ARCHIVÉ -  Transcription

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                      SUBJECT / SUJET:

 

 

 

Review of regulatory framework for wholesale

services and definition of essential service /

Examen du cadre de réglementation concernant les services

de gros et la définition de service essentiel

 

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

 

October 11, 2007                      Le 11 octobre 2007

 

 

 

 

 

Transcripts

 

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.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

 

Review of regulatory framework for wholesale

services and definition of essential service /

Examen du cadre de réglementation concernant les services

de gros et la définition de service essentiel

 

 

 

 

BEFORE / DEVANT:

 

Konrad von Finckenstein           Chairperson / Président

Barbara Cram                      Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Elizabeth Duncan                  Commissioner / Conseillère

Helen del Val                     Commissioner / Conseillère

 

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Marielle Giroux-Girard            Secretary / Secrétaire

Robert Martin                     Staff Team Leader /

Chef d'équipe du personnel

Peter McCallum                    Legal Counsel /

Amy Hanley                        Conseillers juridiques

 

 

 

 

HELD AT:                          TENUE À:

 

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

 

October 10, 2007                  Le 10 octobre 2007

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

RESUMED:  SALVATORE IACONO                        447 / 2957

RESUMED:  WILLIAM TAYLOR

RESUMED:  PAUL ANDERSON

RESUMED:  DENIS HENRY

RESUMED:  MIRKO BIBIC

RESUMED:  SERGE BABIN

RESUMED:  MARGARET SANDERSON

RESUMED:  PETER WATERS

 

Cross-examination by MTS Allstream (Cont'd)       631 / 4109

Cross-examination by Primus                       889 / 6032

 

 

 

- v -

 

              EXHIBITS / PIÈCES JUSTIFICATIVES

 

 

No.                                              PAGE / PARA

 

MTS-4         Telecom Decision CRTC 90-27 and    699 / 4621

              Telecom Decision CRTC 92-8

 

MTS-6         BCE Nexxia Inc. financial          723 / 4786

              statements for year ending
December 31, 1999

 

MTS-7         BCE Nexxia Inc. financial          723 / 4786

              Statements for year ending

              December 31, 2000

 

MTS-8         Two tables entitled "Bell Quebec"  764 / 5128

              And "Bell Ontario"

 

CRTC-4        List of services prepared by       788 / 5299

              Commission Staff

 

MTS-9         ERG Opinion on Functional          798 / 5381

              Separation

 

MTS-10        Document entitled "Price Cap       813 / 5485

              Review and Related Issues",

              prepared by Dr. William E. Taylor

 

PRIMUS-1      Excerpt from the Ontario Energy    901 / 6126

              Board Act

 

PRIMUS-2      Affiliate Relationships Code for   901 / 6126

              Electricity Distributors and

              Transmitters

 

CRTC-5        The Monitoring Report 2007         917 / 6288

 

 

 

 

 

 

 

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon resuming on Thursday, October 11, 2007

    at 0835 / L'audience reprend le jeudi

    11 octobre 2007 à 0835

RESUMED:  SALVATORE IACONO

RESUMED:  WILLIAM TAYLOR

RESUMED:  PAUL ANDERSON

RESUMED:  DENIS HENRY

RESUMED:  MIRKO BIBIC

RESUMED:  SERGE BATIN

RESUMED:  MARGARET SANDERSON

RESUMED:  PETER WATERS

LISTNUM 1 \l 1 \s 41004100             THE CHAIRPERSON:  Good morning.  Let's resume.

LISTNUM 1 \l 14101             Ms Song, I would appreciate if this morning we could move a bit quicker than yesterday.  You took an awful long time to establish the dates, that it took six years to get the various mandated orders.  I think we can establish it by just asking is it true that it started on such a date and was issued on such and such a date and move into the substance.

LISTNUM 1 \l 14102             MS SONG:  Thank you, Chairman.  I will endeavour to do so.

LISTNUM 1 \l 14103             MR. BIBIC:  Mr. Chairman, if I may, a very quick point as a preliminary housekeeping matter.

LISTNUM 1 \l 14104             We have a response to Ms Cram on the 41 percent and we can file it.

LISTNUM 1 \l 14105             The quick answer is Appendix 2 of the Monitoring Report indicates that alternative TSPs are defined as including incumbent TSP out‑of‑territory operations such as Bell Canada in B.C. and Alberta.

LISTNUM 1 \l 14106             We have it.

LISTNUM 1 \l 14107             THE CHAIRPERSON:  Thank you.  Would you just file it with the secretary.

LISTNUM 1 \l 14108             MR. BIBIC:  Okay.

EXAMINATION (CONT'D) / INTERROGATOIRE (SUITE)

LISTNUM 1 \l 14109             MS SONG:  Thank you, Mr. Chair.

LISTNUM 1 \l 14110             We also have provided an exhibit to the Bell panel with respect to the Monitoring Report.  However, I will get a copy of that and address that with the panel a little later on.

LISTNUM 1 \l 14111             At paragraph 147 of Bell et al's 15th March evidence ‑‑ if you could kindly turn to that.

‑‑‑ Pause

LISTNUM 1 \l 14112             COMMISSIONER DUNCAN:  Excuse me, Ms Song, what was the paragraph number?

LISTNUM 1 \l 14113             MS SONG:  147, Commissioner Duncan.

LISTNUM 1 \l 14114             COMMISSIONER DUNCAN:  Thank you.

‑‑‑ Pause

LISTNUM 1 \l 14115             MS SONG:  Okay, does everyone have that?

LISTNUM 1 \l 14116             So I will simply read out paragraph 147.  It says that:

"Bell et al proposed that in the event that the Commission mandates wholesale access to an essential facility which can be used to provide multiple retail services, the Commission should place a restriction on the use of the facility to ensure that absent the access supplier's consent it can only be used to provide the retail service where there is a need for a remedy to address abuse of significant market power in a particular retail market."

(As read)

LISTNUM 1 \l 14117             It is actually the latter part of that quote that I have some questions about.

LISTNUM 1 \l 14118             So I would like to understand how the Commission would determine to use Bell et al's words, "whether there is a need for a remedy to address abuse of significant market power in a particular retail market."

LISTNUM 1 \l 14119             What kind of behaviour would satisfy what Bell et al mean by "abuse of significant market power"?

LISTNUM 1 \l 14120             MR. BIBIC:  We mean that in the sense of the essential facilities test we have proposed, that denial of access would result in a substantial lessening of competition.

LISTNUM 1 \l 14121             MS SONG:  So you mean that the Commission would have to find that there was actual denial of service?

LISTNUM 1 \l 14122             MR. BIBIC:  Well, under the ex post test that we have proposed, yes, and under an ex ante test, I think it would have to be a little bit more forward‑looking.

LISTNUM 1 \l 14123             MS SONG:  Could you provide an example of that?

LISTNUM 1 \l 14124             MR. BIBIC:  Of what, of the definitions?

LISTNUM 1 \l 14125             MS SONG:  Of the kind of behaviour that you are speaking about in this section of your evidence.

LISTNUM 1 \l 14126             MR. BIBIC:  Sure.  I can describe that using an example.

LISTNUM 1 \l 14127             Take a scenario where Bell Canada is the only local service provider in an exchange and no one else is providing service, and a CLEC comes along and wants to start competing for residential local service using unbundled loops, and the incumbent were to say no and deny access, under that scenario I could see the Commission saying:  Well, loops are essential facilities in that exchange.

LISTNUM 1 \l 14128             A counter example would be there is also a cable company also providing service there, in which case denial of loops, if that were to happen, wouldn't result in a substantial lessening of competition.

LISTNUM 1 \l 14129             MS SONG:  Would acts to increase rivals' costs satisfy abuse of significant market power?

LISTNUM 1 \l 14130             MR. BIBIC:  I think ‑‑ well, you are getting into kind of abuse of dominance issues which are addressed through sections 78 and 79 of the Competition Act and the Bureau had a lot to say on that issue with respect to its Telecom Abuse Bulletin.

LISTNUM 1 \l 14131             We meant it here in the context of denial of access resulting in a substantial lessening of competition for the purposes of an essential facilities definition.

LISTNUM 1 \l 14132             MS SONG:  So I just want to understand.  Are you saying that you would have to find behaviour that would meet the test of sections 78 and 79 of the Competition Act in order to satisfy this criterion of a remedy?

LISTNUM 1 \l 14133             MR. BIBIC:  No, Ms Song.  I think I am trying to say that this has nothing to do with sections 78 and 79.  We made that statement in the context of the definition of an essential facility.

LISTNUM 1 \l 14134             I mean just to put it ‑‑ to put another example.  I gave you an example where denial of access to loops may constitute a finding of essentiality.

LISTNUM 1 \l 14135             What we are trying to say here is if in that exchange there is no residential telephony competition and denial of access to loops were to result in a substantial lessening of competition, the Commission could mandate access to loops to provide residential telephony but not access to the same loop to provide a retail internet service if the retail internet market were competitive.

LISTNUM 1 \l 14136             MS SONG:  It was my reading of your evidence that your initial proposal at least in this proceeding was that the Commission use the Bureau's TAB framework; correct?

LISTNUM 1 \l 14137             MR. BIBIC:  We proposed in our submission an essential facilities definition very similar to that set out in the Bureau's TAB.

LISTNUM 1 \l 14138             MS SONG:  Right.  So after the transition period, which is what I think this paragraph relates to, paragraph 147 says that the Commission should intervene only where there is a need for a remedy to address abuse of significant market power.

LISTNUM 1 \l 14139             My understanding was that your initial proposal was that that analysis should take place in accordance with the Bureau's TAB, and now you are telling me that that is not the case, that you have changed your position in that regard?

LISTNUM 1 \l 14140             MR. BIBIC:  No, we did not change our position, Ms Song.

LISTNUM 1 \l 14141             What we were saying is the Commission would have to make a finding of essentiality and we propose they use the same definition of an essential facility that the Bureau proposed in the TAB.

LISTNUM 1 \l 14142             Now, the Bureau would use its definition for purposes of finding abuse of dominance.  We were proposing they use that same definition, that the Commission use that same definition but for the purposes of finding essentiality.

LISTNUM 1 \l 14143             MS SONG:  Mm‑hmm.

LISTNUM 1 \l 14144             MR. BIBIC:  That is all we meant.

LISTNUM 1 \l 14145             MS SONG:  I am not sure we are talking about the same thing, Mr. Bibic.  I am trying to understand in what circumstances after the transition period would it be appropriate for the Commission to re‑mandate access to a facility and you are saying in paragraph 147 that that would only arise where there is a need to remedy an abuse of significant market power.

LISTNUM 1 \l 14146             MR. BIBIC:  Well, Ms Song ‑‑

LISTNUM 1 \l 14147             MS SONG:  So I am trying to understand what behaviour satisfies the criterion of a finding of abuse of significant market power.

LISTNUM 1 \l 14148             MR. BIBIC:  Ms Song, I came here to speak on behalf of the company.  I have an overall responsibility for this evidence.

LISTNUM 1 \l 14149             So I am trying to explain that in that event our position is that the Commission, to determine essentiality, would simply use the test of an essential facility which we have proposed.

LISTNUM 1 \l 14150             Yesterday, we went through one with Mr. Engelhart, which is at one of the interrogs we filed.  I can't remember the number.

LISTNUM 1 \l 14151             If the Commission were to adopt an ex ante structure, we proposed a definition of an essential facility in our opening statement.  That is really what we are saying.  That is the test the Commission would use after the transition period to determine essentiality.

LISTNUM 1 \l 14152             MS SONG:  But isn't it a component of your proposal that there be some kind of conduct in a retail market, that that is another component of your test for essentiality?  That is what I am trying to drive at.  I don't want general statements about your test for essentiality.

LISTNUM 1 \l 14153             I would like to know specifically in relation to your criterion of dominance or whatever it is in the retail market what kind of behaviour would the Commission have to find in order to satisfy your criterion.

LISTNUM 1 \l 14154             MR. BIBIC:  Well, the answer is in the test that we have proposed.  It is denial of access.

LISTNUM 1 \l 14155             MS SONG:  That's it, that's all, denial of access?

LISTNUM 1 \l 14156             MR. BIBIC:  Correct.

LISTNUM 1 \l 14157             MS SONG:  Thank you.

LISTNUM 1 \l 14158             Now, moving on, it is my understanding that in its business segment operations Bell Canada has a small and medium business unit, a Bell West unit which operates west of Ontario and an Enterprise Unit; correct?

LISTNUM 1 \l 14159             MR. IACONO:  Yes, that is correct, Ms Song.

LISTNUM 1 \l 14160             MS SONG:  And what class of customers is served by the Enterprise Unit?

LISTNUM 1 \l 14161             MR. IACONO:  The Enterprise Unit, that is the unit that I am currently working in.  We deal with customers that have operations across the country, very large business basically.

LISTNUM 1 \l 14162             MS SONG:  All right.  So regardless of location?

LISTNUM 1 \l 14163             MR. IACONO:  Yes.  Most of them are national.

LISTNUM 1 \l 14164             MS SONG:  And you would agree with me that Bell Canada through its Enterprise Unit is the most significant competitor in that market, in that segment of the business market as defined by Bell Canada?

LISTNUM 1 \l 14165             MR. IACONO:  Well, we are certainly an important competitor and there are several others as well.

LISTNUM 1 \l 14166             MS SONG:  Does it have the largest market share in that segment of the market?

LISTNUM 1 \l 14167             MR. IACONO:  For some products yes, for some products no.

LISTNUM 1 \l 14168             MS SONG:  And what products are you referring to as being products for which you are the most significant competitor?

LISTNUM 1 \l 14169             MR. IACONO:  Well, I am looking at, for example, legacy services, Frame Relay, services such as those.  Clearly, we are not the largest player in terms of market share.

LISTNUM 1 \l 14170             IP services, which is on the newer, obviously, connectivity type services, we obviously have significant capabilities but so do the major competitors.

LISTNUM 1 \l 14171             MS SONG:  Yes.  And what would that market share estimate be ‑‑

LISTNUM 1 \l 14172             MR. IACONO:  I don't have the ‑‑

LISTNUM 1 \l 14173             MS SONG:  ‑‑ in the higher speed data access services market?

LISTNUM 1 \l 14174             MR. IACONO:  I don't have the market shares with me here.

LISTNUM 1 \l 14175             MS SONG:  Do you have any idea, Mr. Iacono?

LISTNUM 1 \l 14176             MR. IACONO:  In some segments we are probably ‑‑ just looking at ‑‑ I am just going from memory.

LISTNUM 1 \l 14177             If I look at IP VPN, for example, I think we are definitely the largest in terms of IP VPN circuits but I recall from some material that MTS Allstream is not too far behind Bell in terms of number of circuits in the IP VPN.

LISTNUM 1 \l 14178             MTS Allstream has a very significant MPLS network and a full suite of services, and in fact, I believe in some cases MTS Allstream has some services that Bell is not currently offering in the IP space.

LISTNUM 1 \l 14179             So, you know, it is hard to generalize.  It depends on the particular product area that one is looking at.

LISTNUM 1 \l 14180             MS SONG:  Yes.  I am actually looking for a number but you are not ‑‑ you don't know off the top of your head, you can't provide us with an estimate?

LISTNUM 1 \l 14181             MR. IACONO:  No, I can't, not off the top of my head.

LISTNUM 1 \l 14182             MS SONG:  Would you undertake to do so for the markets that you have mentioned?

LISTNUM 1 \l 14183             MR. BIBIC:  Subject to confidentiality if the Commission ‑‑ we could provide what we have to the Commission in confidence.

LISTNUM 1 \l 14184             MS SONG:  Thank you.

LISTNUM 1 \l 14185             But the fact is that in 2006, according to your 2006 Annual Report, the Enterprise Unit alone accounted for revenue totalling approximately $2.5 billion; correct?

LISTNUM 1 \l 14186             MR. IACONO:  Yes, that is correct and that comprises two broad categories of portfolios.  One is the connectivity, which is all of the ‑‑ well, the connectivity services ranging from basic access to the very hi‑speed bandwidth access and that is about half of the revenues.

LISTNUM 1 \l 14187             The other half is all of the newer ICT professional services, security services.

LISTNUM 1 \l 14188             It is a growing business, and our proportion relative to the overall market in the ICT space of that is still quite small.

LISTNUM 1 \l 14189             So the $2.5 billion is a big number, but it comprises a very vast portfolio of connectivity, managed services, professional services, infrastructure services, equipment, et cetera.

LISTNUM 1 \l 14190             MS SONG:  It is Bell's position ‑‑ and I want to return to the aspect of its test that requires that the owner of the facility, which is claimed to be essential, must also be dominant in downstream retail markets.

LISTNUM 1 \l 14191             Clearly, the state of competition in retail markets is a key component in your proposal.

LISTNUM 1 \l 14192             Is that correct?

LISTNUM 1 \l 14193             MR. BIBIC:  That's correct.

LISTNUM 1 \l 14194             MS SONG:  I want to turn now to Bell et al.'s argument that there is competition sufficient to protect the interests of users in retail business markets.

LISTNUM 1 \l 14195             In order to assist the Commission, I would like to focus on the argument set out at pages 9 to 23 of Bell's July 5th Supplementary Evidence.

LISTNUM 1 \l 14196             As I read pages 9 to 23 of Bell et al.s' Supplementary Evidence, there are essentially two aspects to the argument that there is competition sufficient to protect the interests of users in retail business markets.

LISTNUM 1 \l 14197             The first is the presence of other telephone companies in business telecommunications markets and, in particular, in the large to very large segments of business telecommunications markets, and those points are set out, I believe, at pages 9 to 15.

LISTNUM 1 \l 14198             The second is the potential of cable, electrical utility and wireless service providers to enter into the small and medium business segment of business telecommunications markets.

LISTNUM 1 \l 14199             Are you following me so far?

LISTNUM 1 \l 14200             MR. BIBIC:  Yes.

LISTNUM 1 \l 14201             MS SONG:  At this time I would like to focus on the first aspect, the arguments and the evidence that you set out at pages 9 to 15.

LISTNUM 1 \l 14202             Again, as I read pages 9 to 15, you are relying principally on bidding, or a request for proposal, or RFP activity as evidence of the fact that there is competition sufficient to protect the interests of users in retail business markets.

LISTNUM 1 \l 14203             Correct?

LISTNUM 1 \l 14204             MR. BIBIC:  Correct.

LISTNUM 1 \l 14205             MS SONG:  So this bidding activity, and the competitors that are mentioned at pages 9 to 15, are present in the enterprise segment of retail business telecommunications markets.  Correct?

LISTNUM 1 \l 14206             Typically or primarily.

LISTNUM 1 \l 14207             MR. IACONO:  Primarily, yes.

LISTNUM 1 \l 14208             MS SONG:  You don't cite any market share evidence, at least in this part of your July 5th Supplementary Evidence.  Correct?

LISTNUM 1 \l 14209             MR. BIBIC:  Correct.  We didn't think we needed to.

LISTNUM 1 \l 14210             MS SONG:  The evidence that you do cite is a list of 18 competitor press releases from a three and a half year period, between January 13, 2004 and June 5, 2007.  Correct?

LISTNUM 1 \l 14211             MR. IACONO:  Yes.  Those 18 were shown as examples of bids won by competitors that were made public by competitors through their websites.

LISTNUM 1 \l 14212             There are obviously a lot more that were not necessarily made public.

LISTNUM 1 \l 14213             MS SONG:  Including your own.

LISTNUM 1 \l 14214             MR. IACONO:  Yes.  In fact, we provided a few in response to the deficiency response, I believe ‑‑ or deficiency argument.  We provided 5 or 6 ‑‑ I am going from memory ‑‑ as examples ‑‑

LISTNUM 1 \l 14215             MS SONG:  Of your own?

LISTNUM 1 \l 14216             MR. IACONO:  ‑‑ of our own, yes.

LISTNUM 1 \l 14217             MS SONG:  We will discuss the wholesale facilities and services leased by competitors that actually enable even this level of bidding activity on the part of competitors, but, if I understand you correctly, Mr. Iacono, you are not claiming that these 18 press releases are at all representative of overall bidding activity in the enterprise segment.  Correct?

LISTNUM 1 \l 14218             MR. IACONO:  That's correct.

LISTNUM 1 \l 14219             In fact, we noted that these were illustrations based on publicly available press releases.

LISTNUM 1 \l 14220             MS SONG:  Right, and in your interrogatory responses, I think you couch this evidence by saying that they are only examples.

LISTNUM 1 \l 14221             MR. IACONO:  That's correct.

LISTNUM 1 \l 14222             MS SONG:  What would be representative, in fact, is the number that we have already discussed, the $2.5 billion in 2006 alone, garnered from the segment of the business market.

LISTNUM 1 \l 14223             Would you agree with me?

LISTNUM 1 \l 14224             MR. IACONO:  Certainly, the $2.5 billion would not be representative of bidding activity.

LISTNUM 1 \l 14225             MS SONG:  Perhaps not bidding activity alone, but my understanding is that the $2.5 billion revenue figure does, in fact, encompass multi‑year contracts, one, pursuant to bids, or contract renewals in the enterprise segment.  Correct?

LISTNUM 1 \l 14226             MR. IACONO:  Yes.

LISTNUM 1 \l 14227             As I said before, though, covering services that are way beyond connectivity, as well.  So it is a broad, broad portfolio, a full suite of services.

LISTNUM 1 \l 14228             MS SONG:  In order to assist the Commission and this public process, will Bell Canada provide, for the same three and a half year period that is covered by your July 5th Supplementary Evidence, the number of RFPs that Bell Canada bid on and won in that period?

LISTNUM 1 \l 14229             MR. IACONO:  I think we had that discussion through the deficiency response, and I will leave it to Mr. Bibic to comment, or counsel.

LISTNUM 1 \l 14230             MR. DANIELS:  Excuse me.  I am sorry to interrupt, but this actually was an issue of a deficiency response we had at argument.  The Commission has ruled on that actual request already.

LISTNUM 1 \l 14231             So I think we have already had this discussion, and the Commission has already ruled on it.

LISTNUM 1 \l 14232             MS SONG:  There was a deficiency process, and Commission Staff declined to order that Bell produce that information, but I am asking you now, today, because you have put the issue of bidding activity squarely in your evidence, that you provide that information in order to put these 18 press releases, over a three and a half year period, in context.

LISTNUM 1 \l 14233             Will you do that?

LISTNUM 1 \l 14234             MR. IACONO:  Ms Song, if I could refer you to paragraph 9 of page 11 of the July Supplementary Evidence, the pages that you raise, it is very clear there that, for example, in a recent Commission decision ‑‑ and I could probably think of a couple of others where the Commission itself has considered ‑‑ and I quote:

"The Commission, therefore, considers that evidence of rivalrous behaviour, primarily in the form of bid responses, is sufficient to demonstrate that the market is competitive enough to warrant forbearance."  (As read)

LISTNUM 1 \l 14235             Now, that was in a forbearance context.  My point is, the issue of "Does bidding and bidding activity represent an indication of competitive activity" has been determined, number one.

LISTNUM 1 \l 14236             Number two, I also want to cite, by way of an important example ‑‑ government bids, for example, be they federal government, provincial government or municipal government, follow extremely rigorous bid processes.  All one need do is go on the MERX site and you can see the kind of processes that those bids entail, and several businesses of a smaller size than obviously the federal government use very similar principles to make procurements.

LISTNUM 1 \l 14237             We procure all types of things at Bell Canada, and we use RFP processes for many of our procurement requirements, be they network related, where we have a choice, or be they pen and paper.

LISTNUM 1 \l 14238             Those processes are well established.  Large organizations, in particular, have ‑‑ they have to have very tight procurement processes in order to ensure that they give the proper incentives to potential suppliers to be as competitive as possible.

LISTNUM 1 \l 14239             MS SONG:  Mr. Iacono, I am not contesting the fact that you have brought this evidence forward as an indicia of competitiveness in retail business markets, what I am asking you is, if you are going to put this kind of evidence in issue, then I think it is incumbent upon you, the most significant competitor in the enterprise segment of the business market, to come forward with at least the number of RFPs that you have bid on and the number of RFPs that you have won.

LISTNUM 1 \l 14240             MR. BIBIC:  Well, Ms Song, our position ‑‑

LISTNUM 1 \l 14241             THE CHAIRPERSON:  Ms Song, I am confused here.  I thought the interjection from the Competition Bureau ‑‑ I'm sorry, who are you representing?

LISTNUM 1 \l 14242             MR. DANIELS:  Sorry, I'm representing The Companies.

LISTNUM 1 \l 14243             THE CHAIRPERSON:  The Companies, okay.  Well, this has already dealt with interrogatories, and so therefore I really don't quite understand on what basis you feel you can pose a question now in cross‑examination.

LISTNUM 1 \l 14244             MS SONG:  Well, I was not certain whether the commissioners, themselves, had had an opportunity to consider this issue.  It's our companies position that, if this evidence is to be tested, that we should know of the total amount of RFPs that occurred during that period, how many ‑‑

LISTNUM 1 \l 14245             THE CHAIRPERSON:  You surely don't expect me to disavow the Commission.  If the Commission ruled on it in whatever form, that's the Commission's decision.

LISTNUM 1 \l 14246             MS SONG:  All right, I will move on, then, Mr. Chair.

LISTNUM 1 \l 14247             Now, I believe I have read Bell Aliant's interrogatory responses correctly, that it does not have any out‑of‑territory operations.  Correct?

LISTNUM 1 \l 14248             MR. HENRY:  That's correct.

LISTNUM 1 \l 14249             MS SONG:  Bell Canada, in its out‑of‑territory operations, does it lease any facilities from cable companies?

LISTNUM 1 \l 14250             MR. BIBIC:  We don't think so, but I don't know for actual fact.

LISTNUM 1 \l 14251             MS SONG:  All right.  If you come to believe otherwise, you will let me know?

LISTNUM 1 \l 14252             MR. BIBIC:  Absolutely.

LISTNUM 1 \l 14253             MS SONG:  It's my understanding that you are a partner in Inukshuk Wireless Partnership?

LISTNUM 1 \l 14254             MR. BIBIC:  That's correct.

LISTNUM 1 \l 14255             MS SONG:  And Inukshuk holds 323 licences across Canada in the 2.3 gigahertz and 3.5 gigahertz bands.  Correct?

LISTNUM 1 \l 14256             Does that number sound about right to you?

LISTNUM 1 \l 14257             MR. BIBIC:  There's a large number of licences, so I don't think there's much need to quibble with the number of licences we have.  The reason I was hesitating is I thought our licence spectrum was in the 2.5 gigahertz band.

LISTNUM 1 \l 14258             MS SONG:  You are referring to Inukshuk now, when you say "our"?

LISTNUM 1 \l 14259             MR. BIBIC:  Correct.

LISTNUM 1 \l 14260             MS SONG:  Okay, I could be mistaken, but I'm fairly sure it's 2.3 and 3.5.  But, in any event, regardless of the numbers, this is spectrum that is capable of utilizing Wi‑Max technology.  Correct?

LISTNUM 1 \l 14261             MR. BIBIC:  Well, it's pre‑Wi‑Max right now, but we expect that, ultimately, there will be a Wi‑Max standard over that spectrum.

LISTNUM 1 \l 14262             MS SONG:  All right.

LISTNUM 1 \l 14263             Did Mr. Babin have something to add to that response?

LISTNUM 1 \l 14264             MR. BIBIC:  No.

LISTNUM 1 \l 14265             MS SONG:  Okay.

LISTNUM 1 \l 14266             And in its out‑of‑territory operations, does Bell Canada, today, use Wi‑Max to provision last‑mile access connectivity between a customer premises and, say, Bell West's central offices?

LISTNUM 1 \l 14267             MR. BABIN:  Yes, we do, Ms Song.

LISTNUM 1 \l 14268             MS SONG:  And where would that be?

LISTNUM 1 \l 14269             MR. BABIN:  In the Bell West territory, out of territory for the ILEC.

LISTNUM 1 \l 14270             MS SONG:  Sorry, for the ILEC?  What does that mean?

LISTNUM 1 \l 14271             MR. BABIN:  Out of our ILEC territory, which is Ontario and Quebec ‑‑

LISTNUM 1 \l 14272             MS SONG:  Yes.

LISTNUM 1 \l 14273             MR. BABIN:  ‑‑ we do use Wi‑Max as a last‑mile facility.

LISTNUM 1 \l 14274             MS SONG:  Right.  But my question had to do with your out‑of‑territory operations.

LISTNUM 1 \l 14275             MR. BABIN:  That's right.  Our out of territory is in Bell in the West, is out of territory of Ontario and Quebec ‑‑

LISTNUM 1 \l 14276             MS SONG:  Right.

LISTNUM 1 \l 14277             MR. BABIN:  ‑‑ and we do use Wi‑Max technology for last‑mile facilities.

LISTNUM 1 \l 14278             MS SONG:  All right.

LISTNUM 1 \l 14279             You also mention satellite technology as a potential access technology?

LISTNUM 1 \l 14280             MR. BABIN:  Yes.

LISTNUM 1 \l 14281             MS SONG:  Does you Bell West unit use satellite service to provision last‑mile access connectivity?

LISTNUM 1 \l 14282             MR. BABIN:  Not that I'm aware.

LISTNUM 1 \l 14283             MS SONG:  Okay.

LISTNUM 1 \l 14284             I would like to move on now to Bell et al's position on interconnection services.  I believe that you have included interconnection services not as essential facilities or services per se, but services that may still require regulation for technical or social reasons.  Correct?

LISTNUM 1 \l 14285             MR. HENRY:  That's correct.

LISTNUM 1 \l 14286             MS SONG:  You would limit, however, mandated interconnection to only those services that are related to and ancillary to local and toll interconnection.  Correct?

LISTNUM 1 \l 14287             MR. HENRY:  That's correct.

LISTNUM 1 \l 14288             MS SONG:  But that would extend to services ancillary to both toll and local interconnection.  Correct?

LISTNUM 1 \l 14289             MR. HENRY:  Yes.

LISTNUM 1 \l 14290             MS SONG:  Okay.  However, it is your company's position that IP interconnection arrangements need not be mandated.  Correct?

LISTNUM 1 \l 14291             MR. HENRY:  Sorry, which interconnection arrangements?

LISTNUM 1 \l 14292             MS SONG:  Internet protocol, IP to IP interconnection.

LISTNUM 1 \l 14293             MR. HENRY:  Well, it depends what kind of IP interconnection you are talking about, but I think perhaps Mr. Babin can talk to the specific.

LISTNUM 1 \l 14294             If you are talking CLECs offering local service on an IP basis, and that kind of IP to IP interconnection, I believe there are many technical issues associated with that that perhaps Mr. Babin could talk to.

LISTNUM 1 \l 14295             MS SONG:  Well, actually, before Mr. Babin elaborates, I just want to know whether it's your proposal in this proceeding that IP to IP interconnection services be mandated or whether that falls under your negotiation principles.

LISTNUM 1 \l 14296             MR. HENRY:  Well, ultimately, they could be mandated, if it's for the purpose of CLEC to CLEC, or CLEC to ILEC, but a CLEC that's offering local service on an IP platform.  So, ultimately, that could be mandated.  But the problem is that there are many, many technical issues, again, that Mr. Babin can speak to, that have prevented us from getting to the point of reaching some kind of industry consensus on this.

LISTNUM 1 \l 14297             MS SONG:  And when you say "CLEC to CLEC IP interconnection" is that ‑‑

LISTNUM 1 \l 14298             MR. HENRY:  Well, I'm distinguishing it from the Internet ‑‑

LISTNUM 1 \l 14299             MS SONG:  Right.

LISTNUM 1 \l 14300             MR. HENRY:  ‑‑ because Internet IP pairing, I mean, that's done today and there's no Commission intervention.  And the web works just fine without out.

LISTNUM 1 \l 14301             MS SONG:  Right.  So your position would be that IP interconnection for the purposes of providing voice services, data services, at whatever speed, that would all fall under mandated interconnection.  Correct?

LISTNUM 1 \l 14302             MR. HENRY:  Yes.

LISTNUM 1 \l 14303             MS SONG:   What kind of services would not be covered by specifically, and perhaps Mr. Babin can explain what kind of IP interconnection to provide what kind of services would not be mandated in your proposal.

LISTNUM 1 \l 14304             MR. HENRY:  Well, I think I have answered that.  In the Internet world, there are pairing arrangements around the world that have been entered into without regulatory intervention.  Unless and until there were a problem that were ever to develop, I don't see why we would be looking for a solution to a problem that doesn't exist.

LISTNUM 1 \l 14305             On the voice side, if you have a CLEC that operates on an IP basis wanting to interconnect with a CLEC that operates on a TDM basis, well, that is something that, ultimately, could be mandated.  It is something that has been looked at and is being looked at actively in CISC.

LISTNUM 1 \l 14306             As I say, the reason it hasn't happened yet is there are a multitude of technical reasons which, again, I think Mr. Babin could explain.

LISTNUM 1 \l 14307             MS SONG:  Right.  For example, when you say there's a multitude of issues that take a long time to resolve, one example of that would be the length of time it took to resolve the IP interconnection guidelines issue, which was first brought forward to the CISC.

LISTNUM 1 \l 14308             In, I believe, the early part of 2004, the Commission directed that the parties achieve negotiated resolution of that issue by November 2005.  It wasn't until, I believe, the latter part of 2006 that something was put forward to the Commission, and finally approved by the Commission.  So that's the kind of time that we are looking at to these kinds of negotiations taking to resolve.

LISTNUM 1 \l 14309             MR. BABIN:  Yes.  I would add, Ms Song, it's not really negotiations, it's really industry discussions.  I mean, if you look around North America, there is actually a very limited number of IP interconnections between CLECs and ILECs.

LISTNUM 1 \l 14310             The standards are continually evolving and, as you know, as you mentioned, the Technical Bulletin 14 was approved back in April of this year, and the team have recommended, through work on TIF 19, to come up with those guidelines.  But as I said, the protocols and the standards continue to evolve.

LISTNUM 1 \l 14311             Now, to do IP‑to‑IP interconnection within your own network, very easy because you know what is on each end of that interconnection.  But dealing with a multiple group of various companies, different technologies, different technology vendors, it is very difficult to land on a standard, and that is really the discussion that is going on.

LISTNUM 1 \l 14312             And I might add as well, since October last year there has been a lot of submissions and a lot of contributions by all members of this committee through CISC.  Bell has contributed nine submissions, TELUS has contributed six, FCI Broadband has contributed four, and I might add MTS Allstream have been at the meetings but haven't contributed changes to move these standards forward.

LISTNUM 1 \l 14313             So, you know, there is a lot of discussion, it is not an unwillingness to come up with a standard, it is really coming up with a consensus and working with the electronic manufacturers to come up with that standard.

LISTNUM 1 \l 14314             THE CHAIRPERSON:  Do I understand you, the issues are technical, not business then?

LISTNUM 1 \l 14315             MR. BABIN:  That is correct, Mr. Chair.

LISTNUM 1 \l 14316             THE CHAIRPERSON:  Yes, but I mean is it tested.  You suggested we adopt it, all deals with business, not with technical incumbencies.  So assuming that these technical ones could be solved, do you expect to be able to workout a business arrangement and supply these services?

LISTNUM 1 \l 14317             MR. BIBIC:  The answer, for the most part, is yes.  But, under our proposal, we acknowledge that there could be some issues that are industry‑wide and just can't be resolved because they are technical or they are based on standards and they are just not commercial.  In which case, the Commission could step in and say, let us mandate a solution for all.

LISTNUM 1 \l 14318             MS SONG:  I would like you to now turn to your Appendix 10, to your 15 March evidence please.

LISTNUM 1 \l 14319             Is everyone with me?

LISTNUM 1 \l 14320             MR. BIBIC:  We are.

LISTNUM 1 \l 14321             MS SONG:  In this appendix Bell et al cite two examples; one from the broadcasting industry and the other from I believe the transportation industry of possible precedent models that could be followed, correct?

LISTNUM 1 \l 14322             MR. BIBIC:  Correct, they were just examples.

LISTNUM 1 \l 14323             MS SONG:  Right.  And I have to ask, in the broadcasting example, are programming undertakings and distribution undertakings, in addition to being suppliers one to the other, are they also competitors?

LISTNUM 1 \l 14324             MR. BIBIC:  Well, I suppose there could be vertically integrated distribution undertakings.  I know, that Rogers, for example, is both programming undertaking and a distribution undertaking.

LISTNUM 1 \l 14325             MS SONG:  Right.  But when they are negotiating distribution agreements the unit or the entity, affiliate of Rogers that is coming forward seeking a distribution agreement with another distribution undertaking, are they considered to be competitors in the same relevant market?

LISTNUM 1 \l 14326             MR. BIBIC:  I could see them not being competitors.  I mean, I am not as familiar with broadcasting as I am with telecom, but..

LISTNUM 1 \l 14327             MS SONG:  Right.  And in the transportation example, similarly my understanding is that the negotiation model takes place between shippers and carriers?

LISTNUM 1 \l 14328             MR. BIBIC:  Yes, I have more familiarity with that, not more, but I have some familiarity with that and that is correct.

LISTNUM 1 \l 14329             MS SONG:  Okay.  And I assume that you would also agree with me that shippers and carriers, again, are not competitors?

LISTNUM 1 \l 14330             MR. BIBIC:  Typically not.

LISTNUM 1 \l 14331             MS SONG:  Okay.  And is MTS Allstream a customer of yours?

LISTNUM 1 \l 14332             MR. BIBIC:  Yes.

LISTNUM 1 \l 14333             MS SONG:  One of your biggest?

LISTNUM 1 \l 14334             MR. ANDERSON:  Yes, they are.

LISTNUM 1 \l 14335             MS SONG:  It is one of your biggest customers and is also one of your biggest competitors in retail business markets, correct?

LISTNUM 1 \l 14336             MR. BIBIC:  Yes.

LISTNUM 1 \l 14337             MS SONG:  Now that, to me, seems like a distinguishing feature between the telecom industry and the two examples that you cite, you would agree with me?

LISTNUM 1 \l 14338             MR. BIBIC:  Would you repeat the question please, Ms Song?

LISTNUM 1 \l 14339             MS SONG:  So the fact that in the two examples that you cite the negotiations are happening between entities who are not competitors in the same relevant market is a salient fact that we need to consider in determining how your negotiation model is going to work?

LISTNUM 1 \l 14340             MR. BIBIC:  Well, we believe the negotiation model will work because we are going to have an incentive to reach arrangements with our big customers.

LISTNUM 1 \l 14341             MS SONG:  All right.

LISTNUM 1 \l 14342             MR. HENRY:  I might add, the Commission has expedited hearing processes today between competitors and they encourage parties to negotiate.  And as a result of having that very process, parties often do negotiate and often do settle before it gets to the hearing, and very much they are competitors.

LISTNUM 1 \l 14343             MS SONG:  Yes, and I think the Commission has in its own records how much time it does actually take to resolve competitor disputes.

LISTNUM 1 \l 14344             MR. HENRY:  For the expedited hearings?  The expedited hearings are very fast.

LISTNUM 1 \l 14345             MS SONG:  There is lead‑up to expedited hearings ‑‑

LISTNUM 1 \l 14346             MR. HENRY:  They often get settled very fast, even before you get there.

LISTNUM 1 \l 14347             MS SONG:  Right.

LISTNUM 1 \l 14348             MR. ANDERSON:  If I could add, Ms Song.  Sorry, if I could just add to that.

LISTNUM 1 \l 14349             MS SONG:  No problem, Mr. Anderson.

LISTNUM 1 \l 14350             MR. ANDERSON:  You are quite right, that Allstream is one of our largest customers.  And when you look at the model of negotiate first, I think what we believe is that two parties sitting down and trying to make an arrangement is a much simpler and streamlined process than dealing within a much broader spectrum, which would include Commission involvement and so on.  So we are confident.

LISTNUM 1 \l 14351             I mean, as we talked about yesterday, wholesale is a very important business for us, so we are not interested in being uncooperative.

LISTNUM 1 \l 14352             MS SONG:  Sorry, your comment that bilateral party‑to‑party negotiations would work better than if the Commission were involved and overseeing the negotiation, I am just trying to understand that.  Is that what you are saying?

LISTNUM 1 \l 14353             MR. ANDERSON:  I think from a starting point where two parties are sitting down, working through a particular issue, whatever that might be, and coming to an arrangement I think is a good starting point.  Absolutely, the Commission has a very strong role and would get involved as required.

LISTNUM 1 \l 14354             MS SONG:  Right.  I want to turn back to perhaps a specific example, specific examples that you yourselves have raised yesterday.  I believe Mr. Bibic mentioned the example of negotiations occurring in the wholesale arm of your business with respect to forborne services.  Do you recall those statements?

LISTNUM 1 \l 14355             MR. ANDERSON:  Yes, I do.

LISTNUM 1 \l 14356             MS SONG:  And what forborne services are you referring to there or were you referring to?

LISTNUM 1 \l 14357             MR. ANDERSON:  Forborne services is voice and data, so that could be long distance, digital private line on the data side are a couple of examples on both voice and data.

LISTNUM 1 \l 14358             MS SONG:  Right.  And to use the language of the Commission and of the industry, you are referring there to interexchange private line services amongst other things?

LISTNUM 1 \l 14359             MR. ANDERSON:  Correct.

LISTNUM 1 \l 14360             MS SONG:  All right.  And my understanding is that interexchange private line or IXPLs are forborne on a section by section basis, cross‑section by cross‑section basis?

LISTNUM 1 \l 14361             MR. ANDERSON:  That is my understanding as well.

LISTNUM 1 \l 14362             MS SONG:  And the Commission forebears from regulating IXPLs ‑‑

LISTNUM 1 \l 14363             MR. ANDERSON:  In those instances.

LISTNUM 1 \l 14364             MS SONG:  ‑‑ when there is actually an alternate source of supply on that cross‑section, correct?

LISTNUM 1 \l 14365             MR. ANDERSON:  I would agree with that.

LISTNUM 1 \l 14366             MS SONG:  So you would agree with me that the dynamics involved in that negotiation are driven by the fact that there is an alternate source of supply for that facility, correct?

LISTNUM 1 \l 14367             MR. ANDERSON:  Yes.  But I would also say, in sitting down with any large customer, I don't care if it is in wholesale or retail or otherwise, I think the fact that you can't look at one specific situation in isolation.  I mean, you look at the overall customer relationship and work accordingly.  As I said earlier, we are not interested in being uncooperative.

LISTNUM 1 \l 14368             MR. BABIN:  And, Ms Song, if I can just add.  I mean, I have been in the business for over 20 years, I have been on the competitive side and I have negotiated with ILECs and there is an incentive for them to negotiate around services, last mile facilities, transport facilities, IXPLs, so I have seen it, I have negotiated myself.

LISTNUM 1 \l 14369             MS SONG:  Right.  And I was merely trying to point out that when you talk about forborne services and negotiations occurring in your wholesale arm for forborne services, the fact that there is an alternate source of supply for IXPL is a driving factor in those types of negotiations.

LISTNUM 1 \l 14370             MR. BIBIC:  Well, Ms Song, you jumped from technical to forborne services.

LISTNUM 1 \l 14371             On the technical services front, we suggest that we should negotiate first regime.  If it doesn't work, the Commission can step in.  That is the whole point of negotiate first.

LISTNUM 1 \l 14372             On non‑essential services, we are coming at it from the perspective that both parties will have a willingness and an openness to negotiate.  I suspect that in the business side of your client's business that they would too.

LISTNUM 1 \l 14373             For example, in Hong Kong, once wholesale regulation was scaled back, it took the incumbent three to four months to negotiate arrangements with CLECs for the supply of GAS and things like local loops.

LISTNUM 1 \l 14374             MS SONG:  Mr. Anderson also mentioned in an earlier statement that he felt that party‑to‑party, without the intervention of the Commission, would work fine.  Have I represented your evidence correctly?

LISTNUM 1 \l 14375             MR. ANDERSON:  Yes, I simply said that two parties sitting down and initially trying to work through an arrangement is a good starting point.

LISTNUM 1 \l 14376             As I will just reinforce, the Commission, obviously, as we have outlined in our evidence and proposals, has a very strong role, as required.

LISTNUM 1 \l 14377             MS SONG:  I would like to go back to an example that Mr. Iacono raised yesterday as having been an example of successful, I believe, multi‑party negotiations in relation to Tariff Notice 6767D, and the establishment of the wholesale bundled HSA and GAS internet access services, if you will permit me.

LISTNUM 1 \l 14378             It is my understanding that in those negotiations or leading up to those negotiations there was a significant degree of Commission intervention that actually led up to those negotiations.  Is that correct, Mr. Iacono?

LISTNUM 1 \l 14379             MR. IACONO:  Yes, I wasn't involved in that prior to that, but I do understand that there were files and tariff notices ‑‑ not tariff notices, but applications going back to 2001‑2002.  I don't remember the exact dates, but, sure.

LISTNUM 1 \l 14380             MS SONG:  So, with respect to that bundled internet service, the Commission ‑‑

LISTNUM 1 \l 14381             MR. BIBIC:  Ms Song, sorry to interrupt, what do you mean by bundled internet service?  I was reading the transcript yesterday and I got bogged down on that point.  I just want to make sure we are all clear before we answer the question.

LISTNUM 1 \l 14382             MS SONG:  Actually, I think it is pretty clear because we are talking about your tariffed HSA and GSA service.

LISTNUM 1 \l 14383             MR. BIBIC:  It is not bundled though.

LISTNUM 1 \l 14384             MS SONG:  What do you mean by bundled?

LISTNUM 1 \l 14385             MR. BIBIC:  Our HSA and GAS service provides access ‑‑ it goes from the premise back to the central office.

LISTNUM 1 \l 14386             MS SONG:  Right.

LISTNUM 1 \l 14387             MR. BIBIC:  So, when you say "bundled" I don't know what you mean.

LISTNUM 1 \l 14388             MS SONG:  It is the end‑to‑end, or to use Mr. Anderson's word, it is a dedicated internet access service.

LISTNUM 1 \l 14389             MR. BIBIC:  What do you mean by end‑to‑end?  From which end to which end?  I wasn't going to bring this up, but you are using the word "bundled" again, and I just want to make sure nothing turns on it before we answer your question.

LISTNUM 1 \l 14390             MS SONG:  I don't have it in front of me, but ‑‑ here it is.

LISTNUM 1 \l 14391             I think what I mean, and just to be clear for the Commission, is that it is not an unbundled service.  As I believe Mr. Anderson confirmed yesterday, it would be of no use to a competitor who wants to collocate and use part of its network in order to provide the internet access service to the end use customer.

LISTNUM 1 \l 14392             MR. BIBIC:  But, you see, even with GAS and HSA, you go back from the premise, you go back to the central office, and from the central office back through the transport part, you have to buy other elements, either your own self‑supplied, or from the incumbent.

LISTNUM 1 \l 14393             So, you could use GAS and part of your network, and that is why I just want to make sure we are clear on the terminology.

LISTNUM 1 \l 14394             MS SONG:  Yes, and I think we are clear.  I think we are both talking about the fact that the HSA and GAS service involves both an access and transport component.

LISTNUM 1 \l 14395             Moving on with my example, what I wanted to say is that prior to the negotiations, the Commission actually directed Bell to disclose costing information with respect to the ADSL service.  It is my understanding that this costing information revealed that the prices that Bell Canada originally proposed to wholesale competitors for the ADSL service were at mark‑ups ranging from 100 to 600 per cent.  Do you have any information that would contradict this?

LISTNUM 1 \l 14396             MR. IACONO:  No.  I do recall, though, those exchanges because I obviously had to read some of that prior to sitting down with industry to do the negotiations.

LISTNUM 1 \l 14397             We were able to conduct those negotiations without reference to cost studies; we filed the tariffs without reference to cost studies.  There were issues, there were some organizations wanted to do this on a cost plus 15 per cent mark‑up basis, i.e. cat 1, category 1, and we filed it as a category 2 and it was approved as a category 2.

LISTNUM 1 \l 14398             MS SONG:  Right, but in your normal bilateral negotiations without Commission intervention, that kind of relevant information as to your actual costs and the actual mark‑ups that you are incorporating into your negotiated proposals would not apply.

LISTNUM 1 \l 14399             MR. IACONO:  Typically suppliers don't reveal their mark‑ups to their customers.  You don't, your client doesn't when it is negotiating with its customers.  I mean, that is just normal business practice.

LISTNUM 1 \l 14400             MR. BIBIC:  Ms Song, did it take a long time?  Yes.  Did it get done?  Yes.  Is GAS/HSA an essential service?  No.  Even your client agreed, as the Commission pointed out in its orders approving these tariffs, that MTS supported the immediate adoption of Bell Canada's proposed tariff items.

LISTNUM 1 \l 14401             As far as GAS and HSA, MTS Allstream submitted that they should be classified as category 2 competitor services.

LISTNUM 1 \l 14402             MS SONG:  Thank you.

LISTNUM 1 \l 14403             I would like to move off of your negotiate first proposal now, and discuss with you some of the terminology that we have been using in our discussions today.

LISTNUM 1 \l 14404             When we are talking about access, and this follows up on Mr. Bibic's intervention just now, we are talking about the component of the network that connects the customer's premises to a central office.  Correct?

LISTNUM 1 \l 14405             MR. BIBIC:  In our case, yes.

LISTNUM 1 \l 14406             MS SONG:  The transport component involves the facility and services ancillary to the facility that connect to central office to other central offices.  Is that correct?

LISTNUM 1 \l 14407             MR. BABIN:  I would add, Ms Song, not necessarily the central office.  It would be whatever the point of presence is for whichever carrier is taking that access.  So, it is a point of presence, transport between points of presences or COs or central offices would be considered transport.

LISTNUM 1 \l 14408             MS SONG:  Right.  In the case of your own networks, you have not only access to each and every, let's say, commercial building in your operating territories, but also between central offices, points of presence in a fairly dense configuration.  Correct?

LISTNUM 1 \l 14409             MR. BABIN:  I would just clarify the access.  When you say in the incumbent territory, it is generally copper access or low density loop access.  We don't have fibre to every commercial building in our operating territory and that is something we would build on a case‑by‑case basis, as any competitor would do.

LISTNUM 1 \l 14410             MS SONG:  I am glad you bring up fibre.

LISTNUM 1 \l 14411             So, of course you would not build a fibre access facility to the 7‑Eleven in a small town in Ontario.  Correct?

LISTNUM 1 \l 14412             MR. BABIN:  Likely not.

LISTNUM 1 \l 14413             MS SONG:  And that is why you don't have fibre to every building that in your operating territory.  Correct?

LISTNUM 1 \l 14414             MR. BABIN:  Correct.

LISTNUM 1 \l 14415             MS SONG:  But if there is sufficient potential revenue and customers in a building, such as a building in downtown Ottawa, you would surely provision that with a fibre facility.  Correct?

LISTNUM 1 \l 14416             MR. BABIN:  Correct, and I think that the discussion isn't whether you lease facilities or build.  It is whether you can recover, as you said, enough revenue to recover the costs of building that facility or that lateral connection.

LISTNUM 1 \l 14417             As we talked about yesterday, there are other carriers that have facilities running in front of buildings, and we have done some analysis, and we have shown on the record that there are ways of recovering costs, depending on the services you provide to those customers.

LISTNUM 1 \l 14418             MS SONG:  I do want to discuss with you how you decide whether you are going to provision a building with copper or fibre, but I just wanted to talk a little bit about the architecture at this point, but thank you, Mr. Babin.

LISTNUM 1 \l 14419             It is also my understanding that there is a link component that is required to connect the access facility or component to the transport facility or component, correct, when it comes to services like CDN, I am not sure for Ethernet and perhaps DSL.  Correct?

LISTNUM 1 \l 14420             MR. BABIN:  That is correct, connects links in our central office would connect the access to the competitor's co‑location.

LISTNUM 1 \l 14421             MS SONG:  Now I would like to understand, using some specific examples, when Bell Canada, in its operating territory ‑‑ sorry, Bell Canada, Bell Aliant, SaskTel and Télébec would provision specific types of access and transport facilities, because I do think that it is important to bring out that you don't have fibre to every building and that there is a reason for that.  So, I would like to understand what that reason is.

LISTNUM 1 \l 14422             We will do that using specific examples.

LISTNUM 1 \l 14423             Let's say you have the bank customer, and you are familiar with that because you have many bank customers.  Correct?

LISTNUM 1 \l 14424             MR. IACONO:  Yes, we do.

LISTNUM 1 \l 14425             MS SONG:  I spoke about the example of the 7‑Eleven, but let's take the branch office, say a branch office in ‑‑

LISTNUM 1 \l 14426             THE CHAIRPERSON:  Indian Head.

LISTNUM 1 \l 14427             MS SONG:  Indian Head.  Well, the only problem with that example, of course, is that it is not in any of their operating territories.

LISTNUM 1 \l 14428             MR. BIBIC:  SaskTel is part of this panel.

LISTNUM 1 \l 14429             MS SONG:  Excuse me.  All right, then, we will take Indian Head.

LISTNUM 1 \l 14430             I don't think any of the major chartered banks are actually headquartered in Indian Head.  I think that is fair to say.  But, of course, the major chartered banks are all located in Bell Canada's ‑‑ headquartered in Bell Canada's operating territory, I believe, even the Bank of Nova Scotia.  Correct?

LISTNUM 1 \l 14431             MR. IACONO:  That is correct.

LISTNUM 1 \l 14432             MS SONG:  So, I would like to stick to an Ontario example, being a central Canadian myself.

LISTNUM 1 \l 14433             Let's say you have a branch of the bank in Perth, Ontario.  Would you provision or would that kind of a building, stand‑alone branch office in Perth, Ontario, be provisioned using a fibre facility?

LISTNUM 1 \l 14434             MR. BABIN:  That would depend on the services you are selling to that customer, obviously.  As I said, it is about recovering enough revenues from that customer.  If it is hi‑speed, if it is, you know, hi‑speed data services and hi‑speed access to the internet, perhaps it might make sense to construct a lateral fibre connection to that building if there is fibre passing in front of the building.

LISTNUM 1 \l 14435             It would all depend on the services you could sell to that customer.

LISTNUM 1 \l 14436             MS SONG:  And what kind of services would you have to reasonably be capable of serving to that little branch office in Perth, Ontario, in order to decide to provision that with fibre facilities?

LISTNUM 1 \l 14437             MR. BABIN:  Well, hi‑speed services, obviously.  So, DS‑1, DS‑3 services, which are the time division multiplex type services, TDM legacy type services or Ethernet, Ethernet 10 meg, 100 meg or 1 gig.  It would be the higher band width services.

LISTNUM 1 \l 14438             Certainly not for one voice line, but for hi‑speed services, definitely.

LISTNUM 1 \l 14439             MR. IACONO:  Ms Song, typically for those types of situations, DSL services more than sufficiently serve the needs of the branch.  Other IP‑VPN access services, et cetera, you know, an IP Centrex, an IP key system, an IP PBX interconnected with PSTN connectivity linking back to head office.

LISTNUM 1 \l 14440             So, there is a variety of ways of providing branch office locations.  In fact, that is how the solutions are actually designed, be they for in territory operations or be they out of territory where we are, say, operating in Edmonton or Alberta generally or Saskatchewan.  So, we will provision services through third parties where it makes sense to do it through third parties or, in some cases, we will provision using our own network.

LISTNUM 1 \l 14441             So, there is a variety of ways of provisioning and meeting the requirements of the branch locations of a large company.

LISTNUM 1 \l 14442             MS SONG:  It all hinges on the requirements of the customer and primarily, I am hearing, their data needs.  Correct?

LISTNUM 1 \l 14443             MR. IACONO:  Well, data and voice, because typically they are integrated systems.  MST Allstream or Rogers, to the extent that Rogers provisions customers of that type, face the same solution possibilities and solutions‑based dimensions.

LISTNUM 1 \l 14444             You provision, or design a solution based on what the customer's needs ultimately are.  So, typically they have voice and they have data, and they integrate.

LISTNUM 1 \l 14445             MS SONG:  Right.  But if you have your Perth, Ontario branch, and the Perth, Ontario branch has ten employees and the ten employees need a phone line with dial tone and they need to access their e‑mails, I am hearing that you might probably provision that with DSL, copper‑based DSL rather than a fibre facility.

LISTNUM 1 \l 14446             MR. IACONO:  DSL or DSL alternatives, yes.

LISTNUM 1 \l 14447             MR. BABIN:  I would also add that I think your initial assumption was this was a branch network.  Several locations.  So, you would have to look at it as an entire deal.  You may provision based on future needs as well.

LISTNUM 1 \l 14448             I think Mr. Iacono is correct.  Probably a DSL‑type service would suffice, but it depends on the future needs and it depends on all of the locations as part of a total deal.

LISTNUM 1 \l 14449             MS SONG:  Currently would you be provisioning that branch office in certain cases with CDN as opposed to DSL where you are dealing with lower capacity needs?

LISTNUM 1 \l 14450             MR. BIBIC:  CDN we would use potentially out of territory, but in territory you are referring to ‑‑

LISTNUM 1 \l 14451             MS SONG:  I am talking about your in territory now.  So, in territory, would you typically be providing the Perth office with CDN as opposed to DSL where you have lower capacity, lower data band width needs?

LISTNUM 1 \l 14452             MR. IACONO:  CDN doesn't apply to retail customers.  It applies to wholesale customers in terms of the tariff and the rating structure.

LISTNUM 1 \l 14453             Equivalent services would typically be used.

LISTNUM 1 \l 14454             MS SONG:  Right.  I am talking about using a dedicated digital network access line as opposed to a DSL which is a packetized network access line ‑‑

LISTNUM 1 \l 14455             MR. IACONO:  Again, it depends on the specific needs of the customer.  So, it can vary from one customer to the next, and it can vary, in fact, for any given customer from one location to the next, depending on what they need to do from those locations.

LISTNUM 1 \l 14456             MS SONG:  But typically in your in territory operation.  I am not talking, Mr. Iacono ‑‑ I know you have responsibilities over the entire country for enterprise customers, but in territory, when you are deciding how to provision a specific customer location with lower capacity data and voice needs, you would typically be provisioning that using DSL as opposed to digital network access facilities.  Correct?

LISTNUM 1 \l 14457             MR. IACONO:  As I said typically means typically, yes, but in some cases it could be something else.  It depends on the customer's requirements.

LISTNUM 1 \l 14458             In fact, I can think of some situations where they don't need internet connectivity or IP connectivity and a basic business line will do in a particular location for that particular customer.  Can you generalize from that?  No.  It varies one customer to the next.

LISTNUM 1 \l 14459             MS SONG:  Let's move to downtown Ottawa, then.  This downtown Ottawa of the bank has many more employees, perhaps 50, 60, 70 employees, and in addition to providing retail banking services, the bank provides business banking services, there are financial advisory services.  There is a full suite of services being offered to the bank's own customers at this downtown Ottawa location.

LISTNUM 1 \l 14460             It is reasonable to assume, I believe, and you will correct me if I am wrong in my assumption, that at this particular location the customer's needs would be different in terms of band width than your Perth location for the same customer.  Correct?

LISTNUM 1 \l 14461             MR. IACONO:  Yes, I think that would be a safe assumption, yes.

LISTNUM 1 \l 14462             MS SONG:  For that kind of a location, customer location, how would you be provisioning that in territory?

LISTNUM 1 \l 14463             MR. IACONO:  Again, you would use the appropriate facilities in terms of services, be they DS‑3 based or otherwise.  I will ask Mr. Babin to give you the technical side of this because I am not a technician, unfortunately, but, again, it depends on the band width requirements, number of users, scaleability requirements, growth requirements of the customer.  So, you would provision with the higher capacity services and features.

LISTNUM 1 \l 14464             MS SONG:  So, higher capacity, either DSL, CDN or Ethernet in territory?

LISTNUM 1 \l 14465             MR. IACONO:  Well, not CDN because CDN doesn't apply to retail, but the network equivalent of CDN, which is DNA, et cetera, but at a much higher price.

LISTNUM 1 \l 14466             MS SONG:  All right.

LISTNUM 1 \l 14467             And then let's move to downtown Montreal or downtown Toronto where the headquarters of this bank are located and there you have perhaps thousands of employees, there are intense requirements for data transmission because of the amount of financial and other information, perhaps there are even trading desks at this downtown location.

LISTNUM 1 \l 14468             How would you typically provision that kind of a customer location?

LISTNUM 1 \l 14469             MR. IACONO:  I will use the term "big pipes" but I will ask Mr. Babin to explain.

LISTNUM 1 \l 14470             MR. BABIN:  Well, it would be likely fiber.  In many cases these customers are also looking for redundancy, and so they may go to another carrier and get a separate fiber into their location so they have a redundant network in the case of fiber failure, fiber cuts, which happen quite often.  The customer remains in service.

LISTNUM 1 \l 14471             So likely fiber with high capacity bandwidth on that fiber.

LISTNUM 1 \l 14472             MS SONG:  All right.

LISTNUM 1 \l 14473             And just to stay on the technical side, perhaps you can help me understand.

LISTNUM 1 \l 14474             My understanding is that when you are talking about fiber, use of fiber transmission facilities, that translates into what we call Ethernet services and that those services come at very hi‑speeds, 10 megabits per second, 100 megabits per second, or gigi or 1000 megabits per second; correct?

LISTNUM 1 \l 14475             MR. BABIN:  Not necessarily, Ms Song.  I mean fiber, you can use the traditional TDM services on fiber as well ‑‑

LISTNUM 1 \l 14476             MS SONG:  Mm‑hmm.

LISTNUM 1 \l 14477             MR. BABIN:  ‑‑ SONET‑type facilities, not necessarily Ethernet.

LISTNUM 1 \l 14478             MS SONG:  Okay.

LISTNUM 1 \l 14479             MR. BABIN:  Certainly, from my experience in having been, again, on the other side, building to customer locations fiber facilities, we have done that.  We used to do that prior to the CDN decision in 2005.

LISTNUM 1 \l 14480             Today, with CDN, as we talked about yesterday, many out‑of‑territory incumbents now use CDN services.  There is no incentive to build.

LISTNUM 1 \l 14481             MS SONG:  Okay.  So your comments just now had to do with competitors, correct, not your in‑territory ILEC operations?

LISTNUM 1 \l 14482             MR. BABIN:  Correct, out‑of‑territory ILEC operations.

LISTNUM 1 \l 14483             MS SONG:  And your responsibilities are what in the company, sorry?

LISTNUM 1 \l 14484             MR. BABIN:  At Bell Canada I run all the operations for Bell Canada.  I also run field services for Ontario and Quebec.

LISTNUM 1 \l 14485             MS SONG:  All right, so in territory.

LISTNUM 1 \l 14486             MR. BABIN:  And I have experience in out‑of‑territory as well.

LISTNUM 1 \l 14487             MS SONG:  Okay.  I was trying to focus on your in‑territory operations ‑‑

LISTNUM 1 \l 14488             MR. BABIN:  Okay.

LISTNUM 1 \l 14489             MS SONG:  ‑‑ but thank you for the clarification.

LISTNUM 1 \l 14490             MR. BABIN:  You are welcome.

LISTNUM 1 \l 14491             MS SONG:  However, I guess you indicated that you could run lower speed services on fiber facilities but the maximum speeds achievable on Ethernet ‑‑ sorry, fiber facilities running Ethernet are, as I said, 10 megabits, 100 megabits per second, 1000 megabits per second?

LISTNUM 1 \l 14492             MR. BABIN:  No, you can actually run higher speeds with TDM technology as well.

LISTNUM 1 \l 14493             MS SONG:  Mm‑hmm.

LISTNUM 1 \l 14494             MR. BABIN:  There are rings across Canada.  There are metropolitan fiber rings in Montreal, in Toronto, out west, that actually have equivalent speed facilities, equivalent to 1 gig Ethernet.

LISTNUM 1 \l 14495             MS SONG:  So 1 gig Ethernet would be 1.5 ‑‑ sorry, 1000 megabits per second?

LISTNUM 1 \l 14496             MR. BABIN:  Yes.  You have got OC, the optical network, OC‑48, so C‑192s ‑‑ I don't want to get too technical here, Ms Song, but you can actually provide TDM‑type facilities outside of ‑‑ it doesn't have to be Ethernet, I guess is my point.

LISTNUM 1 \l 14497             MS SONG:  Right.  But the DS‑0/DS‑1 run at 56 kilobits per second and DS‑1 facilities run at 1.54 megabits per second ‑‑

LISTNUM 1 \l 14498             MR. BABIN:  That is correct.

LISTNUM 1 \l 14499             MS SONG:  ‑‑ which are lower speeds than the ‑‑

LISTNUM 1 \l 14500             MR. BABIN:  Right.

LISTNUM 1 \l 14501             MS SONG:  ‑‑ lower Ethernet?

LISTNUM 1 \l 14502             MR. BABIN:  That is correct.

LISTNUM 1 \l 14503             MS SONG:  Okay.  All right.

LISTNUM 1 \l 14504             Now, I would like to talk about what distinguishes Ethernet from DSL from a customer experience perspective if you are able to explain that to me and to the Commission panel.

LISTNUM 1 \l 14505             MR. BABIN:  It depends on the services that are riding over those facilities.

LISTNUM 1 \l 14506             DSL is a technology that runs over a copper facility at speeds up to ‑‑ in today's environment you can get up to 15 or 20 megabits per second.

LISTNUM 1 \l 14507             Ethernet is a packet‑switch network technology.  It is also a protocol and you can get equivalent services over that facility, and depending on how it is designed and how it is architected, there are different experience levels, and depending on the applications that you are running, different experience levels using that facility.

LISTNUM 1 \l 14508             MS SONG:  Right.  But my understanding is that DSL, for example, is asynchronous, which means that the maximum speeds ‑‑ sorry.

LISTNUM 1 \l 14509             ADSL is asynchronous, which means that the maximum speeds to download information to the user is much higher typically than the maximum speeds at which the user, the end‑use customer, can upload information?

LISTNUM 1 \l 14510             MR. BABIN:  Yes.  You had started your question with DSL, not ADSL, but there are symmetrical DSL services as well that have the same speed upstream and downstream.  So it depends on the experience.

LISTNUM 1 \l 14511             In many cases when you are just using the internet to download information, you actually don't need upstream capability.

LISTNUM 1 \l 14512             If it is synchronous‑type applications like Tele‑Education, you would usually use symmetrical services like SDSL.

LISTNUM 1 \l 14513             MS SONG:  Right.  And that all depends on the customer's needs, for example.  So for the branch office ADSL may be fine but when you move to the downtown Toronto office, I am assuming you are not provisioning that whole office with its 1,000 employees using DSL facilities necessarily?

LISTNUM 1 \l 14514             MR. BABIN:  Well, we have many large clients that use DSL as an access to our Virtual Private Network and I know Allstream does the same.

LISTNUM 1 \l 14515             It depends on the needs of the customer and it depends on how many users.  It depends on the bandwidth required by the applications.  There are many factors that affect a decision of what facility you are going to use on the customer's premises.

LISTNUM 1 \l 14516             MS SONG:  Right, but I was actually talking about the downtown Toronto location.

LISTNUM 1 \l 14517             MR. BABIN:  Again, it would depend.  There are downtown locations that we would provision using DSL as an access into our IP VPN, for example, network.

LISTNUM 1 \l 14518             MS SONG:  Yes.  I am trying to ask you to stay with the example, which was of the headquarters of the bank office.  I am not talking about any old downtown branch location.

LISTNUM 1 \l 14519             MR. BABIN:  That was in downtown Montreal you had mentioned, I think, not Toronto.  Is that the example you are talking about?

LISTNUM 1 \l 14520             MS SONG:  No, I think I was talking Toronto actually.

LISTNUM 1 \l 14521             MR. BABIN:  Okay.

LISTNUM 1 \l 14522             MS SONG:  But I don't think it much matters except that I am not sure that there are any major chartered banks with headquarters in Montreal anymore.

LISTNUM 1 \l 14523             So I am asking about that particular example of the headquarters of a bank that has many thousands of employees.  Would you be provisioning all the users in that location, in that kind of a customer location, using DSL facilities?

LISTNUM 1 \l 14524             MR. BABIN:  Likely not.  You would probably use fiber, as I said earlier.

LISTNUM 1 \l 14525             MS SONG:  Thank you.  Okay.

LISTNUM 1 \l 14526             And what other limitations are there to an ADSL service as compared to an Ethernet service?

LISTNUM 1 \l 14527             MR. BABIN:  I am not sure I understand the question.  Limitations with respect to what?

LISTNUM 1 \l 14528             MS SONG:  What are the technical differences that distinguish ADSL from Ethernet?

LISTNUM 1 \l 14529             MR. BABIN:  They are very different protocols.

LISTNUM 1 \l 14530             MS SONG:  Yes, they are very different protocols.  DSL is much slower typically, correct?

LISTNUM 1 \l 14531             MR. BABIN:  It would depend on which DSL you are using.

LISTNUM 1 \l 14532             MS SONG:  Right.  So the highest speed DSL is much slower than the highest speed Ethernet service, correct?

LISTNUM 1 \l 14533             MR. BABIN:  That would be correct, yes.

LISTNUM 1 \l 14534             MS SONG:  Right.  And my understanding is that with DSL there are also latency or delay problems due to the fact that typically it is a much slower service than the hi‑speed Ethernet services, correct?

LISTNUM 1 \l 14535             MR. BABIN:  That would not necessarily be the case.  It would depend on the network configuration, the network architecture.  There are dedicated DSL services where you can have speeds, guaranteed speeds above a certain level.

LISTNUM 1 \l 14536             MS SONG:  Right.  And my understanding is that DSL is also distance sensitive, correct?

LISTNUM 1 \l 14537             MR. BABIN:  That is correct.

LISTNUM 1 \l 14538             MS SONG:  Right.  And what distinguishes Ethernet from a DNA or a CDN DS‑0 or DS‑1 service from a customer experience perspective?

LISTNUM 1 \l 14539             MR. BABIN:  Well, CDN is an access facility, so that is just competitive digital network access.  So it is a loop.  CDN is a loop.  It is like an unbundled loop, effectively, that can be used for higher speeds.  CDN is dedicated.  If it is a CDN DS‑1, which is a 1.5 meg service, or a DS‑3, it is a dedicated facility.

LISTNUM 1 \l 14540             MS SONG:  Right.  So I think you were talking about the technical difference between DNA or CDN and Ethernet.

LISTNUM 1 \l 14541             So you are talking there about the fact that Ethernet is a packetized protocol whereas DNA actually creates a virtual ‑‑ sorry, not a virtual, a dedicated channel in whatever physical facility you are running the DNA service over; correct?

LISTNUM 1 \l 14542             MR. BABIN:  You said DNA.  I think you meant CDN.  The CDN facility is dedicated, yes.

LISTNUM 1 \l 14543             MS SONG:  Okay.

LISTNUM 1 \l 14544             MR. BABIN:  But you can run Ethernet over that as well.

LISTNUM 1 \l 14545             MS SONG:  Right.

LISTNUM 1 \l 14546             My understanding is that Ethernet technology is a more efficient technology from a technical or technological perspective, because it allows carriers to fully utilize the capacity on that facility, rather than creating dedicated channels, which, when not in use, are not in use, but cannot be used for other applications or other uses.  Correct?

LISTNUM 1 \l 14547             MR. BABIN:  The CDN is a dedicated facility, so if your bandwidth requirements are less than what your equipment is on the CDN facility, then, yes, you are not using the facility all the time.

LISTNUM 1 \l 14548             MS SONG:  All right.  Thank you very much, Mr. Babin, for helping me through this section.

LISTNUM 1 \l 14549             I would like to move on to another area.

LISTNUM 1 \l 14550             Your companies have stated on the record of this proceeding, I believe, that most of the fibre facilities used to support next generation services were constructed by your companies in the last 10 years.  Correct?

LISTNUM 1 \l 14551             MR. BIBIC:  Do you have a reference in our evidence?

LISTNUM 1 \l 14552             It's quite possible, but I can't remember.

LISTNUM 1 \l 14553             MS SONG:  You cannot remember that.  Okay.

LISTNUM 1 \l 14554             MR. BIBIC:  It is the last 10 years bit that ‑‑

LISTNUM 1 \l 14555             Did we say that in our evidence?

LISTNUM 1 \l 14556             MS SONG:  Do you think it could be longer than that?

LISTNUM 1 \l 14557             MR. BIBIC:  I don't know.  You suggested that we said it in our evidence, but I just can't remember.

LISTNUM 1 \l 14558             MS SONG:  How about turning up Appendix 6, paragraph 76 of your March 15th evidence.

‑‑‑ Pause

LISTNUM 1 \l 14559             MS SONG:  Do you see that?

LISTNUM 1 \l 14560             MR. BIBIC:  We see that.

LISTNUM 1 \l 14561             MS SONG:  You are with me, Mr. Bibic?

LISTNUM 1 \l 14562             MR. BIBIC:  I have the paragraph.

LISTNUM 1 \l 14563             MS SONG:  You are aware that MTS Allstream has stated in its evidence ‑‑ and I don't think I need to take you through it, but the reference is MTS Allstream‑CRTC‑12 April 07‑203 ‑‑ that the establishment of fibre networks to provide next generation services such as Ethernet has taken place over a much longer period than 10 years.  Correct?

LISTNUM 1 \l 14564             Are you aware of that in our company's evidence?

LISTNUM 1 \l 14565             MR. BIBIC:  I am not aware of that in your company's evidence.

LISTNUM 1 \l 14566             MS SONG:  Then I would ask you to turn up that interrogatory.

LISTNUM 1 \l 14567             It is MTS‑A‑CRTC ‑‑

LISTNUM 1 \l 14568             MR. HOFLEY:  Mr. Chairman, is there an exhibit number for this?

LISTNUM 1 \l 14569             THE CHAIRPERSON:  Madam Secretary, are you going to distribute something?

LISTNUM 1 \l 14570             THE SECRETARY:  It is on the pre‑filed record, right?

LISTNUM 1 \l 14571             MS SONG:  Yes, I believe so.

LISTNUM 1 \l 14572             THE SECRETARY:  Could you repeat the question number?

LISTNUM 1 \l 14573             MS SONG:  MTS Allstream‑CRTC‑12 April 07, No. 203.

‑‑‑ Pause

LISTNUM 1 \l 14574             THE SECRETARY:  We don't have that, I'm sorry.

LISTNUM 1 \l 14575             MS SONG:  I apologize.

LISTNUM 1 \l 14576             THE CHAIRPERSON:  Ms Song, what turns on the 10 years that you are trying to establish?

LISTNUM 1 \l 14577             MS SONG:  Pardon me, Mr. Chairman?

LISTNUM 1 \l 14578             THE CHAIRPERSON:  What turns on whether it is 10 years or 12 years since these facilities have been established?

LISTNUM 1 \l 14579             MS SONG:  What am I trying to establish?

LISTNUM 1 \l 14580             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 14581             MS SONG:  I am trying to establish that these networks were actually constructed over a period of almost 20 years, rather than 10 years.

LISTNUM 1 \l 14582             MR. BABIN:  Maybe I could add, Mr. Chairman, that the last 10 years is when we have started to deploy fibre closer to the customer.

LISTNUM 1 \l 14583             If you understand the network, there is the feeder network portion, which is coming from the central office and going out to a business park or a subdivision, and then there is the distribution network beyond that.

LISTNUM 1 \l 14584             Twenty years ago we were deploying fibre, but it was really just to concentrate copper loops and bring it back into the central office on fibre, it wasn't to provide next gen services.

LISTNUM 1 \l 14585             Over the last 10 years the technology is now available to provide higher speeds, next gen‑type services closer to the customer.

LISTNUM 1 \l 14586             MS SONG:  Right.

LISTNUM 1 \l 14587             MR. BABIN:  That's why the reference is to 10 years, because prior to that the fibre was really deployed for interoffice trunking or transport, not out, closer to the customer.

LISTNUM 1 \l 14588             That was, actually, for the purposes of voice traffic.

LISTNUM 1 \l 14589             MS SONG:  Mr. Babin, you are conceding, then, that the deployment of fibre in your ILEC networks may have commenced as early as 20 years ago.

LISTNUM 1 \l 14590             MR. BABIN:  As I said, fibre in order to relieve feeder, which is not necessarily driving customer next gen services.  It is really for the purposes of transporting copper loops back into the central office.

LISTNUM 1 \l 14591             Really, all it is is a concentrator, a digital loop concentrator.  That is what we deployed, and I was at Bell at the time of deploying those, and they were strictly digital loop carrier systems, not hi‑speed, next gen services.

LISTNUM 1 \l 14592             The other area for fibre was in transport facilities between offices ‑‑ between central offices ‑‑ and that was really to carry voice traffic.

LISTNUM 1 \l 14593             MR. BIBIC:  The sentence in paragraph 76 is in reference to fibre to support next gen services.

LISTNUM 1 \l 14594             MS SONG:  Right.

LISTNUM 1 \l 14595             If I understand correctly ‑‑ and I realize that you are much better able to speak to this than me ‑‑ what you are talking about, in part, when you say fibre networks in what you have just said ‑‑ you are talking, in part, about the equipment and other facilities that are required to augment that fibre network in order to provide next generation services.

LISTNUM 1 \l 14596             My question had more to do with:  When did you actually put the fibre in the ground?

LISTNUM 1 \l 14597             That fibre is very expensive to put in the ground, is it not?

LISTNUM 1 \l 14598             MR. BABIN:  It depends if the duct structures are already there or not, but, generally, to put in a transport facility and dig up streets and put in conduit, it is expensive, yes.

LISTNUM 1 \l 14599             MS SONG:  The point that I would like to get at is:  When did you actually start putting that fibre in the ground?

LISTNUM 1 \l 14600             MR. BABIN:  As I said, we started to relieve feeder networks 20 years ago ‑‑ 1986 or 1987 perhaps ‑‑ and that was strictly to relieve feeder cables and prevent digging up streets and adding a lot of copper.

LISTNUM 1 \l 14601             But these were, as I said, digital loop concentrators, which strictly took 500 copper loops and aggregated them into several DS‑1s.

LISTNUM 1 \l 14602             MR. IACONO:  Ms Song, if I may add a very quick comment from a colour and context viewpoint, because I was at Bell, obviously, at the time ‑‑ I was not on the engineering side.  I never was and I never will be, but I do remember the conversations about fibre and the economies achievable through fibre utilization.

LISTNUM 1 \l 14603             So, at the end of the day, it was all about maximizing efficiency, which, in turn, given the regulatory context of that particular day, or time, or era, had implications with regard to:  the lower our costs overall to carry traffic, the better off everyone is, including consumers.

LISTNUM 1 \l 14604             Otherwise, more inefficient utilization of resources would mean higher costs, which would have implications downstream from a tariffing point of view.

LISTNUM 1 \l 14605             So it really was an efficiency perspective, clearly not tied to next gen services, because, quite frankly, I don't think next gen services existed at the time, in terms of the way we define them today.

LISTNUM 1 \l 14606             MS SONG:  I think you have confirmed what my client says on the record of this proceeding, which is that the actual laying of fibre in your in‑territory networks began as early as 20 years ago.  Right?

LISTNUM 1 \l 14607             MR. BABIN:  I think the statement, Ms Song, was that the ILECs' transport and access fibre facilities are ubiquitous, i.e., they are everywhere.

LISTNUM 1 \l 14608             In certain areas, as I said, we did deploy fibre to relieve feeder network.  In those areas there would be fibre.  We would have had to overbuild fibre if we were going even further to provide Nex Gen services closer to the customer.  We would also have to build fibre to get into business buildings to offer services, higher speed services, as we talked about for that bank head office.  That would have to be build.  You know, today, we actually lease fibre out west from other carriers that have fibre.

LISTNUM 1 \l 14609             So there are options out there, and not just the ILEC fibre.  There's lots of fibre in the ground today.

LISTNUM 1 \l 14610             THE CHAIRPERSON:  Mr. Babin, please, can you answer the question and not give us a lecture.

LISTNUM 1 \l 14611             MR. BABIN:  Sure.

LISTNUM 1 \l 14612             THE CHAIRPERSON:  It was a very specific question.  She asked you:  did you start laying fibre 20 years ago?

LISTNUM 1 \l 14613             MR. BABIN:  Yes.

LISTNUM 1 \l 14614             THE CHAIRPERSON:  The answer is yes ‑‑

LISTNUM 1 \l 14615             MR. BABIN:  Yes.

LISTNUM 1 \l 14616             THE CHAIRPERSON:  ‑‑ so let's get on, let's not waste time with commercials.

LISTNUM 1 \l 14617             MR. BABIN:  Okay.

LISTNUM 1 \l 14618             MS SONG:  So I have provided to your counsel previously, and I would ask you to turn up, Telecom Decision CRTC 90‑27.

LISTNUM 1 \l 14619             Madam Secretary, I would like to mark that as an exhibit.

LISTNUM 1 \l 14620             THE SECRETARY:  This will be MTS Exhibit No. 4.

LISTNUM 1 \l 14621             MS SONG:  Thank you.  And also Telecom Decision CRTC 92‑8.

EXHIBIT MTS‑4:  Telecom Decision CRTC 90‑27 and Telecom Decision CRTC 92‑8

LISTNUM 1 \l 14622             MS SONG:  Given the progress that we have made in our discussion, I won't take you through those decisions, but those decisions do confirm the early date at which Bell Canada, for one, began laying fibre in its network.

LISTNUM 1 \l 14623             Now, there is a follow‑up question, however, to this, and it would be that it's my understanding that, for at least part of this period, Bell Canada was rate‑of‑return regulated.  Correct?

LISTNUM 1 \l 14624             MR. HENRY:  Yes, that's correct.

LISTNUM 1 \l 14625             MS SONG:  Right.  And then for, I believe, a few years there in the late‑nineties it was ‑‑ or, sorry, early‑nineties, it was spit rate base regulated.  Correct?

LISTNUM 1 \l 14626             MR. HENRY:  I think split rate base came in '95.

LISTNUM 1 \l 14627             MS SONG:  Right.  And part of the laying of the fibre would have been covered from the utility segment of the spit rate base.  Correct?

LISTNUM 1 \l 14628             MR. HENRY:  I'm not sure what you mean by "covered" by it.  It had to be assigned to ‑‑ some of it had to be assigned to the utility segment.  To the extent that it was used to provide legacy voice services, yes.  To the extent that it was intended to be used for other purposes, it was assigned to the competitive segment.

LISTNUM 1 \l 14629             MS SONG:  Right.  But Mr. Babin has just finished explaining to me that, at the time that the fibre was being laid ‑‑ and at that time ‑‑ the only services that were envisaged were legacy services, not Nex Gen services.  Correct?

LISTNUM 1 \l 14630             MR. HENRY:  In the early nineties, yes.  Towards the mid‑ to late‑nineties, there was, we all know, the Beacon initiative which was envisage, and, in fact, it never materialized.

LISTNUM 1 \l 14631             MS SONG:  Okay, thank you very much.

LISTNUM 1 \l 14632             There has been a reference already in the hearing to date to, I believe, the problem of remotes, and, in fact, I may have referred to that myself in our discussion yesterday.  So the problem that I'm speaking of is the issue in relation to ADSL services, where an end‑use customer is served off of a so‑called remote.

LISTNUM 1 \l 14633             So you are familiar with that issue, gentlemen?

LISTNUM 1 \l 14634             MR. BIBIC:  Yes.  Do you mean a voice remote or a data remote when you say "remote", though?

LISTNUM 1 \l 14635             MS SONG:  I'm not sure that I understood that there was a difference, but let's say both data and voice remote.

LISTNUM 1 \l 14636             MR. BIBIC:  Okay.

LISTNUM 1 \l 14637             MS SONG:  Okay?

LISTNUM 1 \l 14638             MR. BIBIC:  Well, something may turn eventually when you get to the other questions, so we will wait.

LISTNUM 1 \l 14639             MS SONG:  Right.  And you will bring the necessary clarification when we get to that.

LISTNUM 1 \l 14640             Now, my understanding is that a remote is basically ‑‑ can be as small as a green box on a street corner.  Correct?

LISTNUM 1 \l 14641             MR. BABIN:  Yes.

LISTNUM 1 \l 14642             MS SONG:  Right.  That's typically what they are, these cabinets that stand in the ‑‑ metal cabinets that stand on street corners?

LISTNUM 1 \l 14643             MR. BABIN:  Yes, generally brown, but you would see them on the street corners, yes.

LISTNUM 1 \l 14644             MS SONG:  Okay.  I thought they were green in my neighbourhood, but...

LISTNUM 1 \l 14645             And the remote ‑‑ sorry, the customer's premises are connected to the remote by copper facilities, typically.  Correct?

LISTNUM 1 \l 14646             MR. BABIN:  Correct.

LISTNUM 1 \l 14647             MS SONG:  All right.  But the distinction is that from the remote back to the central office, the facility that connects remote to the central office is fibre.  Correct?  It's fibre link?

LISTNUM 1 \l 14648             MR. BABIN:  The fibre connects the remote, but there's also copper facilities there, as well.  Generally, the remotes would be deployed to provide higher services.

LISTNUM 1 \l 14649             MS SONG:  Right.  So are you saying that the old copper facility in your operating territory would not be ripped out?

LISTNUM 1 \l 14650             MR. BABIN:  Correct.

LISTNUM 1 \l 14651             MS SONG:  Okay.  Do you still attach equipment to that copper facility?

LISTNUM 1 \l 14652             MR. BABIN:  Absolutely, yes.

LISTNUM 1 \l 14653             MS SONG:  Okay.

LISTNUM 1 \l 14654             MR. BABIN:  Customers that are using copper facilities would remain connected.  When we deploy a remote, when a customer orders the Nex Gen services, like ADSL, they would be connected to that remote one at a time.

LISTNUM 1 \l 14655             MS SONG:  Okay.  You are saying "one at a time", and once you have connected all of the customer locations that are connected to that remote, what do you then do?

LISTNUM 1 \l 14656             MR. BABIN:  Let me clarify, Ms Song.  One at a time, as they order services.

LISTNUM 1 \l 14657             MS SONG:  Oh, I see.  Okay.

LISTNUM 1 \l 14658             Once you have signed up all the customers, what do you then do with the customer prime equipment that you have ‑‑ sorry, what do you then do with the equipment that's located in your CO that's connected to the fibre?

LISTNUM 1 \l 14659             MR. BABIN:  It remains in the CO.

LISTNUM 1 \l 14660             MS SONG:  All right.

LISTNUM 1 \l 14661             Now, as I understand it, there is a problem that affects competitors in particular with respect to serving customers that are served off of these remotes.  Could you explain that problem for the panel?

LISTNUM 1 \l 14662             MR. BIBIC:  This is where, I think, something may turn on whether or not you are referring to a voice remote or a data remote.  Are you referring to a potential problem in the delivery by competitors of voice services or Internet services?

LISTNUM 1 \l 14663             MS SONG:  Let's talk about Internet services, first of all.

LISTNUM 1 \l 14664             MR. BIBIC:  We are not aware of any ‑‑ well, okay, so your problem's with respect to the provision by competitors of Internet services when Bell has data remotes deployed?

LISTNUM 1 \l 14665             MS SONG:  Well, when the customers are served off a remote as opposed to on a continuous copper loop between the central office and the customer location, yes.

LISTNUM 1 \l 14666             MR. BIBIC:  Okay, and the competitor wants to offer DSL?

LISTNUM 1 \l 14667             MS SONG:  Yes, but it doesn't want to subscribe to your HSA or GAS ADSL tariff.

LISTNUM 1 \l 14668             MR. BABIN:  Well, in that case, there are situations where are no copper facilities available to that remote location and, you know, I think it's an issue in a very small number of cases.  In fact, this year, if I recall, in Ontario, out of all the unbundled loop requests that we received in the first quarter, there was 1.3 percent of them that were considered held order, i.e there was not a copper loop there.  But in many ‑‑ in all the other cases, there are copper facilities available.

LISTNUM 1 \l 14669             My point would be the presence of a remote offering DSL services in that neighbourhood does not mean there are no longer copper facilities available.  As I said, we move the customers over as they order services.  We don't have large market shares of DSL.  There's cable companies that are offering hi‑speed, as well.

LISTNUM 1 \l 14670             So it does mean there's still copper facilities in the majority of cases where there are remotes.

LISTNUM 1 \l 14671             MS SONG:  Did you have anything to add, Mr. Babin.

LISTNUM 1 \l 14672             MR. BIBIC:  No.

LISTNUM 1 \l 14673             MS SONG:  No, okay.

LISTNUM 1 \l 14674             MR. BIBIC:  I had a question for him, that's all.

LISTNUM 1 \l 14675             MS SONG:  Okay.

LISTNUM 1 \l 14676             So you said that in your view, this problem only affects 1.3 percent of competitor requests for loops, and that's throughout the Province of Ontario?  Is that correct?

LISTNUM 1 \l 14677             MR. BABIN:  In the first quarter of this year 1.3 percent of the unbundled loop requests could not be fulfilled in Ontario.

LISTNUM 1 \l 14678             MS SONG:  Right.  But that statistic, of course, is all requests for unbundled local loops, not just requests for locations where you have more intensely deployed remotes, correct?

LISTNUM 1 \l 14679             MR. BABIN:  Yes, it is 1.3 per cent of all orders received for unbundled loops in Ontario in the first quarter of this year.

LISTNUM 1 \l 14680             MS SONG:  Yes, so that includes markets where you don't even have any remotes, correct?

LISTNUM 1 \l 14681             MR. BABIN:  I would have to check that, I am not sure.

LISTNUM 1 \l 14682             MS SONG:  All right, well you will get back to me on that.

LISTNUM 1 \l 14683             MR. BIBIC:  When there is a problem that you mention, the competitor can either lease HSA, GAS or get access to third‑party internet services today.  So there are choices.

LISTNUM 1 \l 14684             MS SONG:  Well, if the competitor in question wants to use a portion of its network, I believe the answer that we established already yesterday was that HSA or GAS is not going to help him, that is not the appropriate solution.  We are talking about unbundled access in order to provide facilities‑based competition in DSL markets.

LISTNUM 1 \l 14685             So I just want to get back to Mr. Babin with respect to his 1.3 per cent figure.

LISTNUM 1 \l 14686             It is my understanding that in Windsor, for example, Bell Canada has said that this problem can affect 25 per cent of customer locations.  Windsor being one of those markets apparently where remotes have been more intensely deployed.  Could that be, Mr. Babin?

LISTNUM 1 \l 14687             MR. BABIN:  I am not familiar with the Windsor.  But I just found the 1.3 per cent reference was in the Bell Canada‑PRIMUS 10, 12 of April, 2007, and it was as a percentage of the total number of inward orders for unbundled loops.

LISTNUM 1 \l 14688             MS SONG:  Right, including for markets that don't have any remotes ‑‑

LISTNUM 1 \l 14689             MR. BABIN:  Correct.

LISTNUM 1 \l 14690             MS SONG:  ‑‑ deployed in them?  All right.

LISTNUM 1 \l 14691             And my understanding is that co‑location in these remotes is not the answer, because we are talking about a little cabinet on a street corner, correct?  Is co‑location possible?

LISTNUM 1 \l 14692             MR. BABIN:  Well, that is correct. I think it was discussed in CISC committee and it was deemed to be, by all members of the CISC, that it was not practical to build another remote next door to the remote.

LISTNUM 1 \l 14693             MS SONG:  Yes.  And my understanding is that this very issue is in fact the issue, or at least a portion of the issue in Tariff Notice 6622, which I discussed with you yesterday, and that has been outstanding for six, seven, perhaps more years than that, correct?

LISTNUM 1 \l 14694             MR. ANDERSON:  That is correct.  I know there were a couple reviews of it and there has been no resolution at this point.

LISTNUM 1 \l 14695             MS SONG:  Right.  And so competitors who currently, under the Commission's local competition framework, have the right to collocate in a central office are out of luck when it comes to customers served off of remotes, correct?

LISTNUM 1 \l 14696             MR. BIBIC:  No.

LISTNUM 1 \l 14697             MS SONG:  Well, Mr. Bibic, apart from your point about they can always subscribe to the retail HSA and GAS service or use TPIA, right, that is what you were going to tell me?

LISTNUM 1 \l 14698             MR. BIBIC:  Correct.  And if they also want to provision voice, there may not be a problem at all.

LISTNUM 1 \l 14699             MR. IACONO:  And, Ms Song, just to clarify, HSA or GAS are not retail services, because they are just simply providing the connectivity.  There is no ISP component to it.

LISTNUM 1 \l 14700             MS SONG:  Right.  And TPIA also has the same limitation as HSA and GAS, in that a competitor who wants to provision the service on a facilities‑based competition basis, again that would be of no avail to it, correct?  That is my understanding.

LISTNUM 1 \l 14701             MR. BIBIC:  I don't know.

LISTNUM 1 \l 14702             MS SONG:  Okay, again I will perhaps have the opportunity to ask that question of somebody who does.

LISTNUM 1 \l 14703             All right.  I want to turn back to paragraph 147, which we started off with this morning.  This is in your March 15 evidence.  But I want to focus on a different aspect of that quotation.

LISTNUM 1 \l 14704             Are you with me again?

LISTNUM 1 \l 14705             MR. BIBIC:  Not quite yet.  Okay.

LISTNUM 1 \l 14706             MS SONG:  I want to focus on the statement that the Commission should place a restriction on the use of the facility to ensure that, absent the access supplier's consent, it can only be used to provide the retail service where there is a need for ‑‑ to address abuse of significant market power in a particular retail market.

LISTNUM 1 \l 14707             So I want to focus on the restriction on use that you intend to impose on competitors that lease your facilities and services.

LISTNUM 1 \l 14708             Now, it is my understanding that currently unbundled local loops can be obtained by competitors to provide downstream internet as well as voice services, correct?

LISTNUM 1 \l 14709             MR. BIBIC:  Correct.

LISTNUM 1 \l 14710             MS SONG:  And in your proposal, what restriction on use of the unbundled local loops should be imposed on competitors in accordance with paragraph 147 of your evidence?

LISTNUM 1 \l 14711             MR. BIBIC:  Well, under our proposal, as we discussed yesterday, loops would be determined to be nonessential, subject to a phase out.  If a competitor came in and said in a particular exchange loops are essential, the Commission would have to look at what the product market is where the competitor is alleging that there is an issue.

LISTNUM 1 \l 14712             MS SONG:  Right.  And I think you have already said that you don't think there is an issue in retail internet access?

LISTNUM 1 \l 14713             MR. BIBIC:  That is correct.

LISTNUM 1 \l 14714             MS SONG:  Right.  So in your proposal, if the Commission did say that unbundled local loops were essential in certain markets, you wouldn't allow a competitor to use that unbundled local loop in order to provision internet access services to a downstream competitor?

LISTNUM 1 \l 14715             MR. BIBIC:  Well, you use the words we "wouldn't allow" and I can't agree with that.  What we are suggesting is that if the retail internet market is competitive in the exchange, but the voice market is not, the Commission could find in that exchange that there should be mandated access to loops for voice.  But the Commission would not mandate use of that loop for internet, whether or not we would reach an agreement to allow the competitor, on terms acceptable to both, to also use that loop for internet.  It would be up to the market to decide.

LISTNUM 1 \l 14716             MS SONG:  Right.  It would be a prohibition, so you are suggesting that the Commission should impose on the use of the unbundled local loop?

LISTNUM 1 \l 14717             MR. BIBIC:  I mean, I haven't really thought through exact words that would be used to implement it, but ultimately the effect of the mandated order would be to allow use of the loops for voice only.

LISTNUM 1 \l 14718             MS SONG:  All right.  And let us say, you know, just as you, Bell Canada, had no inkling that next generation services would emerge, let us say that at the application layer, as I believe was mentioned earlier on in this hearing, at the application layer there is some technological innovation that allows unbundled local loops to be used to provide some other service that none of us here know about or have any knowledge of, at least at this point.  Let us say that happened.

LISTNUM 1 \l 14719             So under your model if somebody came to you and said, I want to use the unbundled local loop to provide advanced home security services.  Your answer to that would be, no, you can't have it, right?

LISTNUM 1 \l 14720             MR. BIBIC:  I believe I said quite the opposite.  I said we would entertain a commercial negotiation.  Restriction on use is not unheard of in the Commission.  There used to be a voice restriction on cable internet access and now there is a multicast of a broadcasting restriction.  That is the type of restriction on use we are talking about.

LISTNUM 1 \l 14721             MS SONG:  Right.  But if you did deny access to that loop for the purposes that the competitor would like to use it for, say perhaps because you yourself think it is an interesting idea to compete in that retail market and you don't see it to be in your interest to grant your competitor access to that loop, let us just say, if you will follow me in that example.

LISTNUM 1 \l 14722             You are saying that you would deny, perhaps.  The competitor would then have to make an application of some kind to the Commission and that would take however long it took.  Meanwhile, I guess, the customer of the competitor would be out of luck.  Correct?

LISTNUM 1 \l 14723             MR. BIBIC:  Dr. Church yesterday gave a long answer to this issue, which I was here and heard and endorse.

LISTNUM 1 \l 14724             The market will sort that out.  I mean, what you left out in your hypothetical is what the retail market is in question and whether or not the so‑called denial, in your words, lead to a lessening of competition or harm the consumer.

LISTNUM 1 \l 14725             MS SONG:  But the point I am driving at is that the Commission has typically looked at factors such as technological neutrality and in the policy direction that has been re‑emphasized.

LISTNUM 1 \l 14726             Is that kind of a rule technologically neutral, when we can't envisage at this point what technological advances could emerge?

LISTNUM 1 \l 14727             MR. BIBIC:  Ms Song, I am going to keep my comments really brief, but the policy direction instructs reliance on market forces, and markets typically work like this.  Somebody has a great idea and needs somebody to manufacture it for them, or a manufacturer needs somebody to distribute it for them, or somebody who is a distributor needs somebody to retail it for them.  I mean, this is how the market functions.

LISTNUM 1 \l 14728             THE CHAIRPERSON:  Let me just understand this.  I am getting lost here.

LISTNUM 1 \l 14729             In Ms Song's example, we are talking about a restriction, and she now says presumably we have mandated access but subject to this restriction, and now she comes along with a new invention that is caught by that restriction.

LISTNUM 1 \l 14730             Wouldn't, under your proposal, then that entail really a new determination by the Commission as to whether the use of your facility for that new use is essential or not?  Wouldn't you go through the whole process again?

LISTNUM 1 \l 14731             MR. BIBIC:  Absolutely.

LISTNUM 1 \l 14732             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 14733             MS SONG:  I would also like to ask with respect to Ethernet or next generation services, where there is a significant amount of technological innovation that is still ongoing, I believe Ethernet technology and transport protocols can be used to provide a panoply of downstream retail services, including voice, wide area network, remote LAN access, probably many others that Mr. Babin could fill in for me.  But the point is that it can be used for a number of downstream retail services.

LISTNUM 1 \l 14734             Again, it is my understanding that with Ethernet, the great power of that technology is that all of that kind of traffic becomes packetized and it all streams down a big pipe and utilizes the capacity on the transmission facility in the most efficient way possible.

LISTNUM 1 \l 14735             So, my question is:  When you are dealing with this restriction on use, how do you apply that in practice to an Ethernet facility which a competitor, like you ‑‑ I mean, you are not separating out your voice and data traffic, I am assuming, on these Ethernet facilities ‑‑ how do you distinguish between, separate out the voice and the data traffic on that facility?

LISTNUM 1 \l 14736             MR. BIBIC:  Contractually.  So, if the Commission has mandated a restriction on use because the mandated access is going to be to remedy a particular downstream problem, the user should be using the facility at mandated rates in order to provide just that, and there are models the Commission has used before where you can have the user self‑declare that through senior officer affidavits that that is all they are using the facility for.

LISTNUM 1 \l 14737             Depending on the product market there is a way to actually technically verify on the network what the facility is being used for, and ultimately there will be a contractual arrangement or a contractual relationship, even through tariff, between the two parties.  If that is breached, then there are remedies for breach of contract.

LISTNUM 1 \l 14738             MS SONG:  My question wasn't a legal ‑‑ I don't think it was a legal question.  It is how do you, from a technology perspective, how do you determine what is voice, what is data, and if the facility is being used to transport both types of traffic?

LISTNUM 1 \l 14739             MR. BIBIC:  Take an example where access to DS‑3, there is mandated access to DS‑3 loops for the purposes of providing high capacity data services to your bank in Toronto, and the user comes up with some whiz bang way of offering TV over that ‑‑ you can tell I am not a technologist ‑‑ it shouldn't without reaching a commercial agreement with the access provider.

LISTNUM 1 \l 14740             There may not be a way of actually determining whether or not that is being done.  I don't know, you might be able to observe it in the marketplace, but ultimately it is up to the user to just respect the restriction.

LISTNUM 1 \l 14741             MS SONG:  So, the restriction is that the Ethernet facility, for example, could only be used to provide voice services.  Correct?

LISTNUM 1 \l 14742             MR. BIBIC:  If that is where the problem is, or data, if that is where the retail market problem is, or both, if there is a retail market in both.

LISTNUM 1 \l 14743             MS SONG:  So, the competitor goes to the customer and says, I have got this big fat pipe that I can give you, but I'm sorry, I can only use to it provide voice services to you.

LISTNUM 1 \l 14744             MR. BIBIC:  We are covering ground we covered yesterday with Mr. Engelhart now.  Or the competitor can go to another provider or they can come to us and reach a broader arrangement.

LISTNUM 1 \l 14745             What we try to do is design a proposal that respected the policy direction's instruction to regulate where necessary in an efficient and proportionate manager and in a least intrusive manner.  That is the policy underpinning of the restriction.

LISTNUM 1 \l 14746             MS SONG:  Mr. Chairman, at the outset of this session this morning there was an issue that was discussed between the panel and MTS Allstream.  We had arranged to discuss it at a break, and I am wondering if ‑‑

LISTNUM 1 \l 14747             THE CHAIRPERSON:  It sounds to me like a wonderful time for a break.  Why don't we have a ten‑minute break and you can discuss it with Bell.

LISTNUM 1 \l 14748             MS SONG:  Thank you very much.

‑‑‑ Upon recessing at 10:30 a.m.

‑‑‑ Upon resuming at 10:46 a.m.

LISTNUM 1 \l 14749             THE CHAIRPERSON:  Ms Song, were you able to resolve things with the company over the break?

LISTNUM 1 \l 14750             MS SONG:  I believe so, Mr. Chairman.  However, I seem to have misplaced some paper.  I apologize, I am going to have to locate that.

LISTNUM 1 \l 14751             THE CHAIRPERSON:  Okay.

‑‑‑ Pause

LISTNUM 1 \l 14752             MS SONG:  Thank you, I am back.

LISTNUM 1 \l 14753             Panel members, I would like you to turn up Bell Aliant, Bell Canada answer to interrog from the Bureau, 12 April '07, number 24.

LISTNUM 1 \l 14754             MR. BIBIC:  Is that number 24?

LISTNUM 1 \l 14755             MS SONG:  Yes, but it is Bell Aliant Bell, not the companies, as you have entitled it there.

LISTNUM 1 \l 14756             MR. BIBIC:  Correct.  We have it.

LISTNUM 1 \l 14757             MS SONG:  Great.  I just would like you to help me understand this answer.  In answering this question, are you referring to how the companies, Bell Aliant and Bell Canada, decide on the size of facility that it will build in its in territory operations?

LISTNUM 1 \l 14758             MR. BIBIC:  That is correct.

LISTNUM 1 \l 14759             MS SONG:  So, the companies decide on the size of network access facility to be built based on its own internal criteria, serving area concept in urban areas and non‑urban concept in rural regions.  That is what you explain in this answer.  Correct?

LISTNUM 1 \l 14760             MR. BIBIC:  Yes.  There was a submission in confidence on the provisioning guidelines called "Access 2000," attachment number 1 to the interrogatory response.

LISTNUM 1 \l 14761             MS SONG:  So, whenever there is a new building, a new development that comes up within your territory, you go through this analysis to determine is it copper, is it fibre, what capacity do we reasonably expect will be required by this particular customer location.  Correct?

LISTNUM 1 \l 14762             MR. BIBIC:  Correct.

LISTNUM 1 \l 14763             MS SONG:  The decision is not whether to build.  The decision is really how big a pipe do I build to that particular location.  Correct?

LISTNUM 1 \l 14764             MR. BABIN:  No, there are decisions whether we do build or not.  Examples, greenfields in Ontario or Quebec, we have made decisions not to build based on economics.

LISTNUM 1 \l 14765             MS SONG:  So there you are talking about greenfields in terms of fiber facilities; correct?

LISTNUM 1 \l 14766             MR. BABIN:  Just serving actually, copper or fiber facilities.

LISTNUM 1 \l 14767             MS SONG:  Okay.  And what regions would that be in, rural, remote regions; correct?

LISTNUM 1 \l 14768             MR. BABIN:  No, there are actually regions just north of Toronto, Richmond Hill, Markham, areas we have made decisions not to build.

LISTNUM 1 \l 14769             MS SONG:  You are making decisions not to build to residential customers?

LISTNUM 1 \l 14770             MR. BABIN:  Correct.

LISTNUM 1 \l 14771             MS SONG:  Okay.  Any other type of customers?

LISTNUM 1 \l 14772             MR. BABIN:  Well, there would be decisions depending on enterprise customers where we may not bid on businesses.

‑‑‑ Pause

LISTNUM 1 \l 14773             MS SONG:  Okay.  And is that a relatively isolated instance, Mr. Babin?

LISTNUM 1 \l 14774             MR. BABIN:  Which instance are you talking about?

LISTNUM 1 \l 14775             MS SONG:  Not building to residential developments in your territory.

LISTNUM 1 \l 14776             MR. BABIN:  It depends on the territory.  The example is FCI Broadband, which is now acquired by Rogers, would go into certain subdivisions north of Toronto and we would make a decision not to build in that subdivision as well.

LISTNUM 1 \l 14777             MS SONG:  Right.  So relatively isolated instances, right?

LISTNUM 1 \l 14778             MR. BABIN:  Yes, in residential.

LISTNUM 1 \l 14779             MS SONG:  All right.  Great.  All right.