvy”) is an independent broadband and voice services provider based in Chatham, Ontario, and Gatineau, Quebec, which provides
· fixed-wireless broadband access within a growing number of underserved communities in southwestern Ontario, and
· Internet and voice services—over its own fixed wireless access and, in much larger numbers, over wholesale network access provided by third parties.
TekSavvy’s affiliate, **** Cable Vision Ltd., is a cable carrier operating in **** County, Ontario. It provides:
· coaxial-cable wireline broadband access in the village of Madoc, and
· Internet and voice services over its broadband access network.
We request to appear at the public hearing.

TekSavvy strongly supports the Commission’s efforts, in this proceeding initiated by TNC 2015-134, to identify the basic telecommunications services to which Canadians’ continued access ought to be supported by a fund to which telecommunications service providers are required to contribute. This proceeding represents a significant opportunity to redefine and update the Basic Service Objective set out in 1999—which empowered consumers by mandating data transmission access allowing a choice of Internet Service Providers (“ISPs”), but did so only in respect of narrowband communications.

Below, TekSavvy responds to certain of the questions posed in the Notice. However, at the heart of TekSavvy’s submissions is its request that the Commission continue to recognize the distinction between broadband access and the Internet service whose access it permits, and confine subsidy to the former by mandating the capability for Canadians to connect to the Internet via high-speed data transmission made available, where feasible, at reasonable wholesale rates. We have also suggested, among other measures, that the Commission: adopt discoverability and market regulation measures before subsidizing transport facilities; and make a small but critical change to how it calculates contribution by restricting its application to those Canadian Telecommunications Services Revenues that, for a TSP and its affiliates, exceed $10 million.

[bookmark: _Ref424661861]As instructed by the Notice’s paragraph 38 and its preamble to Appendix B, TekSavvy’s submissions are structured according to the topics and questions identified in that appendix. They are in the order in which Appendix B presents them. They make reference to the Canadian telecommunications policy objectives set out in section 7 of the Telecommunications Act (“Act”)[footnoteRef:1] and seek to take into consideration the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives (“Policy Direction”).[footnoteRef:2] [1: S.C. 1993, c. 38.] [2: SOR/2006-355.] Commission’s role regarding access to basic telecom services (Q3-Q7)

Q3 Which services should be considered by the Commission as basic telecommunications services necessary for Canadians to be able to meaningfully participate in the digital economy? Explain why.

TekSavvy does not have particular expertise as to which basic telecommunications services are necessary for Canadians to be able to meaningfully participate in the digital society, including the digital economy.

However, we do underline the distinction between Internet service, a connectivity service delivered over physical broadband access; and broadband access itself.

Subject to our review of the submissions of consumer groups and others with expertise in this matter, we respectfully suggest that both Internet service and broadband access are required to be able to meaningfully participate in the digital economy:

· Internet service is required in order to access or fully participate in a range of key services, including government services, banking, education, and—critically—a growing swathe of social life.

· Broadband access is required in order to receive Internet service at a speed that provides for the full range of applications.

**** of these are basic telecommunications services that are likely necessary to participate in the digital economy. But TekSavvy has submitted in its response to question 13 of the Notice that the Commission ought to use its powers under section 46.5 of the Act to help subsidize only one of these: broadband access. However, the Commission ought to do so in a manner that ensures that consumers can access competing Internet services, as the 1999 Basic Service Objective provided for, and as any updated Basic Service Objective ought similarly to provide for.

a. Explain whether the underlying technology (e.g. cable, digital subscriber line, fibre, fixed wireless, mobile wireless, and satellite technology) should be a factor in defining whether a telecommunications service should be considered a basic service.

The underlying technology ought not be considered a factor in defining whether a telecommunications service is the kind of basic service that is essential for participation in the digital economy. But different technologies have different capabilities with respect to the characteristics canvassed in question 1(b) of the Notice. For instance, a high-latency service like geostationary satellite may not be capable of supporting gaming, including educational gaming, or even certain voice services. What is more, different technologies have different levels of upgradability—some may require a wholesale refitting in order to achieve higher speeds; others may simply require that boxes be changed up at a fibre path’s endsTechnology’s performance capabilities and its upgradability should certainly be considered in defining whether a telecommunications service is the kind of basic service that is essential for participation in the digital economy.

c. What should be the prices for basic telecommunications services and how should these prices be determined? Provide rationale to support your answer.

Basic telecommunications services should be made available at just and reasonable rates: subsection 27(1) of the Act requires this, even if the Commission has the power to forebear from acting to enforce such rates.

Where a competitive market in respect of a service functions to support such availability, then the market should decide that service’s rates. However, in many situations in which a competitive market does not exist, section 34 of the Act does not provide for the Commission to forbear from rate regulation.

In such situations, we respectfully submit that the Commission should prefer wholesale to retail regulation.

Q4 Can market forces and government funding be relied on to ensure that all Canadians have access to basic telecommunications services? What are the roles of the private sector and the various levels of government (federal, provincial, territorial, and municipal) in ensuring that investment in telecommunications infrastructure results in the availability of modern telecommunications services to all Canadians?

Market forces and government funding have not, thus far, ensured that all Canadians have access to the range of reliable high-speed, low-latency telecommunications services that support participation in the digital economy.

The private sector has an important role to play in securing such access. But where market competition is insufficient to drive prices down to long-run incremental costs, such as with respect to services that rely on bottleneck facilities, the Commission can help enable private-sector competition through judicious, minimally-intrusive regulation.

In this regard, for instance, TekSavvy recalls the Commission’s mandating of a price-regulated “small basic” service with respect to television.[footnoteRef:3] Such a service is a combination of a network access and a data service, and both TekSavvy and other parties submitted in that proceeding that no retail service should be regulated at a rate that is lower than the wholesale cost of providing it. The same is true of telecommunications services, like high-speed Internet over broadband. The Commission has spent considerable time ensuring a competitive market for retail Internet service. Competition is the best way to discipline prices, incent quality and product differentiation, and ensure broad access; the Commission can help enable such competition by ensuring that the rates it sets for wholesale services accurately reflect long-run incremental costing., [3: A World of Choice - A roadmap to maximize choice for TV viewers and to foster a healthy, dynamic TV market, Broadcasting Regulatory Policy CRTC 2015-96, 19 **** 2015, paragraphs 16-25.] The various levels of government have an important role to play, too. Section 46.5 of the Telecommunications Act allows the Commission to require that TSPs contribute to a fund to support continuing access to basic telecommunications services, but that section does not require that TSPs be the only contributors. When the Canada Media Fund was announced in 2009, it carried forward the CRTC’s proposal to split the fund between public and private streams.[footnoteRef:4] There is no reason that the Commission could not similarly recommend a Canada Broadband Fund, and proceed to mandate the funding of its private stream up to the level set out in the Commission’s recommendation. [4: CRTC Report to the Minister of Canadian Heritage on the Canadian Television Fund, Response to P.C. 2008-289, May 2008; Hon. **** Moore, “Canada Media Fund” (speech), 9 **** 2009 (online: ).] Q5 What should be the Commission’s role in ensuring the availability of basic telecommunications services to all Canadians? What action, if any, should the Commission take where Canadians do not have access to telecommunications services that are considered to be basic services?

The Commission’s first role in ensuring the availability of basic telecommunications services to all Canadians, even before subsidies are broached, is a monitoring function. The Commission ought to act as the central repository and distributor of information regarding the degree to which different communities are adequately served or underserved—both with respect to availability, which disproportionately affects rural Canadians; and with respect to pricing, which disproportionately affects poor Canadians.

Then, where Canadians do not have access to basic telecommunications services to which the Commission considers Canadians ought to have access, the Policy Direction requires that the Commission first consider what the minimum level of intervention is that is required in order to enable such access.

Where high-speed Internet service is unavailable or unaffordable, for instance, the missing element may be broadband access and transport—not the Internet service that can be accessed over it. If acting to make available only the missing network element at one layer would remedy the absence at another layer, then the Commission is required to confine its action to the lower-layer service, so as to “interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives.”[footnoteRef:5] [5: Policy Direction, sub-paragraph 1(a)(ii).] Regulatory measures for basic telecommunications services (Q8-Q13)

Q8 What changes, if any, should be made to the obligation to serve and the basic service objective?
The Basic Service Objective established in 1999 consists of:
· individual line local touch-tone service;
· capability to connect to the Internet via low-speed data transmission at local rates;

· access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service; and· a printed copy of the current local telephone directory upon request.

Much has changed since 1999. Internet access, not touch-tone PSTN access, is the service that enables participation in the digital society and its digital economy. “Low-speed data transmission” means something much faster to most ordinary citizens. Access to long-distance is easily had over the Internet. Local telephone directories, to the extent they still exist, have migrated to the Web—and “information location tools”[footnoteRef:6] like Duckduckgo and Google that bring end-users to directories like Facebook and Instagram have in many cases supplanted them. [6: Copyright Act, R.S.C. 1985, c. C-42, subsection 41.27(5)] Yet certain elements of the Basic Service Objective remain no less important today than in 1999. The Basic Service Objective did not lock in a vertically-integrated model or prevent consumers from the ability to choose their provider. Rather, the 1999 objective separated out the capability to connect to the Internet, from the provider of the network access service over which the consumer would do so.

The Basic Service Objective should now be modified. But we urge the Commission to do so in a way that does not disempower consumers. It must not lock them into a vertically-integrated model that ties communications services, like Internet service, to the broadband access provider over which it is delivered.

TekSavvy therefore proposes that the Basic Service Objective be updated as follows:
· individual line local broadbandtouch-tone service; and
· capability to connect to the Internet via highlow-speed data transmission made available, where feasible, at reasonable wholesalelocal rates;

· access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service; and· a printed copy of the current local telephone directory upon request.

In clean text:
· individual line local broadband service; and
· capability to connect to the Internet via high-speed data transmission made available, where feasible, at reasonable wholesale rates.

“Individual line broadband” service simply refers to the delivery of broadband network access to a premise, over any technology—whether based on DSL over twisted-pair cable, DOCSIS over coaxial cable, fibre, fixed-wireless, or otherwise.

The capability to connect to the Internet, made available at reasonable wholesale rates, is the key to making that individual-line broadband useful. There is no reason to mandate a vertically-integrated model that locks consumers into the services provided by their physical network access provider. Indeed, it is that physical network access—not the Internet or other services provided through it—that constitutes the hard-to-fund bottleneck.

At the same time, TekSavvy recognizes that smaller providers have frequently been exempted from such requirements because they lack the scale to support wholesale services. That is why we have inserted “where feasible” into the proposed Basic Service Objective. In particular, while such a determination ought to fall to the Commission and would benefit from the views of other interveners, we propose that network access providers which, together with their affiliates, reach less than 25,000 residences, businesses and institutional campuses, and other locations with broadband access, they may not have the necessary scale.

Finally, the Commission need not retain the final two, PSTN-specific portions of the Basic Service Objective. Access to the long-distance network, operator/directory assistance services, enhanced calling and privacy protection features, emergency services, as well as voice message relay service, are important. But many of these services remain mandated as a component of providing voice services, and they are available from competing providers, over Internet service, which itself is available from competing providers over broadband. Going forward, the Commission may decide to mandate some of these services as a component of providing Internet services, or even as a component of providing broadband access. But it is achieving the Basic Service Objective that would let the Commission do so.

Q9 Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?
TekSavvy respectfully notes that broadband access and Internet service are distinct from one another.

Each of them is a basic telecommunications service, because each one offers a “pure transmission capability over a communications path that is virtually transparent in terms of its interaction with subscriber-supplied information”.[footnoteRef:7] The matter to be decided is which ought to be subsidized. [7: Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984, II.C.1 (“A basic service should be limited to the offering of transmission capacity between two or more points suitable for a subscriber's transmission needs and subject only to the technical parameters of fidelity or distortion criteria, or other conditioning. Use internal to the service provider's facility of companding techniques, bandwidth compression techniques, circuit switching, message or packet switching, error control or other techniques that facilitate economical, reliable movement of information does not alter the nature of the basic service.”). Arguably, broadband access is a point-to-point service that clearly meets the definition of a basic service, whereas Internet service is an end-to-end service that does not do so as clearly. ] In proposing that the Basic Service Object be revised as set out above, TekSavvy has proposed that broadband access should be subsidized, but that Internet service need not be.

Q11 What changes, if any, should be made to the contribution collection mechanism? Your response should address, with supporting rationale, which TSPs should be required to contribute to the NCF, which revenues should be contribution-eligible and which revenues, if any, should be excluded from the calculation of contribution-eligible revenues.

At present, TSPs are required to contribute to the NCF where there Canadian Telecommunications Services Revenues (“CTSRs”), after deductions, exceed $10 million. Intercarrier payments used to provide internal or contribution-eligible services are not themselves contribution-eligible, in order to prevent the revenues from resold services being assessed contribution more than once.[footnoteRef:8] Retail Internet service revenues are not contribution-eligible, either.[footnoteRef:9] [8: Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000, paragraphs 94-96.] [9: Ibid.; Regulatory framework for voice communication services using Internet Protocol, Telecom Decision CRTC 2005-28, 12 May 2005, as amended by Telecom Decision CRTC 2005-28-1, 30 **** 2005 (in respect of VoIP-over-Internet).] First, TekSavvy respectfully submits that the current approach under which TSPs pay no contribution when their CTSRs are below $10 million, but pay contribution on all of their CTSRs if they exceed $10 million, is an unsatisfactory one. This creates significant uncertainty for smaller competitors who hover around that threshold, and do not know until end-of-year whether they will pay contribution in respect of that year or not—compromising Canadian telecommunications’ competitiveness and challenging the system’s orderly development.[footnoteRef:10] [10: Act, paragraphs 7(a) and 7(c).] With contribution rates set at very low percentages, this is of limited impact. However, especially were the Commission to expand the services that are funded and, correspondingly, the contribution rate applied to CTSRs, the impact could be very significant on smaller competitors’ viability.

We therefore submit that the Commission ought, instead, cause a the first $10 million in a TSP’s and its affiliates’ CTSRs not to be subject to contribution, and make all CTSRs exceeding $10 million subject to contribution. The benefit of such a rule change on growing competitors seeking a foothold in the market would far outweigh any harms.

Second, the Supreme **** of Canada made it clear in 2012 that, when ISPs do not select or originate programming or package programming services, they “merely provide the mode of transmission”, and provide a telecommunications service.[footnoteRef:11] It would appear that the “nature of these services, existing policies with respect to their contribution exempt status and administrative complications” has evolved.[footnoteRef:12] [11: Reference re Broadcasting Act, [2012] 1 S.C.R. 142] [12: Decision CRTC 2000-745, paragraph 91.] Q12 Should some or all services that are considered to be basic telecommunications services be subsidized? Explain, with supporting details, which services should be subsidized and under what circumstances.

It is, in TekSavvy’s respectful submission, clear that not all services considered to be basic telecommunications services can be subsidized.

In our responses to questions 8 and 9, we have proposed that broadband access service be the basic service that is subsidized. In our response to question 13, below, we describe discoverability and market regulation measures that ought to be reviewed and put into place prior to subsidizing transport services.

The circumstances under which broadband access should be subsidized are similar to those now in place. It should be subsidized where, not only is there a lack of competition such that the service is not forborne, but providing it would be so costly that there is an absence of supply.

Q13 If there is a need to establish a new funding mechanism to support the provision of modern telecommunications services, describe how this mechanism would operate. Your response should address the mechanism described in Telecom Regulatory Policy 2013-711 for transport services and/or any other mechanism necessary to support modern telecommunications services across Canada. Your response should also address, but not necessarily be limited to, the following questions:

a. What types of infrastructure and/or services should be funded?

Question 13 is restricted to the funding mechanism enabled by section 46.5 of the Act. However, the appropriate focus of that funding depends on its relation to non-financial measures that ought to also be adopted, in order to increase incentives for innovation and investment in and construction of competing telecommunications network facilities.[footnoteRef:13] [13: Policy Direction, supra note 2, sub-paragraph 1(c)(ii).] Transport services to many underserved communities are costly and insufficient. TekSavvy has some experience of this issue in the communities in which it has deployed broadband access facilities. However, TekSavvy’s experience also supports the view that the location of such facilities is difficult to discover, the pricing is too high, and coordination too difficult.

With respect to transport services, TekSavvy therefore supports the view that discoverability and market regulation are less-intrusive measures that should first be adopted in ought to increase transport services’ broader availability, and incent innovation and investment in them.

First, competitive service providers seeking to launch or expand their footprints ought to be able to know where transport services could feasibly provided by whom. The Commission has a significant opportunity to support information brokerage and clearinghouse tools for this purpose. Such tools would take account of existing network facilities so as to give the Commission an accurate portrait of the status quo ante.

Maintained by the Commission or its designate as a trusted third party, such tools could achieve this supply-side purpose without improperly disclosing any market participant’s confidential information to another. Indeed, such tools could at the same time act as a demand-side registry for existing and prospective network providers who would be interested in coordinating a network build along an underserved route—and who would not advertise this interest publicly, but might signify their willingness to be put in touch with one another.

Much like the “club cables” built as coordinated multinational telcos to create the world’s earliest undersea telecommunications cables, demand-side discoverability by way of such a trusted registry could do much to incent investment in transport facilities by pooling funders—thus lowering such facilities’ cost. Nor would such a registry be restricted to traditional providers. For example, municipal, university, school, and hospital (“MUSH”)-sector users thinking carefully about how to lower the cost would have every reason to participate in such a registry so as to coordinate their own builds with those of potential cost-sharers.

Armed with accurate knowledge of supply-side market conditions with respect to feasible transport facilities, and of demand-side requirements for such transport in underserved communities, the Commission would then—in the second instance—have the opportunity to know whether past forbearance decisions remain appropriate in respect of specific routes. In the same manner, a broadband access provider or Internet service provider seeking transport would have a related opportunity. It could ask the Commission to either: identify competitive alternatives on an existing transport route; or reconsider its forbearance from rate-regulating that route.[footnoteRef:14] [14: Forbearance under subsection 34(1) of the Act requires that refraining from regulation be consistent with the Canadian telecommunications policy objectives, including paragraph 7(b). Forbearance under subsection 34(2) conditions forbearance on competition sufficient to protect the interests of users—and subsection 34(3) prohibits forbearance where it would impair competition, as lack of transport could with respect to related Internet services over broadband access. ] The Commission ought to pursue these discoverability and market regulation measures. They will clarify the level of funding required for transport services, and enable better coordination between third-party carriers in order to minimize the requirements to subsidize such services.

As for access services, TekSavvy reiterates its view that the following infrastructure and/or services should be funded:
· individual-line local broadband access; and
· capability to connect to the Internet over that access via high-speed data transmission made available, where feasible, at reasonable wholesale rates.

In this manner, which is no less technically practicable than locking consumers into a monopoly or duopoly, reliable and affordable services of high quality would become accessible to Canadians in all regions of Canada.

b. In which regions of Canada should funding be provided?
Funding should be provided in those regions where an objective needs assessment shows that it is warranted.

In the transport segment, such funding should only be provided in those regions in which discoverability and market regulation tools had been deployed, in order to lower existing and prospective costs.

c. Which service providers should be eligible to receive funding, and how should eligibility for funding be determined (e.g. only one service provider per area, all service providers that meet certain conditions, wireless service providers, or service providers that win a competitive bidding process)?

All service providers capable of meeting the requirements of the Act should be eligible to receive funding, by winning a competitive bidding process—which is a procurement best practice.

As in other procurement processes, the requirements to be met should be clearly identified in the Commission’s bid documents. Such requirements could look into a service provider’s track record and prior experience. But they should not do so in a manner that excludes new, innovative, and smaller local players.

d. How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?

e. What is the appropriate mechanism for distributing funding? For example, should this funding be (i) paid to the service provider based on revenues and costs, or (ii) awarded based on a competitive bidding process?

The amount and distribution of funding should be determined through a competitive points-based bidding process. The process would put significant emphasis on lowest-price bid to fulfil clearly-identified requirements. Players with existing local networks would, in turn, enjoy a significant home-field advantage in making such bids.

f. Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?
Yes. Publicly-funded infrastructure should be available on a wholesale basis.

In this regard, albeit with respect first of all to broadband access facilities, TekSavvy strongly supports and amplifies the comments of certain interveners in Telecom Regulatory Policy CRTC 2013-711:

The GN, the GNWT, YG, Eeyou, First Mile, and the NBDC were generally of the view that the NCF should be used to fund broadband Internet service and that the subsidy should be portable or that competitors should have open access to the facilities. First Mile submitted that a regulatory framework that encourages open access to publicly-subsidized transport facilities is in the best interest of local communities that can leverage this infrastructure in various ways.[footnoteRef:15] [15: Northwestel Inc. – Regulatory Framework, Modernization Plan, and related matters, Telecom Regulatory Policy CRTC 2013-711, paragraph 113.] The Commission ought to ensure that access and, to the extent required, transport infrastructure that is funded is available on a wholesale basis; and ought to cause the Basic Service Objective to reflect this assurance.

Doing so will allow Canadians in underserved communities to participate fully in the digital society, where competitive Internet services are available over broadband access facilities. Such terms and conditions are far preferable to enforcing the vertically-integrated model which locks users into the services allowed by the person who controls the underlying broadband facility.

g. Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

Where feasible, the Commission ought to regulate wholesale rates before resorting to retail regulation. The Basic Service Objective that TekSavvy advocates in this submission would allow the Commission to take exactly that approach.

However, in communities where the winning bidder is one which is exempted from wholesale requirements—TekSavvy has suggested that these ought to kick in when the network access provider, together with its affiliates, serves 25,000 locations or more—the Commission ought to regulate retail rates, in order to ensure that contribution funds do not merely enable monopoly rents.

h. Should this mechanism replace the existing residential local wireline service subsidy? If so, explain how the existing subsidy should be eliminated, including details on any transition period. In addition, explain whether the small ILECs and/or Northwestel should be subject to any special considerations or modifications for this transition period.

This mechanism should replace the existing residential local wireline service subsidy. Existing incumbents have every opportunity to bid on continued service to a community. Indeed, they ought to have a significant advantage in developing a lowest-price bid, due to their existing infrastructure.

TekSavvy does not have expertise with respect to the special considerations or modifications to which small ILECs or Northwestel ought to be subject, but recognizes that any transition ought to be carefully managed in order to avoid shock to the system.

Conclusion
TekSavvy appreciates the opportunity to submit this intervention, and looks forward to reviewing those of other parties to this proceeding.
Yours sincerely,
[transmitted electronically]
**** Abramson
Chief Legal and Regulatory ****
cc: **** Lo (******@***.com)
**** Kaplan-Myrth (******@***.com)

Intervention: TekSavvy (Intervenor 300)

Document Name: 2015-134.224036.2397989.Intervention(1f#@t01!).doc
(
TekSavvy Solutions Inc
800 **** Street
TELEPHONE
+1
519
360
-
1575
FAX
*-***-***-****
Chatham ON *** ***
TOLL FREE
877-779-
1575
teksavvy.com
)
[bookmark: _GoBack]
Filed via My CRTC Account
Mr. John Traversy, Secretary General
Canadian Radio-television and Telecommunications Commission
1 Promenade du Portage
Gatineau, Quebec *** ***
14 July 2015
RE: Review of basic telecommunications services, Telecom Notice of Consultation CRTC 2015-134, 9 **** 2015 (“TNC 2015-134” or the “Notice”)
**** Mr. Traversy:
TekSavvy Solutions Inc. (“TekSavvy”) is an independent broadband and voice services provider based in Chatham, Ontario, and Gatineau, Quebec, which provides
· fixed-wireless broadband access within a growing number of underserved communities in southwestern Ontario, and
· Internet and voice services—over its own fixed wireless access and, in much larger numbers, over wholesale network access provided by third parties.
TekSavvy’s affiliate, **** Cable Vision Ltd., is a cable carrier operating in **** County, Ontario. It provides:
· coaxial-cable wireline broadband access in the village of Madoc, and
· Internet and voice services over its broadband access network.
We request to appear at the public hearing.

TekSavvy strongly supports the Commission’s efforts, in this proceeding initiated by TNC 2015-134, to identify the basic telecommunications services to which Canadians’ continued access ought to be supported by a fund to which telecommunications service providers are required to contribute. This proceeding represents a significant opportunity to redefine and update the Basic Service Objective set out in 1999—which empowered consumers by mandating data transmission access allowing a choice of Internet Service Providers (“ISPs”), but did so only in respect of narrowband communications.

Below, TekSavvy responds to certain of the questions posed in the Notice. However, at the heart of TekSavvy’s submissions is its request that the Commission continue to recognize the distinction between broadband access and the Internet service whose access it permits, and confine subsidy to the former by mandating the capability for Canadians to connect to the Internet via high-speed data transmission made available, where feasible, at reasonable wholesale rates. We have also suggested, among other measures, that the Commission: adopt discoverability and market regulation measures before subsidizing transport facilities; and make a small but critical change to how it calculates contribution by restricting its application to those Canadian Telecommunications Services Revenues that, for a TSP and its affiliates, exceed $10 million.

[bookmark: _Ref424661861]As instructed by the Notice’s paragraph 38 and its preamble to Appendix B, TekSavvy’s submissions are structured according to the topics and questions identified in that appendix. They are in the order in which Appendix B presents them. They make reference to the Canadian telecommunications policy objectives set out in section 7 of the Telecommunications Act (“Act”)[footnoteRef:1] and seek to take into consideration the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives (“Policy Direction”).[footnoteRef:2] [1: S.C. 1993, c. 38.] [2: SOR/2006-355.] Commission’s role regarding access to basic telecom services (Q3-Q7)

Q3 Which services should be considered by the Commission as basic telecommunications services necessary for Canadians to be able to meaningfully participate in the digital economy? Explain why.

TekSavvy does not have particular expertise as to which basic telecommunications services are necessary for Canadians to be able to meaningfully participate in the digital society, including the digital economy.

However, we do underline the distinction between Internet service, a connectivity service delivered over physical broadband access; and broadband access itself.

Subject to our review of the submissions of consumer groups and others with expertise in this matter, we respectfully suggest that both Internet service and broadband access are required to be able to meaningfully participate in the digital economy:

· Internet service is required in order to access or fully participate in a range of key services, including government services, banking, education, and—critically—a growing swathe of social life.

· Broadband access is required in order to receive Internet service at a speed that provides for the full range of applications.

**** of these are basic telecommunications services that are likely necessary to participate in the digital economy. But TekSavvy has submitted in its response to question 13 of the Notice that the Commission ought to use its powers under section 46.5 of the Act to help subsidize only one of these: broadband access. However, the Commission ought to do so in a manner that ensures that consumers can access competing Internet services, as the 1999 Basic Service Objective provided for, and as any updated Basic Service Objective ought similarly to provide for.

a. Explain whether the underlying technology (e.g. cable, digital subscriber line, fibre, fixed wireless, mobile wireless, and satellite technology) should be a factor in defining whether a telecommunications service should be considered a basic service.

The underlying technology ought not be considered a factor in defining whether a telecommunications service is the kind of basic service that is essential for participation in the digital economy. But different technologies have different capabilities with respect to the characteristics canvassed in question 1(b) of the Notice. For instance, a high-latency service like geostationary satellite may not be capable of supporting gaming, including educational gaming, or even certain voice services. What is more, different technologies have different levels of upgradability—some may require a wholesale refitting in order to achieve higher speeds; others may simply require that boxes be changed up at a fibre path’s endsTechnology’s performance capabilities and its upgradability should certainly be considered in defining whether a telecommunications service is the kind of basic service that is essential for participation in the digital economy.

c. What should be the prices for basic telecommunications services and how should these prices be determined? Provide rationale to support your answer.

Basic telecommunications services should be made available at just and reasonable rates: subsection 27(1) of the Act requires this, even if the Commission has the power to forebear from acting to enforce such rates.

Where a competitive market in respect of a service functions to support such availability, then the market should decide that service’s rates. However, in many situations in which a competitive market does not exist, section 34 of the Act does not provide for the Commission to forbear from rate regulation.

In such situations, we respectfully submit that the Commission should prefer wholesale to retail regulation.

Q4 Can market forces and government funding be relied on to ensure that all Canadians have access to basic telecommunications services? What are the roles of the private sector and the various levels of government (federal, provincial, territorial, and municipal) in ensuring that investment in telecommunications infrastructure results in the availability of modern telecommunications services to all Canadians?

Market forces and government funding have not, thus far, ensured that all Canadians have access to the range of reliable high-speed, low-latency telecommunications services that support participation in the digital economy.

The private sector has an important role to play in securing such access. But where market competition is insufficient to drive prices down to long-run incremental costs, such as with respect to services that rely on bottleneck facilities, the Commission can help enable private-sector competition through judicious, minimally-intrusive regulation.

In this regard, for instance, TekSavvy recalls the Commission’s mandating of a price-regulated “small basic” service with respect to television.[footnoteRef:3] Such a service is a combination of a network access and a data service, and both TekSavvy and other parties submitted in that proceeding that no retail service should be regulated at a rate that is lower than the wholesale cost of providing it. The same is true of telecommunications services, like high-speed Internet over broadband. The Commission has spent considerable time ensuring a competitive market for retail Internet service. Competition is the best way to discipline prices, incent quality and product differentiation, and ensure broad access; the Commission can help enable such competition by ensuring that the rates it sets for wholesale services accurately reflect long-run incremental costing., [3: A World of Choice - A roadmap to maximize choice for TV viewers and to foster a healthy, dynamic TV market, Broadcasting Regulatory Policy CRTC 2015-96, 19 **** 2015, paragraphs 16-25.] The various levels of government have an important role to play, too. Section 46.5 of the Telecommunications Act allows the Commission to require that TSPs contribute to a fund to support continuing access to basic telecommunications services, but that section does not require that TSPs be the only contributors. When the Canada Media Fund was announced in 2009, it carried forward the CRTC’s proposal to split the fund between public and private streams.[footnoteRef:4] There is no reason that the Commission could not similarly recommend a Canada Broadband Fund, and proceed to mandate the funding of its private stream up to the level set out in the Commission’s recommendation. [4: CRTC Report to the Minister of Canadian Heritage on the Canadian Television Fund, Response to P.C. 2008-289, May 2008; Hon. **** Moore, “Canada Media Fund” (speech), 9 **** 2009 (online: ).] Q5 What should be the Commission’s role in ensuring the availability of basic telecommunications services to all Canadians? What action, if any, should the Commission take where Canadians do not have access to telecommunications services that are considered to be basic services?

The Commission’s first role in ensuring the availability of basic telecommunications services to all Canadians, even before subsidies are broached, is a monitoring function. The Commission ought to act as the central repository and distributor of information regarding the degree to which different communities are adequately served or underserved—both with respect to availability, which disproportionately affects rural Canadians; and with respect to pricing, which disproportionately affects poor Canadians.

Then, where Canadians do not have access to basic telecommunications services to which the Commission considers Canadians ought to have access, the Policy Direction requires that the Commission first consider what the minimum level of intervention is that is required in order to enable such access.

Where high-speed Internet service is unavailable or unaffordable, for instance, the missing element may be broadband access and transport—not the Internet service that can be accessed over it. If acting to make available only the missing network element at one layer would remedy the absence at another layer, then the Commission is required to confine its action to the lower-layer service, so as to “interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives.”[footnoteRef:5] [5: Policy Direction, sub-paragraph 1(a)(ii).] Regulatory measures for basic telecommunications services (Q8-Q13)

Q8 What changes, if any, should be made to the obligation to serve and the basic service objective?
The Basic Service Objective established in 1999 consists of:
· individual line local touch-tone service;
· capability to connect to the Internet via low-speed data transmission at local rates;

· access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service; and· a printed copy of the current local telephone directory upon request.

Much has changed since 1999. Internet access, not touch-tone PSTN access, is the service that enables participation in the digital society and its digital economy. “Low-speed data transmission” means something much faster to most ordinary citizens. Access to long-distance is easily had over the Internet. Local telephone directories, to the extent they still exist, have migrated to the Web—and “information location tools”[footnoteRef:6] like Duckduckgo and Google that bring end-users to directories like Facebook and Instagram have in many cases supplanted them. [6: Copyright Act, R.S.C. 1985, c. C-42, subsection 41.27(5)] Yet certain elements of the Basic Service Objective remain no less important today than in 1999. The Basic Service Objective did not lock in a vertically-integrated model or prevent consumers from the ability to choose their provider. Rather, the 1999 objective separated out the capability to connect to the Internet, from the provider of the network access service over which the consumer would do so.

The Basic Service Objective should now be modified. But we urge the Commission to do so in a way that does not disempower consumers. It must not lock them into a vertically-integrated model that ties communications services, like Internet service, to the broadband access provider over which it is delivered.

TekSavvy therefore proposes that the Basic Service Objective be updated as follows:
· individual line local broadbandtouch-tone service; and
· capability to connect to the Internet via highlow-speed data transmission made available, where feasible, at reasonable wholesalelocal rates;

· access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service; and· a printed copy of the current local telephone directory upon request.

In clean text:
· individual line local broadband service; and
· capability to connect to the Internet via high-speed data transmission made available, where feasible, at reasonable wholesale rates.

“Individual line broadband” service simply refers to the delivery of broadband network access to a premise, over any technology—whether based on DSL over twisted-pair cable, DOCSIS over coaxial cable, fibre, fixed-wireless, or otherwise.

The capability to connect to the Internet, made available at reasonable wholesale rates, is the key to making that individual-line broadband useful. There is no reason to mandate a vertically-integrated model that locks consumers into the services provided by their physical network access provider. Indeed, it is that physical network access—not the Internet or other services provided through it—that constitutes the hard-to-fund bottleneck.

At the same time, TekSavvy recognizes that smaller providers have frequently been exempted from such requirements because they lack the scale to support wholesale services. That is why we have inserted “where feasible” into the proposed Basic Service Objective. In particular, while such a determination ought to fall to the Commission and would benefit from the views of other interveners, we propose that network access providers which, together with their affiliates, reach less than 25,000 residences, businesses and institutional campuses, and other locations with broadband access, they may not have the necessary scale.

Finally, the Commission need not retain the final two, PSTN-specific portions of the Basic Service Objective. Access to the long-distance network, operator/directory assistance services, enhanced calling and privacy protection features, emergency services, as well as voice message relay service, are important. But many of these services remain mandated as a component of providing voice services, and they are available from competing providers, over Internet service, which itself is available from competing providers over broadband. Going forward, the Commission may decide to mandate some of these services as a component of providing Internet services, or even as a component of providing broadband access. But it is achieving the Basic Service Objective that would let the Commission do so.

Q9 Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?
TekSavvy respectfully notes that broadband access and Internet service are distinct from one another.

Each of them is a basic telecommunications service, because each one offers a “pure transmission capability over a communications path that is virtually transparent in terms of its interaction with subscriber-supplied information”.[footnoteRef:7] The matter to be decided is which ought to be subsidized. [7: Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984, II.C.1 (“A basic service should be limited to the offering of transmission capacity between two or more points suitable for a subscriber's transmission needs and subject only to the technical parameters of fidelity or distortion criteria, or other conditioning. Use internal to the service provider's facility of companding techniques, bandwidth compression techniques, circuit switching, message or packet switching, error control or other techniques that facilitate economical, reliable movement of information does not alter the nature of the basic service.”). Arguably, broadband access is a point-to-point service that clearly meets the definition of a basic service, whereas Internet service is an end-to-end service that does not do so as clearly. ] In proposing that the Basic Service Object be revised as set out above, TekSavvy has proposed that broadband access should be subsidized, but that Internet service need not be.

Q11 What changes, if any, should be made to the contribution collection mechanism? Your response should address, with supporting rationale, which TSPs should be required to contribute to the NCF, which revenues should be contribution-eligible and which revenues, if any, should be excluded from the calculation of contribution-eligible revenues.

At present, TSPs are required to contribute to the NCF where there Canadian Telecommunications Services Revenues (“CTSRs”), after deductions, exceed $10 million. Intercarrier payments used to provide internal or contribution-eligible services are not themselves contribution-eligible, in order to prevent the revenues from resold services being assessed contribution more than once.[footnoteRef:8] Retail Internet service revenues are not contribution-eligible, either.[footnoteRef:9] [8: Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000, paragraphs 94-96.] [9: Ibid.; Regulatory framework for voice communication services using Internet Protocol, Telecom Decision CRTC 2005-28, 12 May 2005, as amended by Telecom Decision CRTC 2005-28-1, 30 **** 2005 (in respect of VoIP-over-Internet).] First, TekSavvy respectfully submits that the current approach under which TSPs pay no contribution when their CTSRs are below $10 million, but pay contribution on all of their CTSRs if they exceed $10 million, is an unsatisfactory one. This creates significant uncertainty for smaller competitors who hover around that threshold, and do not know until end-of-year whether they will pay contribution in respect of that year or not—compromising Canadian telecommunications’ competitiveness and challenging the system’s orderly development.[footnoteRef:10] [10: Act, paragraphs 7(a) and 7(c).] With contribution rates set at very low percentages, this is of limited impact. However, especially were the Commission to expand the services that are funded and, correspondingly, the contribution rate applied to CTSRs, the impact could be very significant on smaller competitors’ viability.

We therefore submit that the Commission ought, instead, cause a the first $10 million in a TSP’s and its affiliates’ CTSRs not to be subject to contribution, and make all CTSRs exceeding $10 million subject to contribution. The benefit of such a rule change on growing competitors seeking a foothold in the market would far outweigh any harms.

Second, the Supreme **** of Canada made it clear in 2012 that, when ISPs do not select or originate programming or package programming services, they “merely provide the mode of transmission”, and provide a telecommunications service.[footnoteRef:11] It would appear that the “nature of these services, existing policies with respect to their contribution exempt status and administrative complications” has evolved.[footnoteRef:12] [11: Reference re Broadcasting Act, [2012] 1 S.C.R. 142] [12: Decision CRTC 2000-745, paragraph 91.] Q12 Should some or all services that are considered to be basic telecommunications services be subsidized? Explain, with supporting details, which services should be subsidized and under what circumstances.

It is, in TekSavvy’s respectful submission, clear that not all services considered to be basic telecommunications services can be subsidized.

In our responses to questions 8 and 9, we have proposed that broadband access service be the basic service that is subsidized. In our response to question 13, below, we describe discoverability and market regulation measures that ought to be reviewed and put into place prior to subsidizing transport services.

The circumstances under which broadband access should be subsidized are similar to those now in place. It should be subsidized where, not only is there a lack of competition such that the service is not forborne, but providing it would be so costly that there is an absence of supply.

Q13 If there is a need to establish a new funding mechanism to support the provision of modern telecommunications services, describe how this mechanism would operate. Your response should address the mechanism described in Telecom Regulatory Policy 2013-711 for transport services and/or any other mechanism necessary to support modern telecommunications services across Canada. Your response should also address, but not necessarily be limited to, the following questions:

a. What types of infrastructure and/or services should be funded?

Question 13 is restricted to the funding mechanism enabled by section 46.5 of the Act. However, the appropriate focus of that funding depends on its relation to non-financial measures that ought to also be adopted, in order to increase incentives for innovation and investment in and construction of competing telecommunications network facilities.[footnoteRef:13] [13: Policy Direction, supra note 2, sub-paragraph 1(c)(ii).] Transport services to many underserved communities are costly and insufficient. TekSavvy has some experience of this issue in the communities in which it has deployed broadband access facilities. However, TekSavvy’s experience also supports the view that the location of such facilities is difficult to discover, the pricing is too high, and coordination too difficult.

With respect to transport services, TekSavvy therefore supports the view that discoverability and market regulation are less-intrusive measures that should first be adopted in ought to increase transport services’ broader availability, and incent innovation and investment in them.

First, competitive service providers seeking to launch or expand their footprints ought to be able to know where transport services could feasibly provided by whom. The Commission has a significant opportunity to support information brokerage and clearinghouse tools for this purpose. Such tools would take account of existing network facilities so as to give the Commission an accurate portrait of the status quo ante.

Maintained by the Commission or its designate as a trusted third party, such tools could achieve this supply-side purpose without improperly disclosing any market participant’s confidential information to another. Indeed, such tools could at the same time act as a demand-side registry for existing and prospective network providers who would be interested in coordinating a network build along an underserved route—and who would not advertise this interest publicly, but might signify their willingness to be put in touch with one another.

Much like the “club cables” built as coordinated multinational telcos to create the world’s earliest undersea telecommunications cables, demand-side discoverability by way of such a trusted registry could do much to incent investment in transport facilities by pooling funders—thus lowering such facilities’ cost. Nor would such a registry be restricted to traditional providers. For example, municipal, university, school, and hospital (“MUSH”)-sector users thinking carefully about how to lower the cost would have every reason to participate in such a registry so as to coordinate their own builds with those of potential cost-sharers.

Armed with accurate knowledge of supply-side market conditions with respect to feasible transport facilities, and of demand-side requirements for such transport in underserved communities, the Commission would then—in the second instance—have the opportunity to know whether past forbearance decisions remain appropriate in respect of specific routes. In the same manner, a broadband access provider or Internet service provider seeking transport would have a related opportunity. It could ask the Commission to either: identify competitive alternatives on an existing transport route; or reconsider its forbearance from rate-regulating that route.[footnoteRef:14] [14: Forbearance under subsection 34(1) of the Act requires that refraining from regulation be consistent with the Canadian telecommunications policy objectives, including paragraph 7(b). Forbearance under subsection 34(2) conditions forbearance on competition sufficient to protect the interests of users—and subsection 34(3) prohibits forbearance where it would impair competition, as lack of transport could with respect to related Internet services over broadband access. ] The Commission ought to pursue these discoverability and market regulation measures. They will clarify the level of funding required for transport services, and enable better coordination between third-party carriers in order to minimize the requirements to subsidize such services.

As for access services, TekSavvy reiterates its view that the following infrastructure and/or services should be funded:
· individual-line local broadband access; and
· capability to connect to the Internet over that access via high-speed data transmission made available, where feasible, at reasonable wholesale rates.

In this manner, which is no less technically practicable than locking consumers into a monopoly or duopoly, reliable and affordable services of high quality would become accessible to Canadians in all regions of Canada.

b. In which regions of Canada should funding be provided?
Funding should be provided in those regions where an objective needs assessment shows that it is warranted.

In the transport segment, such funding should only be provided in those regions in which discoverability and market regulation tools had been deployed, in order to lower existing and prospective costs.

c. Which service providers should be eligible to receive funding, and how should eligibility for funding be determined (e.g. only one service provider per area, all service providers that meet certain conditions, wireless service providers, or service providers that win a competitive bidding process)?

All service providers capable of meeting the requirements of the Act should be eligible to receive funding, by winning a competitive bidding process—which is a procurement best practice.

As in other procurement processes, the requirements to be met should be clearly identified in the Commission’s bid documents. Such requirements could look into a service provider’s track record and prior experience. But they should not do so in a manner that excludes new, innovative, and smaller local players.

d. How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?

e. What is the appropriate mechanism for distributing funding? For example, should this funding be (i) paid to the service provider based on revenues and costs, or (ii) awarded based on a competitive bidding process?

The amount and distribution of funding should be determined through a competitive points-based bidding process. The process would put significant emphasis on lowest-price bid to fulfil clearly-identified requirements. Players with existing local networks would, in turn, enjoy a significant home-field advantage in making such bids.

f. Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?
Yes. Publicly-funded infrastructure should be available on a wholesale basis.

In this regard, albeit with respect first of all to broadband access facilities, TekSavvy strongly supports and amplifies the comments of certain interveners in Telecom Regulatory Policy CRTC 2013-711:

The GN, the GNWT, YG, Eeyou, First Mile, and the NBDC were generally of the view that the NCF should be used to fund broadband Internet service and that the subsidy should be portable or that competitors should have open access to the facilities. First Mile submitted that a regulatory framework that encourages open access to publicly-subsidized transport facilities is in the best interest of local communities that can leverage this infrastructure in various ways.[footnoteRef:15] [15: Northwestel Inc. – Regulatory Framework, Modernization Plan, and related matters, Telecom Regulatory Policy CRTC 2013-711, paragraph 113.] The Commission ought to ensure that access and, to the extent required, transport infrastructure that is funded is available on a wholesale basis; and ought to cause the Basic Service Objective to reflect this assurance.

Doing so will allow Canadians in underserved communities to participate fully in the digital society, where competitive Internet services are available over broadband access facilities. Such terms and conditions are far preferable to enforcing the vertically-integrated model which locks users into the services allowed by the person who controls the underlying broadband facility.

g. Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

Where feasible, the Commission ought to regulate wholesale rates before resorting to retail regulation. The Basic Service Objective that TekSavvy advocates in this submission would allow the Commission to take exactly that approach.

However, in communities where the winning bidder is one which is exempted from wholesale requirements—TekSavvy has suggested that these ought to kick in when the network access provider, together with its affiliates, serves 25,000 locations or more—the Commission ought to regulate retail rates, in order to ensure that contribution funds do not merely enable monopoly rents.

h. Should this mechanism replace the existing residential local wireline service subsidy? If so, explain how the existing subsidy should be eliminated, including details on any transition period. In addition, explain whether the small ILECs and/or Northwestel should be subject to any special considerations or modifications for this transition period.

This mechanism should replace the existing residential local wireline service subsidy. Existing incumbents have every opportunity to bid on continued service to a community. Indeed, they ought to have a significant advantage in developing a lowest-price bid, due to their existing infrastructure.

TekSavvy does not have expertise with respect to the special considerations or modifications to which small ILECs or Northwestel ought to be subject, but recognizes that any transition ought to be carefully managed in order to avoid shock to the system.

Conclusion
TekSavvy appreciates the opportunity to submit this intervention, and looks forward to reviewing those of other parties to this proceeding.
Yours sincerely,
[transmitted electronically]
**** Abramson
Chief Legal and Regulatory ****
cc: **** Lo (******@***.com)
**** Kaplan-Myrth (******@***.com)

Intervention: TekSavvy Solutions Inc.

Document Name: 2015-134.224036.2397991.Intervention(1f#@v01!).html

Copie envoyée au demandeur et à tout autre intimé si applicable / Copy sent to applicant and to any respondent if applicable: Non/No

Intervention: TekSavvy (Intervenor 300)

Document Name: 2015-134.224036.2397991.Intervention(1f#@v01!).html

Copie envoyée au demandeur et à tout autre intimé si applicable / Copy sent to applicant and to any respondent if applicable: Non/No