File No.

8661-C12-201102350
2011 02 22

To: Mr. Robert A. Morin

Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0N2

Subject: Telecom Notice of Consultation CRTC 2011-77 – Comments regarding requests

for modifying the scope and terms of the proceeding

Dear Mr. Morin,

1 On 8 February 2011 the Commission issued Telecom Notice of Consultation

CRTC 2011-77, Review of billing practices for wholesale residential high-speed access services
(TNC 2011-77) in which it requested comments on how best to implement the following
principles with regard to ILEC and cable carriers' (collectively, the Incumbent Carriers')
wholesale high-speed access services used by wholesale ISPs: (1) that the majority of users
should not have to fund the bandwidth used by the heaviest retail Internet service consumers
and (2) that it is in the best interest of consumers that Small ISPs, which offer competitive
alternatives to Incumbent Carriers' services, should continue to do so. The Commission further
requested that parties provide full rationale and evidence in support of their proposed regulatory
changes to the effect that they would: (a) benefit consumers to allow them fulsome access to
the Internet, (b) respect the principle that ordinary consumers should not fund the bandwidth
used by the heaviest retail Internet service consumers and (c) ensure that wholesale ISPs retain
flexibility and continue to be a source of innovation in the industry.

2 Bell Aliant Regional Communications, Limited Partnership (Bell Aliant) and Bell Canada
(collectively, the Companies) are in receipt of requests for changes to the scope of TNC 2011-
77 by the Public Interest Advocacy Centre (PIAC)1; the Canadian Network Operators
Consortium Inc. (CNOC)2; the Samuelson-Glushko Canadian Internet Policy and Public Interest
Clinic (CIPPIC) on behalf of OpenMedia.ca (OpenMedia)3; and, Vaxination Informatique
(Vaxination)4. These parties essentially seek to wipe clean the last four years of detailed
regulatory proceedings, and to effectively expunge from the regulatory process

1 BellAliant Bell Canada

Denis HenryPIAC letter dated 10 February 2011. David Palmer
2
Floor 19 CNOC letter dated 11 February 2011. Floor 19
3 160 Elgin Street
CIPPIC/Openmedia letter dated 16 February 2011. 160 Elgin Street
4 Ottawa, Ontario K2P 2C4 Ottawa, Ontario K2P 2C4
Vaxination letter dated 17 February 2011.
Telephone: (613) 785-6361 Telephone: (613) 785-6280
Facsimile: (613) 560-0472 Facsimile: (613) 560-0472
regulatory@bell.aliant.ca bell.regulatory@bell.ca
2011 02 22 2

the many reams of evidence, written position statements and oral testimony from a wide breadth
of parties, that have been conducted to examine the regulatory framework for wholesale
services, for Internet traffic management practices (ITMPs) in general. The above-mentioned
parties are now requesting the expansion of the scope of TNC 2011-77 in a manner that
effectively reviews and varies multiple proceedings. These parties have all actively participated
in some or all of these proceedings, namely the proceedings leading to:

- Telecom Decision CRTC 2008-17, Revised regulatory framework for wholesale services
and definition of essential service (Decision 2008-17);
- Telecom Decision CRTC 2008-108, The Canadian Association of Internet Providers'
application regarding Bell Canada's traffic shaping of its wholesale Gateway Access
Service (Decision 2008-108);
- Telecom Decision CRTC 2008-117, Cybersurf Corp.'s application related to matching
service speed requirements for wholesale Internet services (Decision 2008-117);
- Telecom Order CRTC 2009-484, Bell Aliant Regional Communications, Limited
Partnership and Bell Canada – Applications to introduce usage-based billing and other
changes to Gateway Access Services;
- Telecom Regulatory Policy CRTC 2009-657, Review of the Internet traffic management
practices of Internet service providers (TRP 2009-657);
- Telecom Decision CRTC 2010-255, Bell Aliant Regional Communications, Limited
Partnership and Bell Canada – Applications to introduce usage-based billing and other
changes to Gateway Access Services (Decision 2010-255);
- Telecom Regulatory Policy CRTC 2010-632, Wholesale high-speed access services
proceeding (TRP 2010-632);
- Telecom Decision CRTC 2010-802, Bell Aliant Regional Communications, Limited
Partnership and Bell Canada – Application to review and vary Telecom
Decision 2010-255 concerning usage-based billing for Gateway Access Services; and
- Telecom Decision CRTC 2011-44, Usage-based billing for Gateway Access Services
and third-party Internet access services (Decision 2011-44).

3 The Companies submit that a review of the issues that have already been thoroughly
and exhaustively examined in the above-mentioned recent proceedings, other than a narrow
review of the manner in which wholesale UBB should be applied, would be an unduly time
consuming, wasteful and wholly inappropriate endeavour. For these reasons and as further
described below, the Companies submit that the requests to expand the scope of TNC 2011-77
should be denied.

Requests to regulate retail Internet billing practices should be rejected

4 First and foremost, removing forbearance from the regulation of retail Internet services
would require a finding that there is a market failure that needs correcting in the retail Internet
services market, a determination of the appropriate legal test for the re-regulation of forborne
services as well as a finding that retail Internet services meet that test. The Companies submit
that there is no evidence of market failure in the retail Internet services market. In fact, the
Commission has consistently found that the Internet services market is highly competitive in
Canada. Despite this, PIAC and OpenMedia have requested that the Commission expand the
scope of the proceeding to consider the appropriateness of retail Internet billing practices, as
opposed to wholesale billing practices. PIAC even goes so far as to claim that both the Minister
of Industry and Prime Ministers have indicated their support of such a review. The Companies
are not aware of any such statements that request the review of retail billing practices.

5 On 1 February 2011 the Prime Minister stated on twitter: "We're very concerned about
CRTC's decision on usage-based billing and its impact on consumers. I've asked for a review
2011 02 22 3

of the decision." The decision that had come out the week before the Prime Minister's
statement was Decision 2011-44 in which the Commission found that the usage-based
component of wholesale UBB rates should be set at a 15% discount as compared to the usage-
based components of UBB rates applied by Incumbents to their retail services. Coincident with
this event wholesale customers had started announcing changes to their retail rates in light of
Decision 2011-44 and depicted UBB as Commission mandated rate increases. All
announcements of rate increases stated that if customers were against rate increases they
should join the stopthemeter campaign which emailed a petition to the Minister of Industry. For
example, TekSavvy's rate change announcement stated:

2. Why is TekSavvy implementing Usage Based Billing for residential High

Speed DSL Internet customers?
On January 25, 2011, the CRTC rendered a decision allowing incumbent
carriers, such as Bell Canada, to introduce UBB on the wholesale high-speed
access services that TekSavvy employs to provide its own DSL-based high-
speed Internet services in Ontario and Quebec, effective March 1, 2011. The
introduction of UBB by those carriers effectively forces TekSavvy to pass those
additional costs to its Residential DSL High-Speed Internet customers.
[…]

19. Is there anything we can do (as customers) to fight this? / Can you
point out some petitions or effective courses of action?
If you would like to get further involved here's a links to visit to make your
thoughts known and to participate:
- www.stopthemeter.ca (signing the petition will now automatically send our
Minister of Industry, Tony Clement (the person politically responsible for the
CRTC) an email.5

6 Based on the above, the Minister of Industry indicated that he was concerned with the
imposition of a single business model on small ISPs which would remove consumer choice from
the market. It is clear that the Minister's concern has always been with regards to his perceived
imposition of a single business model on wholesale ISPs, not with retail Internet billing practices
in general. PIAC's claim that the Commission was asked to, or told that it could review retail
UBB is unsubstantiated and should thus be ignored.

7 Other parties have put forward a different view with regards to a review of retail
regulation. Vaxination opposes the review of retail UBB practices noting instead that the
Commission has forborne from the regulation of retail Internet services and that it has never
rescinded such forbearance. The Companies agree. However, Vaxination also implies that
TNC 2011-77 is unclear with regards to its applicability to retail services and that it should be
clarified one way or another:

Should the Commission confirm that it has no intentions of regulating retail ISP
services, then it must amend the text of its Notice of Consultation to ask what it
the best pricing paradigm for services such as GAS and TPIA and remove any
references to types of retail users.6

8 The Companies believe that TNC 2011-77 is quite clear in its scope. Indeed, as UBB is
but one of the Companies' three-pronged approach to network management, another review of

5
TekSavvy Usage-Based Billing and New Service Packages announcement, available online:
http://www.dslreports.com/r0/download/1622176~0f013245e898b9b0c6fe679d553c601f/TSI_Usage_Based_Billi
ng_FAQ.pdf
6
Vaxination letter dated 17 February 2011, paragraph 14.
2011 02 22 4

the Companies' retail ITMPs would require a review of all ITMPs and merely duplicate the
efforts of the proceedings leading to Decision 2008-108 and Decision 2009-657. The
Companies note, however, that the regulation of retail Internet services and references to
Internet end-users and end-user traffic patterns are two different things. A determination with
regards to wholesale UBB cannot be made without considering the impact of usage by
wholesale end-users on other end-users, both retail and wholesale.

9 CNOC's half-hearted support of PIAC's request to review retail Internet billing practices
is woven into CNOC's request to review the wholesale access services regulatory framework in
general: "the review of the [wholesale framework] would be significantly preferable to regulatory
intervention in forborne retail markets."7 In fact, as further discussed below, CNOC's request
has little to do with UBB.

CNOC's request has little to do with UBB

10 CNOC's letter amounts to a request for the review and variance of Decision 2008-17
and, in particular, TRP 2010-632. Specifically, CNOC requests that the Commission expand the
scope of TNC 2011-77 to consider:

- WHSAS be regulated as a broadband platform that can support many types of

Internet and non-Internet-based services instead of being regulated by comparison to (or so
as to mimic) the retail Internet services of the incumbents?

- Should WHSAS be configured in a manner that allows competitors to innovate and

differentiate themselves in the marketplace by choosing the attributes of the services
provided to consumers, such as speed, throughput, quality of service, type of service,
aggregation, bundling, etc., and if so, how can this best be achieved?

- Should WHSAS be priced so as only to allow incumbents to recover the associated

costs of providing the services plus a reasonable and consistent mark-up that recognizes
the essential nature of these services, without the application of any subjective principles,
such as value of service pricing, etc.?

- How can the regulatory framework for WHSAS be made more forward looking by,
for example, ensuring that incumbents provide competitors fairly priced access to new
network services, facilities and functions as soon as they become available and are
deployed by the incumbents to provide services to their own end-users?

- Are there any new WHSAS' that would be appropriate for the Commission to require
the incumbents to provide at this time, such as, without limitation, an ADSL-CO service and
a service that provides access to incumbent fibre-to-the-premises (FTTP) facilities?8

11 This amounts to a request to ignore and redo a proceeding which only recently
concluded and resulted in the Commission's decision in TRP 2010-632. The issues above were
clearly considered in the proceeding leading to TRP 2010-632, as expanded by the Governor in
Council in Order-in-Council P.C. 2009-2007. In this order, the Governor in Council referred
Decision 2008-117, Cybersurf Corp.'s (Cybersurf) application related to matching service speed
requirements for wholesale Internet services, and Telecom Order CRTC 2009-111, Cybersurf's
application related to the implementation of Decision 2008-117 regarding the matching speed
requirement, back to the Commission for reconsideration.

7
CNOC letter date 11 February 2011, paragraph 26.
8
Ibid, paragraph 18.
2011 02 22 5

12 As a result of the Order-in-Council, the Commission expanded the proceeding initiated

by Telecom Notice of Consultation CRTC 2009-261, Proceeding to consider the
appropriateness of mandating certain wholesale high-speed access services (TNC 2009-261) to
consider matters identified by the Governor in Council. Specifically, in TNC 2009-261-7, the
Commission invited parties to submit their views, with reasons, on the following:

A. the application of the existing essential services framework on a forward-looking

basis such that it provides appropriate incentives for continued investment in
broadband infrastructure, encourages competition and innovation, and leads to
consumer choice; and

B. in the context of the discussion in response to A, above,

a) whether the speed-matching requirement, mandating the provision of the

high-speed access services under consideration, or mandating access to
any new types of Internet access infrastructure does, or would, unduly
diminish incentives to invest in new network infrastructure in general and,
in particular, in markets of different sizes;

b) whether, in the absence of the speed-matching requirement and the

mandated provision of the high-speed access services under
consideration, there would be competition sufficient to protect the
interests of users;

c) whether the respective wholesale obligations imposed on ILECs and on

incumbent cable companies are equitable or represent a competitive
disadvantage; and

d) whether the impact of these wholesale requirements unduly impairs the

ability of incumbent telephone companies to offer new converged
services, such as IPTV.

13 The resulting proceeding considered all of the issues which CNOC now seeks to
reposition before the Commission and for which the Commission issued its decision and a
report to the Governor in Council, including the appropriateness of ADSL-CO service and
several other potential new wholesale access service options; and was the result of four
separate rounds of detailed written submissions, four separate rounds of interrogatories
consisting of hundreds of questions issued by the Commission and the parties themselves and
resulting evidence and responses and a weeklong oral proceeding consisting of party and
expert testimony before the Commission. The Commission's decision and the resulting
regulatory framework sought to strike a balance between all of the varying interests and issues
identified by the Governor in Council and by the Commission itself in TNC 2009-261. The
Governor in Council had until 29 November 2010 to vary the Commission's report and decision
made pursuant to Order-in-Council P.C. 2009-2007 but did not do so. For all of these reasons,
the Companies submit that CNOC's request to expand the scope of TNC 2011-77, as well as
their associated requested changes to the structure of the proceeding, should be denied.
2011 02 22 6

TNC 2011-77 must not be expanded in a way that discounts previous findings of fact and
requires Carriers to duplicate previous efforts

14 CIPPIC on behalf of OpenMedia states that it is concerned that TNC 2011-77 expresses
certain assumptions that are at issue in the proceeding, such as the correlation between 'heavy
Internet use' and the "TNC's presumption that 'network upgrades are not always the most
practical solution' to congestion." CIPPIC then requests that the proceeding be expanded to
allow for evidence, interrogatories, an online consultation and a public hearing.

15 The Companies submit that these are not assumptions but findings of fact made by the
Commission in Decision 2008-108 and Decision 2009-657. The proceedings leading to these
and subsequent decisions were neither cheap, superficial nor haphazard affairs. The reams of
detailed evidence that have already been submitted in support of these facts must not be
discounted. The Companies are of the view that it would not be appropriate to expand the
scope of TNC 2011-77 to reconsider the founding assumptions of TNC 2011-77 but that parties
should instead focus on appropriate usage-based models for wholesale access services that
allow for greater retail flexibility than may have been afforded by the Companies' initial proposal.

16 The Companies further note that Decision 2008-108 and Decision 2009-657 resulted in
nearly half a million dollars in costs to the cost-paying parties of those proceedings. The
Companies accordingly submit that the Commission should make it clear that costs will not be
awarded for efforts and/or evidence that is duplicative of efforts and/or evidence made in any of
the above-mentioned proceedings.

Yours truly,

[ Original signed by D. Henry ] [ Original signed by D. Palmer ]

Denis E. Henry David Palmer

Bell Aliant Bell Canada
Vice-President – Legal, Regulatory and Government Director - Regulatory Affairs
Affairs & Chief of Privacy

c.c.: John Macri, CRTC

Lynne Fancy, CRTC
Tom Vilmansen, CRTC
Distribution List as per CRTC Letter dated 15 February 2011

PG/sm

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