TELUS

215 Slater Street, Suite 800

Ottawa, Ontario
K1P 0A6
www.telus.com

Ted Woodhead (613) 597-8368 Telephone

Vice-President (866) 855-3982 Facsimile
Telecom Policy & Regulatory Affairs ted.woodhead@telus.com

February 22, 2011

Mr. Robert A. Morin

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

Dear Mr. Morin:

RE: Review of billing practices for wholesale residential high-speed access services,
Telecom Notice of Consultation CRTC 2011-77 (“Notice 2011-77”) –
Requests for modifying the scope and terms of the proceeding, Comments of
TELUS Communications Company (“TELUS”)

1. TELUS is in receipt of a letter from Commission staff issued in response to

separate letters filed by the Public Interest Advocacy Centre (“PIAC”) and the
Canadian Network Operators Inc. (“CNOC”) in relation to Notice 2011-77. In
each of their letters, PIAC and CNOC have requested significant amendments to
the scope and procedure of this proceeding.

2. In accordance with the instructions provided by Commission staff in its letter,

TELUS provides its comments on the requests made by PIAC and CNOC. The
failure of TELUS, in this letter, to deny any statement made by any party in this
scope review should not be construed as agreement or acquiescence of such
statement where agreement or acquiescence would be contrary to TELUS’
interest.

The Usage-Based Billing Framework Decisions Are About Wholesale Services

3. Notice 2011-77 was issued to review the Commission’s approach to the terms
ILECs and cable companies can charge usage-based billing rates to their
wholesale customers for residential high-speed Internet access services. The
Commission’s regulatory approach was put in place by a number of decisions and
orders dating back as many as 11 years ago, but the latest decisions involved the
 manner in which ILECs can charge usage-based billing to their wholesale
customers. These decisions include Decisions 2010-255,1 2010-802,2 and 2011-
44.3

4. In light of the numerous decisions that preceded it, the most recent decision,
Decision 2011-44, was a seemingly innocuous decision regarding the level of
discount ILECs and cable companies have to apply to wholesale customers
relative to retail customers for usage-based billing. However, that Decision has
elicited myriad public and political commentary along with considerable
hyperbole.

5. Notably, the Minister of Industry has requested that the Commission reconsider
this most recent Decision and the CRTC has commenced the current review.
However, the Minister initially stated that the critical concern is of the
Commission’s decisions regarding the imposition of usage-based billing upon
wholesale ISPs, with particular reference to Decision 2011-44. A sample of the
messages that the Minister sent via his Twitter account were enumerated and
reiterated in a number of recent articles, and TELUS reproduces them below.

I’m looking forward to the CRTC chairman’s appearance before the House
Industry Committee ... to explain his support for the UBB decision. [emphasis
added]4

This [usage-based billing] is about forcing a single business model on all

competitors. I’m for market choice. [emphasis added]5

6. As shown by the above statements, Minister Clement’s concerns relate to the

usage-based billing framework for wholesale ISPs. As such, the Commission
was entirely correct to limit to wholesale usage-based billing. Contrary to the

1
Bell Aliant Regional Communications, Limited Partnership and Bell Canada – Applications to
introduce usage-based billing and other changes to Gateway Access Services Telecom Decision
CRTC 2010-255.
2
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,
Telecom Decision CRTC 2010-802.
3
Usage-based billing for Gateway Access Services and third-party Internet access services, Telecom
Decision CRTC 2011-44.
4
See the Minister’s Twitter quote included in CRTC will rescind ’unlimited use’ Internet decision - or
Ottawa will overturn it, The Globe and Mail, February 3, 2011, p. A4.
5
See the Minister’s Twitter quote included in Feds to quash CRTC ruling on download fees; Usage-
based billing rebuffed, Vancouver Sun, February 3, 2011, p. A1.
2
 position of PIAC, the Commission’s review is entirely consistent with the stated
desire of the Minister of Industry.

A Retail Review Cannot Be Undertaken in the Confines of the Current Proceeding

7. PIAC claims that this current proceeding can be simply re-adjusted to allow for
comments on usage-based billing “in the wholesale and retail markets
generally.”6 Such a suggestion cannot be seriously considered.

8. The retail Internet marketplace has never been subject to economic price
regulation. Of course, it is TELUS’ position that such forbearance has served
consumers well, with Canadians having access to leading Internet network
services that rival any services available in the world. Retail forbearance is also
the custom across the globe. Virtually every country allows the market to set
retail Internet prices.

9. Should the Commission wish to entertain the notion that retail Internet prices
should somehow be regulated, including any restriction on usage-based billing, it
can only do so in the context of a dedicated proceeding. Such a proceeding
would require suitable notice be given to all parties, along with sufficient
timelines for parties to file evidence, pose and respond to interrogatories and
prepare final comments and reply.

10. Furthermore, the introduction of economic regulation for any service, including
retail Internet services, is a complex undertaking. Prior to the implementation of
any regulation, the Commission would have to complete a comprehensive review
of the competitive landscape for retail Internet services. In addition, the
Commission would have to undertake a detailed economic and costing analysis of
the underlying services. This would require some type of a rate of return
assessment, with development of costing methodology for embedded and
incremental costs. This is the starting point prior to making any determination on
a regulated rate for any service. As a result, the current proceeding, correctly
dedicated to solely wholesale usage-based Internet billing, does not have the
timetable to permit such steps. Amending the current process will only prevent
the Commission from resolving the current issue in a timely fashion.

6
PIAC letter, p.2.
3
CNOC’s Request for an Expanded Review of Wholesale Services Is Unnecessary

11. For its part, CNOC asks the Commission to expand this proceeding to include a
“comprehensive review of the regulatory framework applicable to all [wholesale
high-speed access services].”7 CNOC lists a number of “issues” for the
Commission to address, including how wholesale services are regulated,
configured and priced, the future availability of new network services and access
to services such as ADSL-CO and wholesale services on fibre-to-the-premises
(“FTTP”) facilities.8

12. There is absolutely no reason for the Commission to expand the scope of this
proceeding to examine the issues requested by CNOC. The Commission has
already ruled on each and every issue requested above and has already scheduled
a further review for 2014.

13. In particular, the Commission conducted a 15-month proceeding that examined

the regulatory framework for wholesale services, which proceeding contained
multiple evidentiary, interrogatory and commentary steps, with an oral hearing
that included cross-examination of parties. This proceeding culminated in the
release of Revised regulatory framework for wholesale services and definition of
essential service, Telecom Decision CRTC 2008-17 (“Decision 2008-17”).

14. In Decision 2008-17 categorized every existing wholesale service into a six
service classifications, which classifications included the extent of continuation of
regulatory treatment, the associated pricing principles for each service. The
Commission also set out a definition of an “essential service” that would be
applied to any future wholesale service. Finally, the Commission noted that a
review of the regulatory framework for mandated wholesale services would take
place six years after March 3, 2008,9 the date of issuance of Decision 2008-17.
Given the fact that the Commission already examined the wholesale regulatory
framework in a detailed and comprehensive fashion, there is no reason for a new
proceeding to examine the regulatory rules, service categories and pricing for
wholesale services prior to the stated review to take place in 2014.

7
CNOC letter, para. 18
8
CNOC letter, para. 18.
9
Decision 2008-17, para. 197.
4
15. On the question of ADSL-CO, that service was the subject of another lengthy
proceeding where a decision was issued by the Commission in Wholesale high-
speed access services proceeding, Telecom Regulatory Policy CRTC 2010-632
(“Policy 2010-632”) on August 30, 2010. Policy 2010-632 was a comprehensive
proceeding that followed multiple evidentiary, interrogatory and commentary
stages, including an oral hearing phase.

16. In Policy 2010-632, the Commission found that “only two competitors have
expressed interest in the CO-based ADSL access service” and that “other
competitors have expressed uncertainty regarding its benefits.”10 Importantly, the
Commission identified that some competitors saw “no attraction in a CO-based
service that would require co-location at the ILEC central office because they
would be required to invest” in facilities and transport components to each ILEC
central office.11 Given that these competitors indicated that they were unwilling
to make such investments in facilities, the Commission concluded that ILECs
were not to be required to provision an ADSL-CO service.12 Given that this
decision was rendered in August 2010, there is no need to revisit the lack of
viability of the ADSL-CO service again.

17. Finally, on the question of FTTP facilities, the Commission ruled that services
available on these “next-generation” network facilities would be assessed using
the existing essential services framework on a case-by-case basis.13 Given that
the current proceeding is about usage-based billing on existing wholesale ADSL
facilities, there no is reason to examine the question of wholesale services on
FTTP facilities here.

Conclusion

18. Given the arguments raised in this letter, the Commission should reject the
requests made by all parties to expand the scope of Notice 2011-77. TELUS
looks forward to its participation in the proceeding as it has been defined.

10
Policy 2010-632, para. 131. TELUS has also had a version of ADSL-CO services available pursuant
to its Carrier Access Tariff, but to date, it has no customers of this service.
11
Policy 2010-632, para. 129.
12
Policy 2010-632, para. 132.
13
Policy 2010-632, para. 122.
5
Yours truly,

{original signed by Ted Woodhead}

Ted Woodhead
Vice-President
Telecom Policy & Regulatory Affairs

EE/cs

cc. Interested parties to Notice 2011-77

John Macri, CRTC, john.macri@crtc.gc.ca
Lynne Fancy, CRTC, lynne.fancy@crtc.gc.ca
Tom Vilmansen, CRTC, tom.vilmansen@crtc.gc.ca
Eric Edora, TELUS, 613-597-8313