Final Submission : Intervenor 756

Document Name: 2015-134.227344.2614310.Final Submission (1k17q01!).html

Raisons pour comparaitre / Reasons for appearanceI would be happy to elaborate on the issues raised in my filing.

Final Submission : Intervenor 756

Document Name: 2015-134.227344.2614309.Final Submission (1k17p01!).pdf
Final Submission to the 2015-134 proceedings
25 May 2016
Regarding CRTC Review of Basic Telecommunications Services
Benjamin ****
1167 Sixth Concession A Dalhousie
Lanark, ON, *** ***
Introduction

1. What follows is an attempt to expand on the possible actions suggested during my oral presentationbefore the CRTC on the 21st of **** 2016. As we are now at the point where action is required, I hope this submission can be helpful in fleshing out some of the details of what I feel needs to be addressed to improve the situation for Canadians that are unserved and unserved by modern telecommunications services.

2. Throughout the 2015-134 proceedings, the overwhelming majority of the respondents have voiced their support for recognizing broadband internet service as a Basic Telecommunications Service. A direct consequence of this action is to invoke the CRTC's obligation under the TelecommunicationsAct to facilitate the availability of “reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada” 1. The following paragraphs will focus on several of the regulatory components which are required to accelerate the deployment of broadband networks in communities that are not yet fully served, and can be used by all market participants (including community groups) to expand service to Canadians who are out of reach of terrestrial broadband services today.

Minimum Standard of Service

3. Much discussion covered what the speed of a basic service should be. While a minimum standard for basic service needs to be defined, it must not be defined in such a way that it precludes the incentive for internet providers to deploy infrastructure which exceeds the minimum. As a policy goal, the CRTC needs to foster the deployment of scalable infrastructure that works for providing sustainable broadband services for today and for tomorrow. It makes no sense to deploy services for a 5/1Mbps standard that is made obsolete in 5 years during the next review of basic services, aswe will be continuously playing catch-up to goals which are already falling behind the variety of needs Canadians have. As such, the policy goal should be for rural and remote communities to be given levels of service that offer equivalent performance and quality of service to well served urban communities.

4. In my opinion, the commission must be extremely cautious about placing too much faith in the claims of satellite based service providers about their service levels. **** latency and capacity 1 Telecommunications Act 7b

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issues on satellites make many services unusable over a satellite connection. Furthermore, the quality of service standards for satellite services compared to terrestrial services must be comparedby using hard metrics to determine if the providers claims are actually true. The simplest metric for the commission to use is the amount of bandwidth available on a system divided by the numberof users. On this metric, satellite based providers are often orders of magnitude worse than DSL and fibre based services. A community must not be considered served if the service is unusable forthe needs of its residents, a theme that has echoed through this proceeding.

Competition Must Be Present

5. Several filings by participants (including Bell and other) in these proceedings have suggested that reverse auctions should be used in combination with any further subsidies awarded to increase broadband coverage. This recommendation is key in ensuring that any private public partnerships make efficient use of deployed resources. Combined with the local community-centric model that EORN used, this will ensure that companies make the most efficient use of capital in expanding services to unserved and underserved Canadians. Without competition, Canadians will not get the best possible coverage for their hard earned dollars.

Areas for Action

6. This filing now focuses on 3 key action areas for the CRTC to consider to help improve the foundation on which broadband internet access in unserved and underserved rural communities.

The areas involved are Transport Service, Colocation and Interconnection, and the Last Mile. All three areas must be addressed in a coordinated fashion in order to increase the likelihood of a favourable outcome in the improvement of broadband availability, as no single component is able to improve service availability on its own.

Transport Service

7. As noted in presentations by the EOWC/EORN, Axia and others, a critical component necessary todeliver broadband service is transport service, also known as the “middle mile” which connects the“last mile” to another location where internet transit is available. EORN made a wise decision to direct funding to both the transport and last mile in tandem, as one is not useful without the other.

8. While the CRTC has forborne from regulating the cost of transport services by the incumbents, a practice that has worked well within the markets that are served by competition, this has not worked well for markets in which there is no competition. The Canadian Cable Systems Alliance points out that “if our members are to upgrade and extend their broadband networks, there must be some mechanism to ensure that they can secure fair, consistent and reasonable access to and pricing of transport services.” 2

9. In communities where incumbents already have fibre between existing Central Offices (COs), the need for transport can be addressed in one of 3 ways:

2 Transcript, Hearing **** 20, 2016 line 11217
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1) regulate the cost of transport services by the incumbent

2) foster the development of competitive transport services by overbuilding the incumbent3) enable the deployment of competitive transport services using the existing fibre facilities ofthe incumbent.

10. Option 1 is the least desirable, as it prevents market forces from encouraging market participants toadapt their pricing to changing conditions in the marketplace. It can take many years for regulated pricing to adapt to changes in equipment and network capabilities that directly impact pricing.

This can lead to outdated tariffs being applied for services that have already decreased in pricing substantially in markets with plenty of competition.

11. Option 2 is economically inefficient. Given that we are talking about rural and remote communities that already are, by definition, more expensive to serve, it makes little sense to replicate the incumbent's facilities at a substantial cost – especially when those facilities may have already been built with subsidies by entities like EORN and previous rounds of targeted government funding.

12. Given the above, it is reasonable to conclude that option 3 is the approach that the CRTC should develop policy for to enable the most economically efficient development of competitive transport service. Since the lifespan of the fibre between adjacent COs is measured in decades, the leasing of these facilities by the incumbents to other market participants should be able to be made affordable. Note that any costing inputs that are based on the costs incurred by the incumbents to build these facilities must be discounted by any subsidies that they received to do so (ie by EORN and other funding programs like Connecting Canadians), and in cases of extremely remote communities, like those in the ****, may need to be subsidized as recommended by a several of participants in the 2015-134 proceedings. A key aspect of affordability must take into account the size and means of the community being served – a 10 household hamlet cannot afford a transport service that costs thousands of dollars per month, but it should be able to obtain access to existing fibre that passes through the community.

13. In order to implement transport option 3, there are 3 possible approaches that can be taken to enable the development of competitive transport service over the incumbent's existing intra-CO fibre:

a) provide access to dark fibre

b) provide access to wavelengths on existing fibre (using CWDM, DWDM or other relatedtechnologies3)

c) provide access to Ethernet circuits or VLANs4

14. Options 3{a,b,c} have different costs and benefits. While access to dark fibre in 3a might be most desired, it can lead to inefficient use of existing fibre facilities since each competitor that wishes to connect to a given location or CO might consume 1 or more fibres. Given that there are a limited number of fibres between existing COs and fibre splice points, facilities could easily be consumed 3 Coarse Wavelength Division Multiplexing or Dense **** Division Multiplexing, both of which are forms of Wavelength Division Multiplexing (WDM) that use different colours of light for different circuits4 IEEE 802.1q Virtual Local Area Networks (VLANs) are supported by almost all managed Ethernet switches on the market

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in the presence of multiple competitors. As such, 3a may only be applicable where the congestion of transport fibre is not expected.

15. Option 3b makes much more efficient use of the fibre between COs, and is scalable to include many circuits by many potential competitors since each competitor can shared the same fibre by using a different colour of light. However, care must be taken to ensure that the cost incurred by the incumbent to install WDM equipment is limited to the direct cost of the hardware and a reasonable amount of labour. The incumbents should not be permitted to choose the most expensive equipment available.

16. Option 3c provides the incumbent with the most flexibility to provide transport between adjacent COs, especially in areas where there is already suitable Ethernet switching equipment installed.

However, given the cost of the equipment, it may in some cases be more expensive than 3b. In cases where the incumbent's equipment is deemed too expensive to operate, competitors should have the option to provide their own Ethernet switch. This is critically important, as the Ethernet switches of 5 years ago were substantially more expensive that equivalent equipment is today.

Competitors must also have the flexibility to install upgraded switching equipment that provides more bandwidth and higher performance, as the incumbent might otherwise refuse to provide service because of unavailable facilities. The nuances of this matter are intimately tied to the Interconnect and Colocation issues discussed below.

17. My recommendation to the commission is to encourage a mix of 3{a,b,c} to enable transport competition. By offering a variety of options, the transport needs of the Canadian Cable Systems Alliance and other market participants can be met in an economically efficient manner, which will help to enable the expansion of broadband services to otherwise underserved markets.

18. Additionally, the development of improved access to transport services is critical to other matters that are currently before the CRTC. In order for the disaggregated wholesale service decision in proceeding 2015-326 to be a cost effective regime, competitors must have access to economically efficient transport services, even in secondary markets that are otherwise underserved by competitive market forces.

Interconnect and Colocation

19. If the commission decides to implement improved access to transport services as outlined above, the question of how a competitor connects to the transport service is another key component in making it possible to put the pieces together in a way that produces the desired outcome of increased broadband access for Canadians. To this end, the commission needs to mandate the ability for competitive transport services to be connected to equipment of competitive transport providers. This needs to be done through interconnection services (attaching fibres to fibres) and colocation (installing equipment in a Central Office).

20. Existing mandated colocation services were put into place and have been used by CLECs and DSLSPs to provide phone and internet access. Where the tariffs of the incumbents have specified the costs for components of the mandated colocation service, the costs have generally been reasonable. Unfortunately, the unspecified costs surrounding engineering and installation have **** 4 of 8

been left undefined, and in many cases are artificially inflated by the incumbents.

21. Given the availability of transport services by a given incumbent, competitors will require 3 ways to connect to transport service:

1) colocating equipment in an existing incumbent's CO

2) installing a competitor's fibre optic cable into the central office to interconnect3) providing a fibre optic cable at the nearest fibre splice point or manhole to the CO for interconnection

22. In the case where a competitor is building a competitive transport service, the competitor will oftenrequire the ability to locate equipment in a Central Office in order to switch or regenerate optical signals. For rural and remote communities, these are facilities that are not economically efficient to duplicate. As stated by Mr. Philipp from SSi stated: “The last mile is not the challenge financially or logistically. It’s the fact that for another competitor to come into Grise Fiord or Qikiqtarjuaq or anywhere in Nunavut, they need a piece of land; they need a building; they need a backup generator; they need a colocation facility; they need a tower; and they need shipping and receiving; they need flights and technical people.”5 This exact issue in the far **** exists in rural communities as well. There are often no other facilities than the incumbent's COs in small towns across Canada that can provide the colocation services with backup power that are needed to connect transport services to the “last mile”. This leaves many longstanding cable systems in rural communities underutilized, without the availability of DOCSIS based internet access.

23. Unlike the provisioning of competitive telephone services and DSL in the early 2000s, competitivefibre services in small towns can often be provided using equipment that only occupies 1U to 5U6.

As such, the existing mandated colocation model based on provisioning entire racks for a CLEC orDSLSP is simply too big and too expensive. Fibre optic cables do not conduct electricity like copper phone lines do, so the heavy metal work to completely ground telco racks for safety reasonsis not required. Fibre patch panels are available in low cost 1U models. Modern Ethernet switches consume a fraction of the power than similar gear required in the 1990s. These points all combine to the issue that the CRTC must overhaul the mandated colocation services of the incumbents to align it with the reality of today's equipment and the needs of competitors. Costs for 1U of equipment must not be in the tens of thousands of dollars that CLECs and DSLSPs have had to pay. They must reflect that racks can often be shared with the incumbents own equipment. Such a service could be considered a mandated micro-colocation service.

24. The micro-colocation service must be able to interconnect to the aforementioned transport facilitiesat reasonable rates, at rates that are affordable and predictable for smaller communities. The engineering and planning costs the incumbents incur must be limited to reasonable amounts for thesize of the market a Central Office serves – the costs in a CO in downtown Toronto should probably not be the same as those in a tiny community like McDonalds Corners, Ontario.

25. Similarly, the costs for bringing a fibre optic cable into and out of a CO must be predictable and reasonable. Fibre optic cable weighs and costs substantially less than equivalent copper telephone cable, and they are often all dielectric and do not require electrical grounding. There must be 5 Transcript, Hearing **** 12, 2016 line 2457

6 1U is 1 rack space unit that is 1.25” high by 19” or 23” wide
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clearly defined rates that are reasonable, predictable and clearly defined by reading the appropriate tariffs of the incumbent.

26. That said, not all competitors will wish to engage in colocation, as they may well have their own data centers, or are comfortable with installing an outdoor remote to serve their community. For those entities, there should be a well defined options for options 2 and 3 where a competitor and anincumbent can engage in a “meet-me” arrangement where 2 fibre optic cables are spliced together in a splice closure or connected together via a cross-connect. Again, there needs to be flexibility inthe use of these facilities, as it must be simple and straightforward to connect transport facilities to “last mile” facilities. Tariffs must provide a sufficient level of detail on all upfront and ongoing costs for a new market entrant or community group to be able to plan their use of these facilities.

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The Last Mile – Support Structures

27. Last, but most certainly not least are the issues involved in deploying the Last Mile: Support Structures. In many communities across Canada, residents have brought numerous cases before the CRTC in these proceedings showing how the incumbents are simply not building out broadband facilities to Canadians. As a guiding principal, if the incumbents are not going to build this infrastructure, the commission must make it as easier and more cost effective for community groups and new market entrants to take up the task.

28. The EORN model has demonstrated how communities and market participants are able to come together and combine local knowledge with the coordinated action of an overseeing entity to address broadband shortcomings. However, since the majority of the EORN projects completed, the remaining underserved and unserved residents in Eastern Ontario are much more difficult to connect.

29. In my oral presentation, I raised the issue of trees and hills in Lanark Highlands, both of which are very effective at blocking wireless and satellite coverage. Similarly, out west there are a number ofcommunities that are unable to obtain satellite service because the exist in the shadow of mountains. Based on these factors, it stands to reason that a number of the remain unserved Canadians will only be reachable by terrestrial services. And in many areas, especially the rocky Canadian shield, this means that service will often have to be provided via a cable strung up on a telephone pole.

30. Support structures have many issues that are similar in nature to those involved in colocation.

While specific charges, such as the rental rate for a telephone pole or a section of steel strand, are specified in tariffs7, the costs of permits and make-ready work are not specified, and the incumbents are free to charge what they consider reasonable rates (which are not necessarily reasonable in the unserved market context). Combine this model with the fact that many rural telephone poles are older and built when safety standards were much less stringent than they are today, and it often becomes cost prohibitive for a new attacher to expand broadband services to pockets of unserved residents.

31. Additionally, duplicating the construction of telephone poles in rural areas is cost prohibitive for new market entrants without some form of assistance. Poles that were installed in the 1950s and are still in service are now well past their end of life expectancy, and in many cases ought to be replaced by the pole's owner. However, with current policies surrounding support structures, the cost of replacement often falls upon the new attacher who wishes to install a new fibre optic cable.

Given that new market entrants do not have the history and customer base to be able to guarantee long term (20 to 30 year) financing of pole replacement, some form of intervention is required.

32. Intervention on this front could be approached in several ways. One approach would be to simply force the incumbents to bear the cost of pole replacement and make-ready where necessary. This could be done by having the large incumbents subsidize their rural support structures with revenue from the much more profitable urban markets. This is by far the simplest approach to the issue, and would vastly simplify the cost benefit analysis for a new market entrant or community group 7 See the Bell Support Structure Tariff, Item 901

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to begin servicing unserved residents. In many cases the incumbent will make back some of the costs through increased revenue for transport services purchased to service these new broadband customers.

33. Alternatively, the cost of support structure replacement and make-ready could be rolled into the pole rental rates. This is, however, a very tricky balancing act in rural markets. If pole rental rates rise too high, the cost of rural broadband services may end up increasing substantially, well beyondthe rates for comparable urban services. If rates increase too much, the operating cost of the service becomes unsustainable, and the residents will continue to remain unserved. In very high cost to service areas, it may be necessary to consider a completely different model for support structure access, where the fees involved are based on the number customers served rather than the number of poles rented. Again, this would likely involve some degree of cross market subsidies to achieve sustainable operating cost levels.

34. There is also the issue of support structures that are owned by electrical utilities. The question of jurisdiction on pole rental rates is further complicated by the fact that provincial entities often set these rates, such as for the Joint Use program HydroOne has in Ontario. However, the CRTC oftenhas some level of jurisdiction in these cases, as incumbents usually have their own steel strand already attached to these poles for which the access is governed by their respective support structure tariffs.

Conclusion

35. The CRTC is at a crossroads when it comes to filling the broadband gaps across Canadian society.

No single approach to the problem is going to solve the issue for all Canadians, but the solution will come in all shapes and sizes filled by different groups across the country. Canadians are a creative and innovative bunch, and if the commission is able to tweak the levers and knobs it has available to it as part of the outcome of these proceedings, I believe we can improve the situation over the next 5 years. Let us strive to make sure that when we next revisit this issue, that we will have made demonstrable progress.

* * * End of document * * *
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