Intervention: Axia NetMedia Corp.

Document Name: 2015-134.223947.2393684.Intervention(1f@z801!).pdf
Response to CRTC’s Review
of Basic Telecommunications
Services for all Canadians
Submitted by: Axia NetMedia Corporation
Date: **** 30, 2015

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians Table of Contents

1. Executive Summary .................................................................................................................................................... 3 2. Axia Overview ................................................................................................................................................................... 4 3. The Next Generation Value Chain .................................................................................................................... 7 4. Global Industry Background ................................................................................................................................ 8 4.1 Sustainable Policy Leveraging the Next Generation Business Model ..................................... 8 4.2 Next Generation Network Technical Summary ........................................................................................ 8 4.3 Telco and Cable Co. Policy Implications ......................................................................................................... 8 5. “Pro-competition” Next Generation Network Policy Structurally Separates Network Infrastructure from Web Services ................................................................................................................. 10 6. Specific Challenges in Canada ........................................................................................................................ 10 7. A Policy Road Map For Canada ........................................................................................................................ 11 7.1 CRTC .......................................................................................................................................................................................... 11 7.2 Implications of these Policies ................................................................................................................................. 11 Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 3 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 1. Executive Summary

The CRTC has commissioned a consultation process examining the CRTC’s role in ensuring that Canadians have access to world-class telecommunications services that enable them to participate actively in the digital economy.

The CRTC’s current policy ensures that Canadians in all regions have access to, at a minimum, a low-speed Internet connection.

Current issues raised by the CRTC request:

• services that should be identified as necessary for Canadians to participate in the digital economy;

• upload and download speeds necessary in this digital age;

• the possible need for funding mechanisms to support the provision of modern telecommunications services;

• the roles of the economic and regulatory players in telecommunications services, such as the private sector, governments and the CRTC; and, • Next Generation Net-Neutrality vs. legacy telecommunications services bundling For Canadians to participate in today’s rapidly advancing digital economy they will require faster, more reliable Internet connections with symmetrical upload and download speeds.

Limited access to high-speed Internet connections, and out-dated infrastructure is creating a digital divide in Canada - limiting the opportunities for economic development, and removing performance and choice from the end user. Canadians should have equal access to the high-speed Internet connections necessary to deliver Next Generation Network web services. To provide these Internet connections that Canadians need, New Basic Infrastructure (NBI) is necessary.

Based on increasing global standards, the upload and download speeds necessary in this digital age need to be scalable, from speeds of 25 Mbps to 1Gbps, with no penalties for exceeding download caps. Symmetrical upload and download speeds are necessary to take advantage of the valuable services available in the web services ecosystem such as high definition video conferencing, data back-up, distance learning and health applications and enhanced telecommuting.

Given the geographic and density diversity in Canada and high variation in existing infrastructure, Axia submits that the fundamental tenants of national public policy should be the following:

1. Optimize the use of private sector long-term lower cost infrastructure capital and only rely on public financial support where necessary to achieve a viable cost of service to end-users.

2. Create a national regulatory framework that allows local governments to elect to drive this new infrastructure so that local related infrastructure and customer needs can be taken into account.

3. Ensure the new infrastructure is not conflicted with other ownership interests in the telecom and Web Service sectors so end-users have effective and lasting competition between the Web Service sectors and legacy telecom sector.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 4 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com The Government of Canada should adopt a policy framework that supports the CRTC implementing regulations that allow either provincial or municipal governments to elect to proceed with focused New Basic Infrastructure initiatives within a nationally recognized regulatory framework. By supporting a pro-competition, Next Generation Network policy framework, Canada can enable sustained competition while enabling the creation of New Basic Infrastructure.

Concurrently, the CRTC should implement regulations that would allow the New Basic Infrastructure to be treated as shared infrastructure and attract private sector infrastructure capital. To ensure equitable sharing ownership of the New Basic Infrastructure would be limited to private sector participants that are not involved in other telecom activities. The CRTC would set out a regulatory framework that any local or provincial government could use to attract investors that would deploy the New Basic Infrastructure and if it followed the framework, the CRTC would recognize the pricing that resulted from the competitive process.

This would allow the evolution of this fibre infrastructure to be driven by ground up needs and supported locally.

These New Basic Infrastructure initiatives should pilot in Alberta.

2. Axia Overview

Axia owns, operates and sells services over fibre optic communications networks.

For over a decade, Axia has focused its business in areas where access to high bandwidth fibre infrastructure does not exist. Our success has been driven by our ability to deliver networks that provide our customers with increased choice, and provide communities with a reliable infrastructure and resultant economic benefit. Axia is focused on providing services to customers in communities in Alberta, Massachusetts and ****.

Axia delivers a distinctive value proposition to the market The success of our approach is evidenced by our growing footprint and increasing usage of our networks. Our goal is to be the preferred service provider of digital transport services delivered over high performing fibre optic networks, in the regions we operate.

• Focus on fibre transport connectivity: Axia’s focus is on delivering the highest quality and most affordable digital transport services, freeing our customers to choose the web services which best meet their needs.

• Support public policy, deliver infrastructure and increase competition in under-served regions: Axia fosters competition by separating the network from the services provided over that network, thereby increasing the customer’s choice of services and providers.

Unlike the traditional telco model, Axia’s approach creates a value chain of industry players that each excel at delivering their core competency. The result is a transformation to markedly improved performance and service, lower cost and Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 5 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com increased choice of services and providers for the end-user. (Fully aligned with principles of net neutrality)

Axia’s priority is to drive long-term, broadband growth by increasing market penetration.

With our established market position, Axia is focused on the following strategic imperatives:

• Bringing new services to market: To increase the use of our networks we invest in state-of-the-art electronics, and operating and business systems, to introduce next generation services to meet customer demands;

• Connecting new customers to our networks: We increase the viability and utility of our networks through the connection of enterprises and government sites, wireless towers and Fibre to the Premise (FTTP) initiatives; and

• Selectively expanding our network footprint: We invest in our existing geographic regions to expand our addressable market in ways that are commercially viable Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 6 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com Axia Networks

Jurisdiction: **** America: Alberta,
Canada
**** America: Western
Massachusetts, USA
****
Name: Axia Axia USA Covage
Primary
Services:
Bandwidth Bandwidth
Dark fibre
Bandwidth
Dark fibre

Network Status: Operational Early Activation Operational Network Activation: 2005 2014 2010

Fibre length: 13,000 kms 2,150 kms 8,530 kms
Headcount: 128 6 130
Customer Connections: 4,921 113 4,792
Infrastructure Replacement
Cost:
$380.0 million $70.0 million $290.0 million

Axia’s Investment: $40.0 million $0.4 million $90.0 million Operating Structure: Combination of owned fibre

networks and operating
agreements with the
Government of Alberta. The
end of the current term on
the operating agreement is
**** 30, 2018
Operating agreement
with the state is a
renewable ten year
licence – initial term ends
in 2023
Combination of
owned fibre networks
and concession
agreements with
regional communities
with terms of varying
lengths (from 15
years to 25 years)
with terms ending
from 2019 to 2037

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 7 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 3. The Next Generation Value Chain

The following diagram (Figure A) illustrates the value chain that creates the optimal competitive environment, performance and choice for the end user:

• Service Bundlers: Application providers that have “on the ground” presence and local relationships with the associated jurisdiction • Peers: **** Web Services that are globally renowned as leaders in their domains • Internet: All other web services available on the World Wide Web • Community Interconnect Grid (“CIG”): Connects the local community POI with fibre back to the closest Internet Gateway with end-to-end fibre. Standardizing bandwidth rates across the CIG eliminates the digital divide, empowering the economics for community investment in fibre. I.E. Alberta’s SuperNet • Fibre to the Premise: connects each home, business, enterprise and public sector facility with fibre back to the community POI

Next Generation Value Chain (Figure A)

Gateway: A network node equipped for interfacing with another network that uses different communication protocols

Community Interconnect Grid (CIG): A fibre grid in a region connecting multiple communities to at least one global gateway. I.E. Alberta SuperNet Community Point of Interconnect (POI): A collocated space designed for the interconnection of New Basic Infrastructure and the Community Interconnect Grid bandwidth Services

New Basic Infrastructure (NBI): Connects ****, Business, Enterprise and Tower customers with fibre back to the Community POI.

Fibre to the Premise (FTTP): A direct fibre optic connection to the home, business, tower, enterprise. Also referred to as the “last mile”

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 8 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 4. Global Industry Background

4.1 Sustainable Policy Leveraging the Next Generation Business Model 1. Axia has invested in Next Generation Networks in Canada, USA, ****, Spain and Singapore. Axia collaborated with Governments regarding Next Generation Network policy in Australia, New Zealand, Scotland, ****, Japan, Finland, Qatar, Kuwait and Tunisia. Axia implements its unique business model in markets where the government policies have concluded that the legacy Incumbent carrier approach will not enable acceptable competition and effective choice for end-user sustainably.

2. The global standard for Internet Protocols (“IP”) has enabled economies of scale and dramatically reduced the cost of technology to individual customers as long as the Ecosystem amortizes the cost of elements of a solution over many customers. Where competition exists, choice of functionality, service provider and cost all favour end user value. The benefits of an efficient marketplace are evidence in the rapid and entrepreneurial emergence of the ecosystem players.

4.2 Next Generation Network Technical Summary

1. Next Generation Networks leverage IP standards, which provide a platform for anything we can see, hear, calculate and store. As a result, regulating the voice call and the TV content is no longer relevant to “pro-competition, pro-choice policy framework” for the End-user.

2. Fibre optic networks;

• Eliminate distance, time and isolation between locations, • Have no effective capacity limitation from an end user perspective, meaning that one fibre connection is all that is necessary for the foreseeable future, • Are less expensive than copper networks to build and maintain, • Are “future-proof” for digital connectivity between fixed points, and • Are fundamentally fixed cost and therefore public policy cannot rely on competing fibre networks at the residential or small to medium enterprise (SME) premise.

3. The platforms to provide sustained evolution of high performance digital connectivity already exist; fibre for fixed wire line and Wi-Fi/LTE for mobility. What is missing is the new commercial/regulatory framework that aligns the technology with the end-user interests on a sustained basis.

4. Based on increasing global standards, the upload and download speeds necessary in this digital age need to be scalable, from speeds of 25 Mbps to 1Gbps, with no penalties for exceeding download caps.

4.3 Telco and Cable Co. Policy Implications

1. The legacy copper networks are out of date from a technology perspective, and are in a business/regulatory framework that promotes oligopolies in lieu of competition.

2. In all cases evolution to a “pro-competition policy framework” is compromised by vested interests and a history of telecommunications and cable company regulation that was based on regulating the charge for a phone-call or typically the content of a TV broadcast. The regulatory framework did not extend to the cost of the basic infrastructure or Internet services.

3. Historical legacy Incumbent Telco and Broadcast TV regulation is counterproductive in achieving a “pro-competition policy framework” because carriers get anti-trust exemptions on the presumption that they are regulated, when in fact the regulations are now dysfunctional from the customer’s perspective.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 9 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 4. The current incumbent approach of bundling certain media and voice services with the underlying network connectivity services is only possible because the incumbent has proprietary control of the network to the premise. The end-user is compromised by the incumbent using various pricing and “over the top” and capacity control tactics to drive the customer to purchase the incumbent’s preferred services as opposed to other web services. This is why consumer advocates and Web service providers argue for Net Neutrality; Legacy incumbents oppose it.

5. From the end user point of view the barrier to choice of Web services today is the legacy Incumbent fixed wire line network to their premise. This is as a result of no effective competition in fixed wireline even where both the Cable co and the Telco exist. True competition would allow customers the choice of content provider independent of data transportation provider.

6. The vast majority of premises in non-metro areas have only the legacy Telco as a fixed wire line provider.

7. **** mobile devices are dependent on data functionality (as opposed to just voice) and therefore require access to towers that are on a fibre grid to ensure end-user wireless performance. As a result competition in mobility is compromised in markets where the non-Incumbent mobile carrier must rely on their competitor’s fibre network for backhaul. This compromises mobility competition in non-metro markets.

8. Incumbent carriers naturally strive to extend their oligopolistic fixed wire line position to all telecommunication services and content and have been very effective in Canada in sustaining high prices for consumers. Some examples of their expansion of services are mobility, media rights, cloud services, data centres and security.

9. It is not possible to effectively regulate an Incumbent carrier that has integrated network services in addition to Web services, hosting services, cloud services and mobility. No regulator in any jurisdiction has been able to implement “cost based regulation” given the complexities and breadth of the services in the Incumbent portfolio.

10. User demand for broadband far outpaces the Incumbent’s capability to offer acceptable bandwidth performance but the existing copper network is too profitable to the Incumbents for them to invest in fibre networks.

11. Incumbents challenge pro competition and choice policy changes. Their arguments include that their copper is good enough, that change to their bundling approach would make their investments not viable and they would be entitled to compensation, that they have what the customers want, that web service providers are “over the top” freeloaders; none of these arguments have any merit today.

12. Incumbents decide whether they make fibre investments and on what terms they make the fibre available to anyone else. Government’s use band-aide approaches such as the Deferral accounts and the National Broadband infrastructure account to try to improve connectivity for end-users. They have been inefficient financially and ineffective from the end-users perspective.

13. Network connectivity issues are confused by CRTC marrying Canadian content initiatives and funding through incumbent carriers.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 10 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 5. “Pro-competition” Next Generation Network Policy Structurally Separates Network Infrastructure from Web Services

1. Define New Basic Infrastructure (“NBI”) as:

• The fibre between the end user premise and the aggregation point in a community,

• New towers in a community, and;

• The fibre between the new tower and the aggregation point in that community.

2. Eliminate ownership conflicts of interest by requiring that only parties that do not participate in any element of the Ecosystem services as Axia defines it are eligible to own NBI.

This structure enables sustained competition in the value chain at the digital content ecosystem level and it enables control of the single purpose fibre grid pricing through effective cost based regulation. The benefits of sharing the costs of the infrastructure are passed along to the end users.

This policy framework is proven in **** and Singapore, which have created competition and compelling end user value using these principles. It is the normal policy framework for any basic shared infrastructure. (water, power, utilities, roads, airports…) 6. Specific Challenges in Canada

1. Metro, rural and remote geographical diversity exists in essentially all Provinces.

2. Canada has National regulation in voice and tv.

3. Legacy integrated Incumbent carriers have dominant roles in each region and in every aspect of telecom.

4. Other comparable infrastructure facilities, (water, sewer, power, roads, right of ways) are all under provincial, municipal government control and attendant regulatory approaches vary.

5. Canada ranks among the highest in price and lowest in bandwidth availability for mobility and wire line services in the world as ranked by the OECD (2013 Communications Outlook, July 17, 2013).

6. Canadian media rights are amongst the most concentrated.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 11 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 7. A Policy Road Map For Canada

7.1 CRTC

1. Implements regulations that allow either provincial governments or municipal governments to elect to proceed with NBI initiatives under their choice of price regulation provided that;

• The ownership of NBI is by private sector companies, which have no affiliates that participate in the Ecosystem, the licensed wireless sector or have competing copper facilities.

• The NBI is available to any party licensed by the CRTC on an equal open access basis.

• In addition, the NBI entity is eligible to provide bandwidth and Internet services directly to end-users.

2. Implements regulations that prohibit other parties from building fibre or tower infrastructure where NBI is implemented under this policy.

3. Agrees to use its regulatory powers to cause the use of copper to be terminated 5 years after the implementation of the NBI if requested to do so as part of the commercial framework that the local government used to secure the NBI at the outset.

7.2 Implications of these Policies

1. The framework for evolution to effective competition in both FTTP based services and mobility services would be created at the national level.

2. Local governments are empowered and can choose priorities and needs for their evolution to FTTP, making it a community by community decision 3. The Incumbents have equal and affordable access to NBI; they simply have to compete with the new Ecosystem from a level local infrastructure playing field.

4. Alberta is an ideal first adopter as Alberta already has a CIG in place. The CIG is available for both FTTP and rural / remote wireless companies, and promotes competition between mobility players.

5. Each level of government could choose whether and how to target financial support at the NBI, as it would get maximum leverage in the form of coverage and price to the End-user through a competitive license process. Use of other local infrastructure would be optimized. Decisions could be made on a community-by-community basis.

This positions each layer of government to be most effective in delivering their objectives.

6. The end-users have the opportunity to drive their own access to Next Generation Network eco-systems by supporting the NBI and rural and remote wireless infrastructure as customers and through engaging their local governments.

7. The current out-dated regulatory framework would only apply to legacy copper. The private sector, with local governments, would be able to implement the NBI without financial support and have access to the Next Generation Value Chain within the current ARPU typically charged by integrated Incumbents.

8. Local levels of government have the opportunity to specify the optimal pricing structure for sustainable access to each element of the network infrastructure. See Figure B below for two potential options available to the customer for acquiring services:

a. Option A: Cable and Telco traditional packaged services. Telco pays “hosting fee” and “dark fibre fee” to the holder of the NBI and sells its services to the end customer.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 12 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com b. Option B: Next Generation Network Internet services. Customer purchases Internet services directly from the NBI holder.

Customer Purchasing Options (Figure B)

Intervention: Axia (Intervenor 216)

Document Name: 2015-134.223947.2393684.Intervention(1f@z801!).pdf
Response to CRTC’s Review
of Basic Telecommunications
Services for all Canadians
Submitted by: Axia NetMedia Corporation
Date: **** 30, 2015

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians Table of Contents

1. Executive Summary .................................................................................................................................................... 3 2. Axia Overview ................................................................................................................................................................... 4 3. The Next Generation Value Chain .................................................................................................................... 7 4. Global Industry Background ................................................................................................................................ 8 4.1 Sustainable Policy Leveraging the Next Generation Business Model ..................................... 8 4.2 Next Generation Network Technical Summary ........................................................................................ 8 4.3 Telco and Cable Co. Policy Implications ......................................................................................................... 8 5. “Pro-competition” Next Generation Network Policy Structurally Separates Network Infrastructure from Web Services ................................................................................................................. 10 6. Specific Challenges in Canada ........................................................................................................................ 10 7. A Policy Road Map For Canada ........................................................................................................................ 11 7.1 CRTC .......................................................................................................................................................................................... 11 7.2 Implications of these Policies ................................................................................................................................. 11 Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 3 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 1. Executive Summary

The CRTC has commissioned a consultation process examining the CRTC’s role in ensuring that Canadians have access to world-class telecommunications services that enable them to participate actively in the digital economy.

The CRTC’s current policy ensures that Canadians in all regions have access to, at a minimum, a low-speed Internet connection.

Current issues raised by the CRTC request:

• services that should be identified as necessary for Canadians to participate in the digital economy;

• upload and download speeds necessary in this digital age;

• the possible need for funding mechanisms to support the provision of modern telecommunications services;

• the roles of the economic and regulatory players in telecommunications services, such as the private sector, governments and the CRTC; and, • Next Generation Net-Neutrality vs. legacy telecommunications services bundling For Canadians to participate in today’s rapidly advancing digital economy they will require faster, more reliable Internet connections with symmetrical upload and download speeds.

Limited access to high-speed Internet connections, and out-dated infrastructure is creating a digital divide in Canada - limiting the opportunities for economic development, and removing performance and choice from the end user. Canadians should have equal access to the high-speed Internet connections necessary to deliver Next Generation Network web services. To provide these Internet connections that Canadians need, New Basic Infrastructure (NBI) is necessary.

Based on increasing global standards, the upload and download speeds necessary in this digital age need to be scalable, from speeds of 25 Mbps to 1Gbps, with no penalties for exceeding download caps. Symmetrical upload and download speeds are necessary to take advantage of the valuable services available in the web services ecosystem such as high definition video conferencing, data back-up, distance learning and health applications and enhanced telecommuting.

Given the geographic and density diversity in Canada and high variation in existing infrastructure, Axia submits that the fundamental tenants of national public policy should be the following:

1. Optimize the use of private sector long-term lower cost infrastructure capital and only rely on public financial support where necessary to achieve a viable cost of service to end-users.

2. Create a national regulatory framework that allows local governments to elect to drive this new infrastructure so that local related infrastructure and customer needs can be taken into account.

3. Ensure the new infrastructure is not conflicted with other ownership interests in the telecom and Web Service sectors so end-users have effective and lasting competition between the Web Service sectors and legacy telecom sector.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 4 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com The Government of Canada should adopt a policy framework that supports the CRTC implementing regulations that allow either provincial or municipal governments to elect to proceed with focused New Basic Infrastructure initiatives within a nationally recognized regulatory framework. By supporting a pro-competition, Next Generation Network policy framework, Canada can enable sustained competition while enabling the creation of New Basic Infrastructure.

Concurrently, the CRTC should implement regulations that would allow the New Basic Infrastructure to be treated as shared infrastructure and attract private sector infrastructure capital. To ensure equitable sharing ownership of the New Basic Infrastructure would be limited to private sector participants that are not involved in other telecom activities. The CRTC would set out a regulatory framework that any local or provincial government could use to attract investors that would deploy the New Basic Infrastructure and if it followed the framework, the CRTC would recognize the pricing that resulted from the competitive process.

This would allow the evolution of this fibre infrastructure to be driven by ground up needs and supported locally.

These New Basic Infrastructure initiatives should pilot in Alberta.

2. Axia Overview

Axia owns, operates and sells services over fibre optic communications networks.

For over a decade, Axia has focused its business in areas where access to high bandwidth fibre infrastructure does not exist. Our success has been driven by our ability to deliver networks that provide our customers with increased choice, and provide communities with a reliable infrastructure and resultant economic benefit. Axia is focused on providing services to customers in communities in Alberta, Massachusetts and ****.

Axia delivers a distinctive value proposition to the market The success of our approach is evidenced by our growing footprint and increasing usage of our networks. Our goal is to be the preferred service provider of digital transport services delivered over high performing fibre optic networks, in the regions we operate.

• Focus on fibre transport connectivity: Axia’s focus is on delivering the highest quality and most affordable digital transport services, freeing our customers to choose the web services which best meet their needs.

• Support public policy, deliver infrastructure and increase competition in under-served regions: Axia fosters competition by separating the network from the services provided over that network, thereby increasing the customer’s choice of services and providers.

Unlike the traditional telco model, Axia’s approach creates a value chain of industry players that each excel at delivering their core competency. The result is a transformation to markedly improved performance and service, lower cost and Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 5 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com increased choice of services and providers for the end-user. (Fully aligned with principles of net neutrality)

Axia’s priority is to drive long-term, broadband growth by increasing market penetration.

With our established market position, Axia is focused on the following strategic imperatives:

• Bringing new services to market: To increase the use of our networks we invest in state-of-the-art electronics, and operating and business systems, to introduce next generation services to meet customer demands;

• Connecting new customers to our networks: We increase the viability and utility of our networks through the connection of enterprises and government sites, wireless towers and Fibre to the Premise (FTTP) initiatives; and

• Selectively expanding our network footprint: We invest in our existing geographic regions to expand our addressable market in ways that are commercially viable Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 6 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com Axia Networks

Jurisdiction: **** America: Alberta,
Canada
**** America: Western
Massachusetts, USA
****
Name: Axia Axia USA Covage
Primary
Services:
Bandwidth Bandwidth
Dark fibre
Bandwidth
Dark fibre

Network Status: Operational Early Activation Operational Network Activation: 2005 2014 2010

Fibre length: 13,000 kms 2,150 kms 8,530 kms
Headcount: 128 6 130
Customer Connections: 4,921 113 4,792
Infrastructure Replacement
Cost:
$380.0 million $70.0 million $290.0 million

Axia’s Investment: $40.0 million $0.4 million $90.0 million Operating Structure: Combination of owned fibre

networks and operating
agreements with the
Government of Alberta. The
end of the current term on
the operating agreement is
**** 30, 2018
Operating agreement
with the state is a
renewable ten year
licence – initial term ends
in 2023
Combination of
owned fibre networks
and concession
agreements with
regional communities
with terms of varying
lengths (from 15
years to 25 years)
with terms ending
from 2019 to 2037

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 7 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 3. The Next Generation Value Chain

The following diagram (Figure A) illustrates the value chain that creates the optimal competitive environment, performance and choice for the end user:

• Service Bundlers: Application providers that have “on the ground” presence and local relationships with the associated jurisdiction • Peers: **** Web Services that are globally renowned as leaders in their domains • Internet: All other web services available on the World Wide Web • Community Interconnect Grid (“CIG”): Connects the local community POI with fibre back to the closest Internet Gateway with end-to-end fibre. Standardizing bandwidth rates across the CIG eliminates the digital divide, empowering the economics for community investment in fibre. I.E. Alberta’s SuperNet • Fibre to the Premise: connects each home, business, enterprise and public sector facility with fibre back to the community POI

Next Generation Value Chain (Figure A)

Gateway: A network node equipped for interfacing with another network that uses different communication protocols

Community Interconnect Grid (CIG): A fibre grid in a region connecting multiple communities to at least one global gateway. I.E. Alberta SuperNet Community Point of Interconnect (POI): A collocated space designed for the interconnection of New Basic Infrastructure and the Community Interconnect Grid bandwidth Services

New Basic Infrastructure (NBI): Connects ****, Business, Enterprise and Tower customers with fibre back to the Community POI.

Fibre to the Premise (FTTP): A direct fibre optic connection to the home, business, tower, enterprise. Also referred to as the “last mile”

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 8 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 4. Global Industry Background

4.1 Sustainable Policy Leveraging the Next Generation Business Model 1. Axia has invested in Next Generation Networks in Canada, USA, ****, Spain and Singapore. Axia collaborated with Governments regarding Next Generation Network policy in Australia, New Zealand, Scotland, ****, Japan, Finland, Qatar, Kuwait and Tunisia. Axia implements its unique business model in markets where the government policies have concluded that the legacy Incumbent carrier approach will not enable acceptable competition and effective choice for end-user sustainably.

2. The global standard for Internet Protocols (“IP”) has enabled economies of scale and dramatically reduced the cost of technology to individual customers as long as the Ecosystem amortizes the cost of elements of a solution over many customers. Where competition exists, choice of functionality, service provider and cost all favour end user value. The benefits of an efficient marketplace are evidence in the rapid and entrepreneurial emergence of the ecosystem players.

4.2 Next Generation Network Technical Summary

1. Next Generation Networks leverage IP standards, which provide a platform for anything we can see, hear, calculate and store. As a result, regulating the voice call and the TV content is no longer relevant to “pro-competition, pro-choice policy framework” for the End-user.

2. Fibre optic networks;

• Eliminate distance, time and isolation between locations, • Have no effective capacity limitation from an end user perspective, meaning that one fibre connection is all that is necessary for the foreseeable future, • Are less expensive than copper networks to build and maintain, • Are “future-proof” for digital connectivity between fixed points, and • Are fundamentally fixed cost and therefore public policy cannot rely on competing fibre networks at the residential or small to medium enterprise (SME) premise.

3. The platforms to provide sustained evolution of high performance digital connectivity already exist; fibre for fixed wire line and Wi-Fi/LTE for mobility. What is missing is the new commercial/regulatory framework that aligns the technology with the end-user interests on a sustained basis.

4. Based on increasing global standards, the upload and download speeds necessary in this digital age need to be scalable, from speeds of 25 Mbps to 1Gbps, with no penalties for exceeding download caps.

4.3 Telco and Cable Co. Policy Implications

1. The legacy copper networks are out of date from a technology perspective, and are in a business/regulatory framework that promotes oligopolies in lieu of competition.

2. In all cases evolution to a “pro-competition policy framework” is compromised by vested interests and a history of telecommunications and cable company regulation that was based on regulating the charge for a phone-call or typically the content of a TV broadcast. The regulatory framework did not extend to the cost of the basic infrastructure or Internet services.

3. Historical legacy Incumbent Telco and Broadcast TV regulation is counterproductive in achieving a “pro-competition policy framework” because carriers get anti-trust exemptions on the presumption that they are regulated, when in fact the regulations are now dysfunctional from the customer’s perspective.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 9 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 4. The current incumbent approach of bundling certain media and voice services with the underlying network connectivity services is only possible because the incumbent has proprietary control of the network to the premise. The end-user is compromised by the incumbent using various pricing and “over the top” and capacity control tactics to drive the customer to purchase the incumbent’s preferred services as opposed to other web services. This is why consumer advocates and Web service providers argue for Net Neutrality; Legacy incumbents oppose it.

5. From the end user point of view the barrier to choice of Web services today is the legacy Incumbent fixed wire line network to their premise. This is as a result of no effective competition in fixed wireline even where both the Cable co and the Telco exist. True competition would allow customers the choice of content provider independent of data transportation provider.

6. The vast majority of premises in non-metro areas have only the legacy Telco as a fixed wire line provider.

7. **** mobile devices are dependent on data functionality (as opposed to just voice) and therefore require access to towers that are on a fibre grid to ensure end-user wireless performance. As a result competition in mobility is compromised in markets where the non-Incumbent mobile carrier must rely on their competitor’s fibre network for backhaul. This compromises mobility competition in non-metro markets.

8. Incumbent carriers naturally strive to extend their oligopolistic fixed wire line position to all telecommunication services and content and have been very effective in Canada in sustaining high prices for consumers. Some examples of their expansion of services are mobility, media rights, cloud services, data centres and security.

9. It is not possible to effectively regulate an Incumbent carrier that has integrated network services in addition to Web services, hosting services, cloud services and mobility. No regulator in any jurisdiction has been able to implement “cost based regulation” given the complexities and breadth of the services in the Incumbent portfolio.

10. User demand for broadband far outpaces the Incumbent’s capability to offer acceptable bandwidth performance but the existing copper network is too profitable to the Incumbents for them to invest in fibre networks.

11. Incumbents challenge pro competition and choice policy changes. Their arguments include that their copper is good enough, that change to their bundling approach would make their investments not viable and they would be entitled to compensation, that they have what the customers want, that web service providers are “over the top” freeloaders; none of these arguments have any merit today.

12. Incumbents decide whether they make fibre investments and on what terms they make the fibre available to anyone else. Government’s use band-aide approaches such as the Deferral accounts and the National Broadband infrastructure account to try to improve connectivity for end-users. They have been inefficient financially and ineffective from the end-users perspective.

13. Network connectivity issues are confused by CRTC marrying Canadian content initiatives and funding through incumbent carriers.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 10 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 5. “Pro-competition” Next Generation Network Policy Structurally Separates Network Infrastructure from Web Services

1. Define New Basic Infrastructure (“NBI”) as:

• The fibre between the end user premise and the aggregation point in a community,

• New towers in a community, and;

• The fibre between the new tower and the aggregation point in that community.

2. Eliminate ownership conflicts of interest by requiring that only parties that do not participate in any element of the Ecosystem services as Axia defines it are eligible to own NBI.

This structure enables sustained competition in the value chain at the digital content ecosystem level and it enables control of the single purpose fibre grid pricing through effective cost based regulation. The benefits of sharing the costs of the infrastructure are passed along to the end users.

This policy framework is proven in **** and Singapore, which have created competition and compelling end user value using these principles. It is the normal policy framework for any basic shared infrastructure. (water, power, utilities, roads, airports…) 6. Specific Challenges in Canada

1. Metro, rural and remote geographical diversity exists in essentially all Provinces.

2. Canada has National regulation in voice and tv.

3. Legacy integrated Incumbent carriers have dominant roles in each region and in every aspect of telecom.

4. Other comparable infrastructure facilities, (water, sewer, power, roads, right of ways) are all under provincial, municipal government control and attendant regulatory approaches vary.

5. Canada ranks among the highest in price and lowest in bandwidth availability for mobility and wire line services in the world as ranked by the OECD (2013 Communications Outlook, July 17, 2013).

6. Canadian media rights are amongst the most concentrated.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 11 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com 7. A Policy Road Map For Canada

7.1 CRTC

1. Implements regulations that allow either provincial governments or municipal governments to elect to proceed with NBI initiatives under their choice of price regulation provided that;

• The ownership of NBI is by private sector companies, which have no affiliates that participate in the Ecosystem, the licensed wireless sector or have competing copper facilities.

• The NBI is available to any party licensed by the CRTC on an equal open access basis.

• In addition, the NBI entity is eligible to provide bandwidth and Internet services directly to end-users.

2. Implements regulations that prohibit other parties from building fibre or tower infrastructure where NBI is implemented under this policy.

3. Agrees to use its regulatory powers to cause the use of copper to be terminated 5 years after the implementation of the NBI if requested to do so as part of the commercial framework that the local government used to secure the NBI at the outset.

7.2 Implications of these Policies

1. The framework for evolution to effective competition in both FTTP based services and mobility services would be created at the national level.

2. Local governments are empowered and can choose priorities and needs for their evolution to FTTP, making it a community by community decision 3. The Incumbents have equal and affordable access to NBI; they simply have to compete with the new Ecosystem from a level local infrastructure playing field.

4. Alberta is an ideal first adopter as Alberta already has a CIG in place. The CIG is available for both FTTP and rural / remote wireless companies, and promotes competition between mobility players.

5. Each level of government could choose whether and how to target financial support at the NBI, as it would get maximum leverage in the form of coverage and price to the End-user through a competitive license process. Use of other local infrastructure would be optimized. Decisions could be made on a community-by-community basis.

This positions each layer of government to be most effective in delivering their objectives.

6. The end-users have the opportunity to drive their own access to Next Generation Network eco-systems by supporting the NBI and rural and remote wireless infrastructure as customers and through engaging their local governments.

7. The current out-dated regulatory framework would only apply to legacy copper. The private sector, with local governments, would be able to implement the NBI without financial support and have access to the Next Generation Value Chain within the current ARPU typically charged by integrated Incumbents.

8. Local levels of government have the opportunity to specify the optimal pricing structure for sustainable access to each element of the network infrastructure. See Figure B below for two potential options available to the customer for acquiring services:

a. Option A: Cable and Telco traditional packaged services. Telco pays “hosting fee” and “dark fibre fee” to the holder of the NBI and sells its services to the end customer.

Response to CRTC’s Review of Basic Telecommunications Services for all Canadians **** 12 of 12

©2015 Axia NetMedia Corporation www.axiafibrenet.com b. Option B: Next Generation Network Internet services. Customer purchases Internet services directly from the NBI holder.

Customer Purchasing Options (Figure B)

Intervention: Axia NetMedia Corp.

Document Name: 2015-134.223947.2393685.Intervention(1f@z901!).html

Please see attached document "Axia Submission to CRTC July 14 Final - Notice 2015-134.Raisons pour comparaitre / Reasons for appearanceAxia NetMedia Corp. wishes to further discuss the suggested policy road map for CRTC and Canada with respect to a pro-competition model.Since this suggested policy framework is not yet established in Canada we feel that an appearance is necessary.

Intervention: Axia (Intervenor 216)

Document Name: 2015-134.223947.2393685.Intervention(1f@z901!).html

Please see attached document "Axia Submission to CRTC July 14 Final - Notice 2015-134.Raisons pour comparaitre / Reasons for appearanceAxia NetMedia Corp. wishes to further discuss the suggested policy road map for CRTC and Canada with respect to a pro-competition model.Since this suggested policy framework is not yet established in Canada we feel that an appearance is necessary.