Intervention: Saskatchewan Telecommunications (SaskTel)

Document Name: 2015-134.223973.2394463.Intervention(1fbkv01!).html

Raisons pour comparaitre / Reasons for appearanceSaskTel requests to appear at the hearing to provide the best representation of its position in this very important proceeding.

Intervention: SaskTel (Intervenor 243)

Document Name: 2015-134.223973.2394463.Intervention(1fbkv01!).html

Raisons pour comparaitre / Reasons for appearanceSaskTel requests to appear at the hearing to provide the best representation of its position in this very important proceeding.

Intervention: Saskatchewan Telecommunications (SaskTel)

Document Name: 2015-134.223973.2543937.Intervention(1$$wx01!).doc
Mr. John Traversy
14 July 2015
**** 2 of 2
[bookmark: _GoBack]
**** Hersche
Senior Director -
Regulatory Affairs
[image: SaskTel]
2121 Saskatchewan Drive
****, Saskatchewan
*** ***
Telephone: (306) 777-5346

Fax: (306) 565-6216 Electronic Fax: (306) 791-1457Internet: ******@***.com

14 July 2015
via Intervention Form and e-mail
File No. 8663-C12-201503186
Mr. John Traversy
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, ON *** ***
**** Mr. Traversy:

Re: Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services1. Pursuant to paragraph 47 of Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services, as amended by Telecom Notice of Consultation CRTC 2015-134-1, Saskatchewan Telecommunications (SaskTel) submits its Intervention in the above noted proceeding.

Sincerely,
[image: **** signature3]
**** McKay
for **** Hersche
Senior Director - Regulatory Affairs
AM/nb
Attachment
cc: John Macri, CRTC, ******@***.com

**** Bailey, CRTC, ****.******@***.comILECs, small ILECs, Northwestel and CNOCDistribution ****

******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com ; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ****.******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com ; ; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com***End of Document***

SaskTel

Intervention: SaskTel (Intervenor 243)

Document Name: 2015-134.223973.2543937.Intervention(1$$wx01!).doc
Mr. John Traversy
14 July 2015
**** 2 of 2
[bookmark: _GoBack]
**** Hersche
Senior Director -
Regulatory Affairs
[image: SaskTel]
2121 Saskatchewan Drive
****, Saskatchewan
*** ***
Telephone: (306) 777-5346

Fax: (306) 565-6216 Electronic Fax: (306) 791-1457Internet: ******@***.com

14 July 2015
via Intervention Form and e-mail
File No. 8663-C12-201503186
Mr. John Traversy
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, ON *** ***
**** Mr. Traversy:

Re: Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services1. Pursuant to paragraph 47 of Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services, as amended by Telecom Notice of Consultation CRTC 2015-134-1, Saskatchewan Telecommunications (SaskTel) submits its Intervention in the above noted proceeding.

Sincerely,
[image: **** signature3]
**** McKay
for **** Hersche
Senior Director - Regulatory Affairs
AM/nb
Attachment
cc: John Macri, CRTC, ******@***.com

**** Bailey, CRTC, ****.******@***.comILECs, small ILECs, Northwestel and CNOCDistribution ****

******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com ; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ****.******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com ; ; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com; ******@***.com***End of Document***

SaskTel

Intervention: Saskatchewan Telecommunications (SaskTel)

Document Name: 2015-134.223973.2394461.Intervention(1fbkt01!).doc
SaskTel Intervention
14 July 2015 TNC 2015-134
**** 19 of 24
[bookmark: _GoBack]
Canadian Radio-television and
Telecommunications Commission
[image: SaskTel]
Telecom Notice of Consultation CRTC 2015-134
Review of basic telecommunications services
INTERVENTION
14 July 2015
[bookmark: _Toc267463597]
****
1.0 Introduction 1
2.0 Market Conditions 2
2.1 Wireline telephony declining, but still relevant for many Canadians 2
2.2 Broadband continues to expand 3
3.0 General Observations 5
3.1 Northwestel is unique 5
3.2 Voice, Broadband Access to the Digital Economy, and Entertainment should be viewed separately and have separate regulatory treatments 6
Voice 6
Broadband Speeds Required for the Digital Economy 7
Broadband for Entertainment Purposes 8
3.3 Download is far more important than upload 9
3.4 Multiple technologies are capable of delivering advanced broadband speeds 10
4.0 SaskTel’s response to the Commissions Questions for discussion 12
5.0 Conclusion 23
Table of Contents
[bookmark: _Toc424564786]Introduction

1. Pursuant to the procedures established at paragraph 47 of Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services (“NC 2015-134” or “the Notice”), Saskatchewan Telecommunications (SaskTel) requests to appear at the public hearing and provides its initial Intervention.

2. SaskTel has divided this Intervention into a fulsome discussion of certain overlying trends and principles which SaskTel believes are relevant to the discussion, followed by direct answers to questions asked in the Notice. In Section One, SaskTel discusses current market conditions for traditional wireline telephony and broadband. In Section Two, SaskTel discusses several issues which the company feels are critical to determining a response to the Commission’s questions. In Section Three, SaskTel provides answers to the Commission’s questions. These answers are informed by the overall trends and concepts discussed in Sections One and Two.

3. In summary, SaskTel believes that:
· The current residential wireline regulatory framework continues to provide a valuable service to Canadians in high cost serving areas and should not be modified;
· While Canadians are gradually migrating away from traditional wireline telephony, many still rely on this service;
· The Commission’s current target download speeds continue to be sufficient for Canadians to access those broadband services required to participate in the digital economy;
· Canadians are adopting higher broadband access speeds – but the driver for this is for entertainment purposes. There is no justification for regulatory intervention to feed Canadians’ Netflix addiction.
[bookmark: _Toc424564787]Market Conditions
[bookmark: _Toc424564788]Wireline telephony declining, but still relevant for many Canadians

4. Residential wireline connections continue to decline, but remain an important factor as they represent the one communications service available to almost 100% of the Canadian population at the most affordable price. While telephony ‘cord-cutting’ continues to increase, a majority of Canadians still rely on this almost ubiquitous wireline service. As noted in the 2014 Communications Monitoring Report, in 2013 there were still 15.9 Million wireline telephony connections in Canada, 6.9 Million of which were residential.

5. As the Commission states in paragraph 8 of the Notice, “the number of telephone lines has decreased from 18.6 million in 2009 to 15.9 million in 2013, [and]...20.4% of Canadian households rely only on mobile wireless services.” However, SaskTel stresses that, while certainly outlining a significant trend, these numbers also indicate that 79.6% of Canadian households continue to rely on wireline service as their primary communications service. This is especially true in high cost service areas (HCSAs) where various satellite and wireless services cannot provide the same dependable quality of service as residential wireline connections. This is a very important service for rural and remote residents who remain more isolated than their urban counterparts.

6. In return for this dependability the current Canadian contribution system ensures that residential voice wireline solutions in HCSA’s remain affordable at rates of just over $30 per month. In urban areas, due primarily to reduced infrastructure costs; wireline voice solutions are even less expensive.

7. In the absence of the current Canadian contribution system the costs borne by rural and remote residents would rise substantially, especially in those cases where the copper infrastructure needs to be replaced. These customers would receive rate increases without increases in the quality of the services offered.

8. In addition to the affordability factor, SaskTel believes that a number of residents retain their wireline access service because they have not yet acquired the skills to use other types of services such as ‘over the top’ (OTT) voice or even cellular wireless. These people include some of the most vulnerable in society such as a portion of the senior population, those with limited access to education and many of the economically disadvantaged without access to terminal equipment. While these demographics will become smaller over time, they should not be abandoned in a rush by society to adopt new technologies; nor can all of their challenges be overcome by the telecommunications industry - which can only provide access.

[bookmark: _Toc424564789]Broadband continues to expand

9. As noted earlier, SaskTel recognizes the growth of broadband and the likelihood of an eventual blending of broadband and voice services. Service providers are extending broadband coverage to more and more Canadians and technology is allowing them to increase maximum download speeds dramatically. The vast majority of Canadians are opting to adopt broadband as a complement to their traditional wireline service or in other cases attempting to use cellular as a combined voice and home broadband service thereby adding congestion to that network.

10. To date, the Commission has relied on market forces and targeted Government programs to expand access to broadband services. This approach has been successful. The overall number of Canadians with access to broadband has been steadily increasing and, the maximum speeds available to all Canadians have increased dramatically since Telecom Regulatory Policy CRTC 2011-291 (RP 2011-291) was released.

11. Even in higher cost areas, average available speeds continue to advance and targeted government programs, such as BRAND and Connecting Canadians, are helping to spread these speeds to areas where this would not otherwise be economical.

12. As the Commission states in paragraph 22 of the Notice, “[v]irtually all Canadians, regardless of whether they live in urban centres or in rural and remote areas, benefit from having access to Internet services using a variety of technologies, including wireless and satellite technologies.” SaskTel has been cognizant of this when planning its capital spending for a number of years.

13. As a result SaskTel now has over 300 rural communities with wireline broadband download speeds over 5 Mbps, over 200 of which have speeds over 10 Mbps; 55 towers providing wireless broadband speeds of 5 Mbps; a partnership with **** Xplornet to access more remote households with satellite-based solutions; an enhanced fibre ring in northern Saskatchewan; an HSPA cellular system which covers over 99% of the population and an ever expanding Wi-Fi network in urban areas. These services are in addition to the operations of other cable and wireless companies which also provide residential broadband access in the province. The overall number of households without access to some type of broadband is already extremely low and is rapidly declining.

14. Paragraph 30 of the Notice states that “[i]t is noted in the Satellite Inquiry Report that roughly 18,000 households without access to broadband Internet service at the Commission’s target speeds are located in satellite-dependent communities in Yukon, the Northwest Territories, and Nunavut, as well as in certain remote areas of British Columbia, Saskatchewan, Manitoba, Ontario, and Quebec.” 15. SaskTel notes that, while 18,000 households is indeed a significant number, which should be addressed in some manner, it represents only a fraction of a percentage of the 14,690,000 households which the Canada Mortgage and Housing Corporation predicts for Canada as of 2016[footnoteRef:1]. [1: Canada Mortgage and Housing Corporation, Research Highlight, ****-Term Household Growth Projections 2013 Update, Table 2 – mid-range estimate for 2016.] 16. The Commission also “notes that other communities in Canada, not just satellite-served communities, are facing challenges in achieving the Commission’s broadband Internet service target speeds.” Paragraph 134 of the Satellite Inquiry Report states “[i]n 2013, approximately 1.2 million, or 9% of, Canadian households did not have access to broadband Internet service at the Commission’s target download and upload speeds.” 17. Again, SaskTel believes that while there may well be an issue to address with respect to the 9% of Canadian households where the Commission’s target has not been met, it is equally important to note that this target indeed has been met in 91% of households. In SaskTel’s opinion that is a sign of success for the current environment.

18. In addition, the Government of Canada is currently conducting another targeted program, the Connecting Canadians program, “targeting to expand access to this speed to up to 280,000 households over the next few years.”[footnoteRef:2] On May 20, 2015 Industry Canada announced that 356,000 homes will be served by that program.[footnoteRef:3] A large number of these new homes served will also be located in the north and in areas which did not have access to required speeds when the Satellite Inquiry was written using data from 2013. The combination of government programs such as this, market forces, and improvements in various technologies means that, as time goes on, more and more Canadians will have access to broadband services at the Commission’s target speeds. [2: Satellite Inquiry Report, paragraph 247] [3: Industry Canada, News Release, May 20, 2015.] [bookmark: _Toc424564790]General Observations

[bookmark: _Toc424564791]Northwestel is unique

19. In the Notice, the Commission asks a number of questions specific to Northwestel, and also asks whether decisions made in the case of Northwestel should be extended to other companies. For example, in paragraph 27 of the Notice, the Commission referenced Telecom Regulatory Policy 2013-711, where it stated its:

[I]ntention to establish a mechanism in the present proceeding, as required, to support the provision of modern telecommunications services in Northwestel’s operating territory. 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 to ensure that they support evolving telecommunications services, such as broadband Internet services.

20. In Appendix B of the Notice (paragraph 7), respondents are asked to “[e]xplain, with supporting rationale, whether there is a need for the Commission to establish such a mechanism in Northwestel’s operating territory” and to “explain whether there is a need for such a mechanism in other regions of Canada.” 21. SaskTel believes that the circumstances faced by Northwestel are unique and that the needs of that particular company should be addressed on a stand-alone basis, as the Commission has always done in the past. The very small number of customers residing in the vast territory served by Northwestel, the lack of any large population centres, and the harsh terrain and distances involved represent an environment not faced – to the same extent - by any of the ILECs.

22. SaskTel submits that potential regulatory measures applicable to Northwestel should be judged on their own merits and not applied indiscriminately to other ILECs. As SaskTel has little experience in Northwestel’s specific circumstances, the company will make no further comment on regulatory regimes applicable to that company.

[bookmark: _Toc424564792]Voice, Broadband Access to the Digital Economy, and Entertainment should be viewed separately and have separate regulatory treatments

23. Although voice and data are gradually merging over time into one ‘communications’ market, they have not yet reached that level. Many Canadians continue to not feel the need for broadband connections. Others may not have the financial resources to be able to afford a voice connection, broadband access and an appropriate terminal. For those Canadians with financial concerns, wireline voice remains the most pervasive and cost-effective connection to society. Although SaskTel believes that these two services will eventually fully merge, SaskTel also feels that it is better to allow this to happen organically, through market forces and demographic changes, rather than introduce regulatory changes which pre-empt this natural evolution.

[bookmark: _Toc424564793]Voice

24. When telephony was initially introduced, voice was the only service available. The introduction of this service played a critical part in allowing all Canadians to become more connected to their community and to access critical services such as emergency response and health care. When the internet was first developing, it became a ‘feature’ that could be accessed over a wireline voice connection and then over the high frequency channel available on that copper pair, or cable TV connection. As time went on, data, and then broadband data, become more and more pervasive and it is now a very important service for many Canadians. However, there are few, if any, truly critical services that cannot be reached over a voice network. As such, voice service continues to allow vulnerable Canadians to participate in the economic and social fabric of their community.

25. Today, with the evolution to IP-based service, voice is gradually becoming a feature of data service rather than the reverse. However, this evolution will take years and may never fully happen for the most vulnerable Canadians - who may not have the skills to operate or the financial resources to afford the charges for a broadband service, let alone the purchase price of an appropriate device to access this service.

26. Meanwhile, with the gradual decline of voice lines in Canada, the voice contribution obligation is becoming a smaller and smaller burden on the industry while continuing to deliver an important social safety net. Although broadband is very important to Canadians, voice provides the most critical communications services – including access to emergency services, and basic human contact. Canadians with voice only service continue to be able to participate fully in society by utilizing a service that is both affordable and reliable. SaskTel submits that the local contribution regime supporting voice service should be maintained in its current form.

[bookmark: _Toc424564794]Broadband Speeds Required for the Digital Economy

27. Canadians have a vast and growing desire for broadband data. Data usage increases dramatically every year and Canadians are moving to higher and higher speeds. However, SaskTel contends that the vast majority of this data is used for applications that, while extremely popular with Canadians, should not be viewed as “basic” or “critical” communications. The speeds required to participate in Canada’s digital economy – which SaskTel will refer to as the ‘Digital Economy Broadband Speeds’ or DEBS, are much lower than those which provide an optimal entertainment experience when gaming or watching movies.

28. There are a growing number of data applications which are becoming important to the economic and social growth of Canada. These include access to distance education, E-health, business applications, and things like online banking and shopping. As noted above, voice alternatives are generally available for anything critical that customers do on data. More crucially, bandwidth requirements for DEBS purposes are far less than for entertainment services such as gaming or streaming video. Applications like E-health and distance education may require high bandwidth at more central locations, such as hospitals and schools or libraries but not within each residence. In Saskatchewan, these institutions, be they operated for the general public or located on First Nations land, all have the potential to reach beyond the 5/1 targets of the Government of Canada. At the individual residence level, the Commission’s current broadband targets are quite sufficient to deliver these services. Many of the targets being discussed by other nations are simply for bragging rights and do not focus on the real or everyday needs of residents.

29. Market forces and government programs are doing a fine job in meeting the less data-intensive needs described above for residences. Therefore, SaskTel submits that there is no regulatory intervention required in the broadband market to provide DEBS to Canadians.

[bookmark: _Toc424564795]Broadband for Entertainment Purposes

30. Entertainment, such as video-gaming and streaming video is perceived as important to Canadians but SaskTel contends that it is neither a critical need nor a basic telecommunications service. There is no justification for regulatory intervention to feed Canada’s streaming video habit. In the creation of social policy mechanisms there must be a distinction between individual wants and needs.

31. SaskTel notes the Commission’s determinations, in Broadcasting Decision CRTC 2015-24, that conventional television licensees are required to maintain an over-the-air presence in order to retain certain regulatory privileges and its statements regarding the “significant investments that broadcasters, Canadians and government recently made into the successful transition to digital over-the-air technology”[footnoteRef:4]. [4: Broadcasting Decision CRTC 2015-24, paragraph 18] 32. Although that decision was made under the Broadcasting Act and with respect to the Commission’s broadcasting responsibilities, it must be noted that maintenance of digital over-the-air services was undertaken in order to provide Canadians with access to “basic” Canadian information and entertainment. SaskTel would suggest that the introduction of any additional subsidy regimes in the current proceeding which further promote Canadian’s migration toward ‘over the top’ (and quite likely ‘out of the country’) video viewing services would seem to represent regulatory intervention in the opposite direction from the quoted determinations.

33. If video “entertainment” is part of the social requirements of Canadians surely the availability of such programming via either digital over-the-air or satellite meets those objectives for both rural and urban Canadians. Broadband need not be available to fulfill that need.

[bookmark: _Toc424564796]Download is far more important than upload

34. Traditionally, download capacity has been much more important to the majority of users than upload capacity. Although certain businesses may require a fast upload speed, few residential customers require similar upload speeds. This is why residential high speed services have been designed to allocate the majority of the total available bandwidth, whatever that may be, to download rather than upload.

35. In today’s network, and in SaskTel’s future forecasts, the majority of data – and capacity requirements – will continue to be driven by downloads. SaskTel has recently reviewed the company’s ITS traffic and download traffic is indeed the significant majority. SaskTel notes that the majority of data consumed today is from video content and that traffic alone is enough to establish downstream as the essential component for the majority of traffic.

36. SaskTel submits that the Commission should be mindful of this relationship when analyzing current and potential future target speeds. It is SaskTel’s belief that improvements in download speeds would be more beneficial to customers than improvements in upload speeds. The vast majority of customers want greater download rather than upload speeds. A simple review of the marketing materials from all service providers, whether they are wireline Telcos, WSPs, Cablecos, fixed wireless or satellite-based providers, would seem to indicate that they all share this belief. Such a widely held belief, and such similarity in promotional activities, would not be present unless the market responded well to it. The Commission should not introduce regulatory factors which might interfere with this proper functioning of the market and the preferences of our customers.

37. Thus, if the Commission makes changes to the Basic Service Objective or introduces a broadband subsidy plan (neither of which it should do), or decides to update its target speeds then the emphasis should be on download, not upload speeds. Introduction of any new regulations - even ‘aspirational’ targets - which unduly emphasize upload speeds would lead to scarce resources being consumed to meet these requirements and that would reduce the resources available to increase download speeds. Such changes might also lead to available bandwidth at subscribers’ residences being allocated to upload in a manner which market forces – which represent consumers’ wishes – would not have dictated. The Commission may be sure that if Canadian consumers begin to value improved upload speeds more than they value improved download speeds, then Canadian service providers will adjust their offerings to meet the changing demands of the market.

[bookmark: _Toc424564797] Multiple technologies are capable of delivering advanced broadband speeds

38. There are multiple technologies and multiple types of service providers capable of delivering advanced broadband speeds, including wireline Telcos, WSPs, CableCos, Fixed Wireless providers and Satellite-based providers.

39. All of these technologies are advancing, with Telcos and CableCos moving fibre closer to customers (including right to the customer premise), technological advances providing better speeds, new satellite capabilities being explored, spectrum being obtained by various service providers, and other developments such as the ever expanding universe of Wi-Fi delivery.

40. Just recently, attendees at the 2015 Telecom Summit in Toronto heard satellite/fixed wireless providers suggesting that 25 Mbps download speeds will be available to all rural Canadians by the year 2017. Meanwhile, improvements in DOCSIS and fibre technologies are allowing CableCos and Telcos to reach impressive speeds.

41. In such an environment of rapid change, the Commission must be careful not to introduce regulations that force one or all of these provider types to deploy resources in a manner that is not responsive to the market or the best use of available technology. Each delivery technology has its own limitations and advantages in certain market niches. Companies should be encouraged to apply the best and most efficient technology wherever possible. Five years ago, who would have envisioned the extensive use of disruptive technologies such the creation of Wi-Fi networks throughout a growing number of urban centres? It is possible that regulatory programs meant to encourage growth would lead to the inefficient use of available capital.

42. For instance, adding a broadband target to the BSO – which applies only to ILECs – could cause those companies to expend scarce resources deploying network which may not, in the end, be attractive to Canadians because other technologies have leapfrogged the ILEC capacity, either through cost, through service attributes, or simply through install speed or service portability.

43. Each technology introduces unique issues and has unique benefits.

44. For instance, satellite, cellular and fixed wireless systems are far more sensitive to congestion issues than are wireline and fibre. Due to spectrum constraints all of these systems can accommodate only so many simultaneous customers per satellite, per tower or per sector before the throughput to individual customers begins to degrade. All claim the ability to deliver extensive speeds such as 25 Mbps today and up to 100 Mbps and beyond in the future, but bandwidth is shared and performance is based on time of day and usage.

45. Technologies such as satellite solutions have superior potential coverage, but are subject to latency issues. Latency may not be an issue at all for many consumers, but for others, such as farmers participating in online auctions, it is an issue.

46. On the other hand, fixed and mobile wireless, Wi-Fi and satellite solutions provide consumers with more flexibility to move their service at their location or to alternate locations such as a park, a workshop or a cabin at the lake. This can be very attractive to some consumers.

47. In rural areas the costs of delivering broadband varies significantly by the type of technologies used and location served: DSL is only available within a certain range of a CDO or remote DSLAM; placing an additional tower with appropriate backhaul for mobile or fixed wireless can cost a million dollars; while putting a satellite in space can cost hundreds of millions of dollars.

48. Developing an ongoing costing model for a contribution regime for broadband would demand as many variants as there are technologies. Questions such as what is the appropriate technology in a specific situation would be better left to the marketplace and to targeted government programs where operators are willing to extend operations in a sustainable manner.

49. The real issue is that unlike the traditional copper-based telephony system, broadband delivery is not homogeneous. Each technology has its challenges and costs, each customer has different preferences and use patterns. The marketplace is working out these issues – perhaps not as quickly as we would like – but it is moving rapidly forward to greater speeds at lower prices for the amount of data used.

[bookmark: _Toc424564798]SaskTel’s response to the Commissions Questions for discussion
50. In this section SaskTel lists each of the Commission’s questions in italics, followed by the company’s responses, which are informed by the ideas discussed earlier in this Intervention.
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?

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?

51. At the current time, access to basic voice service continues to play an important role which is met by the current regulatory framework. Basic voice is the most affordable alternative and provides access to health and emergency services, banking services, and everyday connection to society.

52. Canadians are also using broadband services for all of the items discussed and many more. The items listed – e-commerce, e-banking and/or telephone banking, e-health or telehealth services, telework, and distance education – are some of the most important to ensuring that Canadians meaningfully participate in the digital economy.

53. However, SaskTel submits that the majority of basic internet communications such as e-commerce, e-banking, email, web surfing, etc are performed more than adequately on a broadband internet connection which meets the Commission’s current 5 Mbps target download speeds.

54. In Saskatchewan, many services described above are delivered via the Provincial Government’s CommunityNet program, funded by the Province to deliver broadband access, telehealth and distance education services. These programs are delivered via fibre accesses which the Province has paid to have installed at every hospital, library and school. In addition it should be noted that every First Nations school and health facility in Saskatchewan has the capability to receive at least 10 Mbps.

55. There is no requirement for broadband access in excess of 5 Mbps to be delivered at individual customer residences.

56. In the future, it is possible that individual customers may participate in telehealth initiatives from their residence (or perhaps even via a mobile phone). However, the data being delivered from that residence will be very small indeed and will consist of various sensor readings. Data delivered to that residence would be basic health information such as that delivered via web browsing; slides or short video clips.

57. Distance education in Saskatchewan is delivered in a variety of ways. Remote assistance to schools or individual courses can all be streamed over the internet to central sites in a community or to a resident’s home. As described by the University of ****, for individual courses, “[l]ive-streamed video usually requires about 1-2 Mbps bandwidth (speed at which your computer can download from the Internet)[footnoteRef:5].” On-line courses are also available which are not live-streamed and thus are less sensitive to data requirements. Clearly, this does not require more than the 5 Mbps target download speed. For in-school projects, all Saskatchewan schools and regional colleges have access to higher bandwidth accesses. [5: http://www.uregina.ca/cce/distance-online/televised-courses.htm] 58. The everyday broadband services for residences do not have high capacity requirements. Although there is continued year over year growth in data use from customers on both wireline and wireless networks, this is driven by entertainment services, not by everyday broadband services.

59. Low latency can indeed be an important factor for services such as real time voice or video, electronic auctions and other e-commerce applications. It is problematic to address this issue with any satellite-based technologies. However, the Commission must balance the extreme costs required to connect every remote residence to a wireline solution against this issue. Although many customers see the benefits of accessing the internet through mobile wireless devices, the issues of capacity on the wireless infrastructure, price, and the presence of data caps remain.

60. Capacity is important to many users, especially those interested in the entertainment uses of broadband access. SaskTel has looked at the possibility of utilizing its mobile wireless 4G LTE technology to provide broadband service to the company’s rural customers. Overall, the current mobile wireless technology was not designed to handle the types of traffic loads generated by the wireline internet usage patterns of most consumers. Frequent video access from sources such as Netflix or YouTube requires tremendous use of bandwidth. Given the manner in which 4G LTE would handle both video traffic and internet access plus the normal mobile traffic requirements, congestion would become a common condition.

61. Mobile 4G LTE, which operates in the 700 MHz, 850 MHz and 1900 MHz bands of licensed spectrum, is also based upon frequency-division duplexing (FDD), which is an inefficient use of scarce spectrum resources. FDD is a method that establishes a full-duplex communications link using ‘paired spectrum’ where two different radio frequency bands are allocated, one for the transmit channel and one for the receiving channel. Therefore, downlink and uplink traffic is allocated symmetrically (i.e. the customer receives download speeds equal to their upload speed). Since customers utilize more downlink traffic than uplink traffic, the spectrum allocated to the uplink channel is underutilized. As well, each specific customer data session requires that a pair of channels is allocated for the time the transmittal of data takes place, which contributes to capacity and congestion issues.

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.

62. In Saskatchewan, access to broadband in rural and remote regions outside of population centres remains a large but declining challenge. The company continues to explore innovative technology and access to various government programs to expand broadband coverage to areas where it would not otherwise be economical for SaskTel to do so.

63. However, digital literacy and the ability to afford terminals are not areas the industry has the ability or experience to address. These issues are best left to society, government and educational institutions.

64. Affordability has also been recognized as a challenge for government, not one which can be solved by the industry. Even wireline phones, at some $30 per month, have been recognized by governments as too onerous for some individuals. Wireline phone payments are included in Social Service payments to ensure access.

65. While privacy and security are important, they do not seem to be top of mind concerns which would prevent individuals from obtaining broadband service. SaskTel can and does ensure that concerns related to privacy and security are addressed at the network level and within the applications and websites that it has control over.

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

66. SaskTel is a network provider. Our company, and other network providers, can provide the network for access, and to a limited extent some devices; however, applications and digital literacy are up to the individual and society and government as a whole.

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.

67. Traditional voice services will continue to be of importance; however, broadband internet will become more and more important. Broadband infrastructure must continue to be scalable and evolve to meet the needs of consumers. The market, combined with targeted government programs, has done a good job today in meeting these needs and will continue into the future. Broadband services will likely continue to evolve, but at a much slower rate than entertainment services and with less of an increase in download requirements.

68. Consumers’ insatiable demand for data quantities (not necessarily speed) is one of our biggest challenges as an industry. However, SaskTel’s answers to parts a) through d) do not change because of this.

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?

69. Current download speeds available have been established in response to market forces.

70. As discussed previously, the current download target is sufficient for customers’ everyday broadband needs. While customers may well have wants that are in excess of this, there is no need for Commission intervention to address these wants.

71. SaskTel believes the current upload target actually exceeds the needs of the vast majority of consumers and that; in any event, download speeds are much more important than upload speeds.

72. Forcing the industry to focus on upload speeds, when the overall market is not demanding this, will lead to less customers being served with sufficient download speeds as limited industry and government resources will be consumed to solve an ‘issue’ which is less important than increasing download speeds and expanding network reach. These resources would be better focussed on attaining the target download speeds in underserved areas or in extending service to unserved areas.

73. Therefore, SaskTel submits that the current target speed of 5 Mbps down is sufficient to meet the DEBS requirements of Canadians and that an upload target should either be removed or reduced to 640 Kbps in order to encourage more technologies such as satellite and wireless to fulfill various broadband market niches.

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. 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.

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)?

c) What should be the prices for basic telecommunications services and how should these prices be determined? Provide rationale to support your answer.
74. SaskTel believes that only wireline voice is an essential service and that access to Digital Economy Broadband Services is important, but not essential, for Canadians.

75. DEBS, such as described in 1 a) and b), are not essential for Canadians to be able to meaningfully participate in the digital economy. Voice alternatives exist, as do government programs allowing access to these services at centralized – but community-based – locations.

76. Accessing these services at community-based locations is a much better solution for those members of society who are financially challenged than creating a program which passes their residence with a high capacity service for which they cannot afford the required computer equipment to access or the monthly fee.

77. The specific technology used should not be a factor in defining a basic service, so long as the technology in question delivers the functionality required at an acceptable price.
78. Therefore, SaskTel submits that the only basic telecommunications service should continue to be wireline voice and that the current regulatory framework does not need to be changed at this time.

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?

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?

79. Yes, market forces plus government capital funding can be relied on to ensure that all Canadians have access to basic telecommunications services.

80. Only wireline voice should be considered basic telecommunications at this time and market forces, combined with the Commission’s local service subsidy regime and the obligation to serve, mean that affordable access to this service is near-ubiquitous in Canada.

81. For broadband services – which should not be considered basic telecommunications in any event and, if they were, should only be considered basic telecommunications at a level required to deliver everyday broadband services - market forces have already driven expansion in coverage area and speeds delivered.

82. In addition, the Government of Canada, through early programs such as SchoolNet to more recent programs such as BRAND and Connecting Canadians, continues to play a role by providing targeted funding to allow network expansion to those Canadians which the market cannot currently serve economically. There are also other less well-known programs. In specific SaskTel would like to note the work undertaken through Aboriginal Affairs and Northern Development Canada (AANDC) in expanding broadband. SaskTel in partnership with AANDC has ensured that every aboriginal health care centre and every aboriginal school in Saskatchewan has the capability to access 10 Mbps broadband speeds. By using this as an aggregator model, more than 80% of First Nations people living on a reserve in Saskatchewan also have access to commercial residential internet.

83. Provincial and territorial governments, from the Yukon to New Brunswick, have sponsored programs to expand broadband infrastructure within their jurisdiction. The best known of these programs was Alberta’s “SuperNet” placing fibre fed points of presence in over 400 communities. In Saskatchewan, under the rubric of “CommunityNet” the Province has sponsored numerous initiatives to increase the bandwidth in all health, education and library facilities. These initiatives have laid the groundwork for the creation of innumerable business cases to expand residential broadband in rural and remote regions of the Province.

84. The private sector, especially in the resource industries, also continues to play an important role in the expansion of broadband in remote areas. For instance, in Saskatchewan, non-telecom resource companies who require high bandwidth services pay construction fees required to connect some of their remote sites. This helps service providers develop backhaul and eases the economic business case for expansion of service to residential customers.

85. In addition, communities themselves have become involved in creating a business case to bring broadband to their residents. Municipalities, towns and villages have partnered with telecommunications providers to expand residential broadband. Others, such as Olds, Alberta have taken it upon themselves to create their own fibre network with no involvement of traditional telecommunications providers.

86. Given the general expansion of broadband as a result of all of these companies, institutions and communities of interest there is no need for the Commission to play any role beyond what it is doing today.

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?

87. Given that 91% of the population already has access to the target download speeds and that programs are underway to expand that percentage, no intervention is required. The target has largely been reached.

88. With any such targets, even given strong market forces and successive government programs, there will be some remote, sparsely populated, locations that simply cannot be reached economically. Even satellite solutions do not cover all topology, leaving some customer locations not economically reachable.

89. Even under the current wireline telephony regulatory regime, the Commission acknowledges that the overall cost of extending coverage to the most expensive areas to reach must be considered. For instance, in the proceeding leading to Telecom Decision CRTC 2002-34, Regulatory framework for second price cap period (“Decision 2002-34”), SaskTel identified approximately 200 underserved residence subscribers in its operating territory, generally north of the 54th parallel and proposed a Service Improvement Plan (SIP) which would cost approximately $20,000 per customer to bring service to the Basic Service Objectives (BSO). That plan was denied by the Commission in Decision 2002-34 as the Commission “[found] that SaskTel's proposed cost of $20,000 per line to improve service to underserved subscribers [was] too high”[footnoteRef:6] and SaskTel was required to “monitor the marketplace for faster, less expensive satellite products, or other serving methodologies, to report the results; and to submit a new plan to serve any exchanges currently without access to the Internet via a local call, when appropriate, for Commission consideration.”[footnoteRef:7] SaskTel continues to do so and, to date, no such solutions have been discovered. While not commenting on the specific situation or costs and customers involved, SaskTel submits that the philosophy behind this determination – namely that some things really are too expensive – is correct and must also be applied when analyzing Canadians’ access to high speed bandwidth. [6: Decision 2002-34, paragraph 911] [7: Decision 2002-34, paragraph 914] 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.

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?
90. SaskTel has no input on matters specific to Northwestel.

91. SaskTel submits that there is no need for the Commission to institute additional mechanisms in other areas of Canada. If the Commission were to develop such a mechanism, it is highly unlikely that a program developed to meet the needs of Northwestel’s operating territory would be appropriate.

Regulatory measures for basic telecommunications services
8. What changes, if any, should be made to the obligation to serve and the basic service objective?
92. The current basic service objective consists of:
a) individual line local touch-tone service;
b) capability to connect to the internet via low-speed data transmission at local rates;
c) access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service;
d) a printed copy of the current local telephone directory upon request;
e) unlimited local calling at a flat monthly rate, subject to a price ceiling; and
f) access to a choice of long distance service provider.

93. Certain components listed seem somewhat archaic, such as the references to touch-tone service, dial-up internet access and access to alternate long distance service providers. However, wireline voice is a gradually declining service, there is no pressing need to make changes to the BSO at this time.

9. Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?
94. Only wireline voice should be considered a basic telecommunications service.
95. Broadband services should not be considered basic telecommunications and, if they were, should only be considered basic telecommunications at a level required to deliver everyday broadband services.
96. No other services should be defined as basic telecommunications service.
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)?

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.

97. No changes are required at this time. The local subsidy regime is gradually going away, but continues to provide an important social safety net for a significant segment of society.

98. The collection mechanism is a known, effective methodology for supporting this regime. In addition, the methodology is also used to calculate the Telecom Fees. Therefore, disrupting the methodology of calculation of Contribution will also impact the Telecom Fee payments. No changes should be made.

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.
99. Only wireline voice in HCSAs should continue to be subsidized by programs introduced by the Commission.

100. Broadband services should not be subsidized by programs introduced by the Commission and, if they were, only to a level required to deliver ’everyday’ broadband services as opposed to the high data needs of video streaming and gaming.

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?
b) In which regions of Canada should funding be provided?

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)?

d) How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?
e) What is the appropriate mechanism for distributing funding? For example, should this funding be (i) paid to the service provider based on revenues and costs, or (ii) awarded based on a competitive bidding process?
f) Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?
g) Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

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.

101. SaskTel makes no comments at this time about funding requirements for Northwestel.
102. In the rest of Canada, market forces plus Government of Canada programs such as Connecting Canadians are sufficient and no Commission-initiated programs are required.

103. In any event, the residential local wireline service subsidy should not be replaced. At this time, the subsidy continues to make the most basic telephone connectivity affordable and accessible for Canadians living in High Cost Serving Areas.

104. The industry has been able to thrive in an environment where the residential local wireline service subsidy existed. And the subsidy continues to be less and less of a burden on the industry. As depicted in figure 5.1.8 of the 2014 Communications Monitoring Report, the revenue-percent charge continues to decline, falling steadily from 0.81% in 2009 to 0.53% in 2013, with the total subsidy paid declining from $182 Million to $118 Million over the same period.

105. The residential local wireline service subsidy continues to be a valuable regulatory measure and should not be changed at this time. In 10 years, the Commission may wish to re-evaluate this.
[bookmark: _Toc424564799]Conclusion

106. Over the long range, the Canadian regulatory environment needs to move gradually from viewing internet access as one component of a ‘basic local phone service’ to viewing voice connectivity as one component, or App, of ‘basic high speed connectivity’.

107. However, this should not happen immediately as, although the number of subscribers with only local wireline phone service is dropping, this service continues to provide the most essential connectivity components (access to emergency services, voice connectivity – affordable rates – reliability) for a significant segment of consumers, including the most vulnerable members of society.

108. Therefore SaskTel submits that:
· The voice BSO, including the obligation to serve and the subsidy regime which makes this affordable to consumers should remain in place.
· Any revised High **** Service Objectives, such as the one defined in RP 2011-291, should continue to be targets only, allowing the Commission to continue to monitor the industry’s progress.

· Since the current combination of market forces and government programs has moved coverage substantially towards and beyond the targets originally set, there is no need at this time to mandate this objective or to establish subsidy programs enabling companies to work toward this.

· The Commission should establish this target and review progress towards it in another 5 years, to see if additional measures are required.
· Any HSSO should focus on download speeds.
· 5 Mbps continues to be sufficient download speed for everyday broadband applications.
***End of Document***
SaskTel

Intervention: SaskTel (Intervenor 243)

Document Name: 2015-134.223973.2394461.Intervention(1fbkt01!).doc
SaskTel Intervention
14 July 2015 TNC 2015-134
**** 19 of 24
[bookmark: _GoBack]
Canadian Radio-television and
Telecommunications Commission
[image: SaskTel]
Telecom Notice of Consultation CRTC 2015-134
Review of basic telecommunications services
INTERVENTION
14 July 2015
[bookmark: _Toc267463597]
****
1.0 Introduction 1
2.0 Market Conditions 2
2.1 Wireline telephony declining, but still relevant for many Canadians 2
2.2 Broadband continues to expand 3
3.0 General Observations 5
3.1 Northwestel is unique 5
3.2 Voice, Broadband Access to the Digital Economy, and Entertainment should be viewed separately and have separate regulatory treatments 6
Voice 6
Broadband Speeds Required for the Digital Economy 7
Broadband for Entertainment Purposes 8
3.3 Download is far more important than upload 9
3.4 Multiple technologies are capable of delivering advanced broadband speeds 10
4.0 SaskTel’s response to the Commissions Questions for discussion 12
5.0 Conclusion 23
Table of Contents
[bookmark: _Toc424564786]Introduction

1. Pursuant to the procedures established at paragraph 47 of Telecom Notice of Consultation CRTC 2015-134, Review of basic telecommunications services (“NC 2015-134” or “the Notice”), Saskatchewan Telecommunications (SaskTel) requests to appear at the public hearing and provides its initial Intervention.

2. SaskTel has divided this Intervention into a fulsome discussion of certain overlying trends and principles which SaskTel believes are relevant to the discussion, followed by direct answers to questions asked in the Notice. In Section One, SaskTel discusses current market conditions for traditional wireline telephony and broadband. In Section Two, SaskTel discusses several issues which the company feels are critical to determining a response to the Commission’s questions. In Section Three, SaskTel provides answers to the Commission’s questions. These answers are informed by the overall trends and concepts discussed in Sections One and Two.

3. In summary, SaskTel believes that:
· The current residential wireline regulatory framework continues to provide a valuable service to Canadians in high cost serving areas and should not be modified;
· While Canadians are gradually migrating away from traditional wireline telephony, many still rely on this service;
· The Commission’s current target download speeds continue to be sufficient for Canadians to access those broadband services required to participate in the digital economy;
· Canadians are adopting higher broadband access speeds – but the driver for this is for entertainment purposes. There is no justification for regulatory intervention to feed Canadians’ Netflix addiction.
[bookmark: _Toc424564787]Market Conditions
[bookmark: _Toc424564788]Wireline telephony declining, but still relevant for many Canadians

4. Residential wireline connections continue to decline, but remain an important factor as they represent the one communications service available to almost 100% of the Canadian population at the most affordable price. While telephony ‘cord-cutting’ continues to increase, a majority of Canadians still rely on this almost ubiquitous wireline service. As noted in the 2014 Communications Monitoring Report, in 2013 there were still 15.9 Million wireline telephony connections in Canada, 6.9 Million of which were residential.

5. As the Commission states in paragraph 8 of the Notice, “the number of telephone lines has decreased from 18.6 million in 2009 to 15.9 million in 2013, [and]...20.4% of Canadian households rely only on mobile wireless services.” However, SaskTel stresses that, while certainly outlining a significant trend, these numbers also indicate that 79.6% of Canadian households continue to rely on wireline service as their primary communications service. This is especially true in high cost service areas (HCSAs) where various satellite and wireless services cannot provide the same dependable quality of service as residential wireline connections. This is a very important service for rural and remote residents who remain more isolated than their urban counterparts.

6. In return for this dependability the current Canadian contribution system ensures that residential voice wireline solutions in HCSA’s remain affordable at rates of just over $30 per month. In urban areas, due primarily to reduced infrastructure costs; wireline voice solutions are even less expensive.

7. In the absence of the current Canadian contribution system the costs borne by rural and remote residents would rise substantially, especially in those cases where the copper infrastructure needs to be replaced. These customers would receive rate increases without increases in the quality of the services offered.

8. In addition to the affordability factor, SaskTel believes that a number of residents retain their wireline access service because they have not yet acquired the skills to use other types of services such as ‘over the top’ (OTT) voice or even cellular wireless. These people include some of the most vulnerable in society such as a portion of the senior population, those with limited access to education and many of the economically disadvantaged without access to terminal equipment. While these demographics will become smaller over time, they should not be abandoned in a rush by society to adopt new technologies; nor can all of their challenges be overcome by the telecommunications industry - which can only provide access.

[bookmark: _Toc424564789]Broadband continues to expand

9. As noted earlier, SaskTel recognizes the growth of broadband and the likelihood of an eventual blending of broadband and voice services. Service providers are extending broadband coverage to more and more Canadians and technology is allowing them to increase maximum download speeds dramatically. The vast majority of Canadians are opting to adopt broadband as a complement to their traditional wireline service or in other cases attempting to use cellular as a combined voice and home broadband service thereby adding congestion to that network.

10. To date, the Commission has relied on market forces and targeted Government programs to expand access to broadband services. This approach has been successful. The overall number of Canadians with access to broadband has been steadily increasing and, the maximum speeds available to all Canadians have increased dramatically since Telecom Regulatory Policy CRTC 2011-291 (RP 2011-291) was released.

11. Even in higher cost areas, average available speeds continue to advance and targeted government programs, such as BRAND and Connecting Canadians, are helping to spread these speeds to areas where this would not otherwise be economical.

12. As the Commission states in paragraph 22 of the Notice, “[v]irtually all Canadians, regardless of whether they live in urban centres or in rural and remote areas, benefit from having access to Internet services using a variety of technologies, including wireless and satellite technologies.” SaskTel has been cognizant of this when planning its capital spending for a number of years.

13. As a result SaskTel now has over 300 rural communities with wireline broadband download speeds over 5 Mbps, over 200 of which have speeds over 10 Mbps; 55 towers providing wireless broadband speeds of 5 Mbps; a partnership with **** Xplornet to access more remote households with satellite-based solutions; an enhanced fibre ring in northern Saskatchewan; an HSPA cellular system which covers over 99% of the population and an ever expanding Wi-Fi network in urban areas. These services are in addition to the operations of other cable and wireless companies which also provide residential broadband access in the province. The overall number of households without access to some type of broadband is already extremely low and is rapidly declining.

14. Paragraph 30 of the Notice states that “[i]t is noted in the Satellite Inquiry Report that roughly 18,000 households without access to broadband Internet service at the Commission’s target speeds are located in satellite-dependent communities in Yukon, the Northwest Territories, and Nunavut, as well as in certain remote areas of British Columbia, Saskatchewan, Manitoba, Ontario, and Quebec.” 15. SaskTel notes that, while 18,000 households is indeed a significant number, which should be addressed in some manner, it represents only a fraction of a percentage of the 14,690,000 households which the Canada Mortgage and Housing Corporation predicts for Canada as of 2016[footnoteRef:1]. [1: Canada Mortgage and Housing Corporation, Research Highlight, ****-Term Household Growth Projections 2013 Update, Table 2 – mid-range estimate for 2016.] 16. The Commission also “notes that other communities in Canada, not just satellite-served communities, are facing challenges in achieving the Commission’s broadband Internet service target speeds.” Paragraph 134 of the Satellite Inquiry Report states “[i]n 2013, approximately 1.2 million, or 9% of, Canadian households did not have access to broadband Internet service at the Commission’s target download and upload speeds.” 17. Again, SaskTel believes that while there may well be an issue to address with respect to the 9% of Canadian households where the Commission’s target has not been met, it is equally important to note that this target indeed has been met in 91% of households. In SaskTel’s opinion that is a sign of success for the current environment.

18. In addition, the Government of Canada is currently conducting another targeted program, the Connecting Canadians program, “targeting to expand access to this speed to up to 280,000 households over the next few years.”[footnoteRef:2] On May 20, 2015 Industry Canada announced that 356,000 homes will be served by that program.[footnoteRef:3] A large number of these new homes served will also be located in the north and in areas which did not have access to required speeds when the Satellite Inquiry was written using data from 2013. The combination of government programs such as this, market forces, and improvements in various technologies means that, as time goes on, more and more Canadians will have access to broadband services at the Commission’s target speeds. [2: Satellite Inquiry Report, paragraph 247] [3: Industry Canada, News Release, May 20, 2015.] [bookmark: _Toc424564790]General Observations

[bookmark: _Toc424564791]Northwestel is unique

19. In the Notice, the Commission asks a number of questions specific to Northwestel, and also asks whether decisions made in the case of Northwestel should be extended to other companies. For example, in paragraph 27 of the Notice, the Commission referenced Telecom Regulatory Policy 2013-711, where it stated its:

[I]ntention to establish a mechanism in the present proceeding, as required, to support the provision of modern telecommunications services in Northwestel’s operating territory. 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 to ensure that they support evolving telecommunications services, such as broadband Internet services.

20. In Appendix B of the Notice (paragraph 7), respondents are asked to “[e]xplain, with supporting rationale, whether there is a need for the Commission to establish such a mechanism in Northwestel’s operating territory” and to “explain whether there is a need for such a mechanism in other regions of Canada.” 21. SaskTel believes that the circumstances faced by Northwestel are unique and that the needs of that particular company should be addressed on a stand-alone basis, as the Commission has always done in the past. The very small number of customers residing in the vast territory served by Northwestel, the lack of any large population centres, and the harsh terrain and distances involved represent an environment not faced – to the same extent - by any of the ILECs.

22. SaskTel submits that potential regulatory measures applicable to Northwestel should be judged on their own merits and not applied indiscriminately to other ILECs. As SaskTel has little experience in Northwestel’s specific circumstances, the company will make no further comment on regulatory regimes applicable to that company.

[bookmark: _Toc424564792]Voice, Broadband Access to the Digital Economy, and Entertainment should be viewed separately and have separate regulatory treatments

23. Although voice and data are gradually merging over time into one ‘communications’ market, they have not yet reached that level. Many Canadians continue to not feel the need for broadband connections. Others may not have the financial resources to be able to afford a voice connection, broadband access and an appropriate terminal. For those Canadians with financial concerns, wireline voice remains the most pervasive and cost-effective connection to society. Although SaskTel believes that these two services will eventually fully merge, SaskTel also feels that it is better to allow this to happen organically, through market forces and demographic changes, rather than introduce regulatory changes which pre-empt this natural evolution.

[bookmark: _Toc424564793]Voice

24. When telephony was initially introduced, voice was the only service available. The introduction of this service played a critical part in allowing all Canadians to become more connected to their community and to access critical services such as emergency response and health care. When the internet was first developing, it became a ‘feature’ that could be accessed over a wireline voice connection and then over the high frequency channel available on that copper pair, or cable TV connection. As time went on, data, and then broadband data, become more and more pervasive and it is now a very important service for many Canadians. However, there are few, if any, truly critical services that cannot be reached over a voice network. As such, voice service continues to allow vulnerable Canadians to participate in the economic and social fabric of their community.

25. Today, with the evolution to IP-based service, voice is gradually becoming a feature of data service rather than the reverse. However, this evolution will take years and may never fully happen for the most vulnerable Canadians - who may not have the skills to operate or the financial resources to afford the charges for a broadband service, let alone the purchase price of an appropriate device to access this service.

26. Meanwhile, with the gradual decline of voice lines in Canada, the voice contribution obligation is becoming a smaller and smaller burden on the industry while continuing to deliver an important social safety net. Although broadband is very important to Canadians, voice provides the most critical communications services – including access to emergency services, and basic human contact. Canadians with voice only service continue to be able to participate fully in society by utilizing a service that is both affordable and reliable. SaskTel submits that the local contribution regime supporting voice service should be maintained in its current form.

[bookmark: _Toc424564794]Broadband Speeds Required for the Digital Economy

27. Canadians have a vast and growing desire for broadband data. Data usage increases dramatically every year and Canadians are moving to higher and higher speeds. However, SaskTel contends that the vast majority of this data is used for applications that, while extremely popular with Canadians, should not be viewed as “basic” or “critical” communications. The speeds required to participate in Canada’s digital economy – which SaskTel will refer to as the ‘Digital Economy Broadband Speeds’ or DEBS, are much lower than those which provide an optimal entertainment experience when gaming or watching movies.

28. There are a growing number of data applications which are becoming important to the economic and social growth of Canada. These include access to distance education, E-health, business applications, and things like online banking and shopping. As noted above, voice alternatives are generally available for anything critical that customers do on data. More crucially, bandwidth requirements for DEBS purposes are far less than for entertainment services such as gaming or streaming video. Applications like E-health and distance education may require high bandwidth at more central locations, such as hospitals and schools or libraries but not within each residence. In Saskatchewan, these institutions, be they operated for the general public or located on First Nations land, all have the potential to reach beyond the 5/1 targets of the Government of Canada. At the individual residence level, the Commission’s current broadband targets are quite sufficient to deliver these services. Many of the targets being discussed by other nations are simply for bragging rights and do not focus on the real or everyday needs of residents.

29. Market forces and government programs are doing a fine job in meeting the less data-intensive needs described above for residences. Therefore, SaskTel submits that there is no regulatory intervention required in the broadband market to provide DEBS to Canadians.

[bookmark: _Toc424564795]Broadband for Entertainment Purposes

30. Entertainment, such as video-gaming and streaming video is perceived as important to Canadians but SaskTel contends that it is neither a critical need nor a basic telecommunications service. There is no justification for regulatory intervention to feed Canada’s streaming video habit. In the creation of social policy mechanisms there must be a distinction between individual wants and needs.

31. SaskTel notes the Commission’s determinations, in Broadcasting Decision CRTC 2015-24, that conventional television licensees are required to maintain an over-the-air presence in order to retain certain regulatory privileges and its statements regarding the “significant investments that broadcasters, Canadians and government recently made into the successful transition to digital over-the-air technology”[footnoteRef:4]. [4: Broadcasting Decision CRTC 2015-24, paragraph 18] 32. Although that decision was made under the Broadcasting Act and with respect to the Commission’s broadcasting responsibilities, it must be noted that maintenance of digital over-the-air services was undertaken in order to provide Canadians with access to “basic” Canadian information and entertainment. SaskTel would suggest that the introduction of any additional subsidy regimes in the current proceeding which further promote Canadian’s migration toward ‘over the top’ (and quite likely ‘out of the country’) video viewing services would seem to represent regulatory intervention in the opposite direction from the quoted determinations.

33. If video “entertainment” is part of the social requirements of Canadians surely the availability of such programming via either digital over-the-air or satellite meets those objectives for both rural and urban Canadians. Broadband need not be available to fulfill that need.

[bookmark: _Toc424564796]Download is far more important than upload

34. Traditionally, download capacity has been much more important to the majority of users than upload capacity. Although certain businesses may require a fast upload speed, few residential customers require similar upload speeds. This is why residential high speed services have been designed to allocate the majority of the total available bandwidth, whatever that may be, to download rather than upload.

35. In today’s network, and in SaskTel’s future forecasts, the majority of data – and capacity requirements – will continue to be driven by downloads. SaskTel has recently reviewed the company’s ITS traffic and download traffic is indeed the significant majority. SaskTel notes that the majority of data consumed today is from video content and that traffic alone is enough to establish downstream as the essential component for the majority of traffic.

36. SaskTel submits that the Commission should be mindful of this relationship when analyzing current and potential future target speeds. It is SaskTel’s belief that improvements in download speeds would be more beneficial to customers than improvements in upload speeds. The vast majority of customers want greater download rather than upload speeds. A simple review of the marketing materials from all service providers, whether they are wireline Telcos, WSPs, Cablecos, fixed wireless or satellite-based providers, would seem to indicate that they all share this belief. Such a widely held belief, and such similarity in promotional activities, would not be present unless the market responded well to it. The Commission should not introduce regulatory factors which might interfere with this proper functioning of the market and the preferences of our customers.

37. Thus, if the Commission makes changes to the Basic Service Objective or introduces a broadband subsidy plan (neither of which it should do), or decides to update its target speeds then the emphasis should be on download, not upload speeds. Introduction of any new regulations - even ‘aspirational’ targets - which unduly emphasize upload speeds would lead to scarce resources being consumed to meet these requirements and that would reduce the resources available to increase download speeds. Such changes might also lead to available bandwidth at subscribers’ residences being allocated to upload in a manner which market forces – which represent consumers’ wishes – would not have dictated. The Commission may be sure that if Canadian consumers begin to value improved upload speeds more than they value improved download speeds, then Canadian service providers will adjust their offerings to meet the changing demands of the market.

[bookmark: _Toc424564797] Multiple technologies are capable of delivering advanced broadband speeds

38. There are multiple technologies and multiple types of service providers capable of delivering advanced broadband speeds, including wireline Telcos, WSPs, CableCos, Fixed Wireless providers and Satellite-based providers.

39. All of these technologies are advancing, with Telcos and CableCos moving fibre closer to customers (including right to the customer premise), technological advances providing better speeds, new satellite capabilities being explored, spectrum being obtained by various service providers, and other developments such as the ever expanding universe of Wi-Fi delivery.

40. Just recently, attendees at the 2015 Telecom Summit in Toronto heard satellite/fixed wireless providers suggesting that 25 Mbps download speeds will be available to all rural Canadians by the year 2017. Meanwhile, improvements in DOCSIS and fibre technologies are allowing CableCos and Telcos to reach impressive speeds.

41. In such an environment of rapid change, the Commission must be careful not to introduce regulations that force one or all of these provider types to deploy resources in a manner that is not responsive to the market or the best use of available technology. Each delivery technology has its own limitations and advantages in certain market niches. Companies should be encouraged to apply the best and most efficient technology wherever possible. Five years ago, who would have envisioned the extensive use of disruptive technologies such the creation of Wi-Fi networks throughout a growing number of urban centres? It is possible that regulatory programs meant to encourage growth would lead to the inefficient use of available capital.

42. For instance, adding a broadband target to the BSO – which applies only to ILECs – could cause those companies to expend scarce resources deploying network which may not, in the end, be attractive to Canadians because other technologies have leapfrogged the ILEC capacity, either through cost, through service attributes, or simply through install speed or service portability.

43. Each technology introduces unique issues and has unique benefits.

44. For instance, satellite, cellular and fixed wireless systems are far more sensitive to congestion issues than are wireline and fibre. Due to spectrum constraints all of these systems can accommodate only so many simultaneous customers per satellite, per tower or per sector before the throughput to individual customers begins to degrade. All claim the ability to deliver extensive speeds such as 25 Mbps today and up to 100 Mbps and beyond in the future, but bandwidth is shared and performance is based on time of day and usage.

45. Technologies such as satellite solutions have superior potential coverage, but are subject to latency issues. Latency may not be an issue at all for many consumers, but for others, such as farmers participating in online auctions, it is an issue.

46. On the other hand, fixed and mobile wireless, Wi-Fi and satellite solutions provide consumers with more flexibility to move their service at their location or to alternate locations such as a park, a workshop or a cabin at the lake. This can be very attractive to some consumers.

47. In rural areas the costs of delivering broadband varies significantly by the type of technologies used and location served: DSL is only available within a certain range of a CDO or remote DSLAM; placing an additional tower with appropriate backhaul for mobile or fixed wireless can cost a million dollars; while putting a satellite in space can cost hundreds of millions of dollars.

48. Developing an ongoing costing model for a contribution regime for broadband would demand as many variants as there are technologies. Questions such as what is the appropriate technology in a specific situation would be better left to the marketplace and to targeted government programs where operators are willing to extend operations in a sustainable manner.

49. The real issue is that unlike the traditional copper-based telephony system, broadband delivery is not homogeneous. Each technology has its challenges and costs, each customer has different preferences and use patterns. The marketplace is working out these issues – perhaps not as quickly as we would like – but it is moving rapidly forward to greater speeds at lower prices for the amount of data used.

[bookmark: _Toc424564798]SaskTel’s response to the Commissions Questions for discussion
50. In this section SaskTel lists each of the Commission’s questions in italics, followed by the company’s responses, which are informed by the ideas discussed earlier in this Intervention.
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?

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?

51. At the current time, access to basic voice service continues to play an important role which is met by the current regulatory framework. Basic voice is the most affordable alternative and provides access to health and emergency services, banking services, and everyday connection to society.

52. Canadians are also using broadband services for all of the items discussed and many more. The items listed – e-commerce, e-banking and/or telephone banking, e-health or telehealth services, telework, and distance education – are some of the most important to ensuring that Canadians meaningfully participate in the digital economy.

53. However, SaskTel submits that the majority of basic internet communications such as e-commerce, e-banking, email, web surfing, etc are performed more than adequately on a broadband internet connection which meets the Commission’s current 5 Mbps target download speeds.

54. In Saskatchewan, many services described above are delivered via the Provincial Government’s CommunityNet program, funded by the Province to deliver broadband access, telehealth and distance education services. These programs are delivered via fibre accesses which the Province has paid to have installed at every hospital, library and school. In addition it should be noted that every First Nations school and health facility in Saskatchewan has the capability to receive at least 10 Mbps.

55. There is no requirement for broadband access in excess of 5 Mbps to be delivered at individual customer residences.

56. In the future, it is possible that individual customers may participate in telehealth initiatives from their residence (or perhaps even via a mobile phone). However, the data being delivered from that residence will be very small indeed and will consist of various sensor readings. Data delivered to that residence would be basic health information such as that delivered via web browsing; slides or short video clips.

57. Distance education in Saskatchewan is delivered in a variety of ways. Remote assistance to schools or individual courses can all be streamed over the internet to central sites in a community or to a resident’s home. As described by the University of ****, for individual courses, “[l]ive-streamed video usually requires about 1-2 Mbps bandwidth (speed at which your computer can download from the Internet)[footnoteRef:5].” On-line courses are also available which are not live-streamed and thus are less sensitive to data requirements. Clearly, this does not require more than the 5 Mbps target download speed. For in-school projects, all Saskatchewan schools and regional colleges have access to higher bandwidth accesses. [5: http://www.uregina.ca/cce/distance-online/televised-courses.htm] 58. The everyday broadband services for residences do not have high capacity requirements. Although there is continued year over year growth in data use from customers on both wireline and wireless networks, this is driven by entertainment services, not by everyday broadband services.

59. Low latency can indeed be an important factor for services such as real time voice or video, electronic auctions and other e-commerce applications. It is problematic to address this issue with any satellite-based technologies. However, the Commission must balance the extreme costs required to connect every remote residence to a wireline solution against this issue. Although many customers see the benefits of accessing the internet through mobile wireless devices, the issues of capacity on the wireless infrastructure, price, and the presence of data caps remain.

60. Capacity is important to many users, especially those interested in the entertainment uses of broadband access. SaskTel has looked at the possibility of utilizing its mobile wireless 4G LTE technology to provide broadband service to the company’s rural customers. Overall, the current mobile wireless technology was not designed to handle the types of traffic loads generated by the wireline internet usage patterns of most consumers. Frequent video access from sources such as Netflix or YouTube requires tremendous use of bandwidth. Given the manner in which 4G LTE would handle both video traffic and internet access plus the normal mobile traffic requirements, congestion would become a common condition.

61. Mobile 4G LTE, which operates in the 700 MHz, 850 MHz and 1900 MHz bands of licensed spectrum, is also based upon frequency-division duplexing (FDD), which is an inefficient use of scarce spectrum resources. FDD is a method that establishes a full-duplex communications link using ‘paired spectrum’ where two different radio frequency bands are allocated, one for the transmit channel and one for the receiving channel. Therefore, downlink and uplink traffic is allocated symmetrically (i.e. the customer receives download speeds equal to their upload speed). Since customers utilize more downlink traffic than uplink traffic, the spectrum allocated to the uplink channel is underutilized. As well, each specific customer data session requires that a pair of channels is allocated for the time the transmittal of data takes place, which contributes to capacity and congestion issues.

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.

62. In Saskatchewan, access to broadband in rural and remote regions outside of population centres remains a large but declining challenge. The company continues to explore innovative technology and access to various government programs to expand broadband coverage to areas where it would not otherwise be economical for SaskTel to do so.

63. However, digital literacy and the ability to afford terminals are not areas the industry has the ability or experience to address. These issues are best left to society, government and educational institutions.

64. Affordability has also been recognized as a challenge for government, not one which can be solved by the industry. Even wireline phones, at some $30 per month, have been recognized by governments as too onerous for some individuals. Wireline phone payments are included in Social Service payments to ensure access.

65. While privacy and security are important, they do not seem to be top of mind concerns which would prevent individuals from obtaining broadband service. SaskTel can and does ensure that concerns related to privacy and security are addressed at the network level and within the applications and websites that it has control over.

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

66. SaskTel is a network provider. Our company, and other network providers, can provide the network for access, and to a limited extent some devices; however, applications and digital literacy are up to the individual and society and government as a whole.

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.

67. Traditional voice services will continue to be of importance; however, broadband internet will become more and more important. Broadband infrastructure must continue to be scalable and evolve to meet the needs of consumers. The market, combined with targeted government programs, has done a good job today in meeting these needs and will continue into the future. Broadband services will likely continue to evolve, but at a much slower rate than entertainment services and with less of an increase in download requirements.

68. Consumers’ insatiable demand for data quantities (not necessarily speed) is one of our biggest challenges as an industry. However, SaskTel’s answers to parts a) through d) do not change because of this.

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?

69. Current download speeds available have been established in response to market forces.

70. As discussed previously, the current download target is sufficient for customers’ everyday broadband needs. While customers may well have wants that are in excess of this, there is no need for Commission intervention to address these wants.

71. SaskTel believes the current upload target actually exceeds the needs of the vast majority of consumers and that; in any event, download speeds are much more important than upload speeds.

72. Forcing the industry to focus on upload speeds, when the overall market is not demanding this, will lead to less customers being served with sufficient download speeds as limited industry and government resources will be consumed to solve an ‘issue’ which is less important than increasing download speeds and expanding network reach. These resources would be better focussed on attaining the target download speeds in underserved areas or in extending service to unserved areas.

73. Therefore, SaskTel submits that the current target speed of 5 Mbps down is sufficient to meet the DEBS requirements of Canadians and that an upload target should either be removed or reduced to 640 Kbps in order to encourage more technologies such as satellite and wireless to fulfill various broadband market niches.

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. 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.

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)?

c) What should be the prices for basic telecommunications services and how should these prices be determined? Provide rationale to support your answer.
74. SaskTel believes that only wireline voice is an essential service and that access to Digital Economy Broadband Services is important, but not essential, for Canadians.

75. DEBS, such as described in 1 a) and b), are not essential for Canadians to be able to meaningfully participate in the digital economy. Voice alternatives exist, as do government programs allowing access to these services at centralized – but community-based – locations.

76. Accessing these services at community-based locations is a much better solution for those members of society who are financially challenged than creating a program which passes their residence with a high capacity service for which they cannot afford the required computer equipment to access or the monthly fee.

77. The specific technology used should not be a factor in defining a basic service, so long as the technology in question delivers the functionality required at an acceptable price.
78. Therefore, SaskTel submits that the only basic telecommunications service should continue to be wireline voice and that the current regulatory framework does not need to be changed at this time.

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?

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?

79. Yes, market forces plus government capital funding can be relied on to ensure that all Canadians have access to basic telecommunications services.

80. Only wireline voice should be considered basic telecommunications at this time and market forces, combined with the Commission’s local service subsidy regime and the obligation to serve, mean that affordable access to this service is near-ubiquitous in Canada.

81. For broadband services – which should not be considered basic telecommunications in any event and, if they were, should only be considered basic telecommunications at a level required to deliver everyday broadband services - market forces have already driven expansion in coverage area and speeds delivered.

82. In addition, the Government of Canada, through early programs such as SchoolNet to more recent programs such as BRAND and Connecting Canadians, continues to play a role by providing targeted funding to allow network expansion to those Canadians which the market cannot currently serve economically. There are also other less well-known programs. In specific SaskTel would like to note the work undertaken through Aboriginal Affairs and Northern Development Canada (AANDC) in expanding broadband. SaskTel in partnership with AANDC has ensured that every aboriginal health care centre and every aboriginal school in Saskatchewan has the capability to access 10 Mbps broadband speeds. By using this as an aggregator model, more than 80% of First Nations people living on a reserve in Saskatchewan also have access to commercial residential internet.

83. Provincial and territorial governments, from the Yukon to New Brunswick, have sponsored programs to expand broadband infrastructure within their jurisdiction. The best known of these programs was Alberta’s “SuperNet” placing fibre fed points of presence in over 400 communities. In Saskatchewan, under the rubric of “CommunityNet” the Province has sponsored numerous initiatives to increase the bandwidth in all health, education and library facilities. These initiatives have laid the groundwork for the creation of innumerable business cases to expand residential broadband in rural and remote regions of the Province.

84. The private sector, especially in the resource industries, also continues to play an important role in the expansion of broadband in remote areas. For instance, in Saskatchewan, non-telecom resource companies who require high bandwidth services pay construction fees required to connect some of their remote sites. This helps service providers develop backhaul and eases the economic business case for expansion of service to residential customers.

85. In addition, communities themselves have become involved in creating a business case to bring broadband to their residents. Municipalities, towns and villages have partnered with telecommunications providers to expand residential broadband. Others, such as Olds, Alberta have taken it upon themselves to create their own fibre network with no involvement of traditional telecommunications providers.

86. Given the general expansion of broadband as a result of all of these companies, institutions and communities of interest there is no need for the Commission to play any role beyond what it is doing today.

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?

87. Given that 91% of the population already has access to the target download speeds and that programs are underway to expand that percentage, no intervention is required. The target has largely been reached.

88. With any such targets, even given strong market forces and successive government programs, there will be some remote, sparsely populated, locations that simply cannot be reached economically. Even satellite solutions do not cover all topology, leaving some customer locations not economically reachable.

89. Even under the current wireline telephony regulatory regime, the Commission acknowledges that the overall cost of extending coverage to the most expensive areas to reach must be considered. For instance, in the proceeding leading to Telecom Decision CRTC 2002-34, Regulatory framework for second price cap period (“Decision 2002-34”), SaskTel identified approximately 200 underserved residence subscribers in its operating territory, generally north of the 54th parallel and proposed a Service Improvement Plan (SIP) which would cost approximately $20,000 per customer to bring service to the Basic Service Objectives (BSO). That plan was denied by the Commission in Decision 2002-34 as the Commission “[found] that SaskTel's proposed cost of $20,000 per line to improve service to underserved subscribers [was] too high”[footnoteRef:6] and SaskTel was required to “monitor the marketplace for faster, less expensive satellite products, or other serving methodologies, to report the results; and to submit a new plan to serve any exchanges currently without access to the Internet via a local call, when appropriate, for Commission consideration.”[footnoteRef:7] SaskTel continues to do so and, to date, no such solutions have been discovered. While not commenting on the specific situation or costs and customers involved, SaskTel submits that the philosophy behind this determination – namely that some things really are too expensive – is correct and must also be applied when analyzing Canadians’ access to high speed bandwidth. [6: Decision 2002-34, paragraph 911] [7: Decision 2002-34, paragraph 914] 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.

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?
90. SaskTel has no input on matters specific to Northwestel.

91. SaskTel submits that there is no need for the Commission to institute additional mechanisms in other areas of Canada. If the Commission were to develop such a mechanism, it is highly unlikely that a program developed to meet the needs of Northwestel’s operating territory would be appropriate.

Regulatory measures for basic telecommunications services
8. What changes, if any, should be made to the obligation to serve and the basic service objective?
92. The current basic service objective consists of:
a) individual line local touch-tone service;
b) capability to connect to the internet via low-speed data transmission at local rates;
c) access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service;
d) a printed copy of the current local telephone directory upon request;
e) unlimited local calling at a flat monthly rate, subject to a price ceiling; and
f) access to a choice of long distance service provider.

93. Certain components listed seem somewhat archaic, such as the references to touch-tone service, dial-up internet access and access to alternate long distance service providers. However, wireline voice is a gradually declining service, there is no pressing need to make changes to the BSO at this time.

9. Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?
94. Only wireline voice should be considered a basic telecommunications service.
95. Broadband services should not be considered basic telecommunications and, if they were, should only be considered basic telecommunications at a level required to deliver everyday broadband services.
96. No other services should be defined as basic telecommunications service.
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)?

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.

97. No changes are required at this time. The local subsidy regime is gradually going away, but continues to provide an important social safety net for a significant segment of society.

98. The collection mechanism is a known, effective methodology for supporting this regime. In addition, the methodology is also used to calculate the Telecom Fees. Therefore, disrupting the methodology of calculation of Contribution will also impact the Telecom Fee payments. No changes should be made.

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.
99. Only wireline voice in HCSAs should continue to be subsidized by programs introduced by the Commission.

100. Broadband services should not be subsidized by programs introduced by the Commission and, if they were, only to a level required to deliver ’everyday’ broadband services as opposed to the high data needs of video streaming and gaming.

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?
b) In which regions of Canada should funding be provided?

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)?

d) How should the amount of funding be determined (e.g. based on costs to provide service or a competitive bidding process)?
e) What is the appropriate mechanism for distributing funding? For example, should this funding be (i) paid to the service provider based on revenues and costs, or (ii) awarded based on a competitive bidding process?
f) Should any infrastructure that is funded be available on a wholesale basis and, if so, under what terms and conditions?
g) Should the Commission set a maximum retail rate for any telecommunications service that is subsidized?

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.

101. SaskTel makes no comments at this time about funding requirements for Northwestel.
102. In the rest of Canada, market forces plus Government of Canada programs such as Connecting Canadians are sufficient and no Commission-initiated programs are required.

103. In any event, the residential local wireline service subsidy should not be replaced. At this time, the subsidy continues to make the most basic telephone connectivity affordable and accessible for Canadians living in High Cost Serving Areas.

104. The industry has been able to thrive in an environment where the residential local wireline service subsidy existed. And the subsidy continues to be less and less of a burden on the industry. As depicted in figure 5.1.8 of the 2014 Communications Monitoring Report, the revenue-percent charge continues to decline, falling steadily from 0.81% in 2009 to 0.53% in 2013, with the total subsidy paid declining from $182 Million to $118 Million over the same period.

105. The residential local wireline service subsidy continues to be a valuable regulatory measure and should not be changed at this time. In 10 years, the Commission may wish to re-evaluate this.
[bookmark: _Toc424564799]Conclusion

106. Over the long range, the Canadian regulatory environment needs to move gradually from viewing internet access as one component of a ‘basic local phone service’ to viewing voice connectivity as one component, or App, of ‘basic high speed connectivity’.

107. However, this should not happen immediately as, although the number of subscribers with only local wireline phone service is dropping, this service continues to provide the most essential connectivity components (access to emergency services, voice connectivity – affordable rates – reliability) for a significant segment of consumers, including the most vulnerable members of society.

108. Therefore SaskTel submits that:
· The voice BSO, including the obligation to serve and the subsidy regime which makes this affordable to consumers should remain in place.
· Any revised High **** Service Objectives, such as the one defined in RP 2011-291, should continue to be targets only, allowing the Commission to continue to monitor the industry’s progress.

· Since the current combination of market forces and government programs has moved coverage substantially towards and beyond the targets originally set, there is no need at this time to mandate this objective or to establish subsidy programs enabling companies to work toward this.

· The Commission should establish this target and review progress towards it in another 5 years, to see if additional measures are required.
· Any HSSO should focus on download speeds.
· 5 Mbps continues to be sufficient download speed for everyday broadband applications.
***End of Document***
SaskTel