ARCHIVED - Transcript, Hearing 26 October 2011

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Volume 3, 26 October 2011



Proceeding to review network interconnection matters


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

26 October 2011


In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing.

Canadian Radio-television and Telecommunications Commission


Proceeding to review network interconnection matters


Konrad von FinckensteinChairperson

Len KatzCommissioner

Timothy DentonCommissioner

Suzanne LamarreCommissioner

Candice MolnarCommissioner


Cindy VenturaSecretary

Alastair StewartLegal Counsel

Anthony McIntyreLegal Counsel

Robert MartinHearing Manager and Manager, Telecommunications Policy


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

26 October 2011

- iv -







9. Cogeco Cable Inc.417 / 2546

10. Quebecor Media Inc. (on behalf of Videotron G.P.)472 / 2841

11. SSi Micro Ltd.514 / 3070

12. Yak Communications (Canada) Inc.551 / 3268

17. Public Interest Advocacy Centre (PIAC)603 / 3574

Gatineau, Quebec

--- Upon resuming on Wednesday, October 26, 2011 at 0900

2541   LA SECRÉTAIRE : À l'ordre, s'il vous plaît. Order, please.

2542   LE PRÉSIDENT : O.K., commençons.

2543   LA SECRÉTAIRE : Merci, Monsieur le Président et bonjour à tous.

2544   We will begin today with the presentation by Cogeco Cable Inc.

2545   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Merci.


2546   M. MESSIER : Monsieur le Président, Mesdames et Messieurs les Conseillers, merci de nous donner l'occasion de vous présenter le point de vue de Cogeco Câble à l'occasion de cette audience publique en matière de télécommunications concernant l'interconnexion des réseaux pour les services de voix.

2547   Mon nom est Michel Messier, je suis Directeur, Affaires réglementaires, Télécommunications.

2548   À ma gauche est assis François Audet, Vice-président, Télécommunications et Projets spéciaux.

2549   À ma droite, Philippe Jetté, Vice-président et Chef de la direction technologique.

2550   Également avec nous, à la gauche de François, Philippe Pariseau, Directeur adjoint, Architecture des réseaux de télécommunication.

2551   Notre présentation traitera essentiellement de la pertinence d'adopter un cadre réglementaire favorisant la négociation et l'implantation d'interconnexions fondées sur la technologie IP.

2552   Après quelques remarques introductives, nous aborderons les trois questions posées par le Conseil au sujet de l'interconnexion IP et terminerons notre présentation en adressant succinctement la question du régime d'interconnexion pour les entreprises de service sans-fil.

2553   François.

2554   MR. AUDET: Before going straight to the point, let me briefly remind you how Cogeco Cable is involved in the provisioning of voice services.

2555   Cogeco has been offering local and long-distance voice services since June 2005. Currently, over 400,000 customers subscribe to Cogeco Cable's fixed local VoIP service available throughout most of Cogeco's territory in Ontario and Québec. Cogeco does not provide wireless service at this time.

2556   Cogeco was among the first Canadian carriers to be registered and recognized as a CLEC, following the issuance of the 1997 landmark decision on local competition. However, while Cogeco had at that time established direct local interconnections in some exchanges, less than five years later it divested all of its investment in this undertaking.

2557   Except in the TELUS Québec territory, this time Cogeco has chosen not to interconnect directly with any other Local Exchange Carriers but to use the PSTN access services of an underlying CLEC, namely TELUS, for the purpose of providing local voice service.

2558   While Cogeco is not currently directly interconnected on an IP-to-IP basis with any other local or long-distance carrier, a high proportion of its voice traffic has been negotiated and is exchanged on an IP basis with TELUS where TELUS operates as a CLEC.

2559   For many years, Cogeco has been advocating for the establishment of an IP-to-IP interconnection regime. We would like to thank the Commission for addressing this important issue in the present proceeding.

2560   The use of IP technology is growing constantly within Canadian voice networks. This technology is not only largely prevalent in competitor wireline voice networks, which now serve more than 35 percent of the local residential access lines in service in Canada, but is increasingly used in ILEC networks for providing VoIP services or for transporting voice traffic, notably for interexchange traffic.

2561   This technology is also largely used in wireless networks. However, despite this new reality, we must recognize that the establishment of an IP-based interconnection regime remains marginal in Canada: emerging for interexchange traffic but practically nonexistent for local traffic. There is no doubt that market forces have not, so far, played an important role in this matter.

2562   Cogeco does not believe, as submitted by other parties, that IP-to-IP interconnection should be negotiated on a strictly voluntary basis at this time.

2563   Why? Essentially, because the barrier created by the disinclination of the ILECs for the establishment of IP-to-IP interconnection is inevitable.

2564   The record of this proceeding confirms this absence of willingness from the ILECs for IP-based interconnection negotiations for local and interexchange voice traffic.

2565   In effect, competitors have practically no other choice than to interconnect with the PSTN through the existing mandated interconnection regimes which are uniquely based on circuit-switched or TDM technology.

2566   Therefore, Canadian carriers wishing to establish IP-to-IP interconnections are at the mercy of the ILECs, who have little or no incentive to establish such an interconnection with competitors given their massive legacy TDM investment.

2567   Because of opposing interests between the ILECs and competitors, there will be no natural evolution in this matter. As long as the larger proportion of voice traffic is exchanged between the ILECs and competitors, and the burden of converting voice IP traffic in TDM format and vice versa rests on the shoulders of competitors, these dominant carriers will have the market power to slow down and dictate the pace of implementation of IP-to-IP interconnection in Canada.

2568   TDM technology was the industry standard when local and interexchange interconnection regimes were mandated. Fourteen years later, it should now be recognized that the IP technology is increasingly becoming the new industry standard.

2569   While both technologies will still have to coexist for a certain period of time, it is widely acknowledged that we are currently going through a transition period toward an environment where IP technology will be ubiquitous. All industrialized countries are engaged on this path.

2570   In such a technological evolutionary context, it no longer makes sense and is counterproductive for Canada to continue to mandate interconnection on a single declining technology.

2571   The consolidation of a network-of-networks based on IP technology is in the public interest and should be encouraged and supported in Canada. Such an environment will foster the emergence of innovative services and generate greater efficiency for the benefit of Canadian enterprises and consumers.

2572   Furthermore, the current technological limitation goes against the Policy Direction which requires that regulation related to network interconnection regimes enables competition from new technologies and ensures technological and competitive neutrality.

2573   Canadian carriers should no longer be constrained to the use of a single technology for the exchange of voice traffic in an environment where two competing technologies are used by Canadian carriers to provide voice services.

2574   The Commission has an important role to play in the current conjuncture: removing the existing barriers to the establishment of IP-based interconnection for voice communications by adopting a framework that will create a requirement to negotiate and implement such an interconnection.

2575   MR. JETTÉ: Cogeco is advocating for neither the establishment of detailed ex ante interconnection rules nor for a carbon copy of the existing TDM interconnection requirements.

2576   Rather, Cogeco is advocating for the adoption of two regulatory policies along with basic rules and guidelines that would frame negotiations between carriers.

2577   The first regulatory policy that we propose states as follows:

2578   A Canadian carrier using IP technology within its network to transport voice communications must be required to implement an IP-to-IP interconnection when requested by another carrier.

2579   The main purpose of this requirement is to ensure that a Canadian carrier requesting to negotiate the establishment of an IP-to-IP interconnection with another Canadian carrier will not see its request turned down from the onset.

2580   Furthermore, the enforcement of this policy should clearly be subject to the right to seek Commission intervention. This will create an incentive for negotiations and provide a last recourse for the parties if the negotiations fail.

2581   In practice, a Canadian carrier that is using IP technology to transport and switch local or toll traffic within its network, even on a limited basis, must be required to negotiate an IP-to-IP interconnection for implementation purposes in a reasonable timeframe, upon request from another Canadian carrier.

2582   To be clear, a Canadian carrier that is still solely using TDM technology within its network would not be required to implement IP-to-IP interconnection.

2583   In addition, this interconnection requirement should consequently involve the sub-requirement for the interconnecting LEC to bear the cost of converting its voice traffic from TDM to IP for exchange with its counterpart or from IP to TDM for delivery to its own customers. In fact, this sub-requirement is simply the reciprocity of the current requirement under the existing TDM interconnection regimes.

2584   Finally, just as in the TDM world, these negotiations should be governed by the regulatory status of the Canadian carrier. Currently, the interconnection relationships between LECs and other wireline or wireless LECs are based on a status of co-carrier while the relationships between LECs and Wireless Service Providers or Inter-exchange Carriers are based on a status of provider-customer.

2585   So, IP interconnection negotiations between LECs should be based on reciprocity and guided by principles of shared-cost facilities and peering or bill-and-keep arrangements. These negotiations may also include discussions on imbalanced compensation provisions. However, IP transit arrangements would solely be subject to commercial arrangements.

2586   IP interconnection negotiations between LECs and WSPs or IXCs should be guided by principles of cost recovery and result in reasonable provider-customer arrangements comparable to the ones obtained by these carriers through the current TDM interconnection regimes.

2587   La deuxième politique réglementaire proposée s'énonce comme suit:

2588   L'interconnexion IP pour les services de voix devrait être similaire au modèle de partage (peering) du trafic IP de données entre fournisseurs de services Internet, et le nombre de points d'interconnexion devrait être maintenu aussi bas que possible pour minimiser les coûts. À moins que les parties s'entendent pour s'interconnecter autrement, les points d'interconnexion, par défaut, devraient être établis dans des lieux de " peering " publics.

2589   Qu'il soit bien clair, l'intérêt pour l'implantation d'une interconnexion IP pour les services de voix ne réside pas seulement dans l'échange de trafic IP entre télécommunicateurs, mais également et surtout dans l'efficacité de l'architecture d'interconnexion déjà existante entre les réseaux utilisant le protocole IP.

2590   Ne remplacer que l'interconnexion TDM par l'interconnexion IP dans les régions d'interconnexion locale (les RIL) priverait les télécommunicateurs canadiens des immenses gains d'efficacité que comporte l'architecture des réseaux IP.

2591   Par exemple, afin de rendre son service téléphonique accessible sur l'ensemble de son réseau bidirectionnel, Cogeco devrait s'interconnecter avec différents télécommunicateurs dans une cinquantaine de RIL en Ontario et au Québec, alors que moins d'une dizaine de points d'interconnexion IP seraient probablement suffisants.

2592   De plus, une telle interconnexion permettrait à Cogeco d'étendre la disponibilité de son service téléphonique sur l'ensemble de son réseau bidirectionnel. Actuellement, certaines régions demeurent non desservies principalement en raison de la complexité engendrée par le régime d'interconnexion locale actuel pour de petits groupes d'abonnés.

2593   Cogeco reconnaît que cette question du niveau d'agrégation relative à l'établissement d'un point d'interconnexion n'est pas l'apanage unique de l'interconnexion IP. Comme l'affirme Vidéotron dans la présente instance, elle se pose également avec pertinence dans le cadre de l'interconnexion TDM. Nul doute, la consolidation des RIL actuelles serait souhaitable et bénéfique.

2594   Toutefois, dans la mouvance en faveur de l'interconnexion IP, il importe grandement pour le bénéfice ultime des utilisateurs que les négociations sur l'interconnexion IP s'inscrivent dans un cadre porteur d'une plus grande efficacité que l'architecture locale actuelle. La dépendance envers l'architecture des réseaux TDM des ESLT doit être rompue dans un monde IP, d'où l'importance de cette deuxième politique réglementaire.

2595   Qu'il soit clair, Cogeco ne demande pas au Conseil de rendre obligatoire l'interconnexion IP aux points de " peering " publics actuellement reconnus au Canada par les réseaux IP, comme par exemples QIX à Montréal ou TORIX à Toronto.

2596   En s'engageant à négocier une interconnexion IP, les parties doivent être libres de s'entendre sur la zone et l'emplacement du point d'interconnexion IP qui leur conviennent.

2597   L'adoption de cette politique vise deux objectifs :

2598   - premièrement, à définir une ligne directrice à suivre par les parties dans le cadre de leur négociation sur cette question; et

2599   - deuxièmement, à établir une balise connue de tous les télécommunicateurs canadiens, afin qu'en cas de non-entente entre les parties, toute décision rendue par le Conseil en cette matière soit prise en considération de cette politique.

2600   Enfin, quelques mots sur l'importance de l'établissement d'une base de données canadienne, ENUM, et sur le rôle des groupes de travail sous l'égide du Comité directeur du CRTC sur l'interconnexion, le CDCI.

2601   ENUM est un système permettant aux opérateurs IP de substituer la signalisation SS7 appartenant au monde TDM par un autre mécanisme permettant d'obtenir l'information de routage nécessaire pour terminer un appel.

2602   L'implantation d'une telle base de données devient de plus en plus la norme dans l'interconnexion des réseaux IP pour le trafic de voix et devrait être assignée par le Conseil comme une priorité du CDCI.

2603   Bien entendu, le déploiement de l'interconnexion IP pour les communications de voix continuera de soulever plusieurs questions à court et moyen terme, comme celle relative au réseau 9-1-1 dans un mode IP.

2604   Toutefois, contrairement à la prétention de certaines parties, il n'est pas nécessaire de trouver des réponses à toutes ces questions avant d'adopter un cadre réglementaire à l'égard de l'interconnexion IP. Les télécommunicateurs canadiens ont suffisamment d'expertise à ce moment-ci pour s'engager dans la négociation et l'implantation de telles interconnexions.

2605   Sous le leadership du Conseil, le rôle des groupes de travail du CDCI est de soutenir le déploiement de cette forme d'interconnexion et non pas d'en définir préalablement tous les aspects.

2606   M. MESSIER : Abordons maintenant la question de l'abstention réglementaire.

2607   La perspective de rendre obligatoire l'interconnexion IP pour les services vocaux a fait dire à certains, nommément Bell, qu'en conséquence les services de transit et du service régional devraient être déréglementés.

2608   Plus largement, cette proposition soulève l'hypothétique question de savoir dans quelle mesure le Conseil devrait s'abstenir de réglementer l'interconnexion des réseaux pour les services vocaux si l'interconnexion IP était rendue obligatoire au terme de la présente instance.

2609   Sans connaître la portée du cadre réglementaire qui sera adopté au terme de cette instance, il serait mal avisé de répondre avec certitude à une telle question.

2610   Cogeco ne propose pas à ce moment-ci un encadrement réglementaire détaillé de l'interconnexion IP, comprenant, par exemple, l'approbation de mesures tarifaires, pouvant offrir une solution de rechange instantanée aux concurrents.

2611   L'approche proposée par Cogeco nécessitera, au contraire, plusieurs efforts de négociation de la part des entreprises de télécommunication avant que l'interconnexion IP soit largement répandue.

2612   Il serait également douteux de croire que, du jour au lendemain, toutes les entreprises offrant des services de voix sur IP n'auront plus besoin des installations d'interconnexion qu'elles ont mises en place. Elles ne s'en départiront que dans la mesure où le déploiement de l'interconnexion IP leur offrira une alternative durable au maintien de leur position concurrentielle.

2613   Nul ne peut prévoir avec certitude combien de temps durera la coexistence des régimes d'interconnexion TDM et IP. Sans preuves démontrant que le Conseil peut s'abstenir de réglementer tel ou tel service d'interconnexion sans entraîner une réduction significative de la concurrence des services locaux ou interurbain, les mesures réglementaires d'interconnexion actuelles fondées sur la technologie TDM doivent demeurer en place.

2614   La transition vers l'interconnexion IP devrait être un processus dynamique. Dans cette perspective, Cogeco recommande qu'à tous les trois ans le Conseil réexamine les questions liées à l'interconnexion des réseaux pour les services de voix.

2615   Un tel processus permettrait de réévaluer périodiquement le cadre réglementaire des services d'interconnexion à la lumière des progrès accomplis par le déploiement de l'interconnexion IP, de considérer la pertinence d'introduire ou non de nouvelles mesures réglementaires à cet égard, et, du même coup, de considérer s'il y a lieu pour le Conseil de s'abstenir ou non de déréglementer certains services d'interconnexion.

2616   En terminant, quelques mots sur la question de l'accès à l'interconnexion locale à coûts partagés soulevée par les entreprises de services sans fil indépendantes.

2617   N'offrant pas de services sans fil, la perspective de Cogeco sur cette question est celle d'une entreprise locale concurrente. Actuellement, rien n'interdit à une entreprise de services sans fil d'accéder au régime d'interconnexion locale en devenant une entreprise locale concurrente sans fil, si celle-ci désire bénéficier de cette forme d'interconnexion.

2618   Cependant, comme ce statut entraîne le respect de certaines obligations, dont celui d'offrir l'égalité d'accès aux fournisseurs interurbains, force est de reconnaître que cette situation rend l'accès à cette forme d'interconnexion moins attrayante, principalement en raison des coûts supplémentaires à encourir.

2619   À cet égard, les entreprises sans fil indépendantes ont demandé d'être relevés de cette obligation, tout en ayant accès à l'interconnexion locale à coûts partagées. Elles ont fait valoir que la compétitivité du marché canadien des télécommunications ne serait pas significativement réduite en pareil cas.

2620   Or, ce constat s'applique également aux ESL. Selon Cogeco, le régime d'égalité d'accès pour les fournisseurs interurbains pourrait non seulement être aboli pour les entreprises sans fil mais également pour toutes les entreprises de services locaux, sans que le degré de compétitivité du marché interurbain canadien soit significativement affecté.

2621   Dans un marché où les services sans fil sont de plus en plus utilisés par les consommateurs comme des substituts aux services filaires, en toute équité, l'examen de la pertinence de maintenir ou non l'obligation de fournir l'égalité d'accès aux fournisseurs interurbains doit non seulement prendre en considération les entreprises sans fil mais également les ESL.

2622   Nous vous remercions de nous avoir permis d'exprimer le point de vue de Cogeco en cette matière. Il nous fera maintenant plaisir de répondre à vos questions.

2623   THE CHAIRPERSON: Thank you for your presentation.

2624   If I look at page 2, you say:

"While Cogeco is not currently directly interconnected on an IP-to-IP basis with any other local or long-distance carrier, a high proportion of its voice traffic has been negotiated and is exchanged on an IP basis with TELUS where TELUS operates as a CLEC."

2625   So you do have IP-to-IP interconnection with TELUS right now, if I understand?

2626   MR. AUDET: That is correct, sir. Most of our traffic is exchanged on an IP basis to the PSTN.

2627   THE CHAIRPERSON: But this is basically at the wish of TELUS and what you are suggesting is what you are getting from TELUS should not be because TELUS deems it to be in its interest, it should be an obligation for TELUS to do this?

2628   MR. AUDET: We're fine with TELUS.

2629   THE CHAIRPERSON: I understand that, but I'm trying to say this is a concept that you are advancing here. You are saying everybody who has IP-to-IP interconnection facilities should negotiate it with a CLEC on request, if I understand you?

2630   MR. AUDET: Yes. What we are saying is that anybody else who has a demonstrated ability to do IP should be willing to extend it to other carriers on an interconnection.

2631   THE CHAIRPERSON: Yes, but I am picking on you actually. You have said that you have -- particularly Telus has demonstrated ability.

2632   MR. AUDET: Yes.

2633   THE CHAIRPERSON: So, therefore, if we adopted your rule, Telus would have to interconnect on IP to IP basis with anybody who request it?

2634   MR. AUDET: Yes. And they would also have to do it with us in their highlight territory.

2635   THE CHAIRPERSON: Yes. And this would be under a shared cost basis if I understand it correctly is what you --

2636   MR. AUDET: Yes.

2637   THE CHAIRPERSON: In effect, it's 50/50?

2638   MR. AUDET: Yes.

2639   THE CHAIRPERSON: And why do you think this is preferable to doing what -- to what Rogers yesterday has suggested or is this basically just different words for the same concept?

2640   M. AUDET : Veux-tu répondre?

2641   M. MESSIER : Notre approche est assez similaire à celle de Rogers. La principale différence est sur l'architecture au niveau des points d'interconnexions, l'architecture d'inter-connexions IP.

2642   Ce que nous demandons, et pour nous c'est un des avantages premiers. D'entrer en négociations sur une architecture IP, c'est d'avoir un modèle qui soit comparable à celui qui existe au niveau des services donnés, c'est-à-dire des points d'interconnexions qui soient centralisés, c'est-à-dire une diminution des points d'interconnexions, un ou deux par province avec chacun, de façon à pouvoir avoir une plus grande efficacité, une plus grande portée et une diminution des coûts.

2643   C'est là un des avantages principaux.

2644   LE PRÉSIDENT : Là, si je comprends bien, l'idée principale c'est la même comme celle de Rogers, mais vous voulez une autre condition, c'est les points d'interconnexions. Voulez-vous les avoir réduits?

2645   Mais vous dites que ce n'est pas également ce que l'on utilise par les dates, sinon on va les négocier cas par cas ou...

2646   M. MESSIER : Non, non, pas de rendre obligatoires des points d'interconnexions, des points de terrains publics comme... et ça existe présentement au niveau de... Nous reconnaissons que chaque partie devrait entrer en négociations, certaines feraient valoir qu'elles aimeraient mieux s'interconnecter sur d'autres bases, sur d'autres zones.

2647   Si les parties s'entendent pour établir un point d'interconnexion qui leur convient selon une zone définie, on a aucune objection.

2648   Ce que l'on dit, cependant, c'est que l'efficacité résidant dans l'implantation de points d'interconnexions qui soient réduits au minimum, eh bien s'il y a mésentente entre les parties et si on doit revenir vers le Conseil, chaque partie sera au point de départ en négociant, si vous avez adopté la politique réglementaire que nous proposons, qu'ils doivent négocier pour tenter de s'entendre d'avoir le plus bas... le moins de points d'interconnexions nécessaires et si on va devant le Conseil, bien la décision devra aussi prendre en considération cette politique-là.

2649   Ce que l'on veut c'est pouvoir aller chercher l'efficacité que les réseaux actuellement IP ont construits. On ne va pas tout simplement prendre l'architecture actuellement dans notre TDM et le mettre en mode IP. Pour nous ça n'a pas de...

2650   LE PRÉSIDENT : Oui, oui, je comprends. Je comprends l'idée. Mais vous faites ici allusion aux points d'interconnexions qu'on a pour les dates d'appearing.

2651   Si je comprends bien, comme on dit en anglais, c'est: "The point of reference". Dans les négociations, ça va servir comme point de référence.

2652   O.k. Merci.

2653   Tim, I believe you have some questions?

2654   CONSEILLER DENTON : Oui, bonjour, messieurs.

2655   This is a very thorough going proposal for the modernization of the inter-connection regime and what I wanted you, sort of just question you on the -- why do you think that the telephone companies should bear the cost burden of advancing IP interconnection faster than they would want to go? That's really what's at issue in this hearing.

2656   So, what's going to happen if we impose an interconnection regime on the Tel Cos who are resisting a more rapid move to IP regime because it's at a cost and I would like to hear from you why you believe it's good public policy for us to impose a set of costs of translation from IP to TDM or from TDM to IP on them?

2657   Because, really, what you're asking us to do is we're going to modernize the system and someone is going to have to pay for that modernization and guess what? It's going to be the old TDM base Tel Cos.

2658   En français ou en anglais, comme vous voulez.

2659   M. MESSIER : Je vais y aller en français, peut-être que François pourra rajouter par la suite.

2660   Écoutez, c'est fondamentalement une question d'équité qui va de paire avec ce que nous proposons comme architecture au niveau... pour avoir des gains d'efficacité au niveau de l'architecture IP que nous voulons. Nous ne voulons pas répliquer le modèle actuellement.

2661   Fondamentalement, actuellement, dans le modèle actuel, ce sont les concurrents qui assument les coûts de conversion. Actuellement, comme on l'a démontré, 35 pour cent au marché résidentiel et maintenant sur les concurrents qui sont en grande majorité sur IP, si vous considérez qu'on a déjà amorcé ça, si vous considérez les réseaux wireless, je pense qu'on est arrivé à un point où il y un point de... un point de balance, de retournement où est-ce que, là, on doit considérer le partage entre les deux.

2662   Donc, si on va vers l'avant et on favorise l'interconnexion, c'est que l'on pense qu'on devrait faire dès maintenant puisqu'on a rencontré les conditions, pour faire en sorte aussi de développer un environnement qui sera probablement plus porteur de nouveaux services, plus porteur d'une plus grande efficacité qui sera bénéfique au niveau des consommateurs.

2663   Mais dans cette architecture-là, IPIP, il faut maintenant que les compagnies de téléphone maintenant prennent en charge la conversion et ce sera à eux à gérer la période de transition.

2664   De toute façon, ils ont déjà dans leurs propres réseaux mis les équipements parce qu'ils ont déjà amorcé la fourniture de services IPIP de bout en bout et ils doivent donc entre leurs utilisateurs qui sont dans un accès IP versus ceux qui sont dans un accès TDM, faire cette conversion.

2665   Donc, je pense qu'à ce moment-ci, pour l'environnement et le futur, il faut... on est rendu à un point où je pense que les conditions sont atteintes si on regarde ça dans une perspective de l'industrie et non pas seulement du point de vue strictement de l'angle des compagnies de téléphone, de leur situation actuelle, amorcer un changement et c'est ce qu'on propose.

2666   MR. AUDET: Just to reemphasize a few points. In our estimation, about a third of local access lines in Canada at this point in time, about a third are IP already. Given the very fast pace of development on wireless, it's within the next two years probably, you know, if you look at both wire-line and wireless together, probably about half of access lines in Canada will be IP based.

2667   Does that not trigger a point where the onus is on TDM companies to adapt rather than for us to continue to accommodate them? So, there is that.

2668   And also, the reason we feel we need to centralize interconnection points, and to do that, of course, we need IP transport, we're talking about shared costs interconnection here. If there is a big saving for us in reducing our half of the shared costs by minimizing the number of points of interconnection, this should also be true for the major ILEC because they too would minimize the number of POI builds.

2669   So, there is a saving for both parties given that it's shared costs and certainly we're not proposing this to incur greater costs for ourselves, right? So, inherently, it means there is a saving for the other party as well.

2670   COMMISSIONER DENTON: So, carry on.

2671   MR. JETTÉ: And I would like to add this. We all know that the DNA of the technology in the future will be IP. I think everybody recognizes that IP will be the base for future systems. So, it's not only the costs. It's actually what we are buying with that money.

2672   When we have to buy TDM equipment, we are actually buying something that we cannot re-use in the future, that we cannot use to develop new services. Having them continue to buy IP equipment, they will be able to re-use that equipment in the future it's actually looking forward, and they will be able to develop new services on it.

2673   So, the current policy is actually having us buy equipment that we cannot re-use in the future and we are looking for a change where we are trying to help the industry as a whole to move forward.

2674   COMMISSIONER DENTON: Okay. So, one of the -- I mean, I think the benefits of what you're proposing are quite clear. What we don't yet know and it's not your job to supply us with this information of the Tel Cos is what is going to be the cost because if we do something of the nature you are proposing, we are simply saying to one party in the internet ecology: you've got new costs to pay to modernize your equipment and it would be interesting to figure out what those would be.

2675   I see that you have -- and taking a point on my pet hobby horses here with the ENUM for the modernization of a telephone numbering administration. Does someone want to tell me more about the benefits of this and how it might be advanced?

2676   MR. AUDET: Essentially, right now, when two carriers need to exchange traffic, they look up in the local number portability database to find out who to terminate the traffic to. In an IP world, there is something that looks a lot like an LNP database and it's electronic numbering, IED database.

2677   Right now, we don't need to use that because I need traffic going to the PSTN, be it over IP, we pass on to Telus. So, we have a single partner and by default if a number to -- for the traffic to be delivered to is not on our own network, automatically we send it off to Telus.

2678   In a world where we would inter-connect with possibly tens of other IP enabled carriers, we would need to be able to dip into such a database to determine who to send the traffic to. It's the same functionality as the LNP database.

2679   Just to be clear, we are advocating a -- not a public ENUM, but rather a carrier ENUM database, i.e. we don't want -- in a public database people are able to go and, you know, put their -- individuals can put their email address and stuff and, I don't know, maybe pictures of their dog for all I know. We are not looking for that, we are looking at an industry database.

2680   COMMISSIONER DENTON: You don't want the public messing with your endpoints, I get that, yes.

2681   So how could we, in our decision-making, assist that? Is there anything we need to do?

2682   MR. AUDET: There is work ongoing already. I think it is going to happen, and we are part of some trial work in this direction already.

2683   I think we are raising it more for awareness than for a hard decision at this point.

2684   M. MESSIER : Peut-être une clarification.

2685   Actuellement, certaines entreprises se sont interconnectées sur une base IP, je pense, ont implanté un private ENUM ou carrier ENUM entre eux. Donc, ce n'est pas un préalable ici, mais on se dit que dans un environnement où on veut voir la multiplication des interconnexions IP, le développement d'une base publique ENUM serait souhaitable au Canada.

2686   Donc, nous demandons que le Conseil prenne en charge et demande... au niveau d'un comité, des groupes de travail étudient la question et fassent rapport au Conseil.

2687   CONSEILLER DENTON : Je me rappelle que, hier, Rogers a fait quelques propos dans sa plaidoirie au sujet de l'emploi de SIP et un autre standard qui a été développé dans le CISC. Avez-vous des commentaires là-dessus?

2688   MR. AUDET: The standards in the CISC are largely SIP-based.

2689   I think that CISC intervention is needed between parties where, I guess, one party is less willing than the other, so guidance is needed. That is where you need the CISC.

2690   In our case, between willing parties, we just went ahead and did it.

2691   And if I may expand on this, we heard some parties in earlier contributions in the past two days express concern with the fact that there are some differences in the flavour of the SIP standard between equipment manufacturers. While this is true, and our partner, TELUS, uses largely legacy Nortel equipment, be it Nortel softswitches, which are IP -- and we use Cisco equipment. So, indeed, we know that there are SIP flavour differences between the two.

2692   Between our two networks, we are using session border controllers, which do the protocol mending, as well as provide the necessary firewalling or isolation to preserve network integrity on both sides.

2693   The people who do these session border controllers make it their living to ensure that the protocols mesh up. So it works quite well.

2694   COMMISSIONER DENTON: What I hear you saying, in essence, then, is: We need to move to an IP-to-IP basis, we need to modernize our telephone number lookups, and we need to change the architecture of how this is accomplished to bring it into the 21st Century, or to bring it up to date.

2695   MR. AUDET: That's correct.

2696   And, I guess, we are advocating IP not just for the benefit of IP-for-IP, we are advocating IP as a means to continue to streamline the interconnection regime.

2697   We were very happy with Decision 2004-46, which created the concept of the local interconnect region as a much needed improvement from exchange-by-exchange interconnection. That was a very good step in the right direction, but we think that further gains could be achieved by going even as far as province-wide, and this, we think, can only happen in an IP domain.

2698   COMMISSIONER DENTON: I have one last question, another geeky question. You don't have page numbers, so I will just say it. It is in one of your paragraphs:

"En s'engageant à négocier une interconnexion IP, les parties doivent être libres de s'entendre sur la zone et l'emplacement du point d'interconnexion IP qui leur conviennent."

2699   I take that as: Don't oblige us to use public peering points.

2700   M. MESSIER : Exactement.


--- Pause

2702   COMMISSIONER DENTON: Because they don't work? Because they are bad?

2703   M. MESSIER : Parce qu'on veut laisser les parties, dans le fond, déterminer... Si deux parties sont prêtes à s'entendre sur une zone qui est différente appliquée... il y a eu plusieurs propositions qui ont été faites sur une base de NPA, sur une base des LIR actuellement, des RIL, des régions d'interconnexion locale actuelles. D'autres ont parlé de provinces, d'autres ont parlé, bon... Chacun... et le point d'interconnexion pourrait peut-être être plus approprié à un autre endroit que dans un QIX ou un TORIX ou point public peering.

2704   Donc, laissons... À ce moment-ci, notre proposition est très ouverte à mettons les parties en marche pour négocier l'implantation d'une interconnexion IP, laissons-les définir. On ne veut pas définir de bout en bout quelle serait l'architecture.

2705   Par contre, ce que l'on dit, et d'où l'importance de la politique qu'on adopte, l'orientation ne doit pas être celle de répliquer, de copier le modèle actuel, mais celle plutôt d'aller vers une architecture qui aura beaucoup plus d'efficacité, et le point de référence, c'est les modèles actuellement d'interconnexion IP pour les données, donc, d'où notre référence au point QIX, au point TORIX.

2706   On dit s'il n'y a pas entente entre les parties, bien, les parties seront... d'entrée de jeu qu'elles doivent négocier, s'entendre pour minimiser les points. Puis si elles doivent se présenter vers vous, elles sauront qu'elles pourront peut-être être forcées d'aller dans des points publics qui sont reconnus dans l'industrie.

2707   COMMISSIONER DENTON: The last question, or the last comment, is: What I hear you telling us is that we should encourage a thorough modernization of the interconnection regimes, not merely in terms of translation from TDM to IP and back, but the whole architecture whereby this is accomplished.

2708   M. MESSIER : C'est le point central, effectivement, de notre proposition.

2709   CONSEILLER DENTON : Merci, messieurs.

2710   THE CHAIRPERSON: Thank you. Just one clarification. You mentioned that your IP-to-IP interconnection was with TELUS. Do you have it with any other carrier?

2711   MR. AUDET: Not at this time.

2712   THE CHAIRPERSON: Okay. That's all I wanted to know, whether --

2713   I'm sorry, go ahead.

2714   MR. AUDET: And it is an ongoing conversion because, of course, we started with TDM.

2715   THE CHAIRPERSON: Of course.

2716   MR. AUDET: So, you know, we have had our hands full.

2717   THE CHAIRPERSON: Going at their pace, I gather.

2718   You are going at TELUS' pace.

2719   MR. AUDET: As well as our own. It is a mutual thing.

2720   It is a fair bit of work and, of course, we need to plan it and execute it well, because we have 400,000 subscribers whose service we don't want to compromise. So we are doing it carefully.

2721   M. MESSIER : Peut-être pour mettre au dossier.

2722   Cependant, nous devons dire que nous avons amorcé des discussions avec d'autres pour implanter telle interconnexion. Les quelques discussions préliminaires que nous avons eues avec différentes titulaires ont trouvé une fin de recevoir.

2723   Donc, c'est plutôt avec les concurrents avec lesquels nous explorons actuellement l'implantation d'une interconnexion. Donc, c'est quelque chose qui n'est pas seulement limité avec TELUS, mais qu'on veut étendre aussi et tenter d'avoir avec d'autres.

2724   MR. AUDET: Perhaps I should add that we have ongoing discussions with other parties, as well, and we hope to be able to move forward in early to mid-2012 with other LECs for the exchange of IP traffic.

2725   THE CHAIRPERSON: Thank you.

2726   Len, do you have questions?

2727   COMMISSIONER KATZ: Yes. Thank you, and good morning.

2728   I am going to continue on the same theme. You say that you are on an IP-to-IP basis where TELUS operates as a CLEC.

2729   Is that right?

2730   MR. AUDET: That's correct.

2731   COMMISSIONER KATZ: How long has this been going on live -- forget about the trial -- where your live traffic is actually going through IP-to-IP?

2732   MR. AUDET: I would say going on two years, initially on a trial basis, and then going into a limited production mode, and then a wider production mode.

2733   Right now we are in a conversion process, but more than 50 percent of the traffic is already exchanged on an IP basis.

2734   COMMISSIONER KATZ: And in some cases you are working on dissimilar switches? You have a Nortel softswitch and --

2735   MR. AUDET: They have a Nortel softswitch, we have a Cisco BTS.

2736   We have, actually, three Cisco BTS's, interfacing with, at TELUS for sure, a Nortel DMS, I think a Lucent 5ESS in one case, and another two DMS's, to the best of my knowledge.

2737   COMMISSIONER KATZ: We heard yesterday from some of the parties that there are complications with IP in its infancy, and it is further complicated by the fact that when you have dissimilar switches, there are even more issues with regard to the standardization of some of the optional services or the ancillary services.

2738   Have you experienced any such problems at all?

2739   MR. AUDET: We haven't because we use the session border controllers. The specific brand name that we use is Acme Packet. These people, indeed, look after protocol mending between different vendor's switches, and they have made it their livelihood to do this protocol mending and to do it well, and it works.

2740   COMMISSIONER KATZ: So you have had no problems at all, to speak of.

2741   MR. AUDET: No.

2742   COMMISSIONER KATZ: The other question is, this IP-to-IP connectivity is between you and TELUS as a CLEC.

2743   MR. AUDET: Right.

2744   COMMISSIONER KATZ: How does that translate the rest of the way across the network, when it goes from TELUS, the CLEC, into the PSTN and out the other end?

2745   How does TELUS connect?

2746   MR. AUDET: We understand that TELUS is still interconnected with Bell and others on a TDM basis.

2747   COMMISSIONER KATZ: So the real benefits of the services -- although you may be realizing it from an infrastructure perspective, from a service perspective, those services cannot flow through to the other end of the call until such time as TELUS and Bell connect on an IP-to-IP basis.

2748   MR. AUDET: Correct. Although doing IP-to-IP between TELUS and us also simplifies TELUS' life, as we understand it.

2749   COMMISSIONER KATZ: Okay. To the extent that you are doing this with TELUS as a CLEC, have you approached TELUS for the same connectivity as an ILEC?

2750   MR. AUDET: We have had a superficial discussion, but it is our understanding that, in their ILEC territory, they are bound by tariffs which do not provide for IP interconnection.

2751   COMMISSIONER KATZ: They are bound by tariffs imposed by the Commission?

2752   MR. AUDET: That's our understanding.

2753   COMMISSIONER KATZ: Okay. Well, I guess we will hear from them next week in Phase II. Those are my questions, Mr. Chairman.

2754   THE CHAIRPERSON: Suzanne?

2755   CONSEILLÈRE LAMARRE : Merci, monsieur le président.

2756   D'abord, au sujet du cadre réglementaire que vous proposez qui soit établi pour, au fond, encadrer les négociations, pour obtenir des interconnexions IP to IP, je voudrais clarifier quelque chose.

2757   À la page 6, au moment où vous commencez à en parler, au bas de la page vous dites:

"Furthermore the enforcement of this policy should clearly be subject to the right to seek Commission intervention. This will create an incentive for negotiation and provide a last recourse -- "

2758   -- donc, un dernier recours --

2759   "-- for the parties if the negotiation fails."

2760   Et lorsque vous concluez sur ce point à la page 10, vous dites que :

« L'adoption de cette politique vise deux objectifs, le deuxième étant d'établir une balise connue de tous les télécommunicateurs canadiens, afin qu'en cas de non-entente entre les parties, toute décision rendue par le Conseil en cette matière soit prise en considération de cette politique. »

2761   Alors, à quoi vous faites référence ici? Est-ce que vous faites référence à une décision d'arbitrage qui pourrait être prise par le Conseil si les négociations n'aboutissent pas et qui seraient à ce moment-là exécution obligatoire ou vous faites référence à autre chose?

2762   M. MESSIER : Ici, ce qu'on fait référence, c'est que si les parties ne réussissent pas à s'entendre, d'abord, les deux politiques et l'incitatif, comme on peut le voir sur le dossier, est absent au niveau des compagnies de téléphones, donc on veut, première chose, qu'il y ait une obligation de façon à ce que les négociations puissent s'amorcer.

2763   La deuxième chose, on veut que les négociations se fassent dans une direction, comme on l'a dit, d'une architecture qui soit plus efficiente.

2764   Maintenant, si à travers tout ça il y a vraiment non-négociation et puis on est très conscient que ça ne sera pas des négociations qui vont être courtes et faciles. On amorce puis il y a différents enjeux et ainsi de suite.

2765   Donc, si on vient voir, cependant, en adoptant la deuxième politique que l'on propose, il sera clair à toutes les parties qu'on doit négocier dans une perspective d'une architecture qui soit efficiente avec le moins de points d'interconnexions possible.

2766   Si on n'arrive pas à s'entendre et qu'on décide de déposer une requête devant le Conseil, bien à la lumière de ce qui sera déposé et des demandes qui seront faites, vous aurez probablement une décision à rendre.

2767   Est-ce que, à ce moment-ci, ça voudra dire rendre quelque chose d'exécutoire? C'est très difficile de me prononcer, dépendant de l'objet de la mésentente qu'il y aura entre les parties, mais ça donnera... effectivement, au Conseil il y aura des demandes qui seront faites et puis ce qu'on voudrait c'est que le Conseil rende sa décision sur tout arbitrage qu'il aura à prendre en compte, en considérant cette politique-là qu'il aura adoptée.

2768   CONSEILLÈRE LAMARRE : Mais si on rend une décision en arbitrage, normalement elle est à exécution obligatoire.

2769   M. MESSIER : Bien, elle sera exécutoire.

2770   CONSEILLÈRE LAMARRE : Elle sera exécutoire, O.k.

2771   M. MESSIER : Mais peut-être aussi ce mécanisme-là permettra effectivement de ramasser puis c'est pour ça qu'on a proposé périodiquement, je pense, qu'il doit y avoir une revue.

2772   Si on entre dans ce processus-là, c'est un processus pour faire en sorte de mettre en place un nouveau régime, cette nouvelle forme d'inter-connexion-là, il y aura peut-être un besoin de faire périodiquement une revue sur l'ensemble et de voir si... est-ce que ce mécanisme-là fonctionne?

2773   S'il fonctionne bien, tant mieux, c'est ce que l'on espère. S'il ne fonctionne pas, est-ce qu'il y aura peut-être lieu d'adopter des mesures réglementaires plus contraignantes et exécutoires?

2774   CONSEILLÈRE LAMARRE : Et cette revue périodique, vous, vous la proposez aux trois ans?

2775   M. MESSIER : On pense que trois ans... Si on la met plus tard, on ne veut pas créer, du moins pour la première période, un délai suffisamment long, de façon à ce que les négociations soient traînées jusqu'à ce qu'on se rende à cette période-là.

2776   CONSEILLÈRE LAMARRE : O.k. Maintenant, monsieur Jetté, en réponse à une question, et je ne me rappelle pas laquelle parce qu'on n'a pas la transcription instantanée, mais j'ai noté votre réponse.

2777   Vous avez répondu que, présentement, en permettant encore qu'il y ait de l'interconnexion TDM et qu'on n'impose pas l'interconnexion IPIP, vous COGECO, vous deviez acheter de l'équipement TDM qui ne vous servira pas si longtemps que ça, alors que si on accélère le processus de transition du côté des titulaires, bien, ils vont acheter de l'équipement IP qui va leur servir dans le futur.

2778   Maintenant, quand vous avez dit ça, là, ça m'a fait... ça m'a fait changer de mode de pensée, là, et je suis partie en mode de gestion de projet.

2779   Et, là, quand je pense à la gestion de projet, je suis certaine qu'il y a 14 ans le même argument a été donné en ce qui concernait l'équipement TDM en disant qu'en obligeant l'investissement et l'interconnexion en TDM, de toute façon c'est des investissements qui étaient là pour le futur et qui étaient pour servir.

2780   Et la durée de vie de ces équipements-là est probablement quelque part entre 20 et 25 ans -- je ne sais pas si ça peut aller jusqu'à 30 ans si on est chanceux -- mais en accélérant le "turnover", si vous me permettez l'expression, de ces équipements d'immobilisation-là, ce qu'on fait dans les... ce qu'on ferait dans les faits, ce serait d'augmenter le coût d'investissement chez les titulaires et, traditionnellement, tous les coûts sont refilés aux clients.

2781   Alors, comment est-ce que ça peut être bénéfique, ça, pour le consommateur, selon vous?

2782   M. JETTÉ : Premièrement, vous avez bien compris mon intervention. Je vais apporter quelques points de clarification.

2783   CONSEILLÈRE LAMARRE : S'il vous plaît.

2784   M. JETTÉ : Dans tous les systèmes où il y a une traduction où une translation est nécessaire entre deux éléments, il y a un coût pour cette traduction-là. Qu'on l'applique dans l'un des systèmes ou dans l'autre, le consommateur qui est au bout a une partie de ces coûts-là, peu importe où le coût se situe.

2785   Mon intervention précisait que la nature future des réseaux est basée sur IP et jusqu'ici, le coût avait été imposé aux nouveaux entrants dans le marché qui avaient des services novateurs en voiture IP, d'assurer cette translation-là.

2786   Je pense qu'on a bien fait nos devoirs, on a bien « implimenté » les traductions jusqu'ici et on a supporté les coûts. Trente-cinq pour cent du marché canadien maintenant est sur une technologie qui est orientée IP. Là, ce que l'on demande, c'est de pouvoir nous permettre d'accélérer l'innovation et la génération de service basé sur IP, en transférant les coûts du côté TDM qui ont plafonné -- il n'y a plus de nouveaux équipements TDM.

2787   Et, comprenez-nous bien, on ne demande pas de défaire les interconnexions TDM qui sont en place; on demande de pouvoir négocier des interconnexions basées sur IP pour le futur. Donc, les nouvelles interconnexions vont être basées sur IP. Et Michel?

2788   M. MESSIER : J'aimerais une intervention en rapport avec cette perspective que les coûts pourraient être transférés aux clients, donc faire augmenter les tarifs pour les consommateurs.

2789   Le seul point que je voudrais faire, c'est qu'on est dans un marché concurrentiel actuellement et dont une bonne partie est dérèglementée aussi pour les compagnies de téléphone actuellement. Donc, dans un marché concurrentiel, bien il faut demeurer concurrentiel.

2790   Nous, on est entré, on a assumé les coûts puis on s'est positionné pour être concurrentiel pour aller chercher une part du marché. Je pense que les compagnies de téléphone devront aussi faire avec ces pressions-là s'ils veulent maintenir leur position concurrentielle.

2791   Alors, je ne vois pas comment, dans un environnement où est-ce qu'on va augmenter globalement l'efficacité du régime d'inter-connexion ou qui va augmenter dans le fond une baisse des coûts, donc une pression à la baisse sur les tarifs, que les compagnies de téléphone, de façon avec tout leur pouvoir pourraient augmenter les tarifs.

2792   Donc, je pense que c'est une perspective qui est à mettre de côté.

2793   CONSEILLÈRE LAMARRE : O.k. Maintenant, permettez-moi quand même d'insister avant de la mettre de côté.

2794   Je comprends très très bien ce que vous me dites, c'est concurrentiel, chaque entreprise a des choix à faire au niveau de comment ils veulent essayer d'aller chercher de la clientèle, ça, je le comprends.

2795   Mais, globalement, pour le système, pour l'ensemble, là, de tous les consommateurs au Canada, si au bout du compte on fait une moyenne des coûts, la question que, selon moi, on a à se poser c'est: Est-ce que l'accélération de l'investissement va globalement augmenter les coûts par rapport à ce que la traduction des protocoles vous oblige à faire?

2796   Parce que, oui, je suis d'accord avec vous, là, il y a une question de concurrence, mais en même temps, si on veut rester neutre, il ne faut pas que, à l'inverse, on se trouve à donner de manière involontaire et indue un avantage concurrentiel à une partie de l'industrie plutôt qu'à l'autre. Et on est pris, là, avec justement l'équipement qui existe et qui a été développé au cours des 20, 30, 40 dernières années.

2797   Alors, comment est-ce qu'on réussit à d'abord identifier où est-ce qui est le point d'équilibre et, ensuite, aller de l'avant de façon justement neutre?

2798   M. MESSIER : Je ne pense pas que ce soit de nous donner un avantage concurrentiel. Actuellement, justement, il y a un avantage de l'autre côté où est-ce qu'on se fait dicter à quel rythme ce genre d'interconnexion-là pourrait s'établir.

2799   Ce que l'on veut, c'est... on pense qu'il va y avoir des gains d'efficacité suffisamment grands sur l'ensemble des concurrents. Actuellement, comme on le dit, près de la moitié peut-être des réseaux, là, qui sont actuellement au niveau IP, 35 pour cent du moins des concurrents, donc une bonne partie. Donc, on est arrivé à un point où est-ce qu'il y a une question d'équité qui est en jeu.

2800   Maintenant, je pense qu'accélérer ce... il n'y aura pas d'effet négatif. Nous, on ne voit pas d'effet négatif. Tout ce qu'on fait, je pense qu'on va créer un environnement qui, à moyen terme, va augmenter l'efficacité, réduction des coûts, puis va créer un environnement qui va être plus propice aussi à des services novateurs.

2801   Donc, je pense qu'au bout de la ligne c'est dans l'intérêt public, c'est dans l'intérêt aussi des consommateurs. C'est notre point de vue sur la question.

2802   CONSEILLÈRE LAMARRE : Et, à ce stade-ci, votre proposition d'encadrer les négociations avec une nouvelle politique, là, pour les interconnexions IP, ça ferait le travail, là, comme une preuve.

2803   Vous, vous envisagez ça au fond comme une première étape puisque vous parlez de révision aux trois ans, si nécessaire. Mais ça pourrait être la première étape et aussi la seule étape nécessaire pour encourager le déploiement d'interconnexions IPLP.

2804   M. MESSIER : Bien, c'est certain qu'on voit ça comme une première étape parce que ce qu'on entend dans la salle ce n'est pas un cri de ralliement de tous de dire, il faut mettre ça en chantier.

2805   Donc, on pense, sans vouloir imposer quelque chose de détaillé sur tous, on dit: il faut amener les parties à s'asseoir à une même table, à négocier de bonne foi dans une direction et refaisons le point dans trois ans et on verra si les négociations vont bien.

2806   Si comme le laissent entendre les parties qui demandent que ce soit dérèglementé ou de laisser simplement sur une base volontaire si tout se passe très bien, bien je veux dire, tout ce qu'on espère, effectivement, c'est que les interconnexions vont se multiplier, que ça prendra place et peut-être qu'à terme on pourrait être en mesure de retirer plus des mesures réglementaires sur le régime TDM et puis qu'on n'aura peu besoin de mettre en place des mesures réglementaires sur l'interconnexion IP.

2807   Mais il n'y a rien de garanti et c'est pourquoi on dit: refaisons le point périodiquement et nous verrons dans quelle direction il faudra aller, mais d'entrée de jeu, d'abord mettons les parties à table.

2808   CONSEILLÈRE LAMARRE : Je vous remercie. Ce sont toutes mes questions, monsieur le président.

2809   THE CHAIRPERSON: A couple of cleanup questions. You are doing interconnection with Telus on IP. You need negotiating with others, et cetera. It seems that everybody is tabling a time doing this, et cetera.

2810   The suggestion has been made from some interveners that we should direct you and others to make the information on trial so actual arrangement public or at least the specifications, so that the people don't have to reinvent the wheel. It's a problem that you have come to and you have mastered, can be shared so that others can -- what do you think of that suggestion?

2811   M. MESSIER : Étant donné que l'interconnexion que nous avons établie avec Telus est sur une base d'entente privée comme... qui est notre fournisseur, notre intermédiaire pour rencontrer les obligations soulevées, si vous permettez, on va revenir là-dessus au niveau de la phase de "Reply".

2812   THE CHAIRPERSON: Okay. And now, obviously, I am not -- the idea is to share technical information, et cetera, not the business side of things.

2813   The other one is that when you oppose the proposal of the very similar Rogers proposal and I've put that to the SILEC yesterday, they said that sounds very good pratique, what's the definition of someone who is ready to offer IP and offering IP, there are also some technical -- well, because I think what he has said was just because it's done on simple one basis doesn't mean that everybody and some of the others need to be on a two basis of something like this, et cetera.

2814   You cannot sort of just say if you are offering it to one, you have to offer it to all because the requirements and the technical interfacing is different to anyone technology people use.

2815   Is that a valid objection or is this -- or not? How would you address it?

2816   MR. AUDET : I am not sure I understand the question.

2817   THE CHAIRPERSON: Okay, let me repeat it. That's the way I understood it, maybe I misunderstood because I am way out of my lead here in terms that I am not an engineer, but because these are technical interfacing, it's very difficult.

2818   You or the essence of your proposal and Rogers', if you already enable to interconnect on IP with somebody, you should -- anybody should be able to come and ask. The question is: what is ready to interconnect?

2819   As it was explained to me is that, yes, in your case, Telus is ready to interconnect with COGECO, but that doesn't necessarily mean it's ready to interconnect with others because others may have different technology and it may require different innovations or different interfaces et cetera.

2820   So, therefore, you can't just say merely because Telus is capable of connecting, interconnect those on an IP basis with COGECO, it is ready to connect with everybody else.

2821   MR. AUDET: Understood. But as we've said, the technological differences are -- can be mended with cession border controllers and that is a very standard industry practice. Many people interconnect at the IP level already in the United States and everybody uses cession border controllers. So, they are quite effective.

2822   THE CHAIRPERSON: So, it's really the cost issue, not the technical issue.

2823   MR. AUDET: We think so and yet, it comes to us as a bit of a surprise because doing it IP enables such a reduction and a simplification... a reduction number of poise and simplification in the interconnection that from our point of view, even from an ILEC's perspective, it's not clear to us that the so-called cost issue disfavours IP interconnect.

2824   THE CHAIRPERSON: Okay. When we have the --

2825   MR. AUDET: There is such a potential to increase network efficiency. Reading the Bell contribution from weeks past and where they talk about doing a conversion from IP to TDM centrally and then having to redistribute through their network on a TDM basis actually looks to us like probably the least efficient way of doing it, probably the most costly.

2826   THE CHAIRPERSON: Okay. Well, I guess we are going to have a discussion on that on the rebuttal time. People will take you up on this.

2827   M. JETTÉ : Oui. Je pourrais juste ajouter que lorsqu'on est déterminé à faire quelque chose, on peut y arriver.

2828   Dans les interconnexions, et je vais vous donner un exemple de notre... c'est simplement pour « imager » l'interconnexion, mais ce n'est pas un exemple précis, si on a deux paramètres de chaque côté, on peut... les deux parties peuvent jouer avec deux paramètres. On peut les définir, c'est très simple, les deux parties peuvent s'interconnecter et répliquer le modèle avec plusieurs.

2829   Pour soutenir l'innovation, le nouveau service, on a développé des technologies à plusieurs paramètres. Maintenant, on en a beaucoup plus de chaque côté et c'est justement l'essence qui nous permet de soutenir des meilleures architectures de réseaux, de réduire nos coûts, d'amener des services novateurs. Et lorsque deux parties veulent bien travailler ensemble avec 10, 20, 50 paramètres, ils peuvent le faire.

2830   LE PRÉSIDENT : Merci. J'aime votre note positive.

2831   And on that positive note, we will take a ten-minute break. Thank you.

--- Upon recessing at 1006

--- Upon resuming at 1022

2832   LA SECRÉTAIRE : À l'ordre, s'il vous plaît. Order, please.

2833   THE CHAIRPERSON: Before we start with Quebecor, just one item.

2834   Yesterday I asked the Joint Task Force to explain to me their problem with bypassing SILEC toll regime and we used a graph we had tabled. They have since made a graph of their own which explains it better.

2835   So everybody can understand their testimony, I will introduce Joint Task Force Exhibit 1. It is called "Some Examples of Methods to Bypass SILEC Toll Regime."

2836   We may want to use it on Monday when we have the rebuttal phase. Thank you.

2837   Over to you, Madam Secretary.

2838   THE SECRETARY: Thank you, Mr. Chairman.

2839   We will now proceed with the presentation by Quebecor Media Inc. (on behalf of Videotron G.P.).

2840   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Thank you.


2841   M. BÉLAND : Bon matin, Monsieur le Président, Conseillers et membres du personnel du Conseil. Mon nom est Dennis Béland et je suis directeur principal, affaires réglementaires, télécommunications, chez Quebecor Media inc.

2842   Je suis accompagné aujourd'hui des personnes suivantes :

2843   - madame Siân Morgan, directrice principale, téléphonie, multimédia et réseaux, chez Vidéotron;

2844   - monsieur Gilles Brunet, directeur, service aux télécommunicateurs, chez Vidéotron; et

2845   - monsieur Yanick Boily, directeur, affaires réglementaires, télécommunications, chez Quebecor Media.

2846   C'est avec grand plaisir que nous sommes ici aujourd'hui devant vous afin de partager avec vous nos recommandations quant aux mesures que le Conseil devrait mettre en oeuvre afin d'améliorer l'efficacité des régimes d'interconnexion existants.

2847   Nous traiterons à tour de rôle dans le cadre de notre exposé ce matin des trois grands items et de leurs questions sous-jacentes, tels qu'identifiés en annexe de la lettre du Conseil datée du 12 octobre dernier quant à l'organisation et au déroulement de la présente audience.

2848   Cependant, puisque de nombreux points et items ont déjà fait l'objet de présentations détaillées depuis le début de cette semaine, nos commentaires seront brefs.

2849   Question A.1)

2850   Comme nous l'avons mentionné à nos observations initiales du 2 juin dernier et tel qu'affirmé par plusieurs intervenants à la présente instance, une migration complète des installations commutées vers des installations d'interconnexion par IP doit être considérée comme étant à moyen ou à long terme inévitable. Cette migration a été provoquée tant par le déploiement de nouveaux réseaux conçus sur une base entièrement IP que par les forces du marché, avec la conséquence que l'abandon progressif des technologies Time Division Multiplex (TDM) est une éventualité inéluctable.

2851   Quebecor Media est d'avis que le Conseil devrait pour l'instant laisser les forces du marché dicter le rythme de la progression de cette migration. Cependant, cela ne signifie pas que le Conseil n'aura jamais de rôle à jouer quant à ce qui a trait au régime d'interconnexion par IP.

2852   Prenons un exemple. Lorsque la migration vers des interconnexions par IP approchera de son stade final, il est possible que le Conseil soit appelé à déclarer le remplacement du système d'interconnexion par défaut actuel basé sur le protocole TDM par celui basé sur les interconnexions par IP.

2853   Dans l'entre-temps, le Conseil a la possibilité d'apporter deux améliorations au régime TDM actuel, améliorations qui auront pour effet d'accélérer et de faciliter l'avènement des interconnexions par IP.

2854   La première amélioration est la consolidation des zones d'interconnexion locales contiguës situées à l'intérieur d'une même province, sur une base bilatérale, entre deux entreprises de services locaux (ESL) interconnectées, à la demande de l'une ou l'autre des ESL en question.

2855   La surmultiplication dans le monde TDM actuel des points d'interconnexion au sein de zones géographiques relativement restreintes constitue un gaspillage important d'installations physiques et serait totalement vide de sens dans le monde IP à venir. La mesure que nous proposons représente un premier pas concret vers une consolidation rationnelle et souhaitée des zones d'interconnexion.

2856   La deuxième amélioration que nous proposons est l'établissement de faisceaux directs à haute utilisation (dedicated high-usage trunks) entre des commutateurs filaires et sans fil, lorsque la quantité de trafic échangé entre ces entités le justifie.

2857   La situation actuelle en vertu de laquelle des commutateurs sans fil sont traités comme de simples satellites des commutateurs filaires est en contradiction marquée avec la vision du monde IP à venir, dans le cadre duquel toutes les entités de commutation posséderont une fonctionnalité équivalente.

2858   Question A.2)

2859   Quebecor Media est d'avis que, pour le moment, il est prématuré de songer à rendre obligatoire l'interconnexion des réseaux par IP et d'établir des règles de base en conséquence.

2860   Ceci étant dit, nous sommes convaincus que toute paire d'ESL qui le souhaite devrait être libre de s'entendre sur une base volontaire et consensuelle quant à l'établissement entre elles d'interconnexions par IP, en parallèle avec des interconnexions TDM déjà existantes.

2861   Laisser les ESL libres de s'entendre leur accordera la flexibilité et la marge de manoeuvre nécessaires afin qu'elles puissent expérimenter et investir dans l'identification et la mise en oeuvre d'arrangements d'interconnexions sur IP simplifiés et plus efficaces économiquement.

2862   Cette flexibilité leur permettra également d'innover dans leurs offres de services avancés rendues possibles par le recours aux interconnections par IP, et ce, pour le grand bénéfice de leur clientèle respective.

2863   Ne pas établir un cadre réglementaire d'interconnexions IP prescriptif durant cette période d'expérimentation ne signifie pas que le Conseil devrait en tout temps s'abstenir d'exercer son pouvoir de surveillance en la matière.

2864   Par exemple, s'il devient évident qu'un joueur donné utilise son refus d'établir une interconnexion IP comme d'une arme anticoncurrentielle, le Conseil pourrait être appelé à intervenir sur la base de l'article 27(2) de la Loi sur les télécommunications afin de faire cesser ce type de stratagème.

2865   Question A.3)

2866   The Commission, in Telecom Decision CRTC 2008-17, determined that interconnection services, although distinct from essential services, should nonetheless be mandated given that these services are required to allow for the interchange of traffic with the rest of the PSTN.

2867   Unencumbered access to these services is indeed vital if a telecommunication service provider is to be able to offer truly comprehensive calling services to its end users.

2868   In the all-IP telecommunications environment to come, it is conceivable that the call termination, transit and transport services offered by participant carriers will be so varied and flexible that the mandating of specific interconnection services will no longer be necessary. At the present time, however, such a result is purely speculative.

2869   We respectfully submit that what is required of the Commission at the present time is not to pursue forbearance with respect to old TDM interconnection arrangements, but rather to encourage experimentation with respect to new IP interconnection arrangements. The most important thing the Commission can do in this regard is to make an explicit statement that off-tariff IP-IP interconnection arrangements are not only permitted but desirable.

2870   Question B.1)

2871   Quebecor Media notes that from a purely functional perspective wireless and wireline access networks must be considered as being equivalent given that they both serve a similar purpose: to enable the placing and receiving of telephone calls by end users.

2872   We also note that under the current local exchange services forbearance regime, wireless services are viewed as substitutes to wireline services and, as such, unaffiliated wireless carriers are considered to be independent facilities-based telecommunications service providers for the purpose of satisfying the residential local forbearance test.

2873   A wireless carrier is welcome to take advantage of this equivalency by electing to become a wireless competitive local exchange carrier (wireless CLEC), thereby becoming eligible for shared-cost interconnection, provided of course that it assumes the obligations and responsibilities of CLECs.

2874   Of course, as numerous parties have already mentioned, if a wireless carrier considers that some of the obligations and responsibilities of CLECs are technically infeasible or inconsistent with its business objectives, it can choose the status of Wireless Service Provider (WSP). In doing so, it must then purchase PSTN access services from the ILEC, an affiliated CLEC or an unaffiliated CLEC, or invest in its own CLEC infrastructure.

2875   In our view, this flexibility of choice offered to wireless carriers is appropriate.

2876   Question B.2)

2877   Videotron is an integrated wireline-wireless carrier. Videotron's wireless operations have the status of WSP and obtain their PSTN interconnection services almost exclusively from Videotron's wireline operations. In a small number of locations, these services are obtained via the ILEC WAS tariff.

2878   Did the existence of affiliated wireline operations assist Videotron in its launch of wireless services in September 2010? Of course, it did. The existence of affiliated wireline operations permitted Videotron's wireless operations to reduce -- yet, not eliminate -- tedious local network negotiations with the ILECs, to rationalize some trunking arrangements and to avoid the significant network and system investments that would have been required to implement wireless equal access had Videotron opted to become a wireless CLEC.

2879   Should the Commission regard this situation as a cause for concern? We don't think so.

2880   The advantages gained by Videotron through its integrated status, while meaningful, are modest compared to the aggregate up-front investment required of any carrier to enter the wireless industry in the first place, for example, through the purchase of spectrum licences and the deployment of a radio access network.

2881   Furthermore, the evident recourse for any non-integrated wireless carrier attracted by these advantages is to find its own strategic wireline partner. Evidence suggests this has already happened, at least in some locations.

2882   Despite what we have just said, if it is still the Commission's intention to address this perceived inequity, our only request would be that the Commission find a way to take action that brings everyone up, rather than pulls everyone down.

2883   Mandated POI consolidation and high-usage trunk deployment, for example, would move us in the upward direction. Initiating a new proceeding to consider imposing equal access obligations on all wireless carriers, in contrast, would be a definitive move in the downward direction.

2884   Quebecor Media has serious doubts whether the required investments for wireless equal access would ever have a meaningful chance of recovery. Simply put, equal access was a solution for a different technology at a different time.

2885   Question B.3)

2886   As mentioned in our response to question A.3), Quebecor Media believes it is generally premature for the Commission to forbear from the regulation of network interconnection for voice services, at least until such time as the contours of an IP-IP interconnection regime have become apparent.

2887   This being said, we recognize that arguments have been put forward in this proceeding regarding the degree of competition in the market for Wireless Access Service.

2888   We submit that the Commission should forbear from regulating WAS only when there is concrete evidence of a truly functional and competitive market in these services. Such evidence would consist most notably of non-ILECs offering WAS to parties other than their own affiliates.

2889   We further submit that to protect the interests of WAS purchasers post-forbearance, it would be appropriate to cap WAS rates at the pre-forbearance level. In the context of a gradual migration to cheaper IP-based interconnection services, imposition of such a cap should not be problematic for any party.

2890   Question C.1)

2891   Quebecor Media est en total désaccord avec cette proposition puisqu'elle se traduirait en une surmultiplication d'arrangements d'interconnexion, causant un gaspillage d'installations physiques en plus d'imposer aux entreprises de services sans fil des coûts d'interconnexion déraisonnables et non justifiés.

2892   Une telle surmultiplication va à l'encontre de la consolidation de points d'interconnexion qui est à prévoir dans un environnement IP. De plus, nous tenons à rappeler le fait que Vidéotron est un nouvel entrant dans l'industrie extrêmement concurrentielle du sans fil et qu'elle ne peut donc se permettre de consacrer ses ressources financières à des activités si peu productives.

2893   La proposition des petites ESLT semble être motivée soit par un désir de protéger un flux de subventions implicites associées à leur service de terminaison d'appels interurbains, soit par un désir de capturer une partie des revenus WAS perçus par les ESLT.

2894   Dans le premier cas, Quebecor Media ne peut que réitérer au Conseil sa recommandation à l'effet que toute subvention implicite accordée aux petites ESLT soit abolie et remplacée par des subventions accordées directement -- et de façon transparente -- à même le Fonds de contribution national.

2895   Qui plus est, nous tenons à préciser que Vidéotron, depuis la publication de la Décision de Télécom 2010-908, envoie l'ensemble de son trafic interurbain filaire et sans fil aux petites ESLT via des faisceaux de terminaison d'appels interurbains.

2896   Pour ce qui est du deuxième cas, Quebecor Media fait remarquer que son trafic local destiné aux petites ESLT passe déjà par des faisceaux de terminaison d'appels locaux -- ceux de Bell Canada -- et que les petites ESLT sont déjà pleinement compensées par le biais de leurs ententes avec cette dernière.

2897   Une conclusion s'impose de ce que nous venons de voir : Le Conseil ne devrait apporter aucune modification au régime actuel d'interconnexion avec les petites ESLT.

2898   Nous sommes maintenant prêts à répondre à vos questions. We are now ready to respond to your questions.

2899   LE PRÉSIDENT : Merci pour votre présentation. J'apprécie spécialement la brévité, que vous n'avez pas répété des choses qui ont déjà été dites par d'autres personnes.

2900   Now, you heard this morning from Cogeco. You heard yesterday from Rogers a very similar proposal basically like you are saying, the world is going to IP.

2901   Clearly you should go there. It is desirable. But they suggest that essentially where an ILEC is capable of offering IP interconnection that it should be offering it to everybody. You don't seem to adopt that approach.

2902   Rather, you suggest it should be done on a voluntary basis when people are ready to do so, which has inherently the ability of small players being disadvantaged or at least delayed. Then they come to us and they claim undue benefits and, as you point out, anti-competition activities. We might step in and remedy, but that's a lengthy process. It means delay, et cetera.

2903   Why can you not embrace either the Bell or the Cogeco proposals? What do you see as a disadvantage to you?

2904   MR. BÉLAND: We anticipated this question.

2905   I will begin by saying that I don't think -- well, let me begin by saying that within Videotron itself there was a rather robust debate on this point. Essentially we're saying should IP-IP interconnection for the time being proceed voluntarily or on some sort of mandate?

2906   I can tell you the two views were expressed within Videotron itself.

2907   THE CHAIRPERSON: Yes, but I mean Bell is a semi mandate as you --

2908   MR. BÉLAND: And Rogers. Well, and --

2909   THE CHAIRPERSON: Rogers and Cogeco, yeah.

2910   MR. BÉLAND: And that's precisely the point I was just about to make, is I think at the end of the day we're not terribly far apart, to be frank.

2911   I was listening -- we were listening intently to Cogeco this morning and they are proposing an obligation to negotiate with a rather -- I don't want to -- maybe not the word -- the word is not vague but a rather open set of contours around that negotiation. And we are proposing instead voluntary discussions with a capacity to go to the Commission under 27(2) if there is evidence of some mistreatment.

2912   Practically speaking, at the end of the day I don't think the two will be terribly different.

2913   THE CHAIRPERSON: Okay. The other question that I am asking everybody is, you know, to avoid duplication, et cetera, whatever negotiations you have, whatever technical trials you have on IP-to-IP interconnection do you see any reason why that shouldn't be shared at least with CISC, et cetera so that others can benefit from those trials and from the -- because I understand the IP-to-IP is still in some stages of evolution.

2914   Therefore, you know, to facilitate others it would make a lot of sense. Is that kind of information made available?

2915   MR. BÉLAND: Yeah, and the -- I recall, and I remember this listening to Cogeco this morning in your questioning of Cogeco that in the -- I believe it was an essential services decision, that you actually implemented some form of disclosure obligation related to off-tariff arrangements. I can remember Videotron having to comply with that in the context of TPIA with some off-tariff arrangements we have with TPIA.

2916   So that sort of mechanism is probably workable and you already have at least one precedent for doing that.

2917   Where I would maybe -- where I would have some hesitation would be with regards to disclosure of trials. This is going to be an experimental and evaluative process. There is going to be some trial and error.

2918   I'm not sure whether disclosure of every trial that two companies might want to enter into is necessarily something that would be productive. If you are having a discussion with another company and you are under a condition that you have to reveal the contents of that discussion to everyone else in the telecom environment, I could see that potentially putting a bit of a brake on having more free-flowing discussions and idea exchange.

2919   I could see the logic of the disclosure requirement on the actual implementation of arrangements. On the testing and trialling I'm not sure that's necessarily beneficial.

2920   THE CHAIRPERSON: Okay, thank you.

2921   Candice, I believe you have some questions...?

2922   COMMISSIONER MOLNAR: Thank you.

2923   Before I get into your submission can you just let me know who it is you are interconnecting with today?

2924   MR. BÉLAND: Yeah, I will start with Videotron's --

2925   COMMISSIONER MOLNAR: I don't need to know all IXCs and all of that.

2926   MR. BÉLAND: Oh, yeah.

2927   I think you would find that what we do is pretty conventional. Videotron's wireline operations as a wireless CLEC, we are interconnected with the ILEC obviously on a bill and keep basis.

2928   We also have direct interconnections as a CLEC with three other CLECs in our territory and we are connected with a variety of IXCs through standard IXC terminating arrangements.

2929   And on the wireless side, as I mentioned in the opening presentation, our wireless arm connects through our wireline arm everywhere except a few locations where we don't have a wireline presence at the current time and then we go with the ILEC WAS tariff.

2930   COMMISSIONER MOLNAR: Is your CLEC in direct connect with any of the three CLECs on an IP basis?

2931   MR. BÉLAND: No, we don't.

2932   COMMISSIONER MOLNAR: No? I would assume -- well, are they IP as well as you? Like what would be the reason that those would not be IP interconnections?

2933   MR. BÉLAND: I think I will ask my colleague Gilles to explain in more detail because we may have had some, let's say, initial feelers in that sense. But, at the current time it's all TDM.

2934   But I would not be surprised to hear that they, like us, have some IP in their networks. Perhaps Gilles can expand.

2935   M. BRUNET : Effectivement, nous avons eu des discussions exploratoires au cours des derniers mois, dernières années, pour examiner la possibilité de s'interconnecter en mode IP. Ça demeure toujours des explorations. On n'a aucun plan définitif encore.

2936   Évidemment, il y a des questions de protocole, de session border controller, comme on a entendu parler tantôt, mais il y a aussi des questions administratives. Si on s'interconnecte, dans le cas d'un fournisseur sans fil, c'est peut-être un peu différent, mais avec un autre partenaire qui serait assujetti à des compensations au déséquilibre, comment on va calculer ça, comment on va gérer l'interconnexion.

2937   Alors, il y a beaucoup de questions qui doivent être répondues, et on n'est pas encore rendu là présentement.

2938   COMMISSIONER MOLNAR: Just to make sure I understand, this is interconnection with other IPs or CLECs that would be providing their services on an IP basis, and you have determined because of some of the complexities and so on that at this time you are interconnecting on a TDM basis?

2939   M. BRUNET : C'est très difficile pour nous de savoir exactement l'architecture des autres joueurs, des autres compétiteurs, s'ils sont effectivement 100 pour cent IP ou s'ils ont une partie de leur réseau. Généralement, on n'a pas toute l'information.

2940   Il est évident dans certains cas que certains joueurs offrent des services téléphoniques sur IP, et, donc, ils ont une technologie IP. Mais parfois, ils ont aussi des vieux commutateurs, donc, une technologie TDM. Alors, c'est difficile pour nous de savoir s'ils sont 100 pour cent IP et sont prêts à faire une conversion.

2941   COMMISSIONER MOLNAR: And you are 100 percent IP, correct? Close enough?

2942   MR. BÉLAND: No, we are not. In one of the Commission's -- I believe it was a Commission interrogatory -- we provided that information in confidence.

2943   We are quite a substantial majority IP base but we have a substantial minority of TDM activities going back, all the way back to -- the former Videotron telecom has been a business telecommunication service provider for a very long time. It still has TDM-based equipment.

2944   COMMISSIONER MOLNAR: I would like your views. You know, you have suggested the IP interconnections begin as mandatory or, sorry, not mandatory but voluntary, that we make it clear that we are open to enabling voluntary IP-to-IP interconnection arrangements. Others have suggested we mandate those, you know those negotiations.

2945   Whether it be voluntary or mandatory it is a first step in what essentially is you know an evolution. There is evolutionary steps to take us to any full IP-to-IP interconnection.

2946   I think we could agree from what we have heard that there is no flash-cut here. There is still some technical issues to be worked out. There is a very large base of TDM customers still out there.

2947   So I would like your sense. If we begin this by making it clear that there are -- we are open and encourage IP-to-IP interconnection through off-tariff arrangements, how would you see us proceeding from there?

2948   What are the next steps to get us to the end outcome, like is this a review in two years, three years? What are the steps as you would see it?

2949   MR. BÉLAND: Yeah, thank you.

2950   And let me reinforce the point of the importance of an explicit statement from the Commission first of all that these things are allowed. Because, as we heard again this morning from Cogeco, there are at least some players in Canada that believe that there are barriers to doing these off-tariff IP-to-IP interconnections.

2951   That's something that you can, you know, evacuate, that you can make clear that you are encouraging that and you are permitting that.

2952   Your question goes a little bit back to the Chairman's question about what is it in Videotron that makes us hesitate maybe a little more than some of the other players?

2953   Part of it is that we believe that we will -- all of us, you included, have a lot to learn over the next couple of years as these arrangements start being tested and deployed.

2954   Let me give you one concrete example: Should transiting services be mandated in an IP-IP environment?

2955   It's conceivable that we will see as these interconnections start being deployed voluntarily that a transiting market will evolve naturally. There may be players willing to do that, maybe a multiplicity of players willing to do that.

2956   We don't know that today. We don't know on what basis you would conclude one way or the other whether that sort of mandate should exist, what factual basis you should -- you would be able to conclude that today whether such a mandate should exist.

2957   But you may well have some very useful information in that regard within the next couple of years. That's the same sort of philosophy. Learning philosophy also applies to some of the standardization issues and so on.

2958   The Cogeco idea of a review period is something we would see as quite constructive and quite pertinent, a relatively short review period to see how things are going and where you maybe can start cranking the dial a bit in terms of indicating what you think should be the mandated elements of this regime.

2959   COMMISSIONER MOLNAR: Relatively short being two or three years or what would you say is relatively short?

2960   MR. BÉLAND: Two or three years. I don't think I would want to go beyond that, given the rapidity of change in the current environment.

2961   COMMISSIONER MOLNAR: Thank you.

2962   I'm going to move onto some of the specifics of your proposal, the consolidation of POIs.

2963   I want to go to the comments that you submitted. You said at paragraph 16 that -- I'll just read it in case you haven't brought your comments with you.

2964   MR. BÉLAND: This is our initial comments?

2965   COMMISSIONER MOLNAR: It is, yes. Let me see.

2966   These comments were filed on June 2nd. At paragraph 16 in discussing the mandatory consolidation of contiguous LIRs you say:

"Any two LECs negotiating in a context of equal bargaining power and in the absence of artificial regulatory incentives to impose costs on one another, would never arrive at an interconnection arrangement whereby they incur the expense of deploying numerous unnecessary physical POIs in a single province." (As read)

2967   And I would like you to just explain that further so I understand the "artificial regulatory incentives to impose costs on one another".

2968   MR. BÉLAND: This is in fact a wonderful segue from your last question, because when the Commission set the rule of one POI per LIR, it was setting that rule in something of a vacuum, right.

2969    No one interconnected -- talking TDM now -- no one interconnected directly with anyone other than the ILEC. We had no evidence on which to determine whether one per LIR is the best or one per province is the best or one per something else is the best. So at that time you were making an educated guess and what would appear to be appropriate.

2970   Since that time we actually have information from the free market that can come and now inform a better decision. The information we have is that CLECs in the TDM environment have been interconnecting with each other.

2971   If you were to factually go to all those CLECs and ask them, "When you interconnect to each other do you interconnect on the basis of one POI per LIR?" I know in the case Videotron the answer would be "No, never".

2972   And I would be quite confident that the answer across Canada would be "No, never". So market information, freely negotiating parties with equal bargaining power, arriving at something different, something more consolidated than one per LIR.

2973   That's the basis on which we strongly encourage you, even in the existing TDM environment, to pursue a consolidation.

2974   COMMISSIONER MOLNAR: Okay. Thank you for that. What I need to understand is -- I mean, my expectation, and maybe this is wrong which is what I want your help understanding -- if it is economically efficient for you to move to a consolidated -- a higher consolidation, wouldn't it be equally economically efficient for an ILEC?

2975   MR. BÉLAND: We believe it would be so and I'll ask Gilles Brunet to expand a little on that.

2976   M. BRUNET : C'est évidemment difficile d'évaluer précisément quelles sont les économies de l'autre joueur, d'une compagnie titulaire, parce que, évidemment, ça va dépendre de son infrastructure de réseau de transport et ainsi de suite.

2977   Nous, au cours des 10 dernières années, on a monté une trentaine, même un petit peu plus là, de POI, de structures à coûts partagés. Ce qu'on s'aperçoit, c'est que le gros des dépenses, le gros des investissements qui sont requis lorsqu'on établit une structure à coûts partagés, lorsqu'on monte un POI, oui, il y a l'équipement, il y a les coûts de la fibre, il y a les terminaux optiques, mais ce qui est le gros, c'est vraiment la main-d'oeuvre pour monter tout ça et ensuite gérer tous ces POI individuels, la gestion quotidienne, le dimensionnement dû au trafic et la maintenance. Il faut mettre à niveau ces équipements-là.

2978   Ce coût-là est le même. Que ce soit le compétiteur ou le titulaire, on fait tous face au même problème, puis c'est des coûts prédominants. Donc, il y a un avantage marqué pour le compétiteur, mais on est convaincu que les mêmes avantages existent du côté du titulaire aussi.

2979   COMMISSIONER MOLNAR: So is it your view that the regulatory framework that's in place today would prohibit you from entering into alternate arrangements with -- I guess it's the ILEC because you're able to do it with CLECs out there, that it is our regulatory rules that would prohibit you from, if it's a mutual economic benefit, to move to a consolidated point of interconnection that you're prohibited through our regulatory rules from doing that?

2980   MR. BÉLAND: It's really a question you need to ask the ILECs. Let's separate the TDM from the IP.

2981   COMMISSIONER MOLNAR: As I understand, you are talking here TDM.

2982   MR. BÉLAND: Yes.


2984   MR. BÉLAND: So what I was about to say is that we have heard, I believe it was Bell, make the case that there are barriers to doing off-tariff in the IP world. That's their case to make and for you to clarify the situation.

2985   In a TDM world, I don't specifically recall whether the ILECs have ever argued that there is a regulatory barrier to consolidating TDM POIs. But they certainly don't seem to have any desire to do it, in any event.

2986   COMMISSIONER MOLNAR: And I think we will probably need to have Bell, and Bell in your instance, discuss this further because while you suggest it could be an economic benefit to both parties, if one party doesn't appear to be wanting perhaps it doesn't have the economic benefit.

2987   And perhaps that is why, while you have suggested voluntary IP to IP interconnection arrangements, you have suggested mandatory consolidation of contiguous exchanges?

2988   MR. BÉLAND: Absolutely. The two specific changes we have recommended for the TDM regime would be mandated changes, yes.

2989   COMMISSIONER MOLNAR: So if we were to simply ensure the rules were clear that voluntary arrangements could be met where it is in the economic benefit of both parties, that wouldn't, in your view, be sufficient? You would need it mandated?

2990   MR. BÉLAND: That is right. We believe that the motivation for an ILEC to say no to TDM POI consolidation may well be an assessment not just of their own costs, but we believe that the ILEC may see advantages in imposing excess costs on their competitors and that in and of itself could be a motivation for not wanting to consolidate POIs.

2991   COMMISSIONER MOLNAR: But these are essentially sunk costs at this time. You have these investments, correct? Except for, as you pointed out -- I do understand what you were talking about, it is the ongoing operations and maintenance and optimization of those interconnection arrangements.

2992   MR. BRUNET: Which should not be minimized, because it is a very important cost component to maintenance. The upgrade, software upgrades, of those optical terminals, I mean those are very important costs to us and it would be the same for the other parties.

2993   COMMISSIONER MOLNAR: Okay, thank you. I want to move on to your next proposal, which is the use of dedicated high-usage trunk groups.

2994   And I am not certain I actually fully understand what it is you are needing here. Are you suggesting these high-usage trunks are simply between wireline and wireless, or are you requesting some other kind of high-usage trunks between wireline switches?

2995   MR. BÉLAND: The core of the problem is actually quite simple. In the bill-and-keep environment today, with a shared cost facility between two LECs, at each end of that shared-cost facility there is a switch, a tandem. And behind that tandem are a variety of other switches, wireline and wireless.

2996   Let's take a concrete example, Bell Canada and Vidéotron, we both have a wireless arm and we both purchase PSTN and access services from our own wireline affiliates. So we have this cost-shared facility between us, we have tandem on each end of it, and then behind that is a whole load of wireless and wireline switches.

2997   The perspective that Vidéotron is giving you in this proceeding is that being forced to route traffic destined to this whole group of subtending switches, being forced to route all of that traffic through that first tandem switch -- which is what Bell obliges us to do today -- is extremely wasteful of that switching resource. That an alternative to doing that is to install high-usage trunks which run from that cost-shared facility off to each of the other switches individually.

2998   There are no new physical facilities that Bell has to support in that case. Still the same cost-shared facility between the two companies.

2999   All it requires is software changes to then be directing that traffic at our end of the cost-shared facility to this collection of individual switches rather than wasting the switching capacity, very expensive switching capacity, of that tandem switch.

3000   It is a slam dunk gain in network efficiency in fact for both parties on each end. And what we are asking again, is for the Commission to mandate that efficiency.

3001   And we believe that mandating that sort of environment, where switches speak directly to one another rather than through another switch, is entirely in line with what is the natural evolution, the evident evolution of what is going to come in IP-IP environment.

3002   COMMISSIONER MOLNAR: Okay, it is a slam dunk gain for both parties, and our rules prohibit this from occurring?

3003   MR. BÉLAND: No, we don't believe your rules prohibit it from occurring, but we receive a steadfast refusal from the other party in any event.

3004   COMMISSIONER MOLNAR: Okay. Just as it regards the wireless traffic and routing your wireless traffic through your -- what is this, an access tandem or whatever your switch you are talking about here -- Rogers, as you know, yesterday suggested that it may be okay to simply allow WSPs to acknowledge them as co-carriers without changing obligations in any way.

3005   That would allow you to directly connect to Bell Canada or anybody else on a wireless basis. Would you see that minimizing this problem in any way?

3006   MR. BÉLAND: That recommendation is certainly consistent with our recommendation. I think the one precision that we would want to bring to bear to that is if an integrated carrier with wireline and wireless operations is facing another integrated carrier with wireline and wireless operations, and you have adopted Rogers' proposal, we would want to ensure that the entirety of that wireline and wireless traffic can pass over a single cost-shared facility between the two carriers.

3007   To have to deploy a second cost-shared facilities because the old one is wireline and the new one is wireless would be an evident waste. So with that precision, I think the two recommendations are entirely consistent.

3008   COMMISSIONER MOLNAR: Okay, thank you.

3009   The last thing I wanted to ask you about was your proposal as it regards traffic imbalance.

3010   I am a bit confused, because Monday Bell came here and said, we are always paying the traffic imbalance. And it would appear from your concern with this that perhaps you are the one paying the traffic imbalance.

3011   So if everybody is paying traffic imbalance, this is truly confusing to me. So I assume that you have requested this modification because in the case of your company you are often paying traffic imbalance.

3012   Could you please help me understand, first, why there would be a systemic -- you know, why it would be that you are always paying the traffic imbalance? The whole notion of, you know, why these bill-and-keep were put in place was the expectation that traffic should be relatively balanced between the parties. So what causes this imbalance?

3013   MR. BÉLAND: Vidéotron does pay imbalance in come cases, receives imbalance in some cases. The objective of our proposal was really -- and it is explained in a fair bit more detail in the interrogatory response dealing with that proposal specifically. It is independent of who was receiving the imbalance.

3014   What we don't like about the current imbalance tariff system are the jumps, the step-like jumps, in the arrangement. So, you know, there is one imbalance rate for a 10 per cent imbalance, another for 20 per cent imbalance, another for 30 per cent imbalance, et cetera, and the changes are quite abrupt between those steps.

3015   And what happens is that you see that a party that might be on the edge, you know, it is 19.7 per cent imbalance and it is 20.2 per cent imbalance the next month, whether it is coming in or going out slight changes in traffic patterns turn into fairly substantial changes in payments. And whether they are going in or whether they are going out, our proposal is -- the objective is really to smooth that, to add a little more certainty and forcastability into those payments. That is really what is behind it.

3016   COMMISSIONER MOLNAR: Okay, thank you for that.

3017   But I am going to try and ask my question again.

--- Laughter

3018   MR. BÉLAND: Sure. And I understood that your question --

3019   COMMISSIONER MOLNAR: You know, I understand your issue is with the price. And what I am trying to understand is is there something else going on through these interconnection arrangements that causes traffic imbalance where..?

3020   You know, I am not understanding that piece of the picture. So is there something, is there something else flowing through these links that is causing traffic to be imbalanced?

3021   MR. BÉLAND: Again, I will ask Mr. Brunet to respond. But part of it relates to the segregation of trunk groups in the local interconnection environment. But I think Gilles is much more qualified to answer that question.

3022   M. BRUNET: C'est une question compliquée et parfois des comportements mystérieux.

3023   Normalement, dans deux réseaux de téléphone ordinaire, on ne voit pas... on n'observe pas de débalancements anormaux. Généralement, le trafic est effectivement balancé.

3024   Ce qui vient changer la donne, ce qu'on observe, c'est lorsqu'un joueur, par exemple, un fournisseur, si le compétiteur offre un service d'interconnexion à un fournisseur sans fil, par exemple, Bell Mobilité ou un autre, et que ce fournisseur-là a des forfaits, tous les appels entrants gratuits entre telle heure et telle heure, alors là, on peut avoir un changement du comportement normal du trafic. Ça, c'est une chose qui peut créer un débalancement anormal ou une tendance de débalancement.

3025   On va le voir aussi depuis que les compétiteurs utilisent les interconnexions locales pour terminer leurs appels interurbains. Si j'ai un gros client interurbain derrière moi qui m'utilise pour terminer les appels interurbains, alors, c'est sûr que le compétiteur se retrouve à recevoir du trafic d'ailleurs de ses propres abonnés. Alors, ça aussi, ça peut être une condition de déséquilibre.

3026   Il y a plusieurs phénomènes qui peuvent expliquer le déséquilibre, mais normalement, ça devrait être à peu près égal. Il ne devrait pas y avoir de déséquilibre.

3027   COMMISSIONER MOLNAR: Thank you. Those are my questions.


3029   COMMISSIONER KATZ: Thank you.

3030   I just have one question and it's with regard to the comments that you've made, and others, over the last couple of days, talking about being restricted from being more efficient lower-cost operations, and I think you just mentioned a few minutes ago that notwithstanding the fact that the tariffs don't deny you the ability to negotiate those, you're reaching some difficulty in getting the other side to agree.

3031   This is obviously a regulatory term. It's called stranded investment.

3032   And maybe one of the reasons why there's a concern out there is through regulatory or negotiated means they've had to invest money in plant over the last number of years, such as the LIRs, which was a regulatory construct that actually came about because CLECs didn't want to build out their network and they wanted to reach the interconnection points as cheaply as possible.

3033   So there was a construct created to create those LIRs. Now, what's happening is you're all coming along and saying you've got your own plant, it's very inefficient to do this, why do we have to do it, let's get rid of them all and it will save us all money. One of the realizations is someone invested money into that plant and it may be stranded.

3034   What are your views as to how to deal with that issue?

3035   MR. BÉLAND: I think what the Commission needs to do at a certain point is to say to the ILECs: You can't have it all.

3036   So if you look at Videotron's position, we're not asking you to shift the cost of TDM translation from us to them. We're willing to let that roll for a little while. In return, could we please have some efficiencies on the TDM side of things?

3037   So sure, maybe all of this is motivated by big pieces of ILEC TDM equipment out there that they view as stranded and they don't want to replace too quickly, but at a certain point they can't have it all.

3038   If we let it roll a little bit on the TDM conversion, can we at least have our high usage, can we at least have our POI consolidation? That's Videotron's position.

3039   COMMISSIONER KATZ: Thank you. Those are my questions.

3040   THE CHAIRPERSON: Suzanne, did you have a question?

3041   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

3042   Je voudrais juste m'assurer que je comprends bien la position de Quebecor vis-à-vis celle des petites titulaires, étant donné que vos territoires sont quand même contigus dans certaines mesures.

3043   Si je comprends bien ce que vous dites au paragraphe 32 et paragraphe 33, c'est d'abord que vous voulez avoir la plus grande efficacité possible au niveau du déploiement des infrastructures.

3044   Donc, qu'est-ce qui est proposé par les petites titulaires, vous estimez que c'est un déploiement d'infrastructure qui n'est pas nécessaire, mais pour lequel, si on est d'accord avec les préoccupations des petites titulaires, on pourrait, par ailleurs, trouver une solution comptable plutôt que technologique; est-ce que c'est correct?

3045   M. BÉLAND : Vous dites solution comptable.

3046   CONSEILLÈRE LAMARRE : Comptable.

3047   M. BÉLAND : Moi, j'entends subvention.


3049   M. BÉLAND : Soyons francs.

3050   CONSEILLÈRE LAMARRE : Oui, parfait, et j'y venais.

3051   M. BÉLAND : Et c'est ce qu'on a dit dans notre présentation. La chose la plus importante que vous pouvez faire dans tout ce qui touche à l'interconnexion avec les petites ESLT, que ça soit l'interconnexion locale ou interurbaine, la chose la plus importante que vous pouvez faire, c'est d'éliminer les subventions cachées, parce que, une fois éliminées, une fois que l'interconnexion est basée strictement sur les coûts réels de terminer un appel, on peut évacuer l'ensemble de ces problèmes.

3052   Parce qu'un moment donné, un appel, c'est un appel, c'est un appel. Si ça vient de l'autre côté de la rue, que ça vienne de l'autre côté du pays, que ça vienne de Zimbabwe, le travail effectué par la petite ESLT, en fin de compte, c'est un travail de terminer cet appel à un de ses abonnés, et ça devrait être entièrement non pertinent d'où vient l'appel.

3053   CONSEILLÈRE LAMARRE : Donc, vous n'êtes pas en désaccord avec le principe de la subvention, vous êtes en désaccord avec la manière dont elle est appliquée? Vous voudriez que ça soit totalement transparent et qu'on élimine tous les artifices qui sont potentiellement dans le système actuel?

3054   M. BÉLAND : Notre préférence ultime, c'est d'éliminer les subventions au complet. C'est sûr, on n'est pas un grand partisan du paiement de subventions.

3055   Mais dans la mesure où le Conseil est d'avis que certaines subventions doivent continuer à exister pour certains joueurs dans certaines régions, tout ce qu'on demande, c'est que ça soit transparent via le Fonds central et pas caché dans les...

3056   CONSEILLÈRE LAMARRE : Dans les règles d'interconnexion.

3057   M. BÉLAND : ...dans les frais d'interconnexion ou dans les frais d'installation, et ça va faciliter non seulement notre vie mais votre vie aussi.

3058   CONSEILLÈRE LAMARRE : Maintenant, dans le deuxième cas de figure, lorsque vous dites... au paragraphe 34, vous faites état de comment votre trafic à vous est géré. Le trafic qui est destiné aux petites titulaires, vous dites qu'il passe déjà par des faisceaux de terminaison d'appels locaux pour le service local et que pour votre trafic interurbain filaire ou sans fil, ça se fait déjà par des faisceaux de terminaison d'appels interurbains.

3059   Donc, est-ce que je dois comprendre que dans la mesure où les petites ESLT se plaignent qu'il y a des fuites de trafic, vous estimez que les fuites de trafic, ce n'est pas votre trafic qui fuit?

3060   M. BÉLAND : Oui. Ce qu'on dit, c'est qu'on est conforme avec la décision en ce qui concerne l'acheminement du trafic interurbain, mais je reviens encore une fois à mon point précédent.

3061   Cette notion de fuite, d'observer le trafic, de jouer la police envers le trafic qui passe, tout ça disparaîtrait s'il n'y avait pas de subventions cachées, parce que la seule raison pour laquelle les petites ESLT veulent tout observer, c'est parce qu'elles ont peur de ne pas capturer les subventions cachées. C'est ça.

3062   CONSEILLÈRE LAMARRE : Très bien. Je vous remercie. C'est tout.

3063   THE CHAIRPERSON: Okay. Thank you very much. I think those were all our questions. Your position is eminently clear. Thank you.

3064   We will take a five-minute break and then we will go on with SSi Micro. Thank you.

--- Upon recessing at 1121

--- Upon resuming at 1130

3065   THE CHAIRPERSON: Madam Secretary...

3066   THE SECRETARY: Thank you, Mr. Chairman.

3067   We will now proceed with the presentation by SSi Micro Ltd.

3068   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation.

3069   Thank you.


3070   MR. PHILIPP: Thank you, and good morning, Mr. Chairman and Commissioners.

3071   My name is Jeff Philipp, and I am the Founder and CEO of the SSi Group of Companies. With me on the panel today are Dean Proctor, SSi's Chief Development Officer, and Robert Yates, Co-President of Lemay-Yates Associates.

3072   This is a bit of a déjà vu for us. We had the good fortune to present before the Commission a few weeks ago at a hearing in Yellowknife. That was for Notice 2011-302, which became known as the Northwestel Local Competition Proceeding, looking into the regulatory framework for Northwestel. Our comments today are not on the subject matter of that proceeding.

3073   THE CHAIRPERSON: I am glad to hear that. I don't want to hear about that hearing. That hearing is over. We had the hearing, we are in the process of making a decision, and we will render our decision. So let's talk about what is on the table for today.

3074   MR. PHILIPP: Absolutely.

3075   The Commission points out in Notice 2011-206, today's proceeding, that many telecommunications service providers are now integrated local/toll/wireless operators, that networks are increasingly using IP technology, and that wireless substitution is a growing trend. SSi is one of those integrated operators, with an all-IP broadband wireless network, across which we offer voice and data services.

3076   Consistent with many of the submissions the Commission received in this proceeding, we believe that continuing to deal with interconnection in the historical silos of local, wireless and toll will be detrimental to industry development going forward. It is SSi's view that a new approach to interconnection and a consolidated regime is required.

3077   Tied to this, a revised interconnection framework will not be worth much if essential services needed by competitors to complement interconnection arrangements -- including, notably, backbone connectivity -- are uneconomic or of inferior quality.

3078   On this very point, the representatives from SaskTel on Monday suggested that IP-based voice services are inferior in quality to traditional circuit switched voice services due to issues such as jitter and packet loss. In fact, with proper quality of service guarantees in backbone connectivity, jitter and packet loss can be controlled by the VoIP provider, enabling superb voice quality.

3079   At the Yellowknife hearing earlier this month, the Government of Nunavut made a plea for the Commission to consider ways to address the telecommunications needs of the North in a holistic fashion, rather than incrementally.

3080   A holistic approach is consistent with the goal of the current proceeding, " review the local, wireless, and toll network interconnection regulatory regimes" together with the objective, as stated by the Commission in Notice 2011-206, that:

"The principle [sic] objectives of this proceeding are to determine to what extent existing interconnection regimes can be simplified and consolidated; changes are necessary to enhance competition and, thus, benefit consumers; and changes are necessary to ensure technological neutrality."

3081   We believe that technology and market advances have rendered obsolete and inappropriate today's separate interconnection regimes based on distance -- inter-exchange versus intra-exchange -- and technology -- wireless versus wireline, or circuit switch versus IP.

3082   Dean and I have known each other, and worked together, for some 15 years now on projects aimed at bringing enhanced wireless connectivity and internet services to Canada's northern and outlying regions. Rob has also been involved in some of these projects.

3083   It has been almost 20 years since long distance competition was introduced in southern Canada, and over 14 years since local competition was introduced to the south of the country. The result was intended to be a new era where regulatory burdens would be lifted, but I continue to marvel at how much more complex and extensive telecoms regulation seems to have become in the intervening years.

3084   Let me explain part of our wonderment. SSi is a small company compared to the ILECs. In Canada, we operate only in Northwestel's serving territory.

3085   SSi's operations, which I will describe to you in a minute, are artificially constrained because of regulatory silos and restrictions. It seems logical for us to raise these restrictions as an issue in this proceeding, which is meant to review interconnection matters and determine what changes to interconnection regimes are needed to enhance competition. So we did.

3086   Our intervention in this proceeding led to objections by Northwestel, who argued that some of the issues we raised relating to the interconnection regime were to be dealt with in the Northwestel proceeding, 2011-302. So we did that, as well.

3087   But now we come back to you again, Commission, with our recommendations as to how the interconnection regimes can be simplified and perhaps consolidated.

3088   Some of you may not be overly familiar with SSi, so let me take a minute to provide you a very brief background, and I apologize to those of you who already know our history.

3089   SSi's origins are in my hometown of Fort Providence, located 320 kilometres west of Yellowknife, in the Northwest Territories. In 1965, my parents opened the Snowshoe Inn, which is where the "SSi" in our corporate name comes from. Snowshoe, which started as an inn, has continued to grow and branch into various operations, and remains one of the companies within the SSi Group of Companies.

3090   SSi was founded in 1990, and today is solely focused on telecommunications. We began by selling computer hardware and software in Fort Providence. Five years later we became an internet service provider, and in the following decade deployed numerous voice, data and internet systems in Africa and South East Asia. In 2004, SSi also became a facilities-based competitor to Northwestel when we launched high-speed wireless services in Yellowknife.

3091   In 2005, we built the QINIQ network to provide affordable broadband services to all 25 communities of Nunavut. Since inception, the QINIQ network has improved the lives of residents by providing access to services that did not exist before, including online banking, education and health resources via broadband.

3092   Following completion of the QINIQ network, we deployed the same broadband wireless technology under the "AirWare" brand in 30 communities of the Northwest Territories.

3093   SSi connects to most communities using satellite links to our Teleport located here in Ottawa. In one case -- in Yellowknife -- our connection to the South rides on Northwestel's terrestrial network. The extremely high prices that Northwestel charges us for that backbone connectivity are the subject of a Part 1 Application that we filed earlier this year.

3094   We recently launched the QINIQ ChatBox voice service in all 25 satellite-served communities of Nunavut, using IP technology. With this new service, our customers have an inexpensive alternative for long distance calling, as well as for placing calls to and from each other.

3095   SSi needs the ability to interconnect with Northwestel for the exchange of voice traffic -- whether that is VoIP, wireless or toll. Hence the relevance of our participation here. We are interested in seeing the development of a consolidated interconnection framework that would also apply in the North.

3096   With that, let me turn it over to Dean to describe three basic principles that we believe are essential for the Commission to consider in revising the interconnection framework and, as well, to address the specific questions asked by the Commission in the October 12th Organization and Conduct letter.

3097   MR. PROCTOR: The Commission in this proceeding is considering whether the interconnection regimes across the country can be simplified and consolidated.

3098   Lines are increasingly blurred between local, interexchange and wireless services. Customers are increasingly replacing their local fixed line with wireless. Long distance is no longer distance sensitive, and it is also, to a large extent, now carried over wireless networks. And the internet has increasingly taken over as the primary fixed line service for customers.

3099   Against that backdrop, SSi developed three principles, described in our interventions and evidence.

3100   The first principle is that the benefits of competition in telecommunications should not be denied to Canada's northern territories.

3101   The second principle is that the interconnection framework must focus on the services delivered, not on the underlying technology.

3102   The third principle is that the interconnection regime and pricing framework for interconnection services should be the same across Canada.

3103   Let me go into these principles now in a little more detail.

3104   As a first principle, competition at all levels of telecommunications services must be allowed across Canada, for all Canadians. With respect to local competition, this issue was dealt with in the Northwestel regulatory framework proceeding, and we won't venture further into that today, unless asked.

3105   For Principle 2, the framework for interconnection and the rules for competition must be flexible and adaptable. It is important for the Commission to focus on the regulation of the services ultimately delivered to consumers, not the underlying access technology used to deliver such services. This is particularly important for IP-based integrated providers that may be delivering local, wireless and IX traffic across the same facilities.

3106   The current mish-mash of interconnection rules and interconnection restrictions would exacerbate the situation if applied as is in Northwestel's serving area. This would clearly be to the detriment of consumers, competition and innovation. We believe that a better approach is to start with a clean slate and allow shared-cost interconnection and focus on services rather than technologies.

3107   We further believe that the existing regulatory regimes for all forms of interconnection must be simplified and consolidated in all regions of Canada, and to the greatest extent possible, into a single, more efficient, shared-cost and cost-effective regime.

3108   SSi has proposed simple solutions for interconnection, which can be implemented now, whether the interconnecting carrier is using mobile wireless, circuit switched wireline or IP technologies.

3109   Our Principle 3 goes to more practical aspects of interconnection, from our perspective, and taking into account particularities of the North.

3110   In our response to MTS Allstream's interrogatories in this proceeding, and our response to the Commission's interrogatories in the 2011-302 proceeding, we proposed to distinguish Northwestel's major markets, meaning those communities where, based on public information that we have access to, Northwestel appears to have advanced network infrastructure, both for local switching and for terrestrial backbone.

3111   For Northwestel's major markets, based on that definition of major markets, we see no reason why the interconnection framework cannot follow the regime in place in other parts of Canada, with all traffic types -- fixed local, long distance, wireless, VoIP -- passing between competitors and Northwestel via local interconnect region points, LIR points, perhaps one per Territory.

3112   We believe that Northwestel can fit into the national framework, at least in its major markets, and there is, of course, a benefit that we would see to having all traffic types -- long distance, wireless, local and VoIP -- all passing through the common LIR. But that is part of the Northwestel proceeding.

3113   SSi advocates that wireless, long distance and local interconnection services going forward be consolidated and be based on a regime of bill and keep, with related service pricing based on incremental costs. There should not be any higher markup or different regime to benefit Northwestel or to benefit any other ILEC. Any such special allowances or exemptions would, by necessity, work to the detriment of competition and consumers.

3114   Those are our three principles. Let me now turn to the specific questions asked by the Commission in the October 12th Organization and Conduct letter.

3115   To begin, with respect to network interconnection for voice services as the industry increasingly moves toward an IP-based environment, the Commission asked:

"Does the natural evolution from circuit-switched to IP interconnection facilities require regulatory intervention?"

3116   From our experience in the North, the simple answer is yes. Some ILECs may need a push to pursue what should be a natural evolution.

3117   The evidence of the 2011-302 proceeding was illuminating. It revealed that Northwestel depreciates its switching equipment over 12 years. However, the average age of many of its switches in the North is well over 20 years.

3118   In response to questioning by the Commission at the hearing -- and we have attached the full text of the exchange as well as a follow-on undertaking as attachments to this presentation -- Northwestel is essentially saying that, without a direct subsidy, they have no definite plan or timeframe for capital upgrades to replace already extremely outdated switching equipment.

3119   Indeed, it is the antiquated state of Northwestel's switching equipment that prompted SSi to propose interconnection services with Northwestel using line-side type interconnection arrangements in many communities.

3120   In short, absent mandated upgrades, Northwestel may be a long way from completing a migration from circuit-switched to IP interconnection. It seems that evolution does sometimes need a bit of help.

3121   Question 2:

"Should the Commission mandate IP-based network interconnection and establish basic rules, or should it be commercially driven?"

3122   As we just noted, sometimes evolution does need a bit of help. We have proposed arrangements with Northwestel using traditional interconnection with circuit-switched systems, including line-side type interconnection arrangements in many communities, despite the fact that we are an integrated, all IP-based broadband wireless operator.

3123   To the extent that IP-based network interconnection is mandated, competitors should not be required to pay for any of the ILEC network upgrades necessary to deliver on that mandate.

3124   Question 3:

"To what extent, if any, should the Commission forbear from the regulation of network interconnection for voice services? If so, under what conditions and within which timeframe would it be appropriate for the Commission to forbear under the Telecommunications Act and consistent with the Policy Direction?"

3125   Quite simply, given the current lack of competition in the North for voice services, be that fixed wireline, mobile or VoIP, we believe it is far too early for the Commission to even consider forbearing from the regulation of network interconnection for voice services.

3126   The Commission's next set of questions deals with reassessing the wireless carrier network interconnection regime.

3127   Question 4:

"Should wireless carriers be treated as equal carriers with the ILECs and, therefore, be entitled to shared-cost interconnection with bill and keep and, if so, under what terms and conditions?"

3128   The simple answer is yes.

3129   I would point to our response to a Commission interrogatory in the 2011-302 proceeding, wherein we reviewed the CLEC obligations and indicated where it would be appropriate to modify these obligations to reflect specific conditions in the North.

3130   For example, even on its wireline network, Northwestel does not presently support 911 service, number portability, or equal access across its serving territory. So if, as we advocate, wireless carriers are granted co-carrier status, they should not be required to provide such capabilities until such time as the ILEC does.

3131   Question 5:

"What measures need to be taken to ensure that wireless carriers have the same benefits and obligations, regardless of whether they are independent or part of a vertically integrated telecommunications entity?"

3132   As we just stated, the Commission should recognize wireless operators as co-carriers and establish a wireless interconnection regime on the basis of bill and keep arrangements with shared-cost facilities.

3133   Question 6:

"Would it be appropriate for the Commission to forbear from regulating wireless access service, and, if so, what criteria should be applied?"

3134   On this point, we would note that in the North, wireless carriers can only interconnect with Northwestel using the costly WSP interconnection tariff, referred to down South as the WAS. There is no alternative for interconnection, and Northwestel's equipment is too outdated to allow for IP interconnection. Thus, it is far too early for the Commission to consider a blanket forbearance from the regulation of wireless access services.

3135   Finally, the Commission asks as Question 7:

"Should existing rules be modified to require wireless carriers in small ILEC territories to establish direct network interconnection arrangements with the small ILECs, unless the two parties agree to alternative arrangements?"

3136   We cannot speak to the case of the small ILECs. In the areas we serve, we are the small entity, and, yes, Northwestel should be required to connect with us.

3137   To conclude our presentation, the interests of SSi are fully in line with the principal objectives identified by the Commission for this proceeding.

3138   There are perhaps a couple of takeaways for the rest of Canada, based on our experience and based on the particularities of the North.

3139   First, there should be a common approach to a consolidated interconnection regime across Canada, and this includes in the northern Territories.

3140   That said, there may be cases -- particularly in more remote, satellite-served communities -- and there may be cases of this nature elsewhere in Canada -- where carrying traffic to an LIR may not be practical or technically desirable. In those cases, the interconnection regime needs flexibility to accommodate the most efficient and practical solutions.

3141   Second, there are areas of the country where the incumbent does not provide 911, LNP or equal access. For these cases, it should not be expected of any competitor to implement these before the ILEC does.

3142   We thank the Commission for having allowed us the opportunity to present before you today. Rob, Jeff and I would be pleased to answer any questions you may have.

3143   THE CHAIRPERSON: Well, thank you for your presentation.

3144   Thank you for answering the question I was going to ask you, what does SSi stand for. So it's Snowshoe In, is it? Okay.

3145   Now, you want us to mandate IP to IP interconnection. And if I understand you correctly, in paragraph 48 you said:

"...competitors should not be required to pay for any of the ILEC network upgrades necessary to deliver on that mandate."

3146   That's quite different from most people Most -- I mean, we've heard some of them said don't mandate it at all; let the market take it. Other say, you know, in effect, Rogers and COGECO, let the market determine, but if you do it, you have to do it on a non-discriminatory basis and do it area by area where they are ready to do it, mandate it, et cetera.

3147   But all of them were on a cost-shared basis.

3148   Now, you go whole hog, mandate. On what basis could we justify that?

3149   MR. PROCTOR: Maybe we need to clarify our presentation.

3150   We're not suggesting that there needs to be mandated IP to IP interconnection. What we are saying is if there is mandated IP to IP interconnection as determined by the Commission, we shouldn't be paying for that. We should pay for our own costs; we should not be paying for the ILEC costs.

3151   THE CHAIRPERSON: Okay. Let's say for argument's sake the Commission buys the Rogers COGECO approach and says, you know, as they are ready and as they offer it, you know, they have to offer it to everyone.

3152   Now, from what I understand, for you that means nothing because from what you said here this morning, Northwestel has no plans to go to IP to IP interconnection. And it probably would work, then, as a disincentive to them because if they ever do it anywhere, they have to do it -- they obviously have to offer it to you and they have to pay for it.

3153   MR. PROCTOR: Recognizing that probability, this is why we've come to the Commission in other proceedings and in this proceeding proposing extremely simple interconnection arrangements, line side, in fact, for most communities in the north. And it is our responsibility to convert our IP traffic to TDM to allow for simple interconnection arrangements with the current system of Northwestel.

3154   Obviously, we see benefits to IP to IP interconnection, but it is really up to the Commission to determine, if necessary, whether Northwestel should be upgrading their equipment, not only for interconnection purposes with competing carriers, but for the benefits of the consumers in the north.

3155   THE CHAIRPERSON: But that's a separate proceeding. I'm just trying to figure out what you -- as a result of your submission here, what you would like to see us do in terms of IP interconnection.

3156   MR. PHILIPP: We would like IP to IP interconnection in every site. The reality is, and I think based on the evidence, that Northwestel has already submitted in previous hearings that their switches just -- or at least they state their switches are not capable of it and the cost to upgrade their switches would be exorbitant, but they expect the Commission or the high cost serving area fund to pay for.

3157   That could take a long time. We don't believe, since we are a facilities-based competitor in every one of the communities in Northwest Territories and Nunavut -- and we were the first people in those communities to deliver broadband and an all IP system.

3158   We don't believe that we should be delayed from implementing competition in some of these markets or implementing services and interconnection in some of these markets, in Grise Fjord, in Resolute Bay and some of the places that are very remote. We are capable of converting to TDM and interfacing with them on line side if required. We would prefer IP. We believe it is more efficient, and we just don't know that they'll get there.

3159   THE CHAIRPERSON: Let's stick to IP, which is on the table here.

3160   MR. PHILIPP: Sure.

3161   THE CHAIRPERSON: So in effect, you are -- I don't want to minimize what you're saying, but it seems to me you're saying that this is not really relevant to us in the north because the main -- the ILEC in the north is not going to offer it in the near future and, therefore, much as we would like it, really, we have nothing to contribute to this hearing at this point.

3162   MR. PROCTOR: No, pardon me, Mr. Chairman. We wouldn't agree with that --

3163   THE CHAIRPERSON: I'm talking --

3164   MR. PROCTOR: -- characterization.

3165   THE CHAIRPERSON: -- about IP only and then --

3166   MR. PROCTOR: From an IP only, we again tried to take an approach to assist the Commission but also to assist the development of a decision where we described, we identified the major markets in the north -- and again, those are major markets from the Northwestel perspective -- where, in fact, the switching technology is a little more upgraded.

3167   And we don't have full access to Northwestel's upgrade planes. I would expect that in some markets they will, in fact, be upgrading to -- maybe are already upgraded -- to technology that would allow IP to IP interconnection.

3168   So from that perspective, certainly if IP interconnection is available from facilities from Northwestel or from any other carrier, yeah, we would agree that that should be available to all interconnecting comers, whether that's wireless or local.

3169   THE CHAIRPERSON: So again, what would you like from us out of this proceeding? I'm not quite sure I get it.

3170   Are you saying if and when Northwestel provides IP they should interconnect with us at their cost? Is that what it --

3171   MR. PROCTOR: No, we're suggesting shared cost interconnection.

3172   The upgrade to their facilities to allow for IP interconnection, to have, in fact, an IP based network and facilities, that is their cost. In terms of interconnecting facilities, that's shared cost.

3173   THE CHAIRPERSON: Okay. So if and when they have done the necessary upgrade to their network that they can connect on an IP basis, they should connect with us on a shared cost basis.

3174   MR. PROCTOR: Yes.

3175   THE CHAIRPERSON: And we would like you, Commission, to mandate that.

3176   In its simplest form, is that what you're saying?

3177   MR. PROCTOR: I guess on the final point with respect to mandating, if we go into that level, certainly. If they're able to connect on an IP to IP basis, yes, that shouldn't be left to discretionary forces if, in fact, they're able to do it.

3178   THE CHAIRPERSON: And lastly, just as a curiosity, your QINIQ chatbox voice service which, if I understand it correctly, works over the satellite. Is that over the top voice running on satellite?

3179   MR. PHILIPP: I'm not sure what you mean by over the top. All of our --

3180   THE CHAIRPERSON: Is it like Skype, the equivalent of Skype?

3181   MR. PHILIPP: Not really equivalent to Skype. We certainly offer services like that as well. The chatbox is a hardware device that the person's phone plugs into, doesn't require a computer, goes over a wireless IP last mile and then prioritized and then goes over an IP satellite link back to Ottawa, where it interconnects into the PSTN.

3182   THE CHAIRPERSON: And there's no jitter or latency on that?

3183   MR. PHILIPP: We can control that. Because we control the network end to end and, as you heard earlier, we have session border controllers in every community, even our smallest community of 50 people.

3184   We have no problem with controlling the quality of our voice over IP service.

3185   THE CHAIRPERSON: That's amazing. I've tried using Skype over satellite, and you certainly have latency there.

3186   MR. PHILIPP: Absolutely, yeah. And part of that is -- and the same thing happens with Skype on our network. Because Skype is not a commercial service that we're offering, there is no guaranteed capacity. It runs over best effort internet lanes or pipes, effectively.

3187   But what we've built is a private capacity, I'll say guaranteed capacity with guaranteed quality of service for things like our voice traffic. And we do that both on our terrestrial network and our satellite network.

3188   THE CHAIRPERSON: So you bump the other traffic, or you slow it down to give you --

3189   MR. PHILIPP: Oh, no, we have separate --

3190   THE CHAIRPERSON: But I mean, assuming there is contention, then you give priority to the voice.

3191   MR. PHILIPP: A little bit different than that in that we have dedicated lanes for voice that when not being used for voice is used as extra burst capacity for our internet customers, to benefit them, but it is guaranteed for voice whenever there is voice traffic.

3192   THE CHAIRPERSON: Okay. Thank you very much.

3193   Len, you have some questions?

3194   COMMISSIONER KATZ: Thank you, Mr. Chairman, and good morning 'cause it still is.

3195   You've identified three principles that I read in your previous submission, and here again now in slightly different format.

3196   You've correctly identified the first principle is that of scope, given there's a separate hearing on it. I actually believe the third one is of a similar nature because it talks to interconnection being the same across Canada, and the notion of local interconnection was a function of our hearing up in Yellowknife as well. So I'll stick to principle No. 2 and just try and get more clarification on some of your views here.

3197   You talk, I guess, in paragraph 58 about the fact that, at this point, you know wireless carriers can only interconnect with Northwestel using a costly WSP interconnection tariff, which I guess is what you're using.

3198   And then in paragraph 31 under your second principle, you say:

"The current mishmash of interconnection rules and interconnection restrictions would exacerbate the situation if applied as is in Northwestel's serving area."

3199   And I'm trying to address both of those at the same time.

3200   One is we have, from your perspective, albeit costly, a single interconnection regime in the north. On the other hand, you're saying that if we adopt what is in the south, it would create a mishmash of rules and interconnection regimes.

3201   So I guess it begs the question, what, exactly, are you looking at -- looking for?

3202   MR. PROCTOR: I guess to clarify the record, we are not using the WSP interconnection tariff. We are not directly interconnected with Northwestel anywhere. The only we would interconnect with Northwestel is as a wireless carrier using the WSP interconnection tariff, just to be clear on that.

3203   COMMISSIONER KATZ: And you've chosen not to?

3204   MR. PROCTOR: Yes.

3205   COMMISSIONER KATZ: Or you can't?

3206   MR. PROCTOR: We have chosen not to. We are not interconnected at this point in time.


3208   MR. PROCTOR: And just on that point, if you take a look at the record -- in fact, the comments of the intervenors and the presenters in the last couple of days, just pointing out Bell, the only place in the country where they use the WSP tariff, interconnection tariff, as Bell Mobility is where they are also the ILEC or affiliated with the ILEC.

3209   They aggressively find other means to avoid the WAS tariff outside of their ILEC operating territories, which I think speaks volumes to the uneconomic nature of the WSP interconnection tariff.

3210   In terms of the mishmash, given that -- and I'm trying to avoid trending over to the 302 proceeding. Given that the interconnection framework is currently up for review, given that there are a number of parties to this proceeding -- and I'll point most particularly to MTS Allstream -- have recommended a consolidation of all traffic running across interconnecting pipes.

3211   Given that we are wireless, we are long distance, if, in fact, certain things happen we could also become local, we would also believe that a consolidated regime would be the way to go in the north.

3212   What that then avoids -- when I talk about a mishmash, it avoids having to have too many interconnecting pipes with Northwestel. It also allows for more efficient interconnection because it's based on, again, shared cost facilities. We pay our end; the ILEC pays its end, or the interconnecting carrier, whether it's an ILEC or somebody else, pays its end. And of course, traffic is switched on a Bill and Keep basis.

3213   COMMISSIONER KATZ: So you're in support of the MTS meet me initiative where they're saying they believe in one consolidated interconnection regime, but at one point as well because --

3214   MR. PROCTOR: Yeah.

3215   COMMISSIONER KATZ: -- when I read your evidence, it appeared as though you don't want one point of interconnection. You actually want multiple points of interconnection.

3216   MR. PROCTOR: Well, again, the one point of interconnection is geographically based. Our reading of the MTS Allstream submission -- and in our interrogatory responses to MTS Allstream, we actually did support it on the record of this proceeding.

3217   But the meet me at one point is a geographic point for all traffic types to come through. I certainly hope that MTS isn't suggesting that there be one point of interconnection for all of Canada for each carrier.

3218   If that is the case, then no, that would not be viable for us in the north given that in -- and again, the north can extend further south. It's in satellite served communities where a more efficient form of interconnection, a way of interconnecting that allows for better voice quality, avoids latency from satellite, would be to have direct points of interconnection in each one of those satellite served communities.

3219   Now, again, you don't need to have separate trunks in those remote communities for long distance, for wireless and for local. You can run a Class 1 set of trunks if you take the MTS Allstream model.

3220   COMMISSIONER KATZ: My understanding of the MTS model, and they'll be here again for Phase 2 next week, so we can clarify it, was that they're looking for fewer points of interconnection and fewer LIRs as opposed to multiple ones, and that would allow them to be more efficient in how they use their trunks and their infrastructure.

3221   You are a different situation, obviously, as well, and I recognize that in your evidence. And that's why when you say you support the MTS model of one standard regime, but you have certain conditions on that as well, it isn't really the MTS regime you're looking to support; it's a hybrid that actually provides you with the flexibility you're looking for, which actually is multiple points of interconnection, but having one regime where it can all -- all the services can go into one pipe.

3222   MR. PHILIPP: Yeah, if I can expand on that a little bit.

3223   We have a geographical challenge in that out of our 56 communities, we have 37 which have no terrestrial connectivity into them. They are satellite served only, which means that in those 37 markets, Northwestel has a satellite dish, SSi has a satellite dish. There is no interconnection between those two facilities in that community, so any voice traffic from our customers, long-distance traffic or even traffic within the community, traffic stays local for us. Anything long distance goes out over our satellite.

3224   If there was a case where we had a single point of interconnecting -- Yellowknife, for example -- our Grise Fjord customers calling a Northwestel customer in the same community would have to go all the way out over satellite interconnecting that one point.

3225   And that's the challenge we face, which is why, in some markets where there is choice but to -- or the best technical choice and customer service choice then, in fact, even from a cost perspective, it would make no sense for Northwestel to carry that traffic out of the community, or for us, if we could connect locally.

3226   To the second point, if we are forced to interconnect with one type of trunk for IP data, one type of trunk for voice over IP, one type of trunk for local voice competition, it becomes much more onerous on both SSi and Northwestel's part when, really, I mean, realistically, these two facilities are less than a kilometre apart.

3227   There's numerous ways we could interconnect with one IP trunk between the two to handle all of that type of traffic. It would be much more effective for both parties.

3228   That's really what we're saying, is --

3229   COMMISSIONER KATZ: Yeah, I just want to make sure that I understood that you're not looking for strictly the MTS model, which is a full one interconnection regime for everything, but also one point of interconnection as well for meet me.

3230   You're not looking for that; you're looking for a hybrid, like I said.

3231   MR. PHILIPP: Yeah.

3232   COMMISSIONER KATZ: And I understand why.

3233   MR. PHILIPP: I believe that's correct, yes.


3235   The last question I've got is referring to your paragraph 31 again, and it's the last sentence. And you talked with the Chairman about this as well. You believe a better approach is to start with a clean slate and allow shared cost interconnection, which I understand fully.

3236   And then you add to that, "and focus on services rather than technologies".

3237   This Commission has stated a position that it's technologically neutral and competitively neutral. I don't think we've ever taken a position on services and -- other than saying we support innovation. We don't support neutrality on services, necessarily, either. It's up to the parties to provide the services they want.

3238   So I'm trying to understand what you mean by there's a need to focus on services rather than technologies.

3239   MR. PROCTOR: Quite simply, voice is voice whether it's delivered by a mobile wireless infrastructure, a fixed line circuit-switched infrastructure or voice over IP infrastructure.

3240   COMMISSIONER KATZ: So technology shouldn't be -- so we're technology neutral and --

3241   MR. PROCTOR: Yes.

3242   COMMISSIONER KATZ: -- and that's the point you're trying to make here.

3243   MR. PROCTOR: Yes.


3245   MR. PROCTOR: Yes.

3246   COMMISSIONER KATZ: Those are my questions, Mr. Chairman.

3247   THE CHAIRPERSON: Let me just take you back for one second to paragraph 38 of your presentation. You say:

"SSi advocates that wireless, long distance and local interconnection service going forward be consolidated and be based on a regime of Bill and Keep with related service pricing based on incremental costs."

3248   How do you do Bill and Keep and long distance?

3249   MR. PROCTOR: The --

3250   THE CHAIRPERSON: I mean, I asked the same question to --

3251   MR. PROCTOR: To the extent that there's a traffic imbalance, as under the current rules, obviously if we were to run an excessive amount of long distance across -- in other words, incoming long distance across our trunks running over to Northwestel or whatever interconnecting carrier we have, that would lead to traffic imbalance, which we would compensate the connecting carrier.

3252   So we don't really see a major issue with respect to running long distance across our --

3253   THE CHAIRPERSON: So you assume that the long distance provider also terminates the call.

3254   MR. PROCTOR: Yes. The long distance call has to go somewhere.

3255   We would -- maybe I don't understand the question, Mr. Chairman; sorry.

3256   THE CHAIRPERSON: There are long distance providers who don't necessarily terminate the call. That's why I just wondered how you do Bill and Keep for those.

3257   MR. PROCTOR: Yes. Obviously, Bill and Keep relates to carriers who have N customers.

3258   THE CHAIRPERSON: So everything is based on sort of the reality up north where you have -- every long distance call is presumably terminated by the person who provides the long distance.

3259   MR. PHILIPP: In the north that's the case, and I would think that if we were interconnecting or if we were routing IP traffic or TDM traffic to a southern carrier, if that's where that termination point was, we would be on the same bounds or the same basis. We would hope it would be based on the same model.

3260   Currently, our interconnection and our interest is, as you pointed out, in the Northwest Territories where all customers are Northwestel's, currently.

3261   THE CHAIRPERSON: Okay. Thank you very much. Those are your questions.

3262   We'll break for lunch. We'll resume at 1:30. Thank you.

3263   MR. PROCTOR: Thank you very much.

--- Upon recessing at 1208

--- Upon resuming at 1331

3264   THE CHAIRPERSON: Okay, commençons.

3265   THE SECRETARY: Merci, Monsieur le Président.

3266   We will now proceed with the joint presentation by Yak Communications (Canada) Inc. and WIND Mobile.

3267   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Thank you.


3268   MR. ANTECOL: Good afternoon, Madame Secretary, Mr. Chairman and Commissioners.

3269   My name is Edward Antecol and I am Vice President of Regulatory and Carrier Relations for both WIND Mobile or WIND, for short, and Yak.

3270   With me today on my left is Ante Rupeic. He is Vice President, Core Networks for WIND Mobile and on my right, Rishi Bahall, Vice President, Networks for Yak.

3271   Yak and WIND have identical ownerships within the Globalive group of companies. Yak began the CLEC process well before Globalive started WIND, and Yak's CLEC services continue today to include VoIP-based local services, PRI-based business services and ILEC central office-based local loop services using unbundled loops.

3272   Yak is also a large IXC and continues to be Canada's leading provider of casual calling, a position it has held for a decade.

3273   WIND is Canada's leading non-regional new entrant wireless provider. WIND's network provides end-to-end IP connectivity to its customers. Where appropriate and cost-effective, WIND receives interconnection services from Yak.

3274   We are of the view that WSPs should no longer be treated as the telephone companies' "customers" but should be recognized as "co-carriers" equal in status to LECs. More specifically, we ask the Commission to determine that wireless carriers are entitled to interconnect with all LECs on a shared-cost and bill and keep basis.

3275   By making these changes the Commission can accomplish the principle objectives it set out in Telecom Notice of Consultation 2011-206. These changes would be:

3276   One, simplify the existing interconnection regimes.

3277   Two, enhance competition and benefits to consumers and eliminate the disadvantages created under the current regime and introduce technological neutrality.

3278   We also ask that the Commission further improve the interconnection arrangements available to wireless and wireline carriers by mandating IP interconnection at least initially where LECs have a demonstrated ability to provide such connectivity to others. There is no other single change that has as much potential to drive innovation, improve network efficiency and lower costs.

3279   We recognize that it cannot happen immediately but the Commission should make clear that work should begin in that direction. At a minimum, CISC should re-start work to develop processes and updated standards for IP interconnection, in much the same way it did when local network interconnection was first introduced.

3280   With respect to the other interconnection regimes, we do not believe that there needs to be either a merger of the regimes or extensive changes to the existing interconnection regimes involving LEC-to-LEC or LEC-to-IXC interconnection. However, as a result of this proceeding, we also hope that the Commission will make interconnection more efficient, in three ways as follows:

3281   First, the Commission should re-affirm the cost-sharing model between ILECs and CLECs by eliminating the significant multiplexing charges that some but not all ILECs impose on CLECs when the CLECS elect to lease facilities to the ILEC POI instead of a joint build.

3282   Beyond the LEC POIs, each carrier is supposed to be responsible for its own costs. Thus, these multiplexing charges are not only inconsistent with a CLEC's status as a co-carrier, but also violate the Commission's principle of technological neutrality and discourages rather than enhances competition.

3283   A good starting point in this regard is to confirm the availability of DS-3 interconnection as well as DS-1 interconnection for access to switched services of the ILECs. Today's switches all support DS-3 interfaces in addition to DS-1s. We are not in 1992 anymore. Technology has moved on.

3284   Similarly, IXC's should be able to connect with LECs at the DS-3 level rather than have to lease DS-3s and buy multiplexing to the DS-1 level to connect to the LEC.

3285   Second, we are asking the Commission to eliminate the requirement that EAS transport traffic be carried on separate trunks. There is no reason why the EAS traffic cannot be carried on in-place bill and keep trunks. The use of bill and keep trunks for EAS transport traffic will improve network efficiency, reduce artificial imbalance payments due from ILECs and enhance competition, resulting in benefits to consumers.

3286   Third, the Commission should, if it rejects co-carrier status for WSPs, make LEC-to-LEC interconnection more efficient, particularly where CLECs provide interconnection services to WSPs.

3287   Unfortunately, when a wireless carrier currently uses a CLEC for PSTN connectivity, it is unnecessarily inefficient from a network perspective for the following reason: Calls must exit the WSP switch port to a CLEC switch port and then exit the CLEC switch via another port to the PSTN/interconnecting carrier, three switch ports where one would suffice.

3288   It makes no sense and is extremely wasteful of switching resources to force wireless traffic to be switched at a wireline local access tandem before being exchanged with an interconnecting carrier.

3289   As noted by Videotron this morning, a very simple remedy exists for this problem. Thus, we suggest mandatory deployment of dedicated high-usage bill and keep trunks between interconnection POIs, for the purpose of connecting additional switches whether they be wire-line or wireless switches, so long as the wireless switches belong to a WSP that is purchasing PSTN connectivity from that particular CLEC.

3290   Just as the CLECs requires -- just as the ILECs, I should say, require CLECs to establish high utilization trunks to the ILEC POI for interconnection with other ILEC local switches, CLECs should be able to require ILECs to establish high utilization trunks to the CLEC POI which in turn connects to other CLECs subtending WSP switches.

3291   Rishi Bahal will now address the issues identified by the Commission in its letter dated 12 October 2011.

3292   MR. BAHALL: Does the natural evolution from circuit-switched to IP interconnection facilities require regulatory intervention?

3293   Yes. The Commission must take steps to ensure that the benefits of IP interconnection become broadly available to consumers at the earliest opportunity without waiting for the ILECs to modernize their legacy networks.

3294   Consumers should benefit from innovation. If the Commission does not act in a timely manner, the Commission will have limited the consumer benefits from both the pass-through benefits of IP cost efficiencies and more importantly, the richer end-to-end feature sets that IP technology enables.

3295   It is important that the Commission not underestimate the efficiency gains and cost savings that can occur through IP interconnection. Both Yak's and WIND's local switches are natively packet switches -- thus not having to convert traffic from IP to TDM would create significant efficiency gains.

3296   For example, Yak and WIND could avoid buying TDM switch ports and SONET transport gear which is considerably more expensive than Ethernet transport gear.

3297   Second, in the absence of regulatory action, we are concerned that it will take much longer before the ILECs are willing to entertain IP interconnection with smaller CLECs. Potentially, this would be delayed until the legacy TDM equipment is almost completely replaced with more efficient IP equipment.

3298   Until then, there is plenty of incentive for the ILECs to continue to maintain traffic on the legacy networks until near end of life for such equipment.

3299   Thus, the timeline for the ILECs' natural evolution from circuit-switched to IP interconnection facilities will be to the detriment of smaller CLECs, unless there is regulatory oversight. Being able to extend the life of legacy equipment is a luxury not enjoyed by other market participants such as WSPs who must change out and upgrade their network gear more frequently.

3300   Advanced features made possible by richer end-to-end feature sets that IP technology has the potential to change the way customers view telecommunications. A couple of examples would be allowing multimedia communications or the synchronization of data streams to a voice call.

3301   Should the Commission mandate IP-based network interconnection and establish basic rules, or should it be commercially driven?

3302   We recommend that the Commission mandate IP-based network interconnection including applicable standards and establish basic rules, including tariffs, as a backstop to the freedom of LECs negotiating custom solutions for the following reasons:

3303   First, as discussed, IP-based interconnection technology is more efficient and less costly than its TDM counterpart. Early implementation of IP interconnection is consistent with section 7 (c) of the Telecommunications Act which states that one of the policy objectives is to "enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications".

3304   Second, for the reasons I also just discussed, IP interconnection may not be available to smaller CLECs until the ILECs have retired their TDM equipment.

3305   Third, the principle of technological neutrality would be violated unless IP-based network interconnect and basic rules are established. At their core, the purpose of IP interconnection and TDM interconnection are the same. They both enable the exchange of traffic between competing telecommunications carriers.

3306   he mere fact that IP technology is used for one arrangement and TDM technology is used for the other should not be relevant on how the Commission treats them.

3307   The Commission asked whether it should mandate IP-based network interconnection and establish basic rules or if it should it be commercially driven. It is not necessary to be all or nothing.

3308   A mandated default IP interconnection arrangement does not prevent carriers from negotiating alternate arrangements that are in the best interests of both parties. Indeed, as the Commission is aware, there are many examples of CLECs that have acquired interconnection arrangements different from the default interconnection terms and conditions set out in the Commission's orders, decisions and approved tariffs.

3309   I will follow over to Ed who will continue with the subsequent questions.

3310   MR. ANTECOL: The next question: To what extent, if any, should the Commission forbear from the regulation of network interconnection for voice services

3311   The Commission should not forbear, period. It must continue to regulate network interconnection for voice services. It is a difficult, lengthy and costly process to obtain CLEC status. Without the tariffs and the Commission's directives, many CLECs could not enter.

3312   There is also a constant need for a referee particularly when two out of the three of Canada's largest WSPs are also ILECs.

3313   For example, recently, WIND was not able to resolve a CCS7 dispute with TELUS. TELUS refused to accept transited CCS7 traffic via MTS Allstream related to WIND's WSP E9-1-1 service, even though accepting such traffic would have had no additional costs to TELUS. The Commission found that the TELUS' tariffs permitted the transiting and that it should have been permitted, but by then WIND had relented to the TELUS' demands. This is illustrative of the types of interconnection issues and the need for regulatory oversight.

3314   WAS forbearance is the subject of a separate CRTC question in the process letter. As to forbearance of the other services being discussed in this proceeding, namely EAS and local transit, we prefer the elimination of EAS through the use of bill and keep trunks. We have no objection to forbearance with respect to EAS however, because the alternative, expanding to neighbouring LIRs, is relatively simple. We do note however that this is wasteful of numbering resources.

3315   Expanding to neighbouring LIRs in Toronto would involve connections to Oakville, Oshawa, Richmond Hill and Brampton, for example. Yak's purchase of EAS in Toronto will eventually all be gone as Yak expands to all these neighbouring LIRs and these LIRs will require considerably less EAS. But again, expanding to replace EAS in and of itself is just wasteful.

3316   We are concerned that eliminating local transit will make new CLEC entry and future CLEC interconnection much more difficult. Thus, local transit service should be left in place to facilitate market entry.

3317   There are other actions the CRTC can take to get more LECs to interconnect. The best in Yak's view is to mandate IP interconnect and allow for off-tariff arrangements including mutually agreed regions.

3318   The next best alternative is to encourage more direct interconnection between LECs including, possibly, active CRTC intervention when one LEC seeks to stall interconnection with another. Simply put, Yak does not like buying local transit service and would prefer that LECs come forward to implement direct connections with Yak.

3319   I will now turn it over to Ante to --

3320   MR. RUPEIC: Thank you, Ed.

3321   Should wireless carriers be treated as equal carriers with the ILECs and, therefore, be entitled to shared-cost interconnection with bill and keep and, if so, under what terms and conditions?

3322   If there ever was, there is no longer any policy, regulatory, technical or legal reason why wireless carriers should be subjected to an inferior interconnection regime.

3323   It is interesting to note that in the Commission's August 2011 report titled "Navigating Convergence II", the Commission referenced a study that predicted "28 percent of Canadian households will be wireless-only by the end of 2014". In spite of the obvious growing importance of wireless carriers and the role they will play in the future and their continued massive investments, they are still treated as customers for the purposes of network interconnection.

3324   It is often overlooked that almost all of the CLEC requirements have already been imposed on wireless carriers. They include number portability, membership in the CLNPC, payment of contribution, CCS7 interconnection, provision of 9-1-1 and enhanced 9-1-1 service, confidentiality of customer information and provision of bills and other customer information in alternative formats.

3325   The main exceptions are the requirement to providing listing information (BLIF) to operator services and directory listings companies and the requirement to provide equal access.

3326   The Commission recognizes the difference between wireline and wireless carriers and their subscribers and therefore does not require wireless carriers to provide listing information.

3327   The Commission should also recognize that the mobility of wireless services makes it unsuitable for equal access. The requirement to provide equal access and directory listings are the main exceptions.

3328   There are many reasons why the mobility of wireless services makes it unsuitable for equal access including:

3329   - Wireless consumers use their phones over a wide area. Provision of equal access would require an IXC to connect to multiple wireless switches in order to accept a long distance call because the subscriber could be traveling on any one of many WSP's switches.

3330   Inter-network roaming would further complicate equal access implementation. This also causes customer confusion. A customer who has signed up with an IXC for wireless long distance service will expect the service to be provided no matter where the call originates on that wireless carriers network.

3331   - Equal access calls would have to be subject to more costly switching and aggregation rules as there is considerably more backhaul involved in aggregation. The design of modern distributed WSP networks such as WIND's network does not need to have a switch in Halifax to serve Halifax. The serving switch is in Ottawa.

3332   - Equal Access software for WIND's wireless switches has not been developed.

3333   - WIND does not believe that imposing equal access obligations on wireless network operators will substantially increase the competitiveness of wireless toll services or toll markets in general, while we do believe that the current interconnection regime for WSP's is inefficient and unfair and;

3334   - The costs of implementation will be very high.

3335   Among other things, WIND would incur costs for: the creation and documentation of new business and operational processes associated with EA, software for tracking long distance calls and subsequent billing of IXCs, training of customer service reps and operational staff, implementation and maintenance of PIC/CARE; and, implementation of physical interconnection arrangements with IXCs.

3336   What measures need to be taken to ensure that wireless carriers have the same benefits and obligations, regardless of whether they are independent or part of a vertically integrated telecommunications entity?

3337   If the Commission adopts WIND's recommendations to treat wireless carriers as co-carriers, under the terms and conditions described, in response to the previous question, WSPs will have the same benefits and obligations relative to each other, regardless of whether they are independent or part of a vertically integrated telecommunications entity.

3338   As for the situation today, where WSPs can buy WAS from CLEC affiliates, this is not a vertical integration issue that the Commission needs to deal with, as there are no material inequities involved. Bell, TELUS, Rogers and Videotron WSP operations buy WAS from CLEC affiliates, as does WIND. The only two wireless carriers that don't are Mobilicity and Public Mobile. However, they both have negotiated with other CLECs to obtain PSTN access.

3339   At this point I will pass it over to Ed.

3340   MR. ANTECOL: I will answer the last two remaining Commission questions.

3341   Would it be appropriate for the Commission to forbear from regulating wireless access service, and, if so, what criteria should be applied?

3342   Yes, it would be appropriate for the Commission to forbear from regulating wireless access service, whether or not the Commission permits WSPs to interconnect as co-carriers using shared-cost facilities or maintains the existing WSP regime, provided, however, that the forbearance criteria is appropriate. Not every CLEC is actually able to provide suitable WAS service to WIND, based on WIND's requirement for carrier-grade service.

3343   A useful ILEC forbearance criterion for WAS would be that at least one other CLEC not affiliated with the WSP is actually providing WAS service in an exchange.

3344   WIND knows from its own purchasing efforts that the criterion would result in forbearance in Vancouver, Calgary, Edmonton, Toronto and Montreal immediately.

3345   Most WSP traffic is carried by affiliate LECs wherever possible. There are very compelling incentives to provide WAS via affiliates, including quality of service. And the price, even if tariffed by the LEC, is generally irrelevant to a common shareholder group. This is true for WIND and Yak.

3346   WIND purchases approximately 65 percent of its PSTN connectivity needs from Yak, 30 percent from other CLECs, and 5 percent from ILECs. The 5 percent of WAS provided by ILECs is because WIND has no other choice.

3347   Put another way, while there are CLECs operating in all of the exchanges where WIND operates, we cannot find a CLEC in some exchanges capable of providing carrier-grade services to WIND.

3348   Where commercial or affiliate arrangements are not feasible, such as in smaller, more rural communities, the regulated WAS arrangements remain the only alternative and, therefore, must continue to be available.

3349   Now, for the last question:

3350   Should existing rules be modified to require wireless carriers in small ILEC territories to establish direct interconnection arrangements?

3351   WSPs should not be required to establish interconnection arrangements with small ILECs unless two conditions are present: (1) the SILEC is a provider of E911 access tandem services in its exchanges; and (2) the WSP plans on offering home, or native, telephone numbers associated with the SILEC's exchange.

3352   There is no technical reason why wireless carriers should be mandated to directly interconnect with a SILEC simply to terminate traffic.

3353   WIND uses wholesale long distance traffic termination arrangements to terminate traffic to SILECs today, and can see no reason why this flexibility should be eliminated.

3354   The wholesale IXC likely pays adequate compensation to the SILEC, and, if not, the bypass incentives are simply too high, indicating a need to lower settlement rates.

3355   Thank you very much.

3356   THE CHAIRPERSON: Thank you for your presentation.

3357   Walk me through some of the minor issues to start off with. What is the multiplexing charge? This is the first I have heard about it. Obviously it is of concern to you, otherwise you wouldn't raise it here.

3358   MR. ANTECOL: I will start with when we interconnect as an IXC. What we typically do -- Yak, as an IXC, connects to 38 access tandems across the country, and it typically leases DS3's to those access tandems, and then we have to pay the incumbent ILEC to multiplex those, at the access tandem, down to the DS1 level, and then to interconnect.

3359   Our switches, Yak switches, and most switches today, have DS3 interfaces. So our view is that we are paying for DS3 to DS1 multiplexing for nothing. It shouldn't be required. It's just an extra $500 a month charge. That seems to be the average price that is typically imposed on us as an additional interconnection charge.

3360   Now, this charge is also --

3361   THE CHAIRPERSON: Are they allowed to charge you this or not? I wasn't quite clear --

3362   MR. ANTECOL: Yes, they are allowed to do it for IXCs because many years ago the Commission said that access to the phone company's switch services was at the DS1 level.

3363   THE CHAIRPERSON: So basically you want us to bring it up to standard and say that it should be at the DS3 level.

3364   MR. ANTECOL: As an option, yes.

3365   Then, as a CLEC, we sometimes lease facilities to the ILEC POI instead of joint building to the ILEC POI. Some ILECs say: Okay, that's fine, but you also have to pay for muxing at the POI down to the DS1 level, because that's the only way we are going to allow interconnection.

3366   And other ILECs have said to us: That's fine. We understand that.

3367   And we are responsible for costs on our side of the POI, and they will cover the muxing charges.

3368   So what we are finding is an inconsistent application of the co-carrier rules, where some ILECs -- in particular, Bell Canada is using every opportunity it can to foist extra charges on the CLEC for interconnection.

3369   THE CHAIRPERSON: And that, in your view, is inconsistent?

3370   MR. ANTECOL: Yes.

3371   THE CHAIRPERSON: Why haven't you brought it to us?

3372   MR. ANTECOL: Well, we planned to. What happens is that we struggle every day to advance our network rollouts and to develop our interconnections, and quite often, because we are a start-up in a growth mode, we will make compromises and we will just eat it and deal with it later.

3373   So, in many cases, I have agreed in the negotiations and just -- okay, so they are killing us for another 500 bucks here again today. Let's move on and we will deal with them later.

3374   THE CHAIRPERSON: That's because, if you picked a fight, you wouldn't be connected. Is that the idea?

3375   MR. ANTECOL: Yes. Also, I could be at the Commission every day with a new dispute, if I took issue with --

3376   THE CHAIRPERSON: Don't be tempted, please.

--- Laughter

3377   THE CHAIRPERSON: Your second point is EAS transport. Explain that to me.

3378   Could you use the graph that I handed out yesterday, which explains what EAS transports are on local transits?

3379   Madam Secretary...

3380   MR. ANTECOL: I don't have the graph in front of me --

3381   THE CHAIRPERSON: You will have it in front of you in two seconds.

3382   MR. ANTECOL: -- but I can explain the issue quite well.

3383   I will use Toronto as an example. We connect as a CLEC to the ILEC switch, and we use a number of different trunk groups. We use a bill and keep trunk group, which is for traffic that is -- when we send the phone company traffic, it is destined for the ILEC's LIR only, and it is the ILEC's traffic only.


3385   MR. ANTECOL: Another trunk group is an EAS trunk group, and another one is a local transit trunk group, and there are a few other trunk groups as well. I won't get into all of them.

3386   What happens is, if the traffic is for the ILEC -- so after we do the LNP dip and we say that this is an ILEC, this call is destined for an ILEC customer, but it's not in the LIR, but it is in the EAS, we can't put it on the bill and keep, so instead we put it on the EAS trunks.

3387   Where this becomes a problem is an LIR like Toronto. The Toronto LIR is just the City of Toronto south of Steeles. The Toronto EAS goes all the way up to Aurora, and goes all the way east to Ajax/Pickering, and all the way west to Oakville. So the Toronto EAS is much bigger than the Toronto LIR.

3388   THE CHAIRPERSON: So let's assume it's a call to Oakville. What happens then?

3389   MR. ANTECOL: We put it on the EAS trunk to Bell at the ILEC switch, which is Adelaide, and Bell then transports the call to Oakville on its own network.

3390   THE CHAIRPERSON: Right.

3391   MR. ANTECOL: Now, for a call from Oakville to Toronto, what happens is, Bell transports that call to Toronto, to the Adelaide switch, and hands it off to us on the bill and keep, which they are entitled to do, and I don't have an issue with that.

3392   What happens in this situation is that -- we know our traffic is almost in balance. We measure it constantly, and on any given typical month in Toronto, the balance doesn't sway more than 3 percent.

3393   But what happens is, when we get the traffic in our switch from our customers, we then have to separate it three ways. We separate it by bill and keep, EAS and local transit.

3394   When we get the traffic in the other direction from the phone company, what happens is, they send us bill and keep traffic, but they also put the EAS from Oakville on that bill and keep, and they also put the local transit from other CLECs. So they create a natural imbalance.

3395   In Toronto, we typically collect about $35,000 a month in imbalance payments on our bill and keep trunks with the phone company, and not because our traffic is out of balance. It is right on balance, but what happens is, the traffic we send to the phone company we split over three trunk groups -- EAS, local transit, and bill and keep -- and the traffic we get from the phone company comes on one trunk group, which is the bill and keep trunk group.

3396   So all we are saying is, if you let us --

3397   THE CHAIRPERSON: If that is the case, what advantage does Bell get from doing this?

3398   MR. ANTECOL: Bell charges us zero for the EAS trunk. I buy 14 T1's, at roughly $475 a T1. So, for argument's sake, let's just say that I pay Bell $7,000 a month for EAS, and I collect $35,000 a month on the bill and keep imbalance.

3399   So I come out ahead, but I guess what I am saying is, if I could put that traffic on the bill and keep, then I wouldn't need that trunk group and I would have a lower imbalance, and I would rather have a lower imbalance from Bell, because, frankly, chasing Bell every month for payment on invoices I send them on bill and keep imbalances is something I would rather not do.

3400   THE CHAIRPERSON: But, surely, if there is an imbalance, it's a natural advantage not to have such an imbalance. Are you suggesting -- are they using you as a bank?

3401   Is that what you are telling us?

3402   MR. ANTECOL: If they are using me as a bank, boy, do they have problems.

--- Laughter

3403   THE CHAIRPERSON: I am trying to understand what is the motivation for Bell to do this.

3404   MR. ANTECOL: I don't know what the motivation for Bell is, but I am guessing that maybe they are concerned that they are carrying that call from Oakville to Toronto and, therefore, they should get a little extra for that.

3405   I am just guessing --

3406   THE CHAIRPERSON: But you are telling me that there is also an imbalance in your favour, and they have to chase you for that money, so why --

3407   MR. ANTECOL: No, I have to chase them for the money.

3408   But, yes, I don't understand why they don't permit it. Frankly, it doesn't make any sense to me.

3409   Now, it's not as big a problem in other LIRs. The LIR and the EAS for Oshawa are almost the same. The footprints are similar. I think they are off by an exchange or two.

3410   So we don't have these problems where the LIR and EAS are roughly the same size, but in places like Toronto, it does create an issue.

3411   And, to me, it is just an efficiency issue more than anything else. Quite frankly, we --

3412   THE CHAIRPERSON: And what is your remedy?

3413   MR. ANTECOL: The remedy is one of two things. We will self-remedy eventually, but the remedy is either let me put my EAS traffic on the bill and keep trunk route, or I will expand into all of the other LIRs around Toronto and I won't need an EAS.

3414   But the thing is, I don't want to do the expansion just to avoid $7,000 a month in EAS charges, because that means wasting number resources and other things.

3415   Eventually I will expand all around Toronto as a CLEC, so eventually the problem will go away, but I would think that from a short-term efficiency perspective, they should allow CLECs to put EAS traffic on bill and keep facilities.

3416   THE CHAIRPERSON: Okay. On page 3, at the top paragraph, what are you driving at here?

3417   If we reject co-carrier -- you want us to give them co-carrier status. I understand what that means. But if we don't, you have sort of a fallback solution here. What is that?

3418   MR. ANTECOL: Let me take a step back to explain it, and I am going to use Toronto as an example.

3419   In Toronto, we have bill and keep trunks with Bell Canada, but they are separated into 38 trunk groups. What happens is, we have a bill and keep trunk group to each of 38 different local switches in Toronto.

3420   Bell has said: Okay, there is enough traffic between your switch, Yak, and each of our local switches in Toronto, so we want you to have a bill and keep trunk group to a broader set of switches.

3421   We only pay for the trunking from POI to POI, but we have 38 bill and keep trunk groups in Toronto, 1 to each of 38 switches where we interconnect.

3422   What we are saying is, let us have the reverse ability and let it apply to wireless switches.

3423   So if I have my CLEC switch in Toronto, which I do, which is a Genband switch in Toronto, and I also have a wireless switch in Toronto, what I am saying is, why should the traffic have to go to the wireline switch and then the wireless switch every time?

3424   Why can't I get the same right to high-utilization bill and keep trunks as Bell?

3425   Why can't I say to Bell: And, Bell, by the way, where there is enough traffic from one of your switches to either one of my two switches, I would like you to establish another bill and keep a trunk group -- a high-utilization group -- to my second switch.

3426   Not only that, but it shouldn't matter whether my second switch is a wireless switch or a wireline switch.

3427   If we did that -- and I think what Videotron was suggesting this morning is really a similar concept -- then, in fact, I too, as a CLEC, would get the benefit of high-performance routing in the same way that the phone companies are able to push me to help them have high-performance routing.

3428   THE CHAIRPERSON: Okay. Now, when we talk about going to IP, you suggest that we mandate.

3429   This is quite a change from where you were in your original submission, isn't it?

3430   MR. ANTECOL: Yes, initially -- I mean, I just started to be in charge of Regulatory for Yak and WIND on August 8th. Prior to that the two companies were operating completely independently on Regulatory.

3431   So, yes, there have been some changes. I don't think there have been a lot of changes on mandating IP connectivity. We line up pretty closely with the Rogers/Cogeco approach, which is: mandate where a LEC has demonstrated an ability to --

3432   THE CHAIRPERSON: That was my next question. I thought you went further than that. I thought that you actually said: Do it. Mandate it now.

3433   MR. ANTECOL: Yes, I apologize. In my text remarks we left out the words: " least initially where ILECs have a demonstrated ability to provide such connectivity to others."

3434   When I read my remarks I added those words, but they were missing from --

3435   THE CHAIRPERSON: Yes, they are not in the written text.

3436   MR. ANTECOL: Yes, I apologize. That was my omission.

3437   THE CHAIRPERSON: So you are on the Rogers/Cogeco line.

3438   MR. ANTECOL: Correct.

3439   THE CHAIRPERSON: What it all boils down to is, how do we establish that there is IP connectivity, and if I understand you, you are basically saying --

3440   The fact that you have a connection with somebody else already, that is proof that there is IP connectivity, you can do it.

3441   MR. ANTECOL: Correct.

3442   THE CHAIRPERSON: If that is the case, then any interconnection, let's say with you -- whether WIND or Yak, it doesn't make a difference -- let's say WIND -- then it would be on a cost-shared basis?

3443   MR. ANTECOL: That is correct.

3444   THE CHAIRPERSON: Now, we have heard a lot about the point of interconnection. Would that be on the basis of the LIRs, would it be based on the province? The agreed point of interconnection, how would that be done?

3445   MR. ANTECOL: We think -- and I am going to pass it over to the engineers in a moment, but we think that the default should continue to be the LIR. We think there should be the flexibility to negotiate interconnections that cover larger regions.

3446   In fact, Yak is working on an interconnection agreement with another CLEC. It is pretty much turned up, and the only reason it is not in service is because I haven't had the time to draft up changes to the MALI and file it with the Commission, so we have it on hold.

3447   But what we were contemplating doing with the other CLEC is a larger interconnection region. So we would connect with them in Toronto, and all traffic for that CLEC in Ontario, we would send it to them in Toronto, and any traffic they had for WIND or Yak in Toronto they would send to us on that facility.

3448   We have it in place, but, again, to draft -- unfortunately, it has taken us a long time to get the agreement together, so we have the facility turned down.

3449   I am going to pass it over to the engineers.

3450   I think there should be the flexibility to negotiate with the larger interconnect regions, but they shouldn't be mandated, and I think that is because there are some very harsh technical realities and barriers that would get in the way as you travelled --

3451   THE CHAIRPERSON: We have two different regions here. What is the first region?

3452   When you say where they have IP interconnectivity, is that on an LIR basis?

3453   MR. ANTECOL: That is the default, yes.

3454   THE CHAIRPERSON: That's how you start off.

3455   MR. ANTECOL: Yes.

3456   THE CHAIRPERSON: Then, presumably, the default is, if you have connectivity in LIR, you have to offer it to the people who want it on a cost-shared basis.

3457   MR. ANTECOL: Correct.

3458   THE CHAIRPERSON: However, the fallback is that you can negotiate with them on one point of interconnection for 3 DLRs -- LIRs or whatever -- whatever makes sense in terms of economics and geography.

3459   MR. ANTECOL: Correct. Whatever makes sense from an economic or geographic or technical capacity.

3460   Rishi, do you want to explore that a little bit?

3461   MR. BAHALL: The overall concept is that we will look to the LIR by default, as the backstop that we are looking to get mandated, but holistically you can negotiate on a commercial basis and on a technological basis as to what are viable connectivity options, and let the overall commercial terms drive that, and your business drive that, as to what makes sense.

3462   But what we are really saying is: Give us the LIR as a backstop.

3463   MR. ANTECOL: There is another area. What happens is, if we took all of our traffic --

3464   Yak carries about 150 million minutes a month of traffic. If we took all of our traffic, for all types of services, and funnelled it to one point, and interconnected with a carrier at one point, we could potentially blow them out of the water. We could potentially have more traffic than could be handled on a gig or a 10-gig circuit, in which case, if we needed 100 gig of interconnection, that would mean that the other carrier would need 100 gig backbone on their network to handle that interconnection, and those kinds of networks -- they are coming, but I don't know if 100-gig backbones exist too much today.

3465   So it may not make sense, initially, for a carrier to want to put all of their traffic through a single point, for a number of reasons.

3466   Did you want to add anything?

3467   THE CHAIRPERSON: We don't have to go through that. Your concept is that you start with the LIR as the basic point, and then the parties are free to negotiate whatever arrangements are in their mutual interests.

3468   Now, you said a lot of things in your submission -- and I have asked everybody about this, about the fact that testing and trials and existing interconnections should be shared, especially with CISC, in order to eliminate problems, and also to share knowledge, et cetera.

3469   You didn't repeat that in your oral remarks this morning.

3470   MR. ANTECOL: When we combined our appearances, we took two 20-minute speeches and had to condense them down into one 20-minute speech, but we still maintain that position for disclosure.

3471   Without that, we risk the possibility that Canada will fragment into many, many networks, and consumers could potentially lose some benefits of innovation, to the extent that nothing works with anything else, and then everybody is stuck with the lowest common denominator of inter-working.

3472   THE CHAIRPERSON: The other thing in your written submission was, you said that the MALI has to be amended to make sure that the prohibition for bill and keep regarding IP is removed.

3473   Is that the only change that is required to the MALI? Everything else can be applied to IP interconnection?

3474   MR. ANTECOL: I think for the basic MALI that is the only change, but the Schedule C's that will be written -- we have to file the actual interconnection arrangements. They would be considerably different from what the Commission typically sees today, and the Commission would have to signal a willingness, I think, to allow for a greater deviation in interconnection arrangements.

3475   I don't know why, but the ILECs seem to take the view of: Well, we can't even talk to you about this kind of interconnection, or that kind, because it's not allowed.

3476   THE CHAIRPERSON: If I understand you correctly, if we want to foment interconnection on an IP basis, one of the things to do is to take out the sentence in the MALI, so that, therefore, ILECs couldn't hide behind it, and then, whatever you work out, it would come before us and we would have to approve it.

3477   Is that the idea?

3478   MR. ANTECOL: Yes, that's correct.

3479   THE CHAIRPERSON: Thank you, those are my questions.

3480   Len...?

3481   COMMISSIONER KATZ: Just one, Mr. Chairman. Thank you very much, and good afternoon.

3482   I heard some of the parties this morning and yesterday talk about wireline equal access as being a 1990 phenomenon, and long distance is no longer purchased à la carte.

3483   You are an IXC, what are your views on wireline equal access?

3484   MR. ANTECOL: Let me start by sharing with you some of our experience in IXC connecting with Microcell Fido.

3485   We currently connect to four Fido wireless switches. Fido is a wireless CLEC and provides equal access. Two in Toronto, and one in Vancouver, and I believe one in Montreal or Ottawa. I'm not sure which city. But to four.

3486   And I ran some numbers. We currently have $6,000 a month in revenue from those four interconnections, so clearly, we have to pay for the interconnections, the terminating costs of that traffic, the billing and collection fees, et cetera.

3487   If I had to do it again, would I go out -- or if I wanted -- would I expand that service? Would I -- I'm sure Fido has more than four switches.

3488   Would I go out and seek to interconnect to any other Fido switches to provide equal access more broadly? Today, I wouldn't. You know, it's simply not a growing -- it's simply not a profitable venture when I figure in the interconnection costs that I pay as an IXE.

3489   So I'm not -- as an IXE, I'm not really excited about going out and connecting to all the wireless switches across Canada. I -- but I have something better. And what I have is I have an app called Yapp, Y-A-P-P, and it's a Blackberry app. And with that, wireless subscribers can make long distance calls on our network, and it's a call-back service.

3490   So basically, I turn the -- I turn their call into an inbound call to them so they don't pay any long distance fees to access our network and they can make calls from whatever, work. By the way, it works in small ILEC territories, too. It works everywhere.

3491   And so, you know, it's a much easier way to deliver long distance services to mobile subscribers than the hit and miss approach we have with Microcell. And I can talk more about some of the other difficulties, but it's generally not -- the current equal access implementation that's in place is not, is not really a good equal access solution.

3492   COMMISSIONER KATZ: But as wireless replaces wireline for basic telephone service 'cause they are becoming more and more substitutable and people are cancelling their wireline service, your IXE business as you know it today will also erode, presumably.

3493   MR. ANTECOL: Our IXE business is definitely eroding. It's eroding significantly every year, and we are replacing it with other services. That's why we've pushed into CLEC services. We have digital home phone product, which is a local VOIP product. And we realize that the IX business is declining and --

3494   COMMISSIONER KATZ: So back to my question that you didn't answer when I asked it.

3495   On the wireline side, do you see a day when equal access will no longer be required or necessary because, as some of the parties said this morning and yesterday, long distance isn't sold a la carte any more. It's sold as part of a service.

3496   MR. ANTECOL: Well, I want to delay that day as long as possible because I want to recover my -- you know, my investment. But I imagine at some point it will erode.

3497   I mean, certainly because it's eroding is no reason to cancel it. I think consumers derive a real benefit.

3498   Yakk's rack rate for no plan if you're a PIC TX subscriber for long distance is three and a half cents a minute for Canada termination.

3499   I mean, there are consumers who are, you know, price sensitive and it's a great service. And just because it's eroding, I see that as no reason to abandon it.

3500   Now, on the wireless side, I take Dave Watt's point that, you know, would you cause that investment in the wireless industry today for equal access. Not sure. I don't think it's worthwhile as an endeavour given where things are heading and given the up-front expense of implementation.

3501   COMMISSIONER KATZ: I don't have any more questions, Mr. Chairman.

3502   THE CHAIRPERSON: Suzanne?

3503   COMMISSIONER LAMARRE: Merci, monsieur le président.

3504   Mr. Antecol, I have to admit, you speak as fast in English as I speak fast in French, so we're going to make this easy on both of us.

3505   I'm going to ask slowly my question in English and you're going to answer slowly in English. How's that? Okay.

3506   I want to talk about your request that we regulate and mandate IP to IP interconnection. I got a little bit of a longer preamble than usual, but bear with me. In the end, it should be making sense.

3507   So if I take you to page 4 of your presentation, you say that until then, there is -- TDM equipment is replaced by IP equipment, you said there is plenty of incentive for ILEC to continue to maintain traffic on the legacy networks until near end of life for such equipment.

3508   So there, in my view, you admit that what you want us to do is intervene so we accelerate the turnover of equipment for TDM to IP, and that's your prerogative. I'm not arguing whether it's good or bad.

3509   Now, ILECs do -- and we need to consider this as a fact. They have a large part of equipment -- legacy equipment because of historical reasons. They were a monopoly, they're not any more, but as the former monopoly, they still have this obligation among others' obligation to serve.

3510   So with that in mind, it brings me to page 5 of your presentation when you say that:

"Early implementation of IP interconnection is consistent with Section 7(c) of the Telecomm Act."

3511   Now, there's more to the objective of the Act than 7(c), and as a Commission, we don't have the luxury nor the option to pick just one. We need to consider all the relevant ones, and not only consider them, we need to reconcile them.

3512   So going through the objectives of the Act, there's 7(f), which I'm sure you also like very much, is to foster increased reliance on market forces for the provision of telecomm services.

3513   But let me point your attention to a few others. (a) is to facilitate the orderly development throughout Canada of a telecommunication system; underline "orderly". (b) is to render reliable and affordable telecommunication services of high quality accessible to Canadians in both urban and rural areas, and underline "rural".

3514   (h) is to respond to the economic and social requirements of users of telecomm services.

3515   So tell me just how your position allows us to meet in a satisfactory fashion not just 78, but all the relevant objectives of the Act.

3516   MR. ANTECOL: Okay. Well, thank you for that question.

3517   So first of all, again, and I apologize for the confusion in our speech where we left out some words, but we're asking for a mandate where there's a demonstrated provision of IP interconnection already.

3518   So there'll be a time when the ILECs have -- you know, they have their TDM network, but say 10 percent of it's got IP capability.

3519   So what we're worried about at that point in time is that the ILECs will elect to do IP interconnection, Bell will elect to do it with TELUS and SaskTel and, you know, they'll get together in their little club. And they won't be interested in doing IP interconnection with Yakk -- with the Yakks of this world.

3520   So they'll discriminate against us. They'll choose to do us last. And so, first of all, we're not forcing advancement of early investment. If they've made the investment to offer it to some others, they've got a demonstrated ability to offer the IP interconnect, then we're saying, well, then you should mandate it on some basis so that we can all have a chance because, otherwise, me, as a little guy, is going to get left out.

3521   We're quite sure we'll be left to the bottom of the pile, and we'll be the last ones off the equipment before they turn the power off on the equipment. And I feel sure they'll give us one day's notice that we need to transition because they're turning off the last piece of equipment because that's the way they -- that's the way we're generally treated as a smaller player by the larger players.

3522   So I don't think we're being inconsistent with the objectives of the Act when we're asking for a chance to be treated fairly.

3523   COMMISSIONER LAMARRE: So basically, what you're aiming at when you're asking us to mandate is to make sure there's no undue preferences or undue discrimination that's taking place in the market where IP interconnection is available.

3524   MR. ANTECOL: Correct.

3525   COMMISSIONER LAMARRE: Thank you very much.

3526   Those are all my questions.

3527   THE CHAIRPERSON: Okay, thank you very much.

3528   Sorry. Go ahead, Time.

3529   COMMISSIONER DENTON: Okay. Hi. Good afternoon.

3530   I just don't want to prolong this, but my question is, when you say that in reference to mandating IP interconnection we recognize that it cannot happen immediately, I read that and what I see what you're saying is you would like us to unleash a process of getting there immediately that would result, after suitable standards development or the adoption of standards already made, you would prefer something be unleashed immediately that would lead in an orderly way to IP to IP interconnection as the default.

3531   MR. ANTECOL: Okay. Well, the first comment is IP interconnection is already happening. Yakk itself connects with 29 other carriers on an IP basis. Although albeit for the exchange of IX traffic we connect with all the carriers we connect to with on an IP basis today, our IXEs from -- you know, typically, IXEs in other countries and different equipment. And we have a session border controller, and we match the protocols and off we go.

3532   So we know IP interconnection's happening already, but what doesn't happen on these IP connections, there isn't the feature richness that we would hope from an IP world. And I'm going to pass the mike over in a moment.

3533   But for instance, WIND today offers HD voice service, which is one of the features that IP enables that you don't get on a traditional TDM network.

3534   So what we would like to see evolve is not only replacement of TDM transport with Ethernet transport and SIP protocol, but we'd like to see, you know, a greater inter-working of features and richness of the communications develop. And so it's important that the industry understand what standards are being deployed by all the different carriers who are doing IP interconnect and that the Commission provides some minimum set guidance like they did on SS7 connectivity in terms of what features you need to support because, otherwise, a lot of features might not work with each other.

3535   So just in terms of developing the fabric in Canada, it's important to keep track and monitor and coddle and encourage some level of consistency.

3536   It doesn't have to be perfectly matched. Everyone's going to have different equipment and different add-ons and different flavours of things, but there is some importance to consistency.

3537   COMMISSIONER DENTON: Just you still haven't answered my question. You've answered -- you've given me a lot of interesting things, but the question was, what is your time frame for getting this going. Is it like get this going now and move in an orderly way to arrive at it?

3538   MR. RUPEIC: Yeah. If I may, please.

3539   Yes, we would like to start this time frame now. I'd like to use or talk about a concept called interoperability effect, and I -- being in the wireless business, I'd like to talk about a very important case study that demonstrates the interoperability effect in the context of IP interconnection.

3540   I'm sure you're all familiar with text messaging. And what you may not remember well is that text messaging didn't always interoperate between operators. And what I'm about to say is that interoperability has a dramatic effect on usage, on revenues and on innovation.

3541   So the case study I want to give you very quickly is in the UK. Up to the year 1999, text messaging had plateau'd out in the UK. Then, they subsequently introduced interoperability with all the other competitors in their space, and suddenly, text messaging expanded dramatically, 300 percent within less than a year.

3542   And what's also important to state there is that it didn't just grow for that one operator; it grew for the entire industry. The entire industry saw a boom in messaging, a boom in usage, a boom in revenues.

3543   So what's important to learn there is that interoperability facilitated that.

3544   The other important point to make here is the notion of market momentum. If there's over 50 percent of us that have IP-enabled end user devices today, wireless included, there's a momentum there, a critical mass. And the only way to make that really take off is if the -- all the market players interoperate.

3545   And when they do interoperate, what that facilitates is ease of use between customers on the different networks. That will facilitate richer multimedia services that will facilitate innovation between customers on different carriers and it will increase usage, it will increase revenues for all.

3546   So in my mind, that investment makes sense.

3547   So if we don't do it that way, there is also the potential of stalling the market. And the example I use will be North America and text messaging.

3548   In North America, we did not allow or facilitate text messaging interoperability as quickly as Europe did or as quickly as other markets did. And noticeably, we didn't see a boom in text messaging in North American to begin with.

3549   And even after interoperability, it took longer for that growth in North America than it did in other parts of the world because users were discouraged and didn't know about interoperability or didn't know that you could send text messages to different users.

3550   So anyway, to make a long story short, I think it's a very relevant example demonstrating the importance of interoperability, and the sooner we get to it, the sooner we will all benefit from it.

3551   COMMISSIONER DENTON: Sorry, you just piqued my curiosity.

3552   So now we've had proposals from Rogers, say, that said we've got the SIP portion right and we've got some other standards right that have already been worked out in CISC, which is fine. But what I hear you saying is in addition to that work, more work needs to be done to establish the interoperability of features so that -- and I'm trying to get the order in which things might proceed.

3553   You know, does everything have to happen at once? Can it proceed in a roll-out of features that are agreed upon?

3554   MR. ANTECOL: Okay. I'm going to start and I'm going to pass the question over to Ante.

3555   The first thing is, the CISC stuff was done, I believe, in 2006. I believe they adopted the original Nortel or based their work on the original Nortel SIP standard.

3556   Since then, there's been additional SIP standards developed, SIP -- if you think you've heard the use of the word SIP-T and SIP-I in this hearing, and SIP-I is -- you know, supports a much richer feature set, so -- and the key take-away here is the sooner we get going -- and I think it's pretty urgent because you've got Rogers and Cogeco and others who are end to end IP. You've got WIND that's end to end IP, so you've got wireless carriers, cable carriers, end to end IP.

3557   So I think you've got a pretty large base already forming of IP-capable customers. And so I think, you know, getting it right is key and starting quickly is also key.

3558   Go ahead.

3559   THE CHAIRPERSON: Make it short. I don't need another long talk about a study.

3560   MR. RUPEIC: Fair enough.

3561   So again, to answer your question, IP interconnection is the start. The end to end innovation will come. It'll be driven by market forces, most likely, but I think it's important at least to allow interoperability through an IP interconnection.

3562   COMMISSIONER DENTON: Good. Thank you.

3563   THE CHAIRPERSON: Thank you very much. Those are our questions for you.

3564   Now, we're a little bit ahead of time and if we want to make tomorrow a short day, all the people scheduled for tomorrow, I see that only PIAC is here in its full complement.

3565   PIAC, are you ready to go on right now, or not?

3566   MR. LAWFORD: As long as you don't mind me looking at my computer screen rather than a piece of paper, yes.

3567   THE CHAIRPERSON: Perfect. Then let's take a five-minute break and then you're on.

3568   Thank you.

--- Upon recessing at 1431

--- Upon resuming at 1444

3569   THE CHAIRPERSON: Okay, we have a full complement, let's go.

3570   Madame la Secrétaire.

3571   THE SECRETARY: Thank you, Mr. Chairman.

3572   We will now proceed with the presentation by Public Interest Advocacy Centre.

3573   Please introduce yourselves for the record, after which you will have 20 minutes for your presentation. Thank you.


3574   MR. LAWFORD: Thank you.

3575   Mr. Chairman, Commissioners, Madam Secretary and CRTC staff, my name is John Lawford and I am counsel to the Public Interest Advocacy Centre, PIAC.

3576   With me today is Gerry Wall, President of Wall Communications Inc., who is assisting us with this proceeding.

3577   The Commission initiated this proceeding to review the local, wireless and toll network interconnection regulatory regimes.

3578   The principal objectives of the proceeding, as stated by the Commission, are to determine to what extent existing interconnection regimes can be simplified and consolidated, what changes are necessary to enhance competition, thereby benefiting consumers, and what changes are necessary to ensure technological neutrality.

3579   PIAC views the Commission's current proceeding as a necessary and timely step to take stock of how regulation can ensure that interconnection rules and practices best serve the needs of Canadian consumers.

3580   Historically, various types of network connection -- for example, interconnection, wireless and local -- were addressed separately at discrete points in time. This has resulted in fundamentally different types of interconnection regulations for each network type.

3581   As the science and business of telecommunications have progressed, so have the needs and options for both network operators and consumers. Regulation must necessarily do the same.

3582   The telecommunications world has evolved from a single primary network which was gradually flanked by a limited number of secondary networks to a true "network of networks," where primacy is shared amongst many networks.

3583   At the broadest level, PIAC believes that interconnection must be offered on terms that provide the greatest likelihood of encouraging and strengthening competition, while not imposing undue costs on parties making interconnection available.

3584   We cannot foresee what types of new networks might develop but we can ensure that new technologies and networks are encouraged with favourable interconnection terms and conditions.

3585   We now turn to the Commission's seven questions.

3586   Gerry.

3587   MR. WALL: PIAC is of the view that IP as the primary means of transporting voice traffic will continue for several years. While we believe the Commission should encourage IP-to-IP interconnection for those parties who mutually desire it, we do not believe the public interest is served at this time by mandating IP-to-IP interconnection.

3588   However, since IP technology may develop and be adopted faster than expected, we believe the Commission should monitor the progress of IP use in networks and revisit the issue at some point within the next 24-30 months.

3589   PIAC has concerns, however, that the process of considering IP-to-IP interconnection and the possibility of the need for a tariff should commercial deals become difficult to negotiate may become more urgent within this timeframe.

3590   As a result, we suggest the Commission consider reference to CISC or an industry roundtable, passing them the task during this period of studying and reporting on IP-to-IP interconnection agreements and if necessary drafting a model tariff.

3591   Any work done by CISC or the roundtable participants should be made publicly available ahead of the Commission reconsideration of the issue within two to two and a half years.

3592   As a final consideration in this area, should the Commission accept a version of the Rogers and other cableco submissions that IP-to-IP traffic should be mandated where it is being offered by the ILEC, we have two suggestions.

3593   First, for traffic transiting ILEC networks that is IP at the originating and IP at the terminating carrier, ILECs should be mandated to pass this traffic via IP. In other words, we're asking for an IP transit service.

3594   Second, regarding the stranded investment question, we suggest that ILECs be required to, over a reasonable transition period -- that would be some years, not some months -- transition to absorbing 100 percent of TDM-to-IP conversion costs. This would provide a financial incentive for the ILECs to move to IP.

3595   MR. LAWFORD: Turning to question 3, PIAC shall not be actually addressing the third question of forbearance from the regulation of all network interconnection services for the reasons we gave in our letter to the Commission of the 14th of October 2011.

3596   Question 4. With respect to the question of whether or not wireless carriers should have all CLEC requirements imposed upon them, we do not believe that there is a significant public benefit in having the unaffiliated new entrants take on all CLEC obligations in order to be entitled to participate in the shared-cost and bill-and-keep interconnection regime. Thus, PIAC believes that wireless carriers should be viewed as co-carriers with, as opposed to customers of, local exchange carriers.

3597   In PIAC's view, the relevant question is whether there is a compelling policy reason to grant the unaffiliated new wireless entrants' request.

3598   In this regard, we would note that the entry of the new wireless service providers has given rise to many benefits for consumers, at least in those cities where the new entrants are operating. These benefits include lower prices, more choice, higher subscriber penetration, higher customer satisfaction, simplified pricing, elimination of term contracts and a host of other improvements.

3599   We also recognize that the unaffiliated new wireless entrants face significant challenges in the marketplace.

3600   Such challenges include high costs associated with (a) providing the interconnecting facility between its network and a LEC's network, and (b) paying Commission-approved tariff rates to the LEC for traffic routed from the wireless carrier to the LEC, as well as for traffic routed from the LEC to the wireless carrier.

3601   In contrast, LECs are responsible for their own costs of facilities and services upon interconnection with one another. This status quo evidently affects competition in the marketplace in a negative manner by depriving the unaffiliated new wireless entrants, especially those who wish to provide affordable wireless services to consumers, from competing on a level playing field.

3602   On balance, PIAC believes that it is in the public interest to support and encourage the new entrants where it does not place undue costs on other providers or does not unduly distort incentives in the marketplace.

3603   Moreover, with respect to equal access that should be provided by LECs, PIAC agrees with the argument of WIND and Mobilicity that it is not clear to what extent equal access is actually made available by the Big Three -- TELUS, Rogers, and Bell -- integrated carriers and their affiliated "flanker" brands of mobile wireless service.

3604   What is evident is that each of the Big Three constitutes an integrated wireline and wireless communications undertaking and, as a consequence, their wireless operations as well as their "flanker" brands appear to benefit from the shared-cost interconnection regime of their wireline affiliates.

3605   PIAC further agrees with WIND and Mobilicity when they state that such status quo is "an intercorporate wealth transfer" that does not contribute to meaningful competition in the market.

3606   In keeping with the idea of maintaining a level-playing field for local exchange carriers and wireless carriers in the marketplace, PIAC recommends or requests that the Commission -- that wireless service providers should fulfil all but two specific obligations of the CLECs.

3607   The two obligations that wireless service providers should not be subject to are the following:

3608   - filing proposed tariffs for interexchange equal access and justifying any departure from the terms and conditions contained in ILEC tariffs; and

3609   - supplying directory listings to other LECs that serve the exchanges where the proposed CLEC plans to offer service.

3610   PIAC believes that these obligations would impose a high financial burden on wireless service providers, which would be passed down to consumers without any significant corresponding benefit.

3611   It should also be noted that with respect to the requirement of supplying directory listings, responses of the incumbents such as Rogers and TELUS to interrogatories show that they do not follow this obligation in a strict manner.

3612   For example, the percentage of Rogers Wireless-CLEC customers listed in the White and Yellow Pages is 0.195 percent, while the percentage of TELUS Mobility customers is also below 1 percent.

3613   Regarding the CLEC obligations that are beneficial for consumers, such as 9-1-1, serving area maps, MRS, PIAC believes that the unaffiliated new wireless entrants would not be heavily financially burdened when fulfilling them, or where there are costs, the social benefit is of greater importance than these associated costs.

3614   PIAC notes that the Policy Direction does not require the Commission to intervene only when there is market failure, but rather requires the Commission:

" rely on market forces to the maximum extent feasible to achieve the policy objectives set out in section 7 of the Telecommunications Act (the Act)."

3615   PIAC maintains that removing the equal access requirement for unaffiliated new wireless entrants simply places them on a level playing field with wireless carriers that are affiliates of ILECs or large cablecos as these affiliated carriers do not now permit equal access on their wireless networks, yet benefit from effective notional -- accounting only -- effective shared-cost or even no cost connection to parent corporations.

3616   PIAC's recommendation stands in line with the Policy Direction's requirement to:

"...if they relate to network interconnection arrangements ... ensure the technological and competitive neutrality of those arrangements or regimes, to the greatest extent possible, to enable competition from new technologies and not to artificially favour either Canadian carriers or resellers."

3617   PIAC believes that this proposed regime would create a level playing field for both wireline and wireless players in the market and thus promote competition that would benefit consumers.

3618   The Chair also asked at the outset of this hearing for comments on equal access and whether it should be mandated for all wireless service providers, whether affiliated with an ILEC or large cableco or if a new entrant.

3619   PIAC believes there is more short-term benefit to consumers to allowing new entrants some time to establish themselves on a level playing field without equal access by promoting healthy competition in wireless.

3620   However, we see possible benefits to consumers if the Commission examines the need for an overarching application of the equal access requirement on all wireless service providers in the future, in particular if long distance pricing remains stubbornly high.

3621   PIAC therefore suggests that the Commission evaluate the experience of permitting new entrants to interconnect on a bill-and-keep and shared-cost basis without the equal access requirement and the pricing of wireless long distance in a proceeding to commence two years or two years to 30 months from the date of the decision in this proceeding. This time period aligns with our recommendation for a review of the potential need for an IP interconnection in two to two and a half years.

3622   Gerry.

3623   MR. WALL: We were at first a bit confused by the use of the term "vertically integrated" WSPs in the question, but we have since come to understand that in the context of this proceeding it does not mean an integrated company owning, producing and distributing content through its own communications and broadcasting networks, but rather that a WSP might be affiliated with another entity, whether a separate corporation in the manner of the Bell Mobility relationship with Bell or a division of a larger entity such as Rogers Wireless or even WIND and Yak.

3624   If this understanding of the term "vertical integration" is correct, then there should be technological and competitive neutrality of those arrangement or regimes to the extent possible between both affiliated and "independent" WSPs.

3625   The question will be whether there are certain advantages in an affiliate relationship that make it, in fact, unfair not to have certain differences in treatment between affiliated WSPs and "independent" or new entrant WSPs -- again, depending on how these categories are defined. One example that we have already raised is the equal access rules; another would be directories.

3626   With respect to the question on wireless access service forbearance, as we may have foreshadowed earlier in the proceeding, we are not in favour of the removal of the WAS tariff.

3627   Even if there are declining revenues under the tariff as WSPs find other ways to interconnect, for example through an affiliated CLEC, it appears to us to be enough use of the tariff and enough market power of ILECs in many places to justify its continued existence.

3628   In any case, the tariff is in place not for maintaining the profit of the provider but for the fair billing of the customer in places without real competition.

3629   For example, smaller centres may have a nominal CLEC but one which does not have the facilities necessary for a truly robust presence by a new entrant WSP looking to expand its footprint.

3630   Bell's competitor or CLEC presence test alone, we don't think takes these realities into account.

3631   With respect to the SILECs and interconnection question, number 7, PIAC is not in favour of existing rules being modified to require wireless carriers in small ILEC territories to establish direct network interconnection arrangements with the small ILECs.

3632   We believe that imposing direct interconnection across the board -- unless mutual alternative agreements are made between the wireless carrier and the SILEC -- will be uneconomical in many cases and will almost certainly raise the costs of providing wireless service. The end result could well be that consumers face higher prices.

3633   PIAC notes that the JTF has stated that it is willing to make direct interconnection arrangements with WSPs if requested to do so by a WSP. That's great. We're in favour of that direct interconnection being made available on an optional basis where it makes sense to the parties.

3634   However, we are concerned that if WSPs are required to directly interconnect this will lead to unnecessary deployment of facilities and the JTF has stated that if it is the case that WSPs have to build more points of interconnection in order to offer services in SILEC territories, "then that should be viewed as a reasonable cost of doing business." We do not believe this is in the best interests of consumers.

3635   MR. LAWFORD: In a nutshell, the goal of PIAC in this proceeding is to advocate for efficient interconnection arrangements that provide the greatest encouragement to healthy competition and to the introduction of new and better technologies that would benefit consumers.

3636   We welcome any questions the Commission may have. Thank you.

3637   THE CHAIRPERSON: Thank you.

3638   In your submission, paragraph 9, explain to me the second sentence regarding stranded investments. I've read it now twice. I don't quite get what you're getting at.

3639   MR. WALL: What we heard earlier --and I can't remember the party -- it was one of the smaller carriers that was IP-based saying their problem is not just that they can't connect to the ILEC and then transport an IP traffic from themselves and have it terminated on an IP basis to the ILEC customer, but if they want to interconnect or provide service from one IP carrier to another IP carrier they can't do that today.

3640   So this is one way of saying, okay, then if that's the case it seems to us and, again, not having the engineering evidence from it and based on what we have gathered over the course of this hearing, one way around that is to mandate an IP transit service that would allow an IP carrier to deliver traffic on an IP basis to another IP carrier end-to-end service of not just the voice but all the attending smart services that would go with that.

3641   That does two things in our mind. One is it encourages that type of service to get out to consumers fairly quickly where direct interconnect between the two IP carriers wouldn't be feasible economically. So you get those services being offered and consumers get them quicker.

3642   Plus, the fact that those services are being offered would put some pressure on the ILEC who presumably doesn't offer that because they are terminating on a TDM basis to say, "Hey, if we want to be in this game we have got to get out there and provide the same type of services. So it also puts their toes to the fire.

3643   THE CHAIRPERSON: It must be the late hour of the day. Explain it to me with a concrete example.

3644   MR. WALL: Well, you have got a carrier that's --

3645   THE CHAIRPERSON: Okay. I'm aware of it being IP-based, okay.

3646   MR. WALL: IP based. There was a representative here from the -- I think CNOC.


3648   MR. WALL: He said, "We offer an IP service". We can't provide our service with all its richness and the things that we have to another IP carrier unless we directly interconnect with them and that's not feasible in many cases. And the ILECS will buy that transiting service on an IP basis to allow us to deliver --

3649   THE CHAIRPERSON: Okay. So, in this case, the ILEC would be obliged to provide a transit IP service. Is that what you're saying?

3650   MR. WALL: Yeah. We didn't agree with a mandated thing. We said, "If you decide to go that route" --

3651   THE CHAIRPERSON: Let's say for our --

3652   MR. WALL: Yes.

3653   THE CHAIRPERSON: -- Bell decides there is another business between those and establishes an IP trunk service.

3654   MR. WALL: Right.

3655   THE CHAIRPERSON: Then what?

3656   MR. WALL: Well, then your IP-based carriers can take advantage of that to transit traffic from their customer to the customer of another IP carrier.

3657   THE CHAIRPERSON: Yeah, I understand that but what you're saying. I don't know how this is in answer to the question in paragraph 9 which says:

"Second, regarding the stranded investment question, we suggest that ILECs be required to, over a reasonable transition period (likely some years), transition to absorbing 100% of TDM to IP conversion costs."

3658   MR. WALL: Okay. So I apologize. I didn't understand you had moved to the second part of that paragraph. So let me respond to that.

3659   One of the issues -- so that's the first issue, IP carrier to IP carrier. We have tried to look at that.

3660   The other one is IP carrier to an ILEC that's terminating on a TDM basis.


3662   MR. WALL: What do you do with that?

3663   One of the key questions, as we have all seen, is the conversion cost, who pays for it. So there have been arguments on both sides that you have to force them to do it quickly so mandate it; make them pay all the costs.

3664   The ILECs are saying you know we have got a network that works very well at terminating voice traffic and we shouldn't be forced to move to that. It's not in our customer's best interests.

3665   So, in our view, one compromise, a type of compromise is to start out at the outset of this decision saying, okay, we're going to allow you to recover your conversion costs by charging interconnecting parties for the first year or six months or a certain period of time.

3666   But over time we are going to ramp down what you can recover in terms of your conversion costs so you get --essentially you're each sharing your own costs. When you terminate and you have to convert, you do that. When the other carrier has to convert they do that over a period of time. So it's about sharing --

3667   THE CHAIRPERSON: So you're writing into the tariffs the costs of standard investment to be over a five-year period or something. That's the idea?

3668   MR. WALL: That's right.

3669   THE CHAIRPERSON: I see, okay.

3670   Len, you have some questions?

3671   COMMISSIONER KATZ: Yes, just a few, Mr. Chairman.

3672   In paragraph 6 you suggest in there that we, the Commission, encourage IP-to-IP interconnection. What's your definition of encouragement?

3673   MR. WALL: I think clarification of being able to do off-tariff. For example, if you want to do IP interconnection that would be one example of encouraging.

3674   COMMISSIONER KATZ: So, if they do off-tariff IP-to-IP arrangements how should other parties be made aware or should they be made aware of these so it would encourage others to take part as well?

3675   MR. WALL: Good question, and frankly we haven't addressed all aspects of that in our internal discussions. But it would seem --

3676   MR. LAWFORD: Well, one of the things that we did in the essential facilities decision was say that -- sorry, in the follow up that Bell brought to the essential facilities decision to review a part of it, you said for the non-essential mandated services that you can then go off-tariff but you have to publish.

3677   So would that be a way of doing it? Perhaps that would help that transparency. You could do the same thing.

3678   MR. WALL: Same thing I think there has been a suggestion that if you are offering that service to another party then you have to make that service available to other parties as well. That would be another way of doing it.

3679   COMMISSIONER KATZ: What if you're only offering it to yourself?

3680   MR. LAWFORD: Sorry, could you give me an example? You mean say between Bell Mobility and Bell, Bell wireline?

3681   COMMISSIONER KATZ: Yes. Would you have to make that public as well?

3682   MR. LAWFORD: I guess, if I want to give the lawyer answer, it would be are they separate legal entities; yes, and if they were part of the same division, no. But overall, the better answer is yes, we would make them publish those ones as well.

3683   COMMISSIONER KATZ: Okay. In paragraph 8, you then talk about suggesting we consider reference to a roundtable or to CISC.

3684   Is that in consideration of the encouragement or is that independent of the encouragement? Like do you see that only happening if there is a breakdown, that we then decide based on a complaint to move this over to a CISC?

3685   MR. WALL: Yes, I think it's going to happen anyway and it should happen. Anyway, if they have already dealt with certain of those matters, it should continue to do that.

3686   MR. LAWFORD: There seem to be enough -- excuse me. I will also answer. There seem to be enough issues that we have heard in this proceeding already that require ongoing resolution in CISC.

3687   Adding to them -- I realize they are not normally drafting tariffs there, but adding to them also the larger question such as we framed it or maybe in a better way, would at least keep the pot boiling, if you will, over the next two years until something were -- some of them were brought back to a head here at the Commission.

3688   COMMISSIONER KATZ: In paragraph 19, you summarized your position on the bill and keep and equal access by basically saying, "Let's waive the obligation". In paragraph 15, I guess, you say equal access and directory listings.

3689   Let's go forward with a symmetrical position on wireline and wireless services and then two years from now let's have a hearing to look at whether it works or not. Is that what I read in paragraph 19?

3690   MR. LAWFORD: Effectively, yes, that's exactly what it means.

3691   MR. WALL: Sorry, just to make sure, so it would be new entrants immediately and a consideration of the wider equal access treatment in two years.

3692   Is that what you said?

3693   COMMISSIONER KATZ: Well, it's what you're saying. I'm trying to read what you're saying.

3694   In 15 you're saying no equal access and no supplied directory listing and then you're saying in 19, let's look at that in two years from now and see whether it is fair and equitable for all parties.

3695   MR. WALL: The larger question in our mind, when we were looking at this proceeding was you know, is equal access something that is actually happening in the market? Do the big guys, the Bell, TELUS Mobility people do this right now? No. Is that a problem for consumers? Probably yes.

3696   But in the short term, in the short short term we believe that more will be gained by consumers in having those removed for two years, two and a half years to give the wireless new folks a chance to get up to speed.

3697   But then the nagging question of are long distance prices on wireless going to come down or not? I mean I believe PIAC will say it's probably still going to be there but we'll see.

3698   So that would be the purpose of doing the hearing again in two, two and a half years to look at all -- whether there needs to be an equal access service on wireless for all carriers, all wireless service providers of any kind.

3699   COMMISSIONER KATZ: Okay. My last question is with regard to your SILEC position in paragraph 23, I guess it is. And you talk about not duplicating facilities and being more efficient and the end result you basically say that if, in fact, the SILEC position is upheld, consumers will face higher prices.

3700   I guess the SILECs would argue that if their position isn't considered seriously there is too much leakage out there and ultimately they will be going out of business and therefore in your perspective, consumer prices will go up as well because there will be less competition.

3701   So you're prepared to balance these two and you come on the side of this position?

3702   MR. WALL: I think it's fair to say that the small ILECs have unique problems related to their cost structure and the revenue that they take in.

3703   I think we have heard a number of parties before you this week say that if you're going to do something to alleviate that problem it's a subsidy. It should be transparent.

3704   Any time you try and put a subsidy into a price in essentially a hidden way, you are going to affect market decisions. We don't think that's a good way to go about it.

3705   So we don't deny that they may have special problems that need to be addressed. We don't think by extending that subsidy into another mechanism that would allow them to price and require direct interconnection with other carriers is the right way to do it. And we do think that would lead to higher prices and does not serve consumers well.

3706   COMMISSIONER KATZ: Thank you. Those are my questions.

3707   THE CHAIRPERSON: Tim, you have a question?

3708   COMMISSIONER DENTON: Back in the dark ages around 1992 when we introduced long distance competition I see to have heard this expression "stranded investment" before. And I always thought that stranded investment was the problem of a regulated industry.

3709   An economist friend of mine once said, you know, no one gives a god damn whether General Motors has stranded investment. That's just part of the deal.

3710   So why should we be concerned with stranded investment in a competitive industry?

3711   MR. WALL: Well, I think the first answer is General Motors wasn't regulated. This is telecom and we are regulated.

3712   And to Bell's position and TELUS' position and the other ILECs, they did invest under a certain set of rules and conditions, and I accept that.

3713   But perhaps more importantly --

3714   COMMISSIONER DENTON: But that implies that they have a regulated set of prices that they can extract from the consumer to get -- to make themselves whole from technological change.

3715   MR. WALL: But perhaps, more importantly, they also have made the case that they can deliver voice services to their customers based on a technology they already have in place and for them to, you know, upgrade increases their costs and those costs have to be recovered somehow.

3716   I think the decision should be a market decision: Do you want to upgrade your facilities to offer the same types of services that your competitors are offering that consumers demand and want to get? That should be the driving force.

3717   COMMISSIONER DENTON: Yes, but what about the arguments that were made in the previous submission about you know the scale of interoperability that all of society will benefit from the laggards catching up to the technology that is now being brought in?

3718   MR. LAWFORD: At the risk of getting stabbed coming in between two people facing off here, I would just like to say that I think --

3719   COMMISSIONER DENTON: I was just starting to have fun.

3720   MR. LAWFORD: Yes, I know.

3721   But the idea behind our idea of moving Bell and TELUS and Rogers and all of these folks is from -- the ILECs, excuse me -- is from their entire costs being borne, if you will, by others, their TDM costs to eventually shifting them, say, within five years to bring that cost.

3722   It tries to recognize what you're getting at, I think, which is yeah, you know, times have changed. You're not going to get compensated when something changes in the regulatory regime as you would before. We're now relying on competition. I think that's acknowledged.

3723   But, on the other hand, as I think everyone in the room agrees, you know, it may not be regulation -- rate of return regulation here we're doing, but we're definitely doing regulation. There is some force to the fact that you have a huge ILEC TDM-based network out there which does have a lot of consumers reliant upon it.

3724   We also have the concern at PIAC that you don't want to shake the foundations of that so badly that those folks face higher prices because --

3725   COMMISSIONER DENTON: Do they actually have to compete?

3726   MR. LAWFORD: -- of those costs being passed down to them.

3727   Sorry?

3728   COMMISSIONER DENTON: Do they actually have to compete? I'm sorry. That was rude of me.

3729   MR. LAWFORD: No, no, I follow.

3730   COMMISSIONER DENTON: So what is your prediction for the year in which the last time-division multiplexing machine is turned off?

3731   MR. LAWFORD: Are you asking about the north or the south?

--- Laughter

3732   COMMISSIONER DENTON: No, when do we turn off the last TDM machine?

3733   MR. LAWFORD: I don't think that we are in a position to answer you.

3734   One thing I think we can -- I'll say is that the internet juggernaut seems to go faster than we always think it will. So in my personal capacity I would say you want to put rules in place to cover yourself in case it goes faster.

3735   Speaking from a subscriber's point of view, I think I'm still trying to cover my bases both ways.

3736   MR. WALL: Commissioner Denton, just I recall four years ago the last step-by-step switching system was put out of business in North America -- four years ago. So that gives you a sense of it, in some areas, how long a technology can serve the purpose for which it is intended and which the customer requires it.

3737   COMMISSIONER DENTON: Okay. Well, I just don't want to be caught as the society for the preservation of obsolescent technologies here.

3738   Thank you very much.

3739   THE CHAIRPERSON: Candice?

3740   COMMISSIONER MOLNAR: Thank you.

3741   I, too, want to focus on something you said in paragraph 9. It's the concept of mandating that ILECs provide an IP transit service. I'm trying to understand the rationale behind that.

3742   Just, I guess, what I have been hearing here is, you know, we have got 35 percent of IP lines. It's 50 perhaps if not now, soon, when you add in the wireless and so on. There is a huge IP base. A transit service by its nature competitive; indicates that there is competition within that region.

3743   So why would you put the obligation for IP on the parties that don't have the IP? Like why is it that you don't believe that an IP transit service could be delivered by the market?

3744   MR. LAWFORD: I did follow the previous presentation with WIND and, I think, in speaking on behalf of PIAC, we would probably tend to agree that the last people to be invited to the party would be people who are non-ILECs.

3745   But that aside, it comes back down to again you have got people at both ends chafing at the bit, if you will. We can do IP and all the great things that go along with voice here and we can do it here, but we just have to get through this ILEC bottleneck and --

3746   COMMISSIONER MOLNAR: And that is my question. Why is it we assume that ILEC has to be the bottleneck to those interconnection arrangements?

3747   MR. LAWFORD: They are the path through which you have to pass.

3748   COMMISSIONER MOLNAR: Through which you have to, or through which they have chosen to pass?

3749   MR. LAWFORD: I can't speak for the carriers in the room. Perhaps on reply they can do so, but my understanding is that the interconnection arrangements between other CLECS operating in territories where ILECs are somewhat limited, so that those connections can't be made and they are also less efficient because they already have many connections with the ILECs. They are already running.

3750   The ILECs have shown that they have IP technology within their network for delivering IPTV and for driving faster internet speeds so why not use some of that capacity to offer a transit service?

3751   I agree that the idea has not come before in a hearing but it seemed to strike us, just in listening to the other parties as being a question that might be a part of the answer, if you addressed your minds to that.

3752   So that's -- I'm glad you're asking the question and that's about the best answer I think I can give.

3753   Want to add anything?

3754   MR. WALL: No, just I agree. You should really perhaps address that to the ILECs: Is that -- would that be a problem to provide that service and do they have the capability to offer that relatively quickly?

3755   It would be a cost recovery type of service so there is no saying that they are going to lose money by doing that. What it would do would be to facilitate the introduction of new IP services throughout their entire customer base. That was really the focus of what we were looking at.

3756   I think they do provide the hub. They do provide transit service in many instances. They are a central clearing point, if you will, and so they seem to be a natural spot to have that provision.

3757   COMMISSIONER MOLNAR: Okay. I think it is something that we should talk about next week. So I'm sure the ILECs will be prepared for that.

3758   THE CHAIRPERSON: Suzanne?

3759   COMMISISONER LAMARRE: Merci, Monsieur le Président.

3760   I just want to follow up on the answer you gave to Commissioner Katz's last question about your position on the SILEC's position. I didn't know that you acknowledged that SILECs had a unique issue.

3761   But I was wondering if you would be willing to go further than that and acknowledge that the issue is actually about providing citizens that live in rural areas affordable services, as well as for small and medium enterprises operating in rural areas where there is no competition and there is no appetite for new entrants to go.

3762   MR. LAWFORD: Well, if you are referring to the fact that they should be having service, yes, and just how do you get the business model to work?

3763   COMMISISONER LAMARRE: Well, if it doesn't work for competitors to go and the SILECs still have an obligation to serve, then we're still left with the issue that we need to provide affordable service to people in some areas where they don't have a choice of provider.

3764   MR. LAWFORD: I follow that, and it really comes down to a question of perhaps evidence that you have that we haven't seen about what their costs are.

3765   What we're looking at here though is, you know, is it the best way to go about it? Should wireless providers -- wireless prices go up for all customers and in those areas simply because that's sort of a less transparent way of doing the subsidy, if you will, that's needed.

3766   I understand the Commission has plugged the leaky hole or issued a decision to try to plug the leaky hole, the toll bypass, if you will, for SILECs. Other measures I'm sure that they have raised with you might help also plug the hole. If there is a need for a larger contribution or a subsidy then that, I'm sure, you can tell from their financials.

3767   But, at the end of the day, we are concerned about -- in this proceeding we were coming at it from the perspective of wireless prices for consumers, what services they can get.

3768   COMMISSIONER LAMARRE: By doing that aren't you choosing some consumers over others? Like there are consumers who currently right now are at the point where they live that they cannot replace their land line by wireless because there is just no service by any provider.

3769   MR. LAWFORD: Then it's really just a matter of, have the SILECs shown you that there will be this result? Again, we don't have the financials that you have seen so I'm not sure we can answer that.

3770   We have both concerns. We share them. That's about all I can say.

3771   COMMISISONER LAMARRE: So your contention basically is that by doing interconnections the way they are proposing it there is going to be an increase in costs for the rural system which could be avoided by using another manner of doing it?

3772   MR. LAWFORD: And it may be that the --

3773   COMMISISONER LAMARRE: Is that a yes or a no?

3774   MR. LAWFORD: Yes, and that the overall efficiency, if you will, of doing it the way we suggested would be more efficient.

3775   COMMISISONER LAMARRE: For the system overall.

3776   MR. LAWFORD: Yes.

3777   COMMISISONER LAMARRE: Thank you. Those are my questions.

3778   THE CHAIRPERSON: Okay. Those are all our questions. Thank you very much for accommodating us and for going on today.

3779   So Madam Secretary, we start tomorrow at nine o'clock as usual?

3780   THE SECRETARY: That's correct. Thank you.

3781   THE CHAIRPERSON: Thank you. Okay.

--- Whereupon the hearing adjourned at 1522, to resume on Thursday, October 27, 2011 at 0900


Johanne Morin

Karen Paré

Jennifer Cheslock

Monique Mahoney

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