Intervention: BC Broadband Association (BCBA)

Document Name: 2015-134.224004.2394790.Intervention(1fbty01!).doc
[image: BCBA_Logo01.jpg]
July 14, 2015
Mr. John Traversy
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, ON, *** ***

[bookmark: OLE_LINK3][bookmark: OLE_LINK4][bookmark: OLE_LINK1][bookmark: OLE_LINK2][bookmark: OLE_LINK7][bookmark: OLE_LINK8][bookmark: OLE_LINK5][bookmark: OLE_LINK6][bookmark: OLE_LINK9][bookmark: OLE_LINK10]Re: Comments to Telecom Notice of Consultation CRTC 2015-134 - Review of basic telecommunications services (File No. 8663-C12-201503186)**** Mr. Traversy:

The Commission is initiating a public proceeding to conduct a comprehensive review of its policies regarding basic telecommunications services in Canada and of the telecommunications services that Canadians require to participate meaningfully in the digital economy. We request to appear at the public hearing and plan to participate from the Commission’s regional office in Vancouver via videoconference.

The BC Broadband Association (“BCBA”) is a group of telecommunications service providers, equipment suppliers and infrastructure constructors in Western Canada. Our group applauds the Commission for initiating this review of basic telecommunications services. Our group is submitting the following comments.

Summary

**** regional internet service providers are an economic success story, contributing to the strength of Canada’s telecommunications industry and the vitality of the rural communities they serve.

The deferral account mechanism was created to ensure that Canadians in high-cost serving areas have access to basic telephone service while at the same time ensuring that, to the maximum extent possible, Canadian consumers benefit from competition in the telecommunications industry.

In the years since the inception of this mechanism, the penetration of broadband `connectivity has increased to the point of near-ubiquitous coverage throughout Canada, and the internet has become integrated into the fabric of Canadian society.

Through market forces alone, the Commission estimates that broadband (> 5 Mbps) internet connectivity has reached 91% of Canadian households (not including satellite coverage). The Commission is contemplating the classification of broadband service as a basic service, in order to reach the remaining 9% of households.

In addition to basic voice service, Internet connectivity at a speed of 5 Mbps downstream and 1 Mbps upstream should also be considered a basic telecommunications service. However, the BCBA contends that by introducing a deferral account (ongoing subsidy) mechanism, the Commission will do irreparable harm to the vibrant industry of small internet service providers (ISPs) serving rural Canada, resulting in a loss of competition for many of the same citizens that this program is intended to help.

If the Commission classifies broadband as a basic service, the Commission should refrain from imposing a deferral account mechanism on this market. Instead, the Commission should support Canadians’ access to connectivity by supporting and encouraging programs such as Digital Canada 150 and other provincial and regional initiatives.

Through the past support of the many national, provincial, and regional initiatives, the rural market today is highly competitive. Consumers have access to multiple service providers, high levels of service and competitive pricing in many of the markets served by our members. The service providers serving these markets do not require an operating subsidy.

Canadians’ evolving needs for telecommunications services
1. Canadians are using telecommunications services to fulfill many social, economic, and cultural needs in today’s digital economy.

a) Explain how telecommunications services are used to meet these needs. For example, uses may include e-commerce (i.e. the online purchase and trade of products or services), e-banking and/or telephone banking, e-health or telehealth services, telework, and distance education. Which of these uses of telecommunications services are the most important to ensure that Canadians meaningfully participate in the digital economy?

Telecommunications services in Canada fulfill Canadians’ social, economic and cultural needs today. These services convey information to and from users through phones, computers, tablets, and a multitude of other devices. Of the various telecommunications services available today, we believe access to broadband internet and mobile wireless are currently the most important services to ensure Canadians meaningfully participate in the digital economy.

1. b) Explain which telecommunications services are most important to support these needs and uses. What characteristics (e.g. capacity, mobility, high speed, and low latency) should these telecommunications services have?

Communications networks are evolving to respond to the increase in demand for real-time and streaming applications. These applications require high speed, low latency, and higher sustained bandwidth than the usage requirements that prevailed a decade ago. For most residential and business users, the downstream bandwidth requirements exceed the upstream requirements by a factor of about ten, though this balance may shift if high-resolution video conferencing or webcam use increases.

The demands on mobile networks have increased as well, though not to the extent of home-based and business-based use. Mobile users demand ubiquitous connectivity for messaging and the use of interconnected applications, and indeed for voice communications. The consumption of media across mobile networks is growing, but anecdotally appears to be limited to low-bandwidth media that can be effectively buffered by a small device, such as low-resolution video and audio content.

1. c) Identify and explain the barriers that limit or prevent Canadians from meaningfully participating in the digital economy (e.g. availability, quality, price, digital literacy, and concerns related to privacy and security). Identify which segments of the Canadian population are experiencing such barriers.

The main barriers preventing Canadians from participating in the digital economy are the availability and affordability of reliable, high-speed, low-latency broadband connections, especially in rural areas. With an estimated 75 percent of Canadians within 160 kilometers of the U.S. border, large telecommunications carriers have concentrated their trade in this part of Canada. This model results in lower costs and higher profits.

Most urban areas in northern Canada are adequately served, but outside of these cities, broadband internet and mobile wireless are often not available. These small communities are the segment of the population that are underserved and unserved. In British Columbia today, 7% of the population remains underserved according to the proposed 5 Mbps criteria.

1. d) Identify and explain any enablers that allow Canadians to meaningfully participate in the digital economy (e.g. connected devices and applications).

The tremendous growth of the internet in recent years has led to a rapidly changing digital economy. The cost associated with starting up a small business venture has been greatly reduced through our ability to market goods and services online. The digital economy has enabled those with broadband access to live in rural communities, while marketing to the entire world, and it has also allowed employees to work from home in communities far from their employers’ offices.

In small communities across Canada, the evolving digital economy has given residents with broadband access the ability to live and work in their community while earning a decent income and avoiding long commutes.

The BCBA members have served small communities across BC for many years, and we have seen first-hand that broadband access is necessary to properly participate in this digital economy. Without access to reliable internet at reasonable speeds, it is impossible to meet client deadlines, access files over VPN connections, respond in a timely manner to emails, and participate in video conferencing.

1. e) As Canada’s digital economy continues to grow and evolve during the next 5 to 10 years, which telecommunications services are Canadians expected to need to participate meaningfully? Specify how your responses to parts a) through d) above would change based on your answer.

Over the course of the next 5 to 10 years, we expect that the applications that are run over home internet connections will become more bandwidth-intensive and delay-sensitive. We expect that the services accessed by homes and businesses will become ever more integrated with daily life and business processes, and so the accessibility of these services will be ever more critical.

Our members have seen burgeoning adoption of high quality VoIP, cloud-based services, and VPN connectivity. These applications support real-time interaction between consumers and suppliers in the digital economy, and all of these applications require high-speed low-latency terrestrial connections in order to function properly.

We also expect that, as our dependence on connected services grows, investment in urban infrastructure will continue unabated. Canada's major cable and telephone incumbents will face increasing pressure to re-invest in their urban infrastructure. By comparison, investment in rural markets produces lower return on investments, so rural infrastructure will suffer. Without continued government support directed at rural infrastructure and the smaller Canadian telecommunications service providers active in rural markets, the digital divide will deepen in communities that are too small to attract fibre to the home investments.

Following the growing trend of fibre-to-the home, most of Canada’s urban copper infrastructure will eventually be replaced with fibre-optic infrastructure. As fibre-optic infrastructure replaces copper, the PSTN / CO model will retire and connections will move to IP-based infrastructure. As copper infrastructure becomes obsolete, rural communities’ access to scalable infrastructure will be critical to their participation in the digital economy.

It should be noted that the rural copper-supported voice subsidy regime also indirectly subsidizes rural backbone fibre infrastructure. The impact of any change to the voice subsidy regime should be carefully considered in the light of the need for rural communities to have access to fibre transport.

In the next 5 to 10 years, Canada’s rural communities will be well served by a commitment on behalf of the Commission and Industry Canada to see that funding is available for rural telecommunications systems, and that competition in these markets remains strong. Without this commitment, the digital divide will grow and Canada’s rural economy will weaken.

2. The Commission’s current target speeds for broadband Internet access service are a minimum of 5 Mbps download and 1 Mbps upload, based on uses that consumers should reasonably expect to make of the Internet. Are these target speeds sufficient to meet the minimum needs of Canadians today? If not, what should the new targets be and what time frame would be reasonable to achieve these new targets?

We believe the Commission’s proposed criteria of 5 Mbps download and 1 Mbps upload is a good current target. Our members in the rural space typically find that many customers select packages below 5 Mbps although higher speeds are available. For example, a 3 Mbps connection can deliver a high-definition video stream (i.e. Netflix).

We are not in favour of increasing the criteria of broadband beyond 5 Mbps at this time, as the majority of rural service providers are just now reaching these targets. The Digital Canada 150 Program is injecting $305 Million to increase speed availability to this level.

As described in our response to 1.e) above, we foresee that bandwidth demands will increase during the next 5 to 10 years. We encourage the Commission to revisit this target in 5 years to determine whether this remains an appropriate service level for full participation in the evolving digital economy.

The Commission’s role regarding access to basic telecommunications services

3. 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.

In order to meaningfully participate in the digital economy, Canadian residents and businesses require reliable high-speed, low-latency connections that support two-way voice, video, VPN connectivity, and large file transfers. These characteristics enable both interpersonal communications and the use of cloud-based services that are crucial to many businesses.

In addition to basic voice service, then, Internet connectivity at a speed of 5 Mbps downstream and 1 Mbps upstream should also be considered a basic telecommunications service.

With a 5 Mbps / 1 Mbps connection speed, Canadians are able to set up businesses, tele-commute, access government services, communicate with customers, and remain connected to friends and family.

3. 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.

In considering whether a particular service meets the needs of a basic service, the Commission should consider the underlying technology in the context of the cost of serving a particular area.

The underlying technologies used today vary substantially in their ability to support the services and applications demanded by Canadians. Fibre is the superior technology, enabling substantial capacity for future network growth once installed. Technologies such as DSL, cable, and fixed wireless technologies enable connectivity that meets current needs, and provide scope for future expansion. Fixed wireless in particular is well-suited to providing broadband connectivity in sparsely populated areas, and 4G technology can be deployed in rural areas to enable services that rival DSL and cable.

Satellite services are capable of meeting the broadband and voice demands of households in very remote and rural areas where terrestrial systems are prohibitively expensive to deploy. While these services are currently limited by high latency and low bandwidth transfer limits, they are adequate for basic use that does not include real-time or VPN services. Satellite internet is already available throughout most parts of Canada where terrestrial services are unavailable, so no subsidy mechanism is required in order to ensure access to these services.

The design objectives of mobile wireless networks make these systems ill-suited to providing broadband services to households. In particular, the data-transfer pricing associated with mobile networks is high (i.e. $/GB), these networks are not optimized to provide reliable sustained bandwidth for video streaming or other real-time applications.

The BCBA believes that basic broadband connectivity can be delivered by any of the above-mentioned technologies, with the caveat that satellite and mobile wireless technologies are sub-optimal delivery mechanisms, and should be relied upon only where terrestrial systems are not feasible to deploy.

3. b) Identify, with supporting rationale, the terms, conditions, and service characteristics under which basic telecommunications services should be provided. Should any obligations be placed on the provider(s) of these services? If so, what obligations and on which service provider(s)?

Today, the obligation to provide basic voice services rests wholly with the incumbent ILEC. It is important to recognize the incumbent ILEC is rarely a leader in the provision of rural broadband services today. The rural broadband market is well-served by a highly competitive ecosystem of small, regionally-based internet service providers. Any obligation to provide broadband services should not be arbitrarily assigned to the incumbent ILEC.

While the legacy voice mandate may remain important in the short term, eventually this will no longer be a service that rural Canadians rely on. The copper infrastructure and PSTN will be phased out of service, replaced by IP voice delivered over fibre or fixed wireless infrastructure. The rural copper infrastructure will become obsolete, and will be impractical to maintain within a reasonable subsidy framework. As the role of the copper infrastructure diminishes, the obligation to serve currently assigned to the ILEC should be relinquished.

Satellite today provides adequate voice service for emergency purposes.

Any broadband services defined as basic services should deliver reliable connectivity and consistent speeds. Minimum sustained throughput levels should be available a high percentage of the time, to permit the end users to depend on these services.

Further, any broadband services defined as basic services should meet certain minimum standards of availability. The availability of broadband services is important to maintaining business continuity (for example through the availability of point-of-sale terminals), and is important for Canadians to meet deadlines such as those associated with government services.

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

We believe that mandated price setting is appropriate only in the scenario where an ongoing subsidy is delivered to the service provider. The BCBA does not advocate any ongoing subsidy mechanism associated with the provision of broadband connectivity services. Therefore, we do not believe the Commission should consider price setting at this time.

In the BCBA members’ rural operating areas, competition has resulted in lower prices that are approaching urban prices in some markets. As more competition has been introduced to rural markets and technology has improved, the price for monthly service has fallen and continues to become more and more competitive without the introduction of price regulation.

4. 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 alone have resulted in resulted in excellent service levels in urban and suburban parts of Canada.

In rural parts of Canada, a number of small regional internet service providers and community-led initiatives have brought 5 Mbps terrestrial connectivity to many areas that are not serviced by Canada’s large incumbent service providers.

In many rural and remote areas (i.e. HCSAs), market forces alone cannot support 5 Mbps connectivity to every household. Government-sponsored funding programs that offset capital expenses have brought connectivity to many households in these areas. Local governments have been instrumental in directing funding and ensuring that government funding is effectively deployed.

The Digital Canada 150 program will result in the deployment of 5 Mbps services to thousands of rural and remote communities across Canada.

The continuation of directed-funding programs, administered by various levels of government, is the most effective way to bring connectivity to rural and remote Canadian households in a fiscally responsible manner. These programs have established good service levels for most rural Canadians without an ongoing operational subsidy.

5. 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 role in ensuring availability of services is to promote a healthy marketplace that supports a diversity of firms, to ensure that market forces produce the best result for Canadians.

Many rural markets today are served by a mix of large national mobile carriers, small locally-based fixed wireless broadband carriers, and satellite carriers. A diversity of broadband service providers in the Canadian market as a whole is crucial to ensuring a flexible industry that delivers appropriate options and a variety of choices to Canadian consumers.

A deferral account approach to broadband service will result in a less diverse telecommunications industry, and will result in one-size-fits-all approach to broadband delivery. Such an approach will have higher costs than a market-led approach, and will lead to stagnation of services in rural markets over time, and an ongoing operational subsidy requirement.

Rather than mandate a deferral account mechanism, the Commission’s role should be to encourage all levels of government to continue to promote rural broadband through programs such as Digital Canada 150. These capital subsidy programs encourage competitive proposals that deliver the maximum impact per dollar spent.

6. In Telecom Regulatory Policy 2011-291, the Commission stated that it would closely monitor developments in the industry regarding the achievement of its broadband Internet target speeds to determine whether regulatory intervention may be needed. What action, if any, should the Commission take in cases where its target speeds will not be achieved by the end of 2015?

It has already been established through the Digital Canada 150 Program that there are areas without access to the broadband target speeds today. While some of the projects will be completed in 2015, the bulk will be completed in 2016 and 2017. It would not make sense for the Commission to take any action until the impact of that granting program is known. The commission could be prepared to look at this in 2018 to evaluate any regions that are left under-served at that stage.

7. In Telecom Regulatory Policy 2013-711, the Commission stated its intention to establish a mechanism, as required, in Northwestel’s operating territory to support the provision of modern telecommunications services. Such a mechanism would fund capital infrastructure investment in transport facilities (e.g. fibre, microwave, and satellite), as well as the cost of maintaining and enhancing these facilities. The Commission considered that this mechanism should complement, and not replace, other investments from the private sector and governments, including public-private partnerships.

a) Explain, with supporting rationale, whether there is a need for the Commission to establish such a mechanism in Northwestel’s operating territory. As well, explain whether there is a need for such a mechanism in other regions of Canada.

In many isolated areas of British Columbia, substantial capital infrastructure investment is required in order to bring terrestrial services to households. For example, many island communities, and coastal communities are only accessible by boat or aircraft, and numerous northern communities are accessible only by dirt road, or by long stretches of un-serviced highway.

These isolated communities would require long microwave backhaul networks, undersea cable, or long segments of overhead cable in order to provide terrestrial connectivity. Many of these communities support substantial economic activity (i.e. resource, agriculture, tourism), but could not generate the return on investment required for the substantial capital expenditures required to construct cable or microwave transport.

In many island communities, there is existing microwave backhaul connectivity to the community, however the community is large enough that the microwave backhaul does not have sufficient capacity to enable service providers to offer 5 Mbps to all households, and the microwave backhaul is not expandable. In these cases, undersea cable is the only option to provide 5 Mbps connectivity to all households.

A mechanism to bring terrestrial services to these communities would be welcomed by these communities.
Publicly-funded capital infrastructure should be made available to all service providers through wholesale tariff or open access mechanisms.
7. b) What impact would the establishment of such a mechanism have on private sector investment and government programs to fund the provision of modern telecommunications services?
Without government support for capital infrastructure, private enterprise will not deliver terrestrial services to isolated communities.

With government support, we have seen private enterprise deliver innovative services to many remote communities, and this innovation and investment can be expected to arise in more isolated communities.

The BCBA has seen throughout our serving areas that economic development receives a substantial boost with the introduction of broadband services in rural communities. All citizens benefit from an improvement in the accessibility of social services, and businesses are able to expand in new and innovative ways.

Regulatory measures for basic telecommunications services
8. What changes, if any, should be made to the obligation to serve and the basic service objective?
The BCBA contends that no changes should be made at this time to the obligation to serve and the basic service objective as it relates to voice services.
9. Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?

Broadband Internet service is indeed a basic telecommunications service. However, broadband service should not be part of a deferral account mechanism such as that currently in place for voice services.

Satellite connectivity, available throughout Canada, already provides a level of connectivity that satisfies basic criteria for broadband.

The funding of broadband connectivity through a deferral account mechanism would result in a loss of diversity in the telecommunications industry, and, in the long term, a stagnation of service levels in the communities that are currently well-served by small regionally-based service providers.

10. What changes, if any, should be made to the existing local service subsidy regime? What resulting changes, if any, would be required to the existing regulatory frameworks (e.g. price cap regimes)?

At this time, no changes should be made to the existing local service subsidy regime.
The existing regime should be reviewed in 2020. At that time, the impact of the Digital Canada 150 program will be more apparent.

Further, we note that many Canadians are substituting mobile services for copper telephony services. In five years’ time, the extent of this change may result in the obsolescence of the existing local service subsidy regime.

11. 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.

We recommend that no changes be made to the collection mechanism.

12. 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.

The existing subsidy regime is still necessary to ensure the availability of voice services. Currently, basic voice service provides access to emergency response services for many rural Canadians.

Broadband service should not be subsidized through the existing mechanism due to the damaging impact this will have on Canada’s telecommunications industry, and the potential for long-term reduction of rural Canadians’ service levels and choices.

13. 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?

The existing funding mechanism for voice should be maintained. The mechanism to fund infrastructure investment in transport facilities, as outlined in 2013-711, provides a good framework to support identified needs in Canadian telecommunications infrastructure.

The first priority for infrastructure funding in British Columbia should be infrastructure to bring terrestrial connectivity to isolated communities. This infrastructure could be undersea cable, long overhead cable paths, or microwave backhaul networks.

The second priority for infrastructure funding in British Columbia should be access networks such as fibre-to-the home, fixed wireless networks, or local DSL or cable loops. This infrastructure has been effectively targeted through government funding in the past, and is currently targeted by the Digital Canada 150 program.

The experience of BCBA members suggests that ongoing subsidies for access networks would be required to support networks that service less than 25 customers.
13. b) In which regions of Canada should funding be provided?
Funding should be targeted at very remote, isolated communities that have no terrestrial broadband connectivity.

13. 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)?

The existing subsidy for rural voice delivered over copper networks should continue to be directed to the ILEC.
Any new funding awarded for broadband development should be determined through needs analysis and competitive bidding processes, similar to the Digital Canada 150 program.
13. d) How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?
A competitive bidding process will ensure that the costs of providing service are not excessive.

The Digital Canada 150 program set service targets, and allowed private firms to present the cost of meeting these targets, enabling a cost-benefit analysis of the solutions presented. This system allows Industry Canada clear visibility into the true costs associated with improving broadband connectivity for Canadians.

13. 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?

A competitive bidding process is the best mechanism for distributing funding.
Some mechanism should be in place to adjust the subsidy to reflect actual costs, where a service provider presents an acceptable case for reasonable and unforeseeable cost overruns.
13. f) Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?

Capital infrastructure that is implemented using public funding, such as cable that brings connectivity to a remote or isolated community, should be available on a wholesale basis to service providers.

Tariff rates are not appropriate for access to publicly-funded infrastructure, due to the wide variety of costs associated with providing service to diverse communities across Canada.
13. g) Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

If the Commission implements an ongoing subsidy regime, we agree that a maximum retail rate is appropriate. We are not in favour of ongoing subsidies at this time, but we do believe that broadband prices should remain affordable to Canadians.

If the Commission implements a maximum retail rate, this rate should be referenced to the price of a basket of comparable goods in competitive markets (i.e. urban or suburban areas).

13. 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.

The existing residential local wireline service subsidy should not be replaced. The existing subsidy should be unchanged, and no new deferral account mechanism should be put in place for broadband services.

The existing voice subsidy should be reviewed on an annual basis and be subject to a review to determine its future necessity within five years.
Closing Comments
We would like to thank the Commission for the opportunity to present our perspective on these issues.
Sincerely,
[image: ]
Bob ****
President
British Columbia Broadband Association
*** End of Document ***
248 **** St. ****, BC, *** ***
P *-***-***-**** / F *-***-***-****
******@***.com
WW4
British CDIumbia
Broadband Association

Intervention: BC Broadband Association (Intervenor 275)

Document Name: 2015-134.224004.2394790.Intervention(1fbty01!).doc
[image: BCBA_Logo01.jpg]
July 14, 2015
Mr. John Traversy
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, ON, *** ***

[bookmark: OLE_LINK3][bookmark: OLE_LINK4][bookmark: OLE_LINK1][bookmark: OLE_LINK2][bookmark: OLE_LINK7][bookmark: OLE_LINK8][bookmark: OLE_LINK5][bookmark: OLE_LINK6][bookmark: OLE_LINK9][bookmark: OLE_LINK10]Re: Comments to Telecom Notice of Consultation CRTC 2015-134 - Review of basic telecommunications services (File No. 8663-C12-201503186)**** Mr. Traversy:

The Commission is initiating a public proceeding to conduct a comprehensive review of its policies regarding basic telecommunications services in Canada and of the telecommunications services that Canadians require to participate meaningfully in the digital economy. We request to appear at the public hearing and plan to participate from the Commission’s regional office in Vancouver via videoconference.

The BC Broadband Association (“BCBA”) is a group of telecommunications service providers, equipment suppliers and infrastructure constructors in Western Canada. Our group applauds the Commission for initiating this review of basic telecommunications services. Our group is submitting the following comments.

Summary

**** regional internet service providers are an economic success story, contributing to the strength of Canada’s telecommunications industry and the vitality of the rural communities they serve.

The deferral account mechanism was created to ensure that Canadians in high-cost serving areas have access to basic telephone service while at the same time ensuring that, to the maximum extent possible, Canadian consumers benefit from competition in the telecommunications industry.

In the years since the inception of this mechanism, the penetration of broadband `connectivity has increased to the point of near-ubiquitous coverage throughout Canada, and the internet has become integrated into the fabric of Canadian society.

Through market forces alone, the Commission estimates that broadband (> 5 Mbps) internet connectivity has reached 91% of Canadian households (not including satellite coverage). The Commission is contemplating the classification of broadband service as a basic service, in order to reach the remaining 9% of households.

In addition to basic voice service, Internet connectivity at a speed of 5 Mbps downstream and 1 Mbps upstream should also be considered a basic telecommunications service. However, the BCBA contends that by introducing a deferral account (ongoing subsidy) mechanism, the Commission will do irreparable harm to the vibrant industry of small internet service providers (ISPs) serving rural Canada, resulting in a loss of competition for many of the same citizens that this program is intended to help.

If the Commission classifies broadband as a basic service, the Commission should refrain from imposing a deferral account mechanism on this market. Instead, the Commission should support Canadians’ access to connectivity by supporting and encouraging programs such as Digital Canada 150 and other provincial and regional initiatives.

Through the past support of the many national, provincial, and regional initiatives, the rural market today is highly competitive. Consumers have access to multiple service providers, high levels of service and competitive pricing in many of the markets served by our members. The service providers serving these markets do not require an operating subsidy.

Canadians’ evolving needs for telecommunications services
1. Canadians are using telecommunications services to fulfill many social, economic, and cultural needs in today’s digital economy.

a) Explain how telecommunications services are used to meet these needs. For example, uses may include e-commerce (i.e. the online purchase and trade of products or services), e-banking and/or telephone banking, e-health or telehealth services, telework, and distance education. Which of these uses of telecommunications services are the most important to ensure that Canadians meaningfully participate in the digital economy?

Telecommunications services in Canada fulfill Canadians’ social, economic and cultural needs today. These services convey information to and from users through phones, computers, tablets, and a multitude of other devices. Of the various telecommunications services available today, we believe access to broadband internet and mobile wireless are currently the most important services to ensure Canadians meaningfully participate in the digital economy.

1. b) Explain which telecommunications services are most important to support these needs and uses. What characteristics (e.g. capacity, mobility, high speed, and low latency) should these telecommunications services have?

Communications networks are evolving to respond to the increase in demand for real-time and streaming applications. These applications require high speed, low latency, and higher sustained bandwidth than the usage requirements that prevailed a decade ago. For most residential and business users, the downstream bandwidth requirements exceed the upstream requirements by a factor of about ten, though this balance may shift if high-resolution video conferencing or webcam use increases.

The demands on mobile networks have increased as well, though not to the extent of home-based and business-based use. Mobile users demand ubiquitous connectivity for messaging and the use of interconnected applications, and indeed for voice communications. The consumption of media across mobile networks is growing, but anecdotally appears to be limited to low-bandwidth media that can be effectively buffered by a small device, such as low-resolution video and audio content.

1. c) Identify and explain the barriers that limit or prevent Canadians from meaningfully participating in the digital economy (e.g. availability, quality, price, digital literacy, and concerns related to privacy and security). Identify which segments of the Canadian population are experiencing such barriers.

The main barriers preventing Canadians from participating in the digital economy are the availability and affordability of reliable, high-speed, low-latency broadband connections, especially in rural areas. With an estimated 75 percent of Canadians within 160 kilometers of the U.S. border, large telecommunications carriers have concentrated their trade in this part of Canada. This model results in lower costs and higher profits.

Most urban areas in northern Canada are adequately served, but outside of these cities, broadband internet and mobile wireless are often not available. These small communities are the segment of the population that are underserved and unserved. In British Columbia today, 7% of the population remains underserved according to the proposed 5 Mbps criteria.

1. d) Identify and explain any enablers that allow Canadians to meaningfully participate in the digital economy (e.g. connected devices and applications).

The tremendous growth of the internet in recent years has led to a rapidly changing digital economy. The cost associated with starting up a small business venture has been greatly reduced through our ability to market goods and services online. The digital economy has enabled those with broadband access to live in rural communities, while marketing to the entire world, and it has also allowed employees to work from home in communities far from their employers’ offices.

In small communities across Canada, the evolving digital economy has given residents with broadband access the ability to live and work in their community while earning a decent income and avoiding long commutes.

The BCBA members have served small communities across BC for many years, and we have seen first-hand that broadband access is necessary to properly participate in this digital economy. Without access to reliable internet at reasonable speeds, it is impossible to meet client deadlines, access files over VPN connections, respond in a timely manner to emails, and participate in video conferencing.

1. e) As Canada’s digital economy continues to grow and evolve during the next 5 to 10 years, which telecommunications services are Canadians expected to need to participate meaningfully? Specify how your responses to parts a) through d) above would change based on your answer.

Over the course of the next 5 to 10 years, we expect that the applications that are run over home internet connections will become more bandwidth-intensive and delay-sensitive. We expect that the services accessed by homes and businesses will become ever more integrated with daily life and business processes, and so the accessibility of these services will be ever more critical.

Our members have seen burgeoning adoption of high quality VoIP, cloud-based services, and VPN connectivity. These applications support real-time interaction between consumers and suppliers in the digital economy, and all of these applications require high-speed low-latency terrestrial connections in order to function properly.

We also expect that, as our dependence on connected services grows, investment in urban infrastructure will continue unabated. Canada's major cable and telephone incumbents will face increasing pressure to re-invest in their urban infrastructure. By comparison, investment in rural markets produces lower return on investments, so rural infrastructure will suffer. Without continued government support directed at rural infrastructure and the smaller Canadian telecommunications service providers active in rural markets, the digital divide will deepen in communities that are too small to attract fibre to the home investments.

Following the growing trend of fibre-to-the home, most of Canada’s urban copper infrastructure will eventually be replaced with fibre-optic infrastructure. As fibre-optic infrastructure replaces copper, the PSTN / CO model will retire and connections will move to IP-based infrastructure. As copper infrastructure becomes obsolete, rural communities’ access to scalable infrastructure will be critical to their participation in the digital economy.

It should be noted that the rural copper-supported voice subsidy regime also indirectly subsidizes rural backbone fibre infrastructure. The impact of any change to the voice subsidy regime should be carefully considered in the light of the need for rural communities to have access to fibre transport.

In the next 5 to 10 years, Canada’s rural communities will be well served by a commitment on behalf of the Commission and Industry Canada to see that funding is available for rural telecommunications systems, and that competition in these markets remains strong. Without this commitment, the digital divide will grow and Canada’s rural economy will weaken.

2. The Commission’s current target speeds for broadband Internet access service are a minimum of 5 Mbps download and 1 Mbps upload, based on uses that consumers should reasonably expect to make of the Internet. Are these target speeds sufficient to meet the minimum needs of Canadians today? If not, what should the new targets be and what time frame would be reasonable to achieve these new targets?

We believe the Commission’s proposed criteria of 5 Mbps download and 1 Mbps upload is a good current target. Our members in the rural space typically find that many customers select packages below 5 Mbps although higher speeds are available. For example, a 3 Mbps connection can deliver a high-definition video stream (i.e. Netflix).

We are not in favour of increasing the criteria of broadband beyond 5 Mbps at this time, as the majority of rural service providers are just now reaching these targets. The Digital Canada 150 Program is injecting $305 Million to increase speed availability to this level.

As described in our response to 1.e) above, we foresee that bandwidth demands will increase during the next 5 to 10 years. We encourage the Commission to revisit this target in 5 years to determine whether this remains an appropriate service level for full participation in the evolving digital economy.

The Commission’s role regarding access to basic telecommunications services

3. 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.

In order to meaningfully participate in the digital economy, Canadian residents and businesses require reliable high-speed, low-latency connections that support two-way voice, video, VPN connectivity, and large file transfers. These characteristics enable both interpersonal communications and the use of cloud-based services that are crucial to many businesses.

In addition to basic voice service, then, Internet connectivity at a speed of 5 Mbps downstream and 1 Mbps upstream should also be considered a basic telecommunications service.

With a 5 Mbps / 1 Mbps connection speed, Canadians are able to set up businesses, tele-commute, access government services, communicate with customers, and remain connected to friends and family.

3. 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.

In considering whether a particular service meets the needs of a basic service, the Commission should consider the underlying technology in the context of the cost of serving a particular area.

The underlying technologies used today vary substantially in their ability to support the services and applications demanded by Canadians. Fibre is the superior technology, enabling substantial capacity for future network growth once installed. Technologies such as DSL, cable, and fixed wireless technologies enable connectivity that meets current needs, and provide scope for future expansion. Fixed wireless in particular is well-suited to providing broadband connectivity in sparsely populated areas, and 4G technology can be deployed in rural areas to enable services that rival DSL and cable.

Satellite services are capable of meeting the broadband and voice demands of households in very remote and rural areas where terrestrial systems are prohibitively expensive to deploy. While these services are currently limited by high latency and low bandwidth transfer limits, they are adequate for basic use that does not include real-time or VPN services. Satellite internet is already available throughout most parts of Canada where terrestrial services are unavailable, so no subsidy mechanism is required in order to ensure access to these services.

The design objectives of mobile wireless networks make these systems ill-suited to providing broadband services to households. In particular, the data-transfer pricing associated with mobile networks is high (i.e. $/GB), these networks are not optimized to provide reliable sustained bandwidth for video streaming or other real-time applications.

The BCBA believes that basic broadband connectivity can be delivered by any of the above-mentioned technologies, with the caveat that satellite and mobile wireless technologies are sub-optimal delivery mechanisms, and should be relied upon only where terrestrial systems are not feasible to deploy.

3. b) Identify, with supporting rationale, the terms, conditions, and service characteristics under which basic telecommunications services should be provided. Should any obligations be placed on the provider(s) of these services? If so, what obligations and on which service provider(s)?

Today, the obligation to provide basic voice services rests wholly with the incumbent ILEC. It is important to recognize the incumbent ILEC is rarely a leader in the provision of rural broadband services today. The rural broadband market is well-served by a highly competitive ecosystem of small, regionally-based internet service providers. Any obligation to provide broadband services should not be arbitrarily assigned to the incumbent ILEC.

While the legacy voice mandate may remain important in the short term, eventually this will no longer be a service that rural Canadians rely on. The copper infrastructure and PSTN will be phased out of service, replaced by IP voice delivered over fibre or fixed wireless infrastructure. The rural copper infrastructure will become obsolete, and will be impractical to maintain within a reasonable subsidy framework. As the role of the copper infrastructure diminishes, the obligation to serve currently assigned to the ILEC should be relinquished.

Satellite today provides adequate voice service for emergency purposes.

Any broadband services defined as basic services should deliver reliable connectivity and consistent speeds. Minimum sustained throughput levels should be available a high percentage of the time, to permit the end users to depend on these services.

Further, any broadband services defined as basic services should meet certain minimum standards of availability. The availability of broadband services is important to maintaining business continuity (for example through the availability of point-of-sale terminals), and is important for Canadians to meet deadlines such as those associated with government services.

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

We believe that mandated price setting is appropriate only in the scenario where an ongoing subsidy is delivered to the service provider. The BCBA does not advocate any ongoing subsidy mechanism associated with the provision of broadband connectivity services. Therefore, we do not believe the Commission should consider price setting at this time.

In the BCBA members’ rural operating areas, competition has resulted in lower prices that are approaching urban prices in some markets. As more competition has been introduced to rural markets and technology has improved, the price for monthly service has fallen and continues to become more and more competitive without the introduction of price regulation.

4. 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 alone have resulted in resulted in excellent service levels in urban and suburban parts of Canada.

In rural parts of Canada, a number of small regional internet service providers and community-led initiatives have brought 5 Mbps terrestrial connectivity to many areas that are not serviced by Canada’s large incumbent service providers.

In many rural and remote areas (i.e. HCSAs), market forces alone cannot support 5 Mbps connectivity to every household. Government-sponsored funding programs that offset capital expenses have brought connectivity to many households in these areas. Local governments have been instrumental in directing funding and ensuring that government funding is effectively deployed.

The Digital Canada 150 program will result in the deployment of 5 Mbps services to thousands of rural and remote communities across Canada.

The continuation of directed-funding programs, administered by various levels of government, is the most effective way to bring connectivity to rural and remote Canadian households in a fiscally responsible manner. These programs have established good service levels for most rural Canadians without an ongoing operational subsidy.

5. 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 role in ensuring availability of services is to promote a healthy marketplace that supports a diversity of firms, to ensure that market forces produce the best result for Canadians.

Many rural markets today are served by a mix of large national mobile carriers, small locally-based fixed wireless broadband carriers, and satellite carriers. A diversity of broadband service providers in the Canadian market as a whole is crucial to ensuring a flexible industry that delivers appropriate options and a variety of choices to Canadian consumers.

A deferral account approach to broadband service will result in a less diverse telecommunications industry, and will result in one-size-fits-all approach to broadband delivery. Such an approach will have higher costs than a market-led approach, and will lead to stagnation of services in rural markets over time, and an ongoing operational subsidy requirement.

Rather than mandate a deferral account mechanism, the Commission’s role should be to encourage all levels of government to continue to promote rural broadband through programs such as Digital Canada 150. These capital subsidy programs encourage competitive proposals that deliver the maximum impact per dollar spent.

6. In Telecom Regulatory Policy 2011-291, the Commission stated that it would closely monitor developments in the industry regarding the achievement of its broadband Internet target speeds to determine whether regulatory intervention may be needed. What action, if any, should the Commission take in cases where its target speeds will not be achieved by the end of 2015?

It has already been established through the Digital Canada 150 Program that there are areas without access to the broadband target speeds today. While some of the projects will be completed in 2015, the bulk will be completed in 2016 and 2017. It would not make sense for the Commission to take any action until the impact of that granting program is known. The commission could be prepared to look at this in 2018 to evaluate any regions that are left under-served at that stage.

7. In Telecom Regulatory Policy 2013-711, the Commission stated its intention to establish a mechanism, as required, in Northwestel’s operating territory to support the provision of modern telecommunications services. Such a mechanism would fund capital infrastructure investment in transport facilities (e.g. fibre, microwave, and satellite), as well as the cost of maintaining and enhancing these facilities. The Commission considered that this mechanism should complement, and not replace, other investments from the private sector and governments, including public-private partnerships.

a) Explain, with supporting rationale, whether there is a need for the Commission to establish such a mechanism in Northwestel’s operating territory. As well, explain whether there is a need for such a mechanism in other regions of Canada.

In many isolated areas of British Columbia, substantial capital infrastructure investment is required in order to bring terrestrial services to households. For example, many island communities, and coastal communities are only accessible by boat or aircraft, and numerous northern communities are accessible only by dirt road, or by long stretches of un-serviced highway.

These isolated communities would require long microwave backhaul networks, undersea cable, or long segments of overhead cable in order to provide terrestrial connectivity. Many of these communities support substantial economic activity (i.e. resource, agriculture, tourism), but could not generate the return on investment required for the substantial capital expenditures required to construct cable or microwave transport.

In many island communities, there is existing microwave backhaul connectivity to the community, however the community is large enough that the microwave backhaul does not have sufficient capacity to enable service providers to offer 5 Mbps to all households, and the microwave backhaul is not expandable. In these cases, undersea cable is the only option to provide 5 Mbps connectivity to all households.

A mechanism to bring terrestrial services to these communities would be welcomed by these communities.
Publicly-funded capital infrastructure should be made available to all service providers through wholesale tariff or open access mechanisms.
7. b) What impact would the establishment of such a mechanism have on private sector investment and government programs to fund the provision of modern telecommunications services?
Without government support for capital infrastructure, private enterprise will not deliver terrestrial services to isolated communities.

With government support, we have seen private enterprise deliver innovative services to many remote communities, and this innovation and investment can be expected to arise in more isolated communities.

The BCBA has seen throughout our serving areas that economic development receives a substantial boost with the introduction of broadband services in rural communities. All citizens benefit from an improvement in the accessibility of social services, and businesses are able to expand in new and innovative ways.

Regulatory measures for basic telecommunications services
8. What changes, if any, should be made to the obligation to serve and the basic service objective?
The BCBA contends that no changes should be made at this time to the obligation to serve and the basic service objective as it relates to voice services.
9. Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?

Broadband Internet service is indeed a basic telecommunications service. However, broadband service should not be part of a deferral account mechanism such as that currently in place for voice services.

Satellite connectivity, available throughout Canada, already provides a level of connectivity that satisfies basic criteria for broadband.

The funding of broadband connectivity through a deferral account mechanism would result in a loss of diversity in the telecommunications industry, and, in the long term, a stagnation of service levels in the communities that are currently well-served by small regionally-based service providers.

10. What changes, if any, should be made to the existing local service subsidy regime? What resulting changes, if any, would be required to the existing regulatory frameworks (e.g. price cap regimes)?

At this time, no changes should be made to the existing local service subsidy regime.
The existing regime should be reviewed in 2020. At that time, the impact of the Digital Canada 150 program will be more apparent.

Further, we note that many Canadians are substituting mobile services for copper telephony services. In five years’ time, the extent of this change may result in the obsolescence of the existing local service subsidy regime.

11. 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.

We recommend that no changes be made to the collection mechanism.

12. 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.

The existing subsidy regime is still necessary to ensure the availability of voice services. Currently, basic voice service provides access to emergency response services for many rural Canadians.

Broadband service should not be subsidized through the existing mechanism due to the damaging impact this will have on Canada’s telecommunications industry, and the potential for long-term reduction of rural Canadians’ service levels and choices.

13. 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?

The existing funding mechanism for voice should be maintained. The mechanism to fund infrastructure investment in transport facilities, as outlined in 2013-711, provides a good framework to support identified needs in Canadian telecommunications infrastructure.

The first priority for infrastructure funding in British Columbia should be infrastructure to bring terrestrial connectivity to isolated communities. This infrastructure could be undersea cable, long overhead cable paths, or microwave backhaul networks.

The second priority for infrastructure funding in British Columbia should be access networks such as fibre-to-the home, fixed wireless networks, or local DSL or cable loops. This infrastructure has been effectively targeted through government funding in the past, and is currently targeted by the Digital Canada 150 program.

The experience of BCBA members suggests that ongoing subsidies for access networks would be required to support networks that service less than 25 customers.
13. b) In which regions of Canada should funding be provided?
Funding should be targeted at very remote, isolated communities that have no terrestrial broadband connectivity.

13. 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)?

The existing subsidy for rural voice delivered over copper networks should continue to be directed to the ILEC.
Any new funding awarded for broadband development should be determined through needs analysis and competitive bidding processes, similar to the Digital Canada 150 program.
13. d) How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?
A competitive bidding process will ensure that the costs of providing service are not excessive.

The Digital Canada 150 program set service targets, and allowed private firms to present the cost of meeting these targets, enabling a cost-benefit analysis of the solutions presented. This system allows Industry Canada clear visibility into the true costs associated with improving broadband connectivity for Canadians.

13. 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?

A competitive bidding process is the best mechanism for distributing funding.
Some mechanism should be in place to adjust the subsidy to reflect actual costs, where a service provider presents an acceptable case for reasonable and unforeseeable cost overruns.
13. f) Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?

Capital infrastructure that is implemented using public funding, such as cable that brings connectivity to a remote or isolated community, should be available on a wholesale basis to service providers.

Tariff rates are not appropriate for access to publicly-funded infrastructure, due to the wide variety of costs associated with providing service to diverse communities across Canada.
13. g) Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

If the Commission implements an ongoing subsidy regime, we agree that a maximum retail rate is appropriate. We are not in favour of ongoing subsidies at this time, but we do believe that broadband prices should remain affordable to Canadians.

If the Commission implements a maximum retail rate, this rate should be referenced to the price of a basket of comparable goods in competitive markets (i.e. urban or suburban areas).

13. 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.

The existing residential local wireline service subsidy should not be replaced. The existing subsidy should be unchanged, and no new deferral account mechanism should be put in place for broadband services.

The existing voice subsidy should be reviewed on an annual basis and be subject to a review to determine its future necessity within five years.
Closing Comments
We would like to thank the Commission for the opportunity to present our perspective on these issues.
Sincerely,
[image: ]
Bob ****
President
British Columbia Broadband Association
*** End of Document ***
248 **** St. ****, BC, *** ***
P *-***-***-**** / F *-***-***-****
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British CDIumbia
Broadband Association

Intervention: BC Broadband Association (BCBA)

Document Name: 2015-134.224004.2394792.Intervention(1fb%001!).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: BC Broadband Association (Intervenor 275)

Document Name: 2015-134.224004.2394792.Intervention(1fb%001!).html

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