Intervention: Cogeco Cable Inc.

Document Name: 2015-134.224003.2394778.Intervention(1fbtm01!).pdf
5 Place Ville ****, bureau 1700
Montréal (Québec) *** ***
Telephone: (514) 764-4700
Fax: (514) 874-2625
******@***.com
Via GCKey
14 July 2015
Mr. John Traversy
Secretary General
CANADIAN RADIO-TELEVISION AND
TELECOMMUNICATIONS COMMISSION
Ottawa (Ontario) *** ***

Re: CRTC File number: 8663-C12-201503186 - Review of basic telecommunications services, Telecom Notice of Consultation 2015-134 (“TNC 2015-134”) – Initial Submission of Cogeco Cable Inc. (“Cogeco”) **** Mr. Traversy:

Cogeco Cable Inc. (Cogeco) is pleased to file this intervention in the matter of the Commission’s telecommunications regulatory proceeding initiated by TNC 2015-134.

Cogeco is also pleased to file under separate cover its responses to the Commission’s Requests for Information respecting this proceeding.

Cogeco welcomes the opportunity to participate fully in this proceeding and requests the opportunity to appear at the public hearing scheduled to begin on **** 11, 2016.

Yours truly,
**** Messier

Senior Director, Regulatory Affairs, Telecommunications CC: John Macri, CRTC, ******@***.com

**** Baily, CRTC, ******@***.com
**** Dorval, Cogeco Inc., ****.******@***.com
mailto:******@***.com
mailto:******@***.com
mailto:******@***.com
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EXECUTIVE SUMMARY

ES 1. Cogeco commends the Commission for initiating this important proceeding with a view to assessing the present state of basic telecommunications services offered across Canada, the needs that these services fulfill presently and are expected to fulfill in the future, as well as the prospects for the future development and extension of these services across the country.

ES 2. Today more than ever, consumers throughout Canada enjoy more choice in telecommunications services, the telecommunications service providers that offer them, and the range and pricing of competitive service offerings available to them.

The quality and reliability of these services has also improved tremendously.

ES 3. This situation reflects the fact that, in the highly dynamic and competitive environment for telecommunications services in the Canadian marketplace, TSPs are driven to satisfy the rising needs and expectations of Canadian consumers as technological advances unfold and more bandwidth-intensive applications and services become available to them.

ES 4. In Telecom Regulatory Policy 2011-291, the Commission established universal target speeds of 5 Mbps download and 1 Mbps upload for broadband Internet access in Canada. Currently, these target speeds have not only been widely met across Canada but also exceeded by many TSPs for their entry-level service broadband Internet access service offerings, including Cogeco’s entry-level service in its Ontario and Quebec serving territories.

ES 5. In addition, as a result of the recent government funding initiative, namely the Connecting Canadians program, over 98 percent of Canadian households will be able to subscribe to high-speed Internet at minimum speeds of 5 Mbps based on different technologies by 2017. This is a great accomplishment.

ES 6. Furthermore, over the next 5 to 10 years, the evolution of technology and competitive market dynamics will continue to drive innovation and bring further improvements in the range, quality, reliability and pricing of telecommunications services offered across Canada.

ES 7. In such a context, broadband Internet access service speeds of 15 Mbps download and 2 Mbps upload (15/2 Mbps) could be reasonably set by the Commission as its revised speed targets, to be effectively and consistently achieved 14 July 2015

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by TSPs throughout Canada within the next five years.

ES 8. That said, due to the vastness of the land, the very uneven distribution of the population and the huge cost of deploying ever more powerful and sophisticated telecommunications technologies, there are still, and there will continue to be for the foreseeable future, some differences in the availability, range and price of telecommunications services in Canada.

ES 9. These differences, however, should not be seen as evidence of a systemic problem or failure of market forces but rather as an ongoing challenge inherent in the Canadian reality, that a combination of improved and more cost effective technologies, dynamic competitive market forces and targeted government funding programs will be able to address most effectively.

ES 10. There is therefore no need for the Commission to impose additional regulatory requirements to TSPs across the board for an obligation to serve or the extension of the basic service objective to a broadband Internet access service, nor to consider industry-wide ex ante regulatory measures to ensure that existing or future target speeds are met generally by TSPs across Canada. Specifically, there is no reason to consider implementing any changes to the National Contribution Fund for the purpose of supporting broadband Internet service expansion at this time.

ES 11. A general objective to be pursued through the telecommunications regulatory framework noted in TRP 2011-291 is to reduce reliance on subsidies. It follows that cross-subsidization measures should be eliminated rather than multiplied over time.

Cogeco submits that this objective is entirely appropriate and relevant throughout Canada, including but not limited to Northwestel’s operating territory.

ES 12. Consistent with the statutory telecommunications policy objectives and the federal government’s Policy Direction, the Commission should refrain from establishing a new or expanded cross-subsidization mechanism that would extend to broadband Internet or other telecommunications services. Furthermore, in all workably competitive markets in Canada, the Commission should abstain from price regulation whether in the form of tariffs or price caps, including for those telecommunications services that the Commission determines should be considered as basic for all Canadians.

ES 13. The only obligation to be placed on TSPs generally for broadband Internet access services and basic voice service should be that such access be provided without unfair discrimination or undue preference to customers requesting such services where facilities are available. In short, the telecommunications services that 14 July 2015

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may be considered by the Commission as most important to support Canadians’ telecommunications needs generally should be basic voice and broadband Internet access services provided by the TSP of their choice.

ES 14. The Commission’s primary role and responsibility with regard to the availability of basic telecommunications service and the achievement of its target broadband service speeds is to monitor whether target broadband Internet access services and basic voice service are being deployed to all Canadians in a reasonable and timely fashion and, if needed, to take appropriate measures. In this regard, Cogeco submits that the regulatory approach established through the policy determinations made by the Commission in TRP 2011-291, consistent with the statutory telecommunications policy objectives and the government’s Policy Direction, remains fully appropriate, relevant and sufficient.

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GENERAL COMMENTS

1. Cogeco is pleased to file this intervention in the matter of the Commission’s telecommunications regulatory proceeding initiated by Telecom Notice of Consultation (TNC) CRTC 2015-134. Cogeco welcomes the opportunity to participate fully in this proceeding and requests the opportunity to appear at the public hearing scheduled to begin on **** 11, 2016.

2. Cogeco commends the Commission for initiating this important proceeding with a view to assessing the present state of basic telecommunications services offered to Canadians across Canada, the needs that these services fulfill presently and are expected to fulfill in the future, as well as the prospects for the future development and extension of these services throughout the country.

3. As evidenced by the Commission’s annual communications monitoring reports, the Canadian telecommunications industry and the services that it provides to Canadians are evolving rapidly due to technological change and a highly dynamic and competitive market environment.

4. As a result, Canadian consumers now enjoy more choice than ever before in telecommunications services, the telecommunications service providers that offer them, and the range and pricing of competitive service offerings available to them.

The quality and reliability of these services have also improved tremendously.

5. Due to the vastness of the land, the very uneven distribution of the population and the huge cost of deploying ever more powerful and sophisticated telecommunications technologies, there are still, and there will continue to be for the foreseeable future, some differences in the availability, range and price of telecommunications services in Canada, including basic telecommunications services, as is the case for many other services which can also be considered as 14 July 2015

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basic for the well being of Canadians in a modern society, such as food, energy and transport.

6. These differences should not be seen as evidence of a systemic problem or failure of market forces but rather as an ongoing challenge that a combination of improved and more cost effective technologies, dynamic competitive market forces and targeted government funding programs will be able to address most effectively.

7. In this regard, as a result of the recent government funding initiative, namely the Connecting Canadians program, it is significant to note that 98 percent of Canadian households will have access to the current high-speed Internet target speed of 5 Mbps downstream, based on different technologies, by 2017.

8. The Commission should therefore continue to set achievable forward-looking targets in consultation with all telecommunications industry participants and Canadian consumers with respect to basic telecommunications services, while also continuing to monitor their development, deployment, quality and affordability throughout Canada.

9. In keeping with the federal government’s Policy Direction, the Commission should not however attempt to preempt or replace technological change, competitive market forces and targeted government funding programs with a view to implementing uniform basic telecommunications service objectives through ex ante regulatory intervention, including through mandated cross-subsidization schemes.

RESPONSE TO THE COMMISSION’S QUESTIONS FOR DISCUSSION 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.

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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?

10. Telecommunications services are used by Canadians for a very wide range of personal, business, institutional and other needs, including but not limited to e-commerce, e-banking, e-health, telework and distance education. For example, telecommunications services are also used for general Internet surfing, chatting, gaming, gambling and movie and other entertainment content downloading.

11. Also, telecommunications services are accessed by Canadians over a wide variety of technologies, platforms and devices and are used by Canadians over a very wide range of service configurations and packages, including mixed packages of telecommunications, broadcasting, software and hardware products and services.

12. The importance and perceived value of each available individual telecommunications service varies from one customer to the other, based on the customer’s own individual preferences and circumstances.

13. Cogeco respectfully submits that it is neither possible nor appropriate for the Commission to attempt to define what would constitute “meaningful participation” in the “digital economy” in relation to any particular use of any specific telecommunications service or package of telecommunications services.

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?

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14. The telecommunications services that may be considered by the Commission as most important to support Canadians’ basic telecommunications needs should be voice and broadband Internet access services provided by the TSP of their choice.

15. The evolution of telecommunications technology over various transmission protocols and platforms, as well as competitive market dynamics, are driving on an on-going basis the appropriate parameters for specific telecommunications services, including but not limited to capacity, mobility, speed and latency.

16. In the highly dynamic competitive market environment for telecommunications services in Canada, changes to these service parameters occur rapidly, efficiently and seamlessly in a way that cannot be matched or replaced by ex ante regulatory intervention.

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.

17. As evidenced in the Commission’s annual communications monitoring reports and other publicly available reports and statistics on the telecommunications industry in Canada, the use of fixed, mobile and satellite telecommunications services by Canadians is pervasive throughout Canada. However, there will always be a segment of the Canadian population that will not use or will stop using broadband Internet access service for various reasons, including lack of confidence, skills or other personal considerations or limitations.

18. Furthermore, even in such a mature industry environment, given the vastness of the country and the very uneven distribution of the Canadian population across the 14 July 2015

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land, there are still, and there will likely continue to be for the foreseeable future, differences in the choice and level of services as between urban areas and very remote and underserved areas of Canada, not only for telecommunications services but also for all other goods and services.

19. Bringing about telecommunications service enhancements in very remote and underserved areas of Canada will continue to require a mix of taxpayer-funded government programs and private investment initiatives as resources become available.

20. The federal government’s current public funding program will provide basic broadband Internet access to some additional 356,000 Canadians in very remote and underserved areas of Canada1.

21. For other Canadians in remote and underserved areas where basic voice and broadband Internet access services are already available, the quality of these services and the broadband service speeds will continue to improve over time.

22. In communities across Canada where competitive market dynamics are in place, there will continue to be marked improvements in technical quality, reliability, pricing, variety, choice and flexibility of telecommunications services offered to Canadians on an on-going basis without any need for ex ante regulatory intervention.

23. Finally, while privacy and security are important concerns, they cannot be considered barriers to meaningful participation by Canadians in the digital economy.

There are already extensive statutory and regulatory requirements in effect that must 1

“High-Speed Internet Coming to Rural Canada”, Industry Canada, News Release, 20 May 2015.

http://news.gc.ca/web/article-en.do?nid=976709
http://news.gc.ca/web/article-en.do?nid=976709
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be met by all TSPs with a view to ensuring the privacy and security of telecommunications in Canada.

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

24. In addition to the existing wide range of available hardware, software and personal electronic devices currently available throughout Canada and used for fulfilling digital voice, data and other digital telecommunications needs, enablers also include digital service awareness and Internet literacy.

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.

25. In our view, voice and broadband Internet access services will continue to be the foundation for meaningful participation by Canadians in the digital economy in the foreseeable future.

26. Over the next 5 to 10 years, the evolution of technology and competitive market dynamics will continue to drive innovation and bring further improvements in the range, quality, reliability and pricing of telecommunications services offered to Canadians across Canada.

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 14 July 2015

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frame would be reasonable to achieve these new targets?

27. The Commission’s current target speeds for broadband Internet access service have not only been widely met across Canada but also exceeded by many TSPs for their entry-level service broadband Internet access service offerings, including Cogeco’s entry-level service in its Ontario and Quebec telecommunications service footprint. We anticipate that the TSPs’ responses to the Commission’s request for information in this proceeding will prove that.

28. This situation reflects the fact that, in the highly dynamic and competitive environment for telecommunications services in the Canadian marketplace, TSPs are driven to satisfy the rising needs and expectations of Canadian consumers as technological advances unfold and more bandwidth-intensive applications and services become available to them.

29. Additionally, it cannot be ignored that over 98 percent of Canadian households will be able to subscribe to high-speed Internet at minimum speeds of 5 Mbps based on different technologies by 2017 as a result of the recent government funding initiative, namely the Connecting Canadians program2.

30. In light of this context and taking into account the current trend, Cogeco believes that broadband Internet access service speeds of 15 Mbps download and 2 Mbps upload (15/2 Mbps) could be reasonably set by the Commission as its revised 2

In the news releases recently issued by Industry Canada announcing the subsidies allowed by the Government of Canada to different projects aiming to bring high-speed Internet to underserved and unserved areas across the country, it is repeatedly stated that “By Canada’s 150th

birthday in 2017,

over 98 percent of Canadian households will be able to subscribe to new or improved high-speed Internet services”. See the following news releasesMay 20, 2015—High-Speed Internet Coming to Communities in Rural Manitoba; **** 25, 2015—High-Speed Internet Coming to Scugog; July 6, 2015—High-Speed Internet Coming to Saguenay–Lac-Saint-Jean; July 7, 2015—Harper Government expands high-speed Internet to rural Nova Scotia.

http://news.gc.ca/web/article-en.do?nid=976989
http://news.gc.ca/web/article-en.do?nid=976989
http://news.gc.ca/web/article-en.do?nid=991709
http://news.gc.ca/web/article-eng.do?nid=995989
http://news.gc.ca/web/article-eng.do?nid=996789
http://news.gc.ca/web/article-eng.do?nid=996789
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targets, to be effectively and consistently achieved by TSPs throughout Canada within the next five years.

31. Cogeco submits that such revised target speeds would not only be consistent with baseline speeds targeted in other jurisdictions3 but also enable Canadians to meet their basic needs with respect to their use of broadband Internet access service over the next five years.

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.

32. As indicated in our answer to question 1 b) above, the telecommunications services that may be considered by the Commission as most important to support Canadians’ telecommunications needs generally should be basic voice and broadband Internet access services provided by the TSP of their choice.

33. Cogeco submits that basic voice and broadband Internet access services enable all basic voice, data and other telecommunications needs in the digital world.

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.

34. In keeping with the Canadian telecommunications policy and the federal government’s Policy Direction, the Commission’s regulatory framework, including with 3

For example, the FCC recently adopted a new minimum speed standard of 10 Mbps downstream and 1 Mbps upstream (10/1 Mbps), previously set at 4/1 Mbps, for recipients of high-cost universal service support. See FCC 14-190, 18 December 2014.

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respect to basic telecommunications service requirements, should be technologically neutral.

35. Technological neutrality is also supported by the fact that many TSPs, including the Incumbent local exchange carriers (ILECs), currently use or have access to a variety of technological platforms, and that they have both the opportunity and the incentive to decide on the most appropriate configuration of technologies and platforms to deliver their telecommunications services to Canadians while meeting standard, technologically agnostic, basic regulatory requirements.

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)?

36. The only obligation to be placed on TSPs generally for basic voice and broadband Internet access services should be that such access be provided without any unfair discrimination or undue preference to customers requesting such services where facilities are available and subject to the fulfillment by the customer of the TSP’s standard terms of service and the payment of the applicable charges and fees published by the TSP for such services.

37. Cogeco submits that this standard basic service obligation should apply across the board to all TSPs irrespective of the particular technology or combination of technologies used by the TSP.

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

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38. The federal government’s Policy Direction provides the underlying principles that should govern regulatory intervention by the Commission, including on pricing for basic telecommunications services. Specifically, Section 1 a) i) of the Policy Direction clearly states that the Commission should “rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives”.

39. Therefore, in all workably competitive markets in Canada, in furtherance of the statutory telecommunications policy objective respecting the promotion of competition4, and as determined in accordance with the criteria set in the Policy Direction, Cogeco submits that the Commission should abstain from price regulation whether in the form of tariffs or price caps, including for those telecommunications services that the Commission determines should be considered as basic for all Canadians.

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?

40. The fundamental principle underlying the federal government’s Policy Direction is reliance on market forces to the maximum extent feasible. Hence, market forces must remain the fundamental driver for the delivery of basic telecommunications services by TSPs to Canadians.

4

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41. The Commission’s primary role and responsibility is to ensure that all telecommunications markets in Canada are and remain workably competitive rather than to intervene in workably competitive markets through price reregulation or other forms of ex ante regulation.

42. Governments, whether at the federal, provincial, territorial or municipal level, may elect to implement, or continue to implement, public funding programs in the public interest with a view to achieving the deployment of baseline telecommunications infrastructure and/or services in those markets where uneconomic conditions actually preclude the attainment of this objective. In this regard, we note that the federal government currently has in place such a program.

43. The role of TSPs in the private sector is to compete vigorously in the offering of all telecommunications services and the rollout of telecommunications infrastructure and facilities.

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?

44. In Telecom Regulatory Policy CRTC 2011-291 (“TRP 2011-291”) issued on 3 May 2011, following an extensive public proceeding on the obligation to serve and other related matters, the Commission made a number of important policy determinations consistent with the statutory policy objectives for telecommunications in the Telecommunications Act and the federal government’s Policy Direction.

45. In paragraph 189 of TRP 2011-291, the Commission stated that these regulatory measures “… are efficient and proportionate to their purpose, and minimally interfere with market forces”, noted in this regard its determinations “… with 14 July 2015

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respect to reducing reliance on subsidies, eliminating the application of the basic service objective in forborne exchanges, and providing ILECs with the flexibility to achieve their obligation to serve by using the technology of their choice”, and further specifically noted its determination that “… regulatory intervention is not appropriate at this time with respect to the matter of access to broadband and that market forces should continue to be relied upon”.

46. In the absence of clear widespread market failure, Cogeco submits that these explicit policy determinations remain fully appropriate, relevant and sufficient.

47. The Commission should continue to monitor on an on-going basis the actual improvements to the availability of basic voice and broadband Internet access services and the achievement of its target speeds for broadband Internet access service throughout Canada.

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?

48. The information collected by the Commission from TSPs through its requests for information in this proceeding should provide further insight on the actual extent to which its broadband Internet target speeds have not been effectively met in certain areas, and which TSPs have not met them.

49. Cogeco is convinced however that the evidence will demonstrate that there is not a systemic problem caused by widespread market failure. Furthermore, as stated on the Canadians Connecting – Digital Canada 150 website, once completed, it is http://www.crtc.gc.ca/eng/archive/2011/2011-291.htm14 July 2015

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noteworthy that 98 percent of Canadian households will have access to at least 5 Mbps5.

50. In the specific case of exchanges served by Northwestel, Cogeco notes that the shortcomings in the deployment of competitive alternatives and the achievement of the Commission’s target speeds for broadband Internet access service have already been considered and addressed in Telecom Decision CRTC 2015-78.

51. Further, Cogeco notes that competitive broadband Internet access service alternatives are currently being extended in Northwestel’s operating territory through competitors such as SSi Micro Ltd. with the assistance of the federal government‘s funding program for remote and underserved communities6.

52. Cogeco submits therefore that there is no need for the Commission to consider industry-wide ex ante regulatory measures to ensure that existing or future target speeds are met generally by TSPs across Canada.

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 5

See the Connecting Canadians website at http://www.ic.gc.ca/eic/site/028.nsf/eng/h_00587.html 6

“Improved High-Speed Internet Coming to Nunavut”, Industry Canada, News Release, 7 July 2015.

http://news.gc.ca/web/article-en.do?nid=997049

http://www.crtc.gc.ca/eng/archive/2013/2013-711.htmhttp://www.ic.gc.ca/eic/site/028.nsf/eng/h_00587.htmlhttp://news.gc.ca/web/article-en.do?nid=997049

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mechanism in other regions of Canada.

53. Northwestel is a wholly-owned subsidiary of the largest Canadian incumbent ILEC, Bell Canada. As a corporate group, Bell Canada has the economies of scope and size required to support the provision of basic telecommunications services by its Northwestel subsidiary in its operating territory.

54. The corporate veil should not be used to obtain new or additional regulatory cross-subsidization measures at the expense of Bell Canada’s competitors or their customers in order to further support Northwestel’s basic telecommunications service obligations in its operating territory.

55. As the Commission specifically noted in TRP 2011-291, a general objective to be pursued through the telecommunications regulatory framework is to reduce reliance on subsidies. It follows that cross-subsidization measures should be eliminated rather than multiplied over time. Cogeco submits that this objective is entirely appropriate and relevant throughout Canada, including but not limited to Northwestel’s operating territory.

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?

56. As mentioned in paragraph 46 above in our answer to question 5, Cogeco submits that the Commission’s policy determinations in TRP 2011-291 remain fully appropriate, relevant and sufficient.

57. In the absence of a clear model for the operation, funding and implementation timetable for such new or additional cross-subsidization measures, and to which basket of services they would apply, it is not possible to assess precisely the resulting 14 July 2015

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impact on private sector investment and government programs to fund modern telecommunications services mechanism in the operating territory involved.

58. It is however possible to state with confidence that such new or additional mandated cross-subsidization measures for the benefit of the incumbent monopoly carrier in Northwestel’s operating territory would likely prevent mixed public and private competitive initiatives from taking hold or extending further.

59. It is also possible to state with confidence that the design and implementation of such new or additional cross-subsidization measures would inevitably involve daunting challenges as well as a substantial regulatory burden on the Commission and industry participants.

Regulatory measures for basic telecommunications services 8 What changes, if any, should be made to the obligation to serve and the basic service objective?

60. Cogeco submits that there is no compelling reason for changing or varying the obligation to serve and the basic service objective in non-forborne exchanges as determined in TRP 2011-291.

61. Further, there is no need to apply additional ex ante regulatory requirements to all TSPs across the board for an obligation to serve or the extension of the basic service objective to a broadband Internet access service.

9 Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?

62. Please refer to our answer to question 1 b) above.

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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)?

63. As determined in TRP 2011-291, the existing local service subsidy regime should be maintained for the benefit of the few remaining non-forborne local exchanges in the high-cost service areas until they become workably competitive.

However, any proposed changes submitted in the current proceeding that would contribute to reduce or even eliminate reliance on such subsidies should be considered by the Commission.

64. An extension of the existing local service subsidy regime to broadband Internet services, or its replacement by a new regime that would extend to broadband Internet services, would be highly problematic for the same reasons that led the Commission not to do so in TRP 2011-291.

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.

65. Cogeco submits that there is no reason to consider implementing at this time any changes to the National Contribution Fund (NCF).

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.

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66. Cogeco submits that, consistent with the statutory telecommunications policy objectives7 and the federal government’s Policy Direction, the Commission should refrain from establishing a new or expanded cross-subsidization mechanism that would extend to broadband Internet or other telecommunications services.

67. The establishment of a cross-subsidization mechanism for broadband Internet services would be highly problematic and could not be implemented in a technologically and competitively neutral fashion. In addition, such a regime would have a deleterious effect on the investment by the private sector of the telecommunications industry in the upgrading and extension of broadband telecommunications facilities.

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)?

7

To this purpose, see specifically the following objectives : (c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; and, (f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.

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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.

68. Please refer to Cogeco’s answers to questions 10, 11 and 12 above. In keeping with the federal government’s Policy Direction, Cogeco submits that the Commission should not attempt to implement across the Canadian telecommunications industry a uniform and expanded basic telecommunications service objective through a new mandated cross-subsidization scheme.

FURTHER SUBMISSIONS

69. Cogeco reserves the right to clarify, expand, complete or vary its general comments and answers above and file additional evidence as part of a further intervention pursuant to paragraph 64 of TNC 2015-134 or to any subsequent notice relating to this proceeding.

* END OF DOCUMENT *

Intervention: Cogeco (Intervenor 273)

Document Name: 2015-134.224003.2394778.Intervention(1fbtm01!).pdf
5 Place Ville ****, bureau 1700
Montréal (Québec) *** ***
Telephone: (514) 764-4700
Fax: (514) 874-2625
******@***.com
Via GCKey
14 July 2015
Mr. John Traversy
Secretary General
CANADIAN RADIO-TELEVISION AND
TELECOMMUNICATIONS COMMISSION
Ottawa (Ontario) *** ***

Re: CRTC File number: 8663-C12-201503186 - Review of basic telecommunications services, Telecom Notice of Consultation 2015-134 (“TNC 2015-134”) – Initial Submission of Cogeco Cable Inc. (“Cogeco”) **** Mr. Traversy:

Cogeco Cable Inc. (Cogeco) is pleased to file this intervention in the matter of the Commission’s telecommunications regulatory proceeding initiated by TNC 2015-134.

Cogeco is also pleased to file under separate cover its responses to the Commission’s Requests for Information respecting this proceeding.

Cogeco welcomes the opportunity to participate fully in this proceeding and requests the opportunity to appear at the public hearing scheduled to begin on **** 11, 2016.

Yours truly,
**** Messier

Senior Director, Regulatory Affairs, Telecommunications CC: John Macri, CRTC, ******@***.com

**** Baily, CRTC, ******@***.com
**** Dorval, Cogeco Inc., ****.******@***.com
mailto:******@***.com
mailto:******@***.com
mailto:******@***.com
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EXECUTIVE SUMMARY

ES 1. Cogeco commends the Commission for initiating this important proceeding with a view to assessing the present state of basic telecommunications services offered across Canada, the needs that these services fulfill presently and are expected to fulfill in the future, as well as the prospects for the future development and extension of these services across the country.

ES 2. Today more than ever, consumers throughout Canada enjoy more choice in telecommunications services, the telecommunications service providers that offer them, and the range and pricing of competitive service offerings available to them.

The quality and reliability of these services has also improved tremendously.

ES 3. This situation reflects the fact that, in the highly dynamic and competitive environment for telecommunications services in the Canadian marketplace, TSPs are driven to satisfy the rising needs and expectations of Canadian consumers as technological advances unfold and more bandwidth-intensive applications and services become available to them.

ES 4. In Telecom Regulatory Policy 2011-291, the Commission established universal target speeds of 5 Mbps download and 1 Mbps upload for broadband Internet access in Canada. Currently, these target speeds have not only been widely met across Canada but also exceeded by many TSPs for their entry-level service broadband Internet access service offerings, including Cogeco’s entry-level service in its Ontario and Quebec serving territories.

ES 5. In addition, as a result of the recent government funding initiative, namely the Connecting Canadians program, over 98 percent of Canadian households will be able to subscribe to high-speed Internet at minimum speeds of 5 Mbps based on different technologies by 2017. This is a great accomplishment.

ES 6. Furthermore, over the next 5 to 10 years, the evolution of technology and competitive market dynamics will continue to drive innovation and bring further improvements in the range, quality, reliability and pricing of telecommunications services offered across Canada.

ES 7. In such a context, broadband Internet access service speeds of 15 Mbps download and 2 Mbps upload (15/2 Mbps) could be reasonably set by the Commission as its revised speed targets, to be effectively and consistently achieved 14 July 2015

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by TSPs throughout Canada within the next five years.

ES 8. That said, due to the vastness of the land, the very uneven distribution of the population and the huge cost of deploying ever more powerful and sophisticated telecommunications technologies, there are still, and there will continue to be for the foreseeable future, some differences in the availability, range and price of telecommunications services in Canada.

ES 9. These differences, however, should not be seen as evidence of a systemic problem or failure of market forces but rather as an ongoing challenge inherent in the Canadian reality, that a combination of improved and more cost effective technologies, dynamic competitive market forces and targeted government funding programs will be able to address most effectively.

ES 10. There is therefore no need for the Commission to impose additional regulatory requirements to TSPs across the board for an obligation to serve or the extension of the basic service objective to a broadband Internet access service, nor to consider industry-wide ex ante regulatory measures to ensure that existing or future target speeds are met generally by TSPs across Canada. Specifically, there is no reason to consider implementing any changes to the National Contribution Fund for the purpose of supporting broadband Internet service expansion at this time.

ES 11. A general objective to be pursued through the telecommunications regulatory framework noted in TRP 2011-291 is to reduce reliance on subsidies. It follows that cross-subsidization measures should be eliminated rather than multiplied over time.

Cogeco submits that this objective is entirely appropriate and relevant throughout Canada, including but not limited to Northwestel’s operating territory.

ES 12. Consistent with the statutory telecommunications policy objectives and the federal government’s Policy Direction, the Commission should refrain from establishing a new or expanded cross-subsidization mechanism that would extend to broadband Internet or other telecommunications services. Furthermore, in all workably competitive markets in Canada, the Commission should abstain from price regulation whether in the form of tariffs or price caps, including for those telecommunications services that the Commission determines should be considered as basic for all Canadians.

ES 13. The only obligation to be placed on TSPs generally for broadband Internet access services and basic voice service should be that such access be provided without unfair discrimination or undue preference to customers requesting such services where facilities are available. In short, the telecommunications services that 14 July 2015

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may be considered by the Commission as most important to support Canadians’ telecommunications needs generally should be basic voice and broadband Internet access services provided by the TSP of their choice.

ES 14. The Commission’s primary role and responsibility with regard to the availability of basic telecommunications service and the achievement of its target broadband service speeds is to monitor whether target broadband Internet access services and basic voice service are being deployed to all Canadians in a reasonable and timely fashion and, if needed, to take appropriate measures. In this regard, Cogeco submits that the regulatory approach established through the policy determinations made by the Commission in TRP 2011-291, consistent with the statutory telecommunications policy objectives and the government’s Policy Direction, remains fully appropriate, relevant and sufficient.

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GENERAL COMMENTS

1. Cogeco is pleased to file this intervention in the matter of the Commission’s telecommunications regulatory proceeding initiated by Telecom Notice of Consultation (TNC) CRTC 2015-134. Cogeco welcomes the opportunity to participate fully in this proceeding and requests the opportunity to appear at the public hearing scheduled to begin on **** 11, 2016.

2. Cogeco commends the Commission for initiating this important proceeding with a view to assessing the present state of basic telecommunications services offered to Canadians across Canada, the needs that these services fulfill presently and are expected to fulfill in the future, as well as the prospects for the future development and extension of these services throughout the country.

3. As evidenced by the Commission’s annual communications monitoring reports, the Canadian telecommunications industry and the services that it provides to Canadians are evolving rapidly due to technological change and a highly dynamic and competitive market environment.

4. As a result, Canadian consumers now enjoy more choice than ever before in telecommunications services, the telecommunications service providers that offer them, and the range and pricing of competitive service offerings available to them.

The quality and reliability of these services have also improved tremendously.

5. Due to the vastness of the land, the very uneven distribution of the population and the huge cost of deploying ever more powerful and sophisticated telecommunications technologies, there are still, and there will continue to be for the foreseeable future, some differences in the availability, range and price of telecommunications services in Canada, including basic telecommunications services, as is the case for many other services which can also be considered as 14 July 2015

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basic for the well being of Canadians in a modern society, such as food, energy and transport.

6. These differences should not be seen as evidence of a systemic problem or failure of market forces but rather as an ongoing challenge that a combination of improved and more cost effective technologies, dynamic competitive market forces and targeted government funding programs will be able to address most effectively.

7. In this regard, as a result of the recent government funding initiative, namely the Connecting Canadians program, it is significant to note that 98 percent of Canadian households will have access to the current high-speed Internet target speed of 5 Mbps downstream, based on different technologies, by 2017.

8. The Commission should therefore continue to set achievable forward-looking targets in consultation with all telecommunications industry participants and Canadian consumers with respect to basic telecommunications services, while also continuing to monitor their development, deployment, quality and affordability throughout Canada.

9. In keeping with the federal government’s Policy Direction, the Commission should not however attempt to preempt or replace technological change, competitive market forces and targeted government funding programs with a view to implementing uniform basic telecommunications service objectives through ex ante regulatory intervention, including through mandated cross-subsidization schemes.

RESPONSE TO THE COMMISSION’S QUESTIONS FOR DISCUSSION 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.

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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?

10. Telecommunications services are used by Canadians for a very wide range of personal, business, institutional and other needs, including but not limited to e-commerce, e-banking, e-health, telework and distance education. For example, telecommunications services are also used for general Internet surfing, chatting, gaming, gambling and movie and other entertainment content downloading.

11. Also, telecommunications services are accessed by Canadians over a wide variety of technologies, platforms and devices and are used by Canadians over a very wide range of service configurations and packages, including mixed packages of telecommunications, broadcasting, software and hardware products and services.

12. The importance and perceived value of each available individual telecommunications service varies from one customer to the other, based on the customer’s own individual preferences and circumstances.

13. Cogeco respectfully submits that it is neither possible nor appropriate for the Commission to attempt to define what would constitute “meaningful participation” in the “digital economy” in relation to any particular use of any specific telecommunications service or package of telecommunications services.

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?

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14. The telecommunications services that may be considered by the Commission as most important to support Canadians’ basic telecommunications needs should be voice and broadband Internet access services provided by the TSP of their choice.

15. The evolution of telecommunications technology over various transmission protocols and platforms, as well as competitive market dynamics, are driving on an on-going basis the appropriate parameters for specific telecommunications services, including but not limited to capacity, mobility, speed and latency.

16. In the highly dynamic competitive market environment for telecommunications services in Canada, changes to these service parameters occur rapidly, efficiently and seamlessly in a way that cannot be matched or replaced by ex ante regulatory intervention.

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.

17. As evidenced in the Commission’s annual communications monitoring reports and other publicly available reports and statistics on the telecommunications industry in Canada, the use of fixed, mobile and satellite telecommunications services by Canadians is pervasive throughout Canada. However, there will always be a segment of the Canadian population that will not use or will stop using broadband Internet access service for various reasons, including lack of confidence, skills or other personal considerations or limitations.

18. Furthermore, even in such a mature industry environment, given the vastness of the country and the very uneven distribution of the Canadian population across the 14 July 2015

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land, there are still, and there will likely continue to be for the foreseeable future, differences in the choice and level of services as between urban areas and very remote and underserved areas of Canada, not only for telecommunications services but also for all other goods and services.

19. Bringing about telecommunications service enhancements in very remote and underserved areas of Canada will continue to require a mix of taxpayer-funded government programs and private investment initiatives as resources become available.

20. The federal government’s current public funding program will provide basic broadband Internet access to some additional 356,000 Canadians in very remote and underserved areas of Canada1.

21. For other Canadians in remote and underserved areas where basic voice and broadband Internet access services are already available, the quality of these services and the broadband service speeds will continue to improve over time.

22. In communities across Canada where competitive market dynamics are in place, there will continue to be marked improvements in technical quality, reliability, pricing, variety, choice and flexibility of telecommunications services offered to Canadians on an on-going basis without any need for ex ante regulatory intervention.

23. Finally, while privacy and security are important concerns, they cannot be considered barriers to meaningful participation by Canadians in the digital economy.

There are already extensive statutory and regulatory requirements in effect that must 1

“High-Speed Internet Coming to Rural Canada”, Industry Canada, News Release, 20 May 2015.

http://news.gc.ca/web/article-en.do?nid=976709
http://news.gc.ca/web/article-en.do?nid=976709
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be met by all TSPs with a view to ensuring the privacy and security of telecommunications in Canada.

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

24. In addition to the existing wide range of available hardware, software and personal electronic devices currently available throughout Canada and used for fulfilling digital voice, data and other digital telecommunications needs, enablers also include digital service awareness and Internet literacy.

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.

25. In our view, voice and broadband Internet access services will continue to be the foundation for meaningful participation by Canadians in the digital economy in the foreseeable future.

26. Over the next 5 to 10 years, the evolution of technology and competitive market dynamics will continue to drive innovation and bring further improvements in the range, quality, reliability and pricing of telecommunications services offered to Canadians across Canada.

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.

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frame would be reasonable to achieve these new targets?

27. The Commission’s current target speeds for broadband Internet access service have not only been widely met across Canada but also exceeded by many TSPs for their entry-level service broadband Internet access service offerings, including Cogeco’s entry-level service in its Ontario and Quebec telecommunications service footprint. We anticipate that the TSPs’ responses to the Commission’s request for information in this proceeding will prove that.

28. This situation reflects the fact that, in the highly dynamic and competitive environment for telecommunications services in the Canadian marketplace, TSPs are driven to satisfy the rising needs and expectations of Canadian consumers as technological advances unfold and more bandwidth-intensive applications and services become available to them.

29. Additionally, it cannot be ignored that over 98 percent of Canadian households will be able to subscribe to high-speed Internet at minimum speeds of 5 Mbps based on different technologies by 2017 as a result of the recent government funding initiative, namely the Connecting Canadians program2.

30. In light of this context and taking into account the current trend, Cogeco believes that broadband Internet access service speeds of 15 Mbps download and 2 Mbps upload (15/2 Mbps) could be reasonably set by the Commission as its revised 2

In the news releases recently issued by Industry Canada announcing the subsidies allowed by the Government of Canada to different projects aiming to bring high-speed Internet to underserved and unserved areas across the country, it is repeatedly stated that “By Canada’s 150th

birthday in 2017,

over 98 percent of Canadian households will be able to subscribe to new or improved high-speed Internet services”. See the following news releasesMay 20, 2015—High-Speed Internet Coming to Communities in Rural Manitoba; **** 25, 2015—High-Speed Internet Coming to Scugog; July 6, 2015—High-Speed Internet Coming to Saguenay–Lac-Saint-Jean; July 7, 2015—Harper Government expands high-speed Internet to rural Nova Scotia.

http://news.gc.ca/web/article-en.do?nid=976989
http://news.gc.ca/web/article-en.do?nid=976989
http://news.gc.ca/web/article-en.do?nid=991709
http://news.gc.ca/web/article-eng.do?nid=995989
http://news.gc.ca/web/article-eng.do?nid=996789
http://news.gc.ca/web/article-eng.do?nid=996789
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targets, to be effectively and consistently achieved by TSPs throughout Canada within the next five years.

31. Cogeco submits that such revised target speeds would not only be consistent with baseline speeds targeted in other jurisdictions3 but also enable Canadians to meet their basic needs with respect to their use of broadband Internet access service over the next five years.

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.

32. As indicated in our answer to question 1 b) above, the telecommunications services that may be considered by the Commission as most important to support Canadians’ telecommunications needs generally should be basic voice and broadband Internet access services provided by the TSP of their choice.

33. Cogeco submits that basic voice and broadband Internet access services enable all basic voice, data and other telecommunications needs in the digital world.

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.

34. In keeping with the Canadian telecommunications policy and the federal government’s Policy Direction, the Commission’s regulatory framework, including with 3

For example, the FCC recently adopted a new minimum speed standard of 10 Mbps downstream and 1 Mbps upstream (10/1 Mbps), previously set at 4/1 Mbps, for recipients of high-cost universal service support. See FCC 14-190, 18 December 2014.

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respect to basic telecommunications service requirements, should be technologically neutral.

35. Technological neutrality is also supported by the fact that many TSPs, including the Incumbent local exchange carriers (ILECs), currently use or have access to a variety of technological platforms, and that they have both the opportunity and the incentive to decide on the most appropriate configuration of technologies and platforms to deliver their telecommunications services to Canadians while meeting standard, technologically agnostic, basic regulatory requirements.

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)?

36. The only obligation to be placed on TSPs generally for basic voice and broadband Internet access services should be that such access be provided without any unfair discrimination or undue preference to customers requesting such services where facilities are available and subject to the fulfillment by the customer of the TSP’s standard terms of service and the payment of the applicable charges and fees published by the TSP for such services.

37. Cogeco submits that this standard basic service obligation should apply across the board to all TSPs irrespective of the particular technology or combination of technologies used by the TSP.

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

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38. The federal government’s Policy Direction provides the underlying principles that should govern regulatory intervention by the Commission, including on pricing for basic telecommunications services. Specifically, Section 1 a) i) of the Policy Direction clearly states that the Commission should “rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives”.

39. Therefore, in all workably competitive markets in Canada, in furtherance of the statutory telecommunications policy objective respecting the promotion of competition4, and as determined in accordance with the criteria set in the Policy Direction, Cogeco submits that the Commission should abstain from price regulation whether in the form of tariffs or price caps, including for those telecommunications services that the Commission determines should be considered as basic for all Canadians.

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?

40. The fundamental principle underlying the federal government’s Policy Direction is reliance on market forces to the maximum extent feasible. Hence, market forces must remain the fundamental driver for the delivery of basic telecommunications services by TSPs to Canadians.

4

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41. The Commission’s primary role and responsibility is to ensure that all telecommunications markets in Canada are and remain workably competitive rather than to intervene in workably competitive markets through price reregulation or other forms of ex ante regulation.

42. Governments, whether at the federal, provincial, territorial or municipal level, may elect to implement, or continue to implement, public funding programs in the public interest with a view to achieving the deployment of baseline telecommunications infrastructure and/or services in those markets where uneconomic conditions actually preclude the attainment of this objective. In this regard, we note that the federal government currently has in place such a program.

43. The role of TSPs in the private sector is to compete vigorously in the offering of all telecommunications services and the rollout of telecommunications infrastructure and facilities.

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?

44. In Telecom Regulatory Policy CRTC 2011-291 (“TRP 2011-291”) issued on 3 May 2011, following an extensive public proceeding on the obligation to serve and other related matters, the Commission made a number of important policy determinations consistent with the statutory policy objectives for telecommunications in the Telecommunications Act and the federal government’s Policy Direction.

45. In paragraph 189 of TRP 2011-291, the Commission stated that these regulatory measures “… are efficient and proportionate to their purpose, and minimally interfere with market forces”, noted in this regard its determinations “… with 14 July 2015

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respect to reducing reliance on subsidies, eliminating the application of the basic service objective in forborne exchanges, and providing ILECs with the flexibility to achieve their obligation to serve by using the technology of their choice”, and further specifically noted its determination that “… regulatory intervention is not appropriate at this time with respect to the matter of access to broadband and that market forces should continue to be relied upon”.

46. In the absence of clear widespread market failure, Cogeco submits that these explicit policy determinations remain fully appropriate, relevant and sufficient.

47. The Commission should continue to monitor on an on-going basis the actual improvements to the availability of basic voice and broadband Internet access services and the achievement of its target speeds for broadband Internet access service throughout Canada.

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?

48. The information collected by the Commission from TSPs through its requests for information in this proceeding should provide further insight on the actual extent to which its broadband Internet target speeds have not been effectively met in certain areas, and which TSPs have not met them.

49. Cogeco is convinced however that the evidence will demonstrate that there is not a systemic problem caused by widespread market failure. Furthermore, as stated on the Canadians Connecting – Digital Canada 150 website, once completed, it is http://www.crtc.gc.ca/eng/archive/2011/2011-291.htm14 July 2015

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noteworthy that 98 percent of Canadian households will have access to at least 5 Mbps5.

50. In the specific case of exchanges served by Northwestel, Cogeco notes that the shortcomings in the deployment of competitive alternatives and the achievement of the Commission’s target speeds for broadband Internet access service have already been considered and addressed in Telecom Decision CRTC 2015-78.

51. Further, Cogeco notes that competitive broadband Internet access service alternatives are currently being extended in Northwestel’s operating territory through competitors such as SSi Micro Ltd. with the assistance of the federal government‘s funding program for remote and underserved communities6.

52. Cogeco submits therefore that there is no need for the Commission to consider industry-wide ex ante regulatory measures to ensure that existing or future target speeds are met generally by TSPs across Canada.

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 5

See the Connecting Canadians website at http://www.ic.gc.ca/eic/site/028.nsf/eng/h_00587.html 6

“Improved High-Speed Internet Coming to Nunavut”, Industry Canada, News Release, 7 July 2015.

http://news.gc.ca/web/article-en.do?nid=997049

http://www.crtc.gc.ca/eng/archive/2013/2013-711.htmhttp://www.ic.gc.ca/eic/site/028.nsf/eng/h_00587.htmlhttp://news.gc.ca/web/article-en.do?nid=997049

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mechanism in other regions of Canada.

53. Northwestel is a wholly-owned subsidiary of the largest Canadian incumbent ILEC, Bell Canada. As a corporate group, Bell Canada has the economies of scope and size required to support the provision of basic telecommunications services by its Northwestel subsidiary in its operating territory.

54. The corporate veil should not be used to obtain new or additional regulatory cross-subsidization measures at the expense of Bell Canada’s competitors or their customers in order to further support Northwestel’s basic telecommunications service obligations in its operating territory.

55. As the Commission specifically noted in TRP 2011-291, a general objective to be pursued through the telecommunications regulatory framework is to reduce reliance on subsidies. It follows that cross-subsidization measures should be eliminated rather than multiplied over time. Cogeco submits that this objective is entirely appropriate and relevant throughout Canada, including but not limited to Northwestel’s operating territory.

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?

56. As mentioned in paragraph 46 above in our answer to question 5, Cogeco submits that the Commission’s policy determinations in TRP 2011-291 remain fully appropriate, relevant and sufficient.

57. In the absence of a clear model for the operation, funding and implementation timetable for such new or additional cross-subsidization measures, and to which basket of services they would apply, it is not possible to assess precisely the resulting 14 July 2015

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impact on private sector investment and government programs to fund modern telecommunications services mechanism in the operating territory involved.

58. It is however possible to state with confidence that such new or additional mandated cross-subsidization measures for the benefit of the incumbent monopoly carrier in Northwestel’s operating territory would likely prevent mixed public and private competitive initiatives from taking hold or extending further.

59. It is also possible to state with confidence that the design and implementation of such new or additional cross-subsidization measures would inevitably involve daunting challenges as well as a substantial regulatory burden on the Commission and industry participants.

Regulatory measures for basic telecommunications services 8 What changes, if any, should be made to the obligation to serve and the basic service objective?

60. Cogeco submits that there is no compelling reason for changing or varying the obligation to serve and the basic service objective in non-forborne exchanges as determined in TRP 2011-291.

61. Further, there is no need to apply additional ex ante regulatory requirements to all TSPs across the board for an obligation to serve or the extension of the basic service objective to a broadband Internet access service.

9 Should broadband Internet service be defined as a basic telecommunications service? What other services, if any, should be defined as basic telecommunications services?

62. Please refer to our answer to question 1 b) above.

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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)?

63. As determined in TRP 2011-291, the existing local service subsidy regime should be maintained for the benefit of the few remaining non-forborne local exchanges in the high-cost service areas until they become workably competitive.

However, any proposed changes submitted in the current proceeding that would contribute to reduce or even eliminate reliance on such subsidies should be considered by the Commission.

64. An extension of the existing local service subsidy regime to broadband Internet services, or its replacement by a new regime that would extend to broadband Internet services, would be highly problematic for the same reasons that led the Commission not to do so in TRP 2011-291.

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.

65. Cogeco submits that there is no reason to consider implementing at this time any changes to the National Contribution Fund (NCF).

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.

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66. Cogeco submits that, consistent with the statutory telecommunications policy objectives7 and the federal government’s Policy Direction, the Commission should refrain from establishing a new or expanded cross-subsidization mechanism that would extend to broadband Internet or other telecommunications services.

67. The establishment of a cross-subsidization mechanism for broadband Internet services would be highly problematic and could not be implemented in a technologically and competitively neutral fashion. In addition, such a regime would have a deleterious effect on the investment by the private sector of the telecommunications industry in the upgrading and extension of broadband telecommunications facilities.

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)?

7

To this purpose, see specifically the following objectives : (c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; and, (f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.

http://www.crtc.gc.ca/eng/archive/2013/2013-711.htm14 July 2015

Review of basic telecommunications services
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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.

68. Please refer to Cogeco’s answers to questions 10, 11 and 12 above. In keeping with the federal government’s Policy Direction, Cogeco submits that the Commission should not attempt to implement across the Canadian telecommunications industry a uniform and expanded basic telecommunications service objective through a new mandated cross-subsidization scheme.

FURTHER SUBMISSIONS

69. Cogeco reserves the right to clarify, expand, complete or vary its general comments and answers above and file additional evidence as part of a further intervention pursuant to paragraph 64 of TNC 2015-134 or to any subsequent notice relating to this proceeding.

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Intervention: Cogeco Cable Inc.

Document Name: 2015-134.224003.2394865.Intervention(1fbw101!).html

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

Intervention: Cogeco (Intervenor 273)

Document Name: 2015-134.224003.2394865.Intervention(1fbw101!).html

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