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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
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 16, 2007 Le 16 octobre 2007
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
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and staff attending the public hearings, and the Table of
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.
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
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Canadian Radio‑television and
Conseil de la radiodiffusion et des
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 16, 2007 Le 16 octobre 2007
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
SOUS AFFIRMATION SOLENNELLE : DENNIS BÉLAND 1544 /10684
SOUS AFFIRMATION SOLENNELLE : CHRISTOPHER TAYLOR
Cross-examination by The Companies 1545 /10689
Cross-examination by TELUS 1565 /10854
Cross-examination by Primus 1587 /11014
Cross-examination by Cybersurf 1594 /11070
Cross-examination by Xittel 1611 /11191
SOUS AFFIRMATION SOLENNELLE : FRANÇOIS AUDET 1620 /11260
AFFIRMED: DAVID McKEOWN
SOUS AFFIRMATION SOLENNELLE : MICHEL MESSIER
AFFIRMED: DIMITRI STATHIS
SOUS AFFIRMATION SOLENNELLE : ROBIN LAVOIE
Cross-examination by The Companies 1621 /11264
Cross-examination by TELUS 1657 /11495
Cross-examination by Primus 1688 /11638
Cross-examination by Cybersurf 1690 /11652
SWORN: JEAN BRAZEAU 1693 /11674
SWORN: CINDY McCLOCKLIN
SWORN: ESTHER SNOW
Examination-in-chief by Shaw 1693 /11674
Cross-examination by The Companies 1693 /11681
Cross-examination by TELUS 1719 /11864
Cross-examination by Primus 1731 /11951
Cross-examination by Xittel 1734 /11975
- v -
EXHIBITS / PIÈCES JUSTIFICATIVES
No. PAGE / PARA
TELUS-4 Tab 6 of the Compendium 1580 /10961
- vi -
ERRATA / ADDENDA
PAGE / PARA DESCRIPTION
1515 / 10494 "MR. TACIT:" s/b ""MR. WARE:"
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon resuming on Tuesday, October 16, 2007
at 0800 / L'audience reprend le mardi
16 octobre 2007 à 0800
LISTNUM 1 \l 1 \s 106721067 THE SECRETARY: Can you be seated, please. Veuillez vous asseoir, s'il vous plaît.
LISTNUM 1 \l 11068 THE CHAIRPERSON: Good morning.
LISTNUM 1 \l 11069 Madam Secretary, whom do we have today?
LISTNUM 1 \l 11070 LA SECRÉTAIRE : Bonjour, Monsieur le Président.
LISTNUM 1 \l 11071 Le prochain panel, c'est Quebecor Media inc. Je vais demander à monsieur Béland de faire la présentation de ses témoins.
LISTNUM 1 \l 11072 MR. BÉLAND: Good morning, Mr. Chairman, commissioners.
LISTNUM 1 \l 11073 My name is Dennis Béland and I am Director of Regulatory Affairs, Telecommunications at Quebecor Media Inc.
LISTNUM 1 \l 11074 With me this morning is Christopher Taylor, outside counsel for Quebecor for this proceeding.
LISTNUM 1 \l 11075 A brief biographical statement for myself and Mr. Taylor has been provided to the Commission and circulated to the parties.
LISTNUM 1 \l 11076 Quebecor avait indiqué au Conseil que monsieur Gilles Brunet, notre directeur de Services aux transporteurs chez Vidéotron, serait aussi sur le panel avec nous. Malheureusement, monsieur Brunet n'est pas en mesure de participer aujourd'hui à cause de raisons personnelles.
LISTNUM 1 \l 11077 En l'absence de monsieur Brunet, monsieur Taylor et moi allons répondre aux questions du Conseil au meilleur de nos connaissances, et si nécessaire, nous prendrons des engagements pour des réponses additionnelles.
LISTNUM 1 \l 11078 Madame la Secrétaire, si vous voulez faire l'assermentation du panel, nous allons procéder, par la suite, avec l'attestation formelle concernant nos preuves.
LISTNUM 1 \l 11079 LA SECRÉTAIRE : Merci, Monsieur Béland.
SOUS AFFIRMATION SOLENNELLE : DENNIS BÉLAND
SOUS AFFIRMATION SOLENNELLE : CHRISTOPHER TAYLOR
LISTNUM 1 \l 11080 MR. BÉLAND: Mr. Chairman, the evidence and other written submissions of Quebecor were prepared by me or under my direction. I confirm that these materials are accurate and complete.
LISTNUM 1 \l 11081 We would be pleased to now take questions from other parties and from the Commission.
LISTNUM 1 \l 11082 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11083 THE SECRETARY: Counsel on behalf of the Companies, you may proceed with the cross‑examination.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11084 MR. HOFLEY: Thank you very much, Madam Secretary.
LISTNUM 1 \l 11085 Good morning, commissioners. Good morning, panel.
LISTNUM 1 \l 11086 I will have very few questions for you with respect to the definition of essential facilities in your evidence. All I will be referring to is your March 15th evidence. So if you have that handy, that would be great.
LISTNUM 1 \l 11087 And my colleague Mr. Daniels has a few questions for you, following mine.
LISTNUM 1 \l 11088 Now, if I could take you to paragraph 18 of your evidence, which is at page 5, bottom right corner, here you will recall that you indicate your preferred definition and it has three features.
LISTNUM 1 \l 11089 I would like to just go through them because I have a couple of clarificatory questions and then I have one set of questions around an issue raised by them.
LISTNUM 1 \l 11090 The first criterion is:
"...control by one service provider of a service." (As read)
LISTNUM 1 \l 11091 I just wanted to clarify. When you say "a service," do you mean a service or a functional equivalent to that service?
LISTNUM 1 \l 11092 MR. BÉLAND: We mean in fact a service or a facility as defined by the Commission.
LISTNUM 1 \l 11093 MR. HOFLEY: But in other words, does it have to be that particular service or if there is a functional equivalent to that service, something that does the same thing, that would suffice?
LISTNUM 1 \l 11094 MR. BÉLAND: I am not sure I understand the question. We are talking about a service that we control.
LISTNUM 1 \l 11095 MR. HOFLEY: Okay. Well, we will come to it, I think, later on.
LISTNUM 1 \l 11096 Now, your second criterion is:
"...needed by a second service provider to offer services." (As read)
LISTNUM 1 \l 11097 Is that by any single service provider? So it says "a second service provider." Is it just one service provider or is it needed by service providers generally?
LISTNUM 1 \l 11098 MR. BÉLAND: It could be one service provider, yes.
LISTNUM 1 \l 11099 MR. HOFLEY: Just one, okay. Well, we will come back to that.
LISTNUM 1 \l 11100 And when you say "to offer services" ‑‑ "to build or operate a network or offer services," do you mean in the retail market downstream?
LISTNUM 1 \l 11101 MR. BÉLAND: Generally speaking, yes.
LISTNUM 1 \l 11102 MR. HOFLEY: And then your third criterion we all understand, which is the question of duplicability.
LISTNUM 1 \l 11103 If you go to paragraph 25 of your submission, which is over on page 7, you talk about three classes of wholesale services ‑‑ well, that is the title actually but in paragraph 25 you say there are three reasons for requiring a service to be provided on a wholesale basis.
LISTNUM 1 \l 11104 The first one has to do with:
"...to promote the public interest in interconnected, interoperable networks." (As read)
LISTNUM 1 \l 11105 And I am not going to be asking you any questions about that.
LISTNUM 1 \l 11106 The second is:
"...to address a situation where a service provider has SMP in respect of an access service." (As read)
LISTNUM 1 \l 11107 And I will have some questions about that.
LISTNUM 1 \l 11108 And the third is:
"...to promote other social goods such as public safety, public convenience... [et cetera]. (As read)
LISTNUM 1 \l 11109 Now, your test covers all three of the ‑‑ is intended to cover, to be a broad test covering all three of these reasons; is that a fair statement?
LISTNUM 1 \l 11110 MR. BÉLAND: No, the ‑‑ one of the issues we wanted to convey in our initial evidence was our belief that mandated wholesale services should not necessarily be limited to only essential services.
LISTNUM 1 \l 11111 So you need to look at our three categories of mandated wholesale services and our definition of essential service separately.
LISTNUM 1 \l 11112 To give you perhaps the most evident example, there could be services that are not essential, yet fall within the category of public good, and by breaking out these categories, we wanted to ensure that the Commission took into consideration that possibility.
LISTNUM 1 \l 11113 MR. HOFLEY: Okay. So is essential then really ‑‑ when we are talking about the essential services definition, are we talking about the second reason there?
LISTNUM 1 \l 11114 MR. BÉLAND: No. In fact, to be more precise, there could be essential services falling within any of those three categories.
LISTNUM 1 \l 11115 MR. HOFLEY: Okay.
LISTNUM 1 \l 11116 MR. BÉLAND: We just want to make sure that the Commission when looking at those three categories doesn't necessarily limit itself to essential services.
LISTNUM 1 \l 11117 MR. HOFLEY: Okay.
LISTNUM 1 \l 11118 Well, I would like to focus on your second category, the SMP category, if we could.
LISTNUM 1 \l 11119 MR. BÉLAND: Yes.
LISTNUM 1 \l 11120 MR. HOFLEY: At paragraph 53 ‑‑
LISTNUM 1 \l 11121 THE CHAIRPERSON: Before you do that, Mr. Hofley, can I just interject.
LISTNUM 1 \l 11122 So I gather your category 1 and category 3, those are really baskets 5 and 6 in the framework that the Commission sent to you?
LISTNUM 1 \l 11123 MR. BÉLAND: Yes, they would fall well into the Commission's framework in that way.
LISTNUM 1 \l 11124 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11125 I am sorry, go ahead.
LISTNUM 1 \l 11126 MR. HOFLEY: So if I could take you to paragraph 53, which is page 16, and this is where you talk about access services subject to SMP and you discuss this in more detail.
LISTNUM 1 \l 11127 At paragraph 54, you talk about a number of reasons for market power ‑‑ you will recall that ‑‑ and then you make a submission in the middle. It says:
"In any case, QMI submits that the public interest in fostering competition justifies requiring the network operator with SMP to make the relevant access facilities available on a wholesale basis." (As read)
LISTNUM 1 \l 11128 When you are talking about competition there, are you talking about competition at the retail level?
LISTNUM 1 \l 11129 MR. BÉLAND: Yes, generally speaking.
LISTNUM 1 \l 11130 MR. HOFLEY: All right. So if there is no significant market power at the retail level, even assuming there is control over a facility at the wholesale level, would you agree with me that there is no need to mandate access to solve any competition problem downstream?
LISTNUM 1 \l 11131 MR. BÉLAND: That is not the way we have structured our definition, no. We haven't made a linkage in our definition between the upstream and downstream markets.
LISTNUM 1 \l 11132 MR. HOFLEY: I guess I understand you haven't made a linkage, but what I'm asking you is: Given that you have said that there is a public interest in fostering competition downstream and you go on to say:
"The new entrants would then be able to provide retail services to customers." (As read)
LISTNUM 1 \l 11133 What I'm asking you is whether or not there should be that linkage, whether or not what you really are saying is that if there isn't a competition problem downstream then there wouldn't be a need to mandate access to an input used for that retail market.
LISTNUM 1 \l 11134 MR. BÉLAND: Again, we have focused solely on the upstream. If there is a market power issue upstream, that would be sufficient for us ‑‑ in our opinion for the Commission to give consideration to mandating wholesale access.
LISTNUM 1 \l 11135 MR. HOFLEY: Thank you for that.
LISTNUM 1 \l 11136 I don't have any further questions, but my friend Mr. Daniels does.
LISTNUM 1 \l 11137 MR. DANIELS: Madam Secretary, I think I have one exhibit, a prefiled exhibit.
LISTNUM 1 \l 11138 THE SECRETARY: There was a prefiled document that was already distributed.
LISTNUM 1 \l 11139 MR. DANIELS: It has already been distributed?
LISTNUM 1 \l 11140 THE SECRETARY: Yes.
LISTNUM 1 \l 11141 MR. DANIELS: All right.
LISTNUM 1 \l 11142 For those following in the back of the room, I have just one reference to an interrogatory QMI/CRTC 12 April 2007‑107.
LISTNUM 1 \l 11143 In this interrogatory ‑‑ actually I should say, Mr. Chair, the purpose of my cross‑examination at this point is to understand QMI's position on restriction on use. This is a very short interrogatory where their position is outlined.
LISTNUM 1 \l 11144 Mr. Béland, I take it you were here on Friday and heard my discussion about the restriction on use with the Rogers panel?
LISTNUM 1 \l 11145 MR. BÉLAND: Yes, I did.
LISTNUM 1 \l 11146 MR. DANIELS: In light of that I would like to look at your proposed response on this. This was in response to an interrogatory from the Commission asking you for your position on it.
LISTNUM 1 \l 11147 You say here:
"QMI does not agree with Bell Canada's proposal ..."
LISTNUM 1 \l 11148 I'm talking about the restriction on use:
"... as it is reminiscent of the resale versus sharing distinction that the Commission attempted to enforce the late 1980s and early 1990s."
LISTNUM 1 \l 11149 Let's spare everyone from going through what that means, for those of us who studied it and whatever.
LISTNUM 1 \l 11150 MR. BÉLAND: That's agreed.
LISTNUM 1 \l 11151 MR. DANIELS: But that distinction was unenforceable and QMI believes that Bell Canada's proposal would be equally unenforceable. I would like to just ask you about this unenforceability for a moment.
LISTNUM 1 \l 11152 QMI has its own wholesale tariff for wholesale internet called TPIA, Third Party Internet Access.
LISTNUM 1 \l 11153 Is that correct?
LISTNUM 1 \l 11154 MR. BÉLAND: Yes, we do.
LISTNUM 1 \l 11155 MR. DANIELS: Would you agree with me that you, too, like we discussed with Rogers, have restrictions on use in that tariff?
LISTNUM 1 \l 11156 MR. BÉLAND: Yes, we do.
LISTNUM 1 \l 11157 MR. DANIELS: Am I correct in stating that you do not have an enforcement problem with the restrictions in those tariffs?
LISTNUM 1 \l 11158 MR. BÉLAND: No. We haven't seen an enforcement problem to date, no.
LISTNUM 1 \l 11159 MR. DANIELS: Okay. So we can agree, then, that restrictions on use can be enforced through a tariff?
LISTNUM 1 \l 11160 MR. BÉLAND: I would agree with that statement, yes.
LISTNUM 1 \l 11161 MR. DANIELS: Now, I also noticed that ‑‑ I'm not going to ask you to turn to this. There is an interrogatory where QMI states that it purchases CDN from the ILEC ‑‑ which I assume is Bell Canada considering your location ‑‑ but makes little use of those service.
LISTNUM 1 \l 11162 So it is my understanding that you have limited use of CDN, but you do purchase CDN
LISTNUM 1 \l 11163 Is that correct?
LISTNUM 1 \l 11164 MR. BÉLAND: Exactly. We purchase some CDN services from Bell, but very limited quantities.
LISTNUM 1 \l 11165 MR. DANIELS: I take it you also do not perform any simple resale of those circuits. By that, just so I'm clear what I mean, is as I understand CDN, CDN is to be used by a competitor to augment its network, it's not to take strictly a CDN circuit and simply resell it at the low rate in the retail market.
LISTNUM 1 \l 11166 Is that correct?
LISTNUM 1 \l 11167 MR. BÉLAND: That's correct.
LISTNUM 1 \l 11168 If I can perhaps foresee where you are going with this, in fact we signed an affidavit, a senior official of Québecor Media ‑‑ of Vidéotron, excuse me, signs an affidavit once a year affirming that we do not engage in simple resale of those services.
LISTNUM 1 \l 11169 MR. DANIELS: That is because there is a restriction in the tariff on use for the purpose of resale.
LISTNUM 1 \l 11170 Is that correct?
LISTNUM 1 \l 11171 MR. BÉLAND: More precisely I recall it being a Commission directive, but I think we are touching the same thing, yes.
LISTNUM 1 \l 11172 MR. DANIELS: And again, are you aware of any enforcement problems with that restriction?
LISTNUM 1 \l 11173 MR. BÉLAND: It's your service that you are selling to us so it would be you that would be aware of an enforcement problem, but we take the signature of the affidavit very seriously and we produce it once a year as required.
LISTNUM 1 \l 11174 MR. DANIELS: One last question, Mr. Béland.
LISTNUM 1 \l 11175 Yesterday we heard some testimony from the Rogers panel about what is involved to get access to come into this building if Rogers wanted to come into this building with their own facility. In light of that I wanted to ask you: Could you confirm that you do provide basic cable service in this building, and specifically ‑‑ I don't know if you are aware right now whether you do, but I assume maybe you can take an undertaking.
LISTNUM 1 \l 11176 MR. BÉLAND: I'm looking at the quantity of televisions in this room and I hope we provide service, but I can't confirm it on the spot.
LISTNUM 1 \l 11177 MR. DANIELS: All right. Well, maybe you could take an undertaking, if you are willing to do that, and you may also want to check with the Le Mirage restaurant right around the corner here which appears to have basic cable.
LISTNUM 1 \l 11178 MR. DANIELS: So to confirm, you would like an undertaking that we provide cable television service to this building and to Le Mirage restaurant ‑‑
LISTNUM 1 \l 11179 MR. DANIELS: Located at ‑‑
LISTNUM 1 \l 11180 MR. BÉLAND: ‑‑ which is in this building as well?
LISTNUM 1 \l 11181 MR. DANIELS: Yes, it is in this building. So basically I'm just suggesting that may be the quickest way for you to confirm that you provide cable television services.
LISTNUM 1 \l 11182 MR. BÉLAND: Okay. Thank you.
LISTNUM 1 \l 11183 MR. DANIELS: Are you prepared to take that undertaking?
LISTNUM 1 \l 11184 MR. BÉLAND: Yes.
LISTNUM 1 \l 11185 MR. DANIELS: Thank you.
LISTNUM 1 \l 11186 That concludes our questions, Mr. Chairman.
LISTNUM 1 \l 11187 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11188 Mr. Béland, can I ask you about your section 25, subparagraph (2) where you say:
"To address the situation where a service provider has significant market power in respect of an access service..." (As read)
LISTNUM 1 \l 11189 Which is really sort of the key rationale you have advanced for mandating ‑‑ you are making no reference at all to upstream or downstream markets, et cetera.
LISTNUM 1 \l 11190 So the significant market power could be as a result of the efficient operation of an operator rather than in any way being connected to its dominance or control of the wholesale market?
LISTNUM 1 \l 11191 So far, for the last three days we have heard everything was because somebody had significant power on the wholesale market he could control the downstream market. We had a lot of argument whether the downstream market you would have to have control, but all ‑‑ so this key ‑‑ you can't get into the system unless you get through the wholesaler, so therefore everything was targeted on wholesale market.
LISTNUM 1 \l 11192 Your definition doesn't at all refer either to upstream or downstream markets or wholesale or retail, whatever you want to call it.
LISTNUM 1 \l 11193 MR. BÉLAND: We are referring to the access service, so we are clearly in the upstream market here.
LISTNUM 1 \l 11194 But you are correct that we don't ‑‑ we expressly avoided bringing in any linkage with the downstream market, any assessment of the service provider's intentions that it might have with regards to limiting or lessening competition in the downstream market. We felt that an efficient proposal would be one that would look at the upstream service in question and assess the market power there.
LISTNUM 1 \l 11195 THE CHAIRPERSON: All right.
LISTNUM 1 \l 11196 Andrée?
LISTNUM 1 \l 11197 CONSEILLERE NOËL : Alors, Monsieur Béland, si je comprends bien, vous nous dites... parce que vous faites une distinction entre les services dits essentiels et les services qui doivent être offerts en vente aux services de gros, wholesale.
LISTNUM 1 \l 11198 Quand vous dites que les services doivent être fournis sur une base de services en gros, vous ne parlez pas nécessairement de services essentiels? C'est bien ce que j'ai compris de votre proposition.
LISTNUM 1 \l 11199 M. BÉLAND : Exactement.
LISTNUM 1 \l 11200 M. BÉLAND : Exactement.
LISTNUM 1 \l 11201 CONSEILLERE NOËL : Vous faites une distinction entre les services qui doivent être offerts, mandated en anglais, sur une base de services offerts en gros, et les services essentiels, qui sont une autre chose.
LISTNUM 1 \l 11202 Alors, pour vous, un service là où le fournisseur de service au niveau du gros a une part de marché significative, SMP, vous dites que le service d'accès doit être offert sur une base obligatoire?
LISTNUM 1 \l 11203 M. BÉLAND : En fait, si je peux revenir à l'origine de notre proposition.
LISTNUM 1 \l 11204 La préoccupation qu'on avait chez QMI en regardant cette question, c'était une préoccupation concernant la possibilité que le Conseil limiterait la définition de services vendus en gros mandatés à des services essentiels uniquement.
LISTNUM 1 \l 11205 Cela nous préoccupait pour deux... on peut parler de deux catégories de services où on voyait que ça ne marcherait pas très.
LISTNUM 1 \l 11206 La première catégorie, c'est les services d'interconnexion, où la notion d'interconnexion et la notion de service essentiel ne se marient pas très bien. C'est possible qu'on peut développer une définition d'essentiel qui englobe les services d'interconnexion, mais pour nous, on voulait que ça soit plus explicite, l'interconnexion, les services d'interconnexion. Que ça tombe dans une définition d'essentiel ou pas, ça mérite d'être mandaté comme tel.
LISTNUM 1 \l 11207 CONSEILLERE NOËL : Au niveau de l'intérêt public?
LISTNUM 1 \l 11208 M. BÉLAND : Au niveau de l'intérêt public.
LISTNUM 1 \l 11209 Deuxième catégorie de services, ce sont les services qu'on a dit ici social goods, de type biens publics. Des exemples, ça serait le réseau 9‑1‑1, l'accès au réseau 9‑1‑1.
LISTNUM 1 \l 11210 On pourrait, j'imagine, avoir un long débat à savoir si le réseau 9‑1‑1 actuel est un service essentiel ou pas, mais à certain point, c'est un débat inutile. La réalité actuelle, c'est que les concurrents ont besoin d'accéder à ce réseau là s'ils veulent offrir un service local ou même un service sans fil ou même un service VoIP sans installation au Canada.
LISTNUM 1 \l 11211 Un autre exemple, ça serait les poteaux. On pourrait...
LISTNUM 1 \l 11212 CONSEILLERE NOËL : Les structures de soutènement.
LISTNUM 1 \l 11213 M. BÉLAND : Des structures de soutènement. On pourrait débattre longtemps la question économique de l'aspect essentiel ou pas, mais en fin de journée, on peut s'entendre qu'il y a un intérêt public à partager les poteaux de téléphone.
LISTNUM 1 \l 11214 CONSEILLERE NOËL : En tout cas, pour les propriétaires sur les terrains desquels les poteaux sont installés, il y a certainement un intérêt visuel...
LISTNUM 1 \l 11215 M. BÉLAND : Oui.
LISTNUM 1 \l 11216 CONSEILLERE NOËL : ...à les partager.
LISTNUM 1 \l 11217 Mais pour ce qui est des services essentiels comme tels, qu'est‑ce que vous qualifiez comme services essentiels?
LISTNUM 1 \l 11218 M. BÉLAND : Mais on a fourni une définition...
LISTNUM 1 \l 11219 CONSEILLERE NOËL : Oui.
LISTNUM 1 \l 11220 M. BÉLAND : ...avec, effectivement, trois éléments.
LISTNUM 1 \l 11221 CONSEILLERE NOËL : Pouvez‑vous me la répéter? Pouvez‑vous me la répéter?
LISTNUM 1 \l 11222 M. BÉLAND : On va le chercher. C'est quel paragraphe?
LISTNUM 1 \l 11223 M. BÉLAND : Vous allez le trouver...
LISTNUM 1 \l 11224 CONSEILLERE NOËL : Au paragraphe 2?
LISTNUM 1 \l 11225 M. BÉLAND : ...au paragraphe 20 de notre...
LISTNUM 1 \l 11226 CONSEILLERE NOËL : Vingt.
LISTNUM 1 \l 11227 M. BÉLAND : ...de notre soumission initiale.
LISTNUM 1 \l 11228 Les éléments essentiels de notre définition...
LISTNUM 1 \l 11229 CONSEILLERE NOËL : Mm‑hmm. D'accord.
LISTNUM 1 \l 11230 M. BÉLAND : ...si je peux dire, ce sont le contrôle par un fournisseur du service ou de l'installation en question, le besoin d'un autre fournisseur à utiliser ce service pour lui‑même offrir un service dans le marché, généralement le marché de détail, et finalement, l'idée que le service ou l'installation ne peut pas être dupliqué, d'une perspective objective et pratique.
LISTNUM 1 \l 11231 CONSEILLERE NOËL : D'accord.
LISTNUM 1 \l 11232 Moi, je n'ai pas d'autres questions, Monsieur le Président.
LISTNUM 1 \l 11233 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11234 Commissioner Cram.
LISTNUM 1 \l 11235 COMMISSIONER CRAM: In your interconnection ‑‑ how would you treat access tandem and DC, direct connect? Would you treat it as part of interconnection or under your second ‑‑ the SMP access test?
LISTNUM 1 \l 11236 MR. BÉLAND: A surprisingly complex question and the reason is that ‑‑
LISTNUM 1 \l 11237 COMMISSIONER CRAM: I don't realize it because I don't even know that it is complex.
LISTNUM 1 \l 11238 MR. BÉLAND: I would love to be able to give you a one‑word answer.
LISTNUM 1 \l 11239 The reason is that in fact, QMI, we proposed what I would call a restructuring of that whole notion of direct connect/access tandem.
LISTNUM 1 \l 11240 What we have proposed in our evidence is what I would call a simplification restructuring of interconnection whereby we would effectively do away with this need to distinguish between inter‑exchange carriers and local exchange carriers and say that all interconnection happens at the local interconnection region level, the LIR level.
LISTNUM 1 \l 11241 An inter‑exchange carrier knocking on the door of an ILEC or a CLEC would have a right based on interconnection principles to terminate traffic within the entire LIR that they are looking at.
LISTNUM 1 \l 11242 Any further transport functionality that they would be looking for in the nature of a larger, geographically larger access tandem type of thing would be considered a non‑interconnection service and then you would need to look at whether that particular service was essential in a particular context.
LISTNUM 1 \l 11243 COMMISSIONER CRAM: Under the SMP test? Under your SMP test?
LISTNUM 1 \l 11244 MR. BÉLAND: Yes.
LISTNUM 1 \l 11245 COMMISSIONER CRAM: Okay, thank you.
LISTNUM 1 \l 11246 THE CHAIRPERSON: Okay, thank you very much.
LISTNUM 1 \l 11247 Who is next, Madam Secretary?
LISTNUM 1 \l 11248 THE SECRETARY: I am calling the counsel for TELUS Communications Company, please, to come forward.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11249 MR. SCHMIDT: Good morning, Mr. Chairman. Good morning, commissioners and panel members.
LISTNUM 1 \l 11250 My name is Stephen Schmidt and I am counsel to TELUS in this proceeding.
LISTNUM 1 \l 11251 I am assisted this morning by Mr. Mark Murakami, a Director in TELUS' Wholesale Division.
LISTNUM 1 \l 11252 I will be referring to QMI's 15 March evidence a couple of times this morning, so it would be helpful if you had that at hand.
LISTNUM 1 \l 11253 I will be referring as well to a compendium of documents which we have pre‑filed with the Hearing Secretary and I believe she is distributing it now.
LISTNUM 1 \l 11254 I am going to touch on four topics this morning and I would be surprised if it took more than 30 minutes, Mr. Chairman.
LISTNUM 1 \l 11255 The first topic area relates to QMI's use of and dependency on ILEC facilities, the basic object of this conversation being to explore what QMI needs to deliver their retail telephone service.
LISTNUM 1 \l 11256 To that end, I would ask you to open Tab 1 of the compendium, which contains Interrogatory Response QMI‑Bureau 12Apr‑2, and at paragraph B of that response, QMI states:
"With limited exceptions all of QMI's services other than mobile wireless services are provided over QMI's wholly owned network." (As read)
LISTNUM 1 \l 11257 So I want to explore this statement a little bit with the panel to see what particular classes of ILEC services fall within or outside of your limited exception that you articulated.
LISTNUM 1 \l 11258 So can I take it from your statement at paragraph B there that you provide both business telephone service and residential service over your own network, just as a general proposition?
LISTNUM 1 \l 11259 MR. BÉLAND: As a general proposition, yes.
LISTNUM 1 \l 11260 MR. SCHMIDT: Thank you. Well, I will get a bit more specific then.
LISTNUM 1 \l 11261 Do you use ILEC loops to provide your residential telephone service?
LISTNUM 1 \l 11262 MR. BÉLAND: No.
LISTNUM 1 \l 11263 MR. SCHMIDT: Okay. Do you use ILEC loops to provide your business telephone service?
LISTNUM 1 \l 11264 MR. BÉLAND: In some cases, yes, and perhaps here we should distinguish between the two networks that Vidéotron operates.
LISTNUM 1 \l 11265 Vidéotron operates what is traditionally referred to as a cable network, a hybrid fibre‑optic coaxial cable network over which we provide some business services.
LISTNUM 1 \l 11266 MR. SCHMIDT: Okay.
LISTNUM 1 \l 11267 MR. BÉLAND: We also operate a ‑‑ let's call it a pure fibre network which corresponds to the former Vidéotron Telecom Ltd. ‑‑
LISTNUM 1 \l 11268 MR. SCHMIDT: Okay.
LISTNUM 1 \l 11269 MR. BÉLAND: ‑‑ and Vidéotron Telecom Ltd. generally provides business services over its own end‑to‑end network but, in some circumstances, does make use of ILEC local loops, local services and some other services.
LISTNUM 1 \l 11270 MR. SCHMIDT: And what type of circumstances would those be where you might be using an ILEC loop?
LISTNUM 1 \l 11271 MR. BÉLAND: Probably the classic example would be were Vidéotron business services were to win a multi‑site, larger business service contract. Vidéotron may have connectivity, using its own fibre, to the majority of sites, but may not have connectivity to a couple of sites. In those cases, then we will look at the opportunity to get those connections from an alternative supplier, which will often end up being the ILEC.
LISTNUM 1 \l 11272 MR. SCHMIDT: But could be someone else potentially as well?
LISTNUM 1 \l 11273 MR. BÉLAND: Could be someone else, sure.
LISTNUM 1 \l 11274 MR. SCHMIDT: Okay. So to the extent that you are using business loops I hear it, it is in the exceptional circumstances maybe I will paraphrase, where you are planting a contract that extends beyond your network footprint or whatever?
LISTNUM 1 \l 11275 MR. BÉLAND: The clear preference for Vidéotron business services is to provide services over its own end‑to‑end facilities. But in some circumstances, relatively limited, we make use of other providers' facilities, yes.
LISTNUM 1 \l 11276 MR. SCHMIDT: Okay, thanks. Do you make use of co‑location services from any ILEC to provide residential telephone services?
LISTNUM 1 \l 11277 MR. BÉLAND: No.
LISTNUM 1 \l 11278 MR. SCHMIDT: Okay. And flipping to the business side, do you use co‑location services from any ILEC to provide business telephone services?
LISTNUM 1 \l 11279 MR. BÉLAND: No, and neither were we using the coax network nor were we using our own fibre network.
LISTNUM 1 \l 11280 MR. SCHMIDT: So co‑location is not part of the recipe at all for you to deliver services in the retail market?
LISTNUM 1 \l 11281 MR. BÉLAND: No.
LISTNUM 1 \l 11282 MR. SCHMIDT: I will ask you, would this mean you wouldn't be picked up in Rogers' test, the four co‑locator test? You are in the market, but you are not co‑locating?
LISTNUM 1 \l 11283 MR. BÉLAND: If you will allow me, let me just back‑up one step. Vidéotron itself is not co‑located anywhere, in any ILEC central offices. But if we return to the small number of cases where Vidéotron makes use of another service provider's services to reach a minority of locations, that service provider that we might be purchasing those services from, itself, maybe co‑located.
LISTNUM 1 \l 11284 MR. SCHMIDT: I accept that, but I have asked you about yourself.
LISTNUM 1 \l 11285 MR. BÉLAND: Yes.
LISTNUM 1 \l 11286 MR. SCHMIDT: And you don't co‑locate?
LISTNUM 1 \l 11287 MR. BÉLAND: I just wanted to clarify that. We don't anywhere.
LISTNUM 1 \l 11288 MR. SCHMIDT: And the you wouldn't be picked up in the Rogers' test, another carrier might be?
LISTNUM 1 \l 11289 MR. BÉLAND: I am not sure what you mean by picked up, but I would think, no.
LISTNUM 1 \l 11290 MR. SCHMIDT: Well, the Rogers' test, which is looking at four co‑locatees, if I could invent a word.
LISTNUM 1 \l 11291 MR. BÉLAND: If we are not co‑located we wouldn't be picked up.
LISTNUM 1 \l 11292 MR. SCHMIDT: Yes, that is certainly my impression. Thank you.
LISTNUM 1 \l 11293 Okay, continuing with just a few more questions about how your network works. When one QMI telephone customer is calling another QMI telephone customer, all within the same city, I guess Montreal could be an example, is there any facility you need at all from the ILEC to complete that call between those two customers?
LISTNUM 1 \l 11294 MR. BÉLAND: A QMI telephone customer calls another QMI telephone customer in Montreal ‑‑
LISTNUM 1 \l 11295 MR. SCHMIDT: All in the same city.
LISTNUM 1 \l 11296 MR. BÉLAND: ‑‑ in the same city. Off the top of my head, I don't think we would need any facility of an ILEC.
LISTNUM 1 \l 11297 MR. SCHMIDT: Yes, that would be my suspicion. Okay.
LISTNUM 1 \l 11298 So in that fact situation you can probably route and complete the call entirely over your own network?
LISTNUM 1 \l 11299 MR. BÉLAND: I think that is probably a fair statement, yes.
LISTNUM 1 \l 11300 MR. SCHMIDT: Okay, thank you. And then if I tweak the situation slightly and say one QMI telephone customer calling another QMI telephone customer, but they happen to be in different cities that you serve, would you need any ILEC facility to get the call from that city to that city, all to QMI customers?
LISTNUM 1 \l 11301 MR. BÉLAND: I can't say definitively, but I would suspect that in the majority of cases that that call, again, is carried entirely over QMI's facilities.
LISTNUM 1 \l 11302 MR. SCHMIDT: Okay, thank you.
LISTNUM 1 \l 11303 That is about it on this topic, Mr. Chairman. And in terms of punch lines, I infer from my exchange there that they are substantially able to duplicate the ILEC network and they are able to substantially deliver residential and voice telephone services entirely over their own platform.
LISTNUM 1 \l 11304 The second topic I would like to move onto relates to CDN services and the precise impact that their introduction had on your business. We have heard a lot of people talk about CDN services and what it did or didn't do, whether it is good or whether it is bad, but we haven't talked to you about it. And you have put in evidence.
LISTNUM 1 \l 11305 If you would turn to paragraph 57 of your 15 March evidence. There you say in the last sentence in the paragraph:
"Instead, CDN service prices were set at a level which severely undermined the ability of Vidéotron and other competitors in the market to compete in the market and greatly decreased the incentive for new entrants to build competing facilities." (As Read)
LISTNUM 1 \l 11306 Since that is a pretty brief description, I want to just talk to you for a couple minutes to kind of factually fill out the picture about what this means.
LISTNUM 1 \l 11307 I guess first off, when you say CDN services, what type of services or facilities are you referring to in that passage?
LISTNUM 1 \l 11308 MR. BÉLAND: We would be referring to ILEC access services, DS‑1, DS‑3 and up. We would be referring to the intra‑exchange portion that goes along with those services. We may also be referring to some inter‑exchange services of DS‑1, DS‑3 and up.
LISTNUM 1 \l 11309 MR. SCHMIDT: Okay. And keeping in mind that the service was introduced progressively over a period of about five years, I think beginning in May 2002 and sort of creeping along all the way to the present, there has been a ruling I think even as recently as February of this year, the CDN links ruling for example. So given this sort of five‑year rolling introduction or expansion of CDN, when you are talking about the impact of CDN on your business what kind of timeframe are we talking about?
LISTNUM 1 \l 11310 MR. BÉLAND: I am not sure I would use your language about a rolling introduction. Sure, there were issues being resolved over time, but I think the hit, if you will, the introduction came in a couple pretty large discreet chunks.
LISTNUM 1 \l 11311 MR. SCHMIDT: Yes, I mean, I accept that, I work at a carrier too. All I am trying to say is that it didn't all happen at once, but I accept your characterization.
LISTNUM 1 \l 11312 MR. BÉLAND: Yes. But, if you want me to comment on the impact on the former Vidéotron Telecom, which ‑‑
LISTNUM 1 \l 11313 MR. SCHMIDT: That is my whole object here.
LISTNUM 1 \l 11314 MR. BÉLAND: ‑‑ for the information of everyone, was merged into Vidéotron January 1, 2006, but I will refer to it as Vidéotron Telecom, which it was at the time.
LISTNUM 1 \l 11315 I guess what was maybe particular about our circumstance at that time was that Vidéotron Telecom was a CLEC, it became a CLEC very early on, I think in 1998 or, sorry, maybe even 1996, even prior to Decision 97‑8. And Vidéotron Telecom was focused, to a large extent, on the wholesale market. Vidéotron Telecom's business plan, to a very large extent in those early years, was to be a carrier's carrier. So Vidéotron was selling these CDN equivalent services to people like other wireline CLECs, wireless carriers. That was a very large portion of the company's business.
LISTNUM 1 \l 11316 What happened when the CDN regime was introduced is that suddenly whereas Vidéotron was in the market building facilities and competing against the ILECs' retail rates for those DNA services ‑‑
LISTNUM 1 \l 11317 MR. SCHMIDT: Which were once retail services and CDN is just a new name and a lower price for a retail service.
LISTNUM 1 \l 11318 MR. BÉLAND: To be precise, imagine that there is a wireline CLEC that wants Vidéotron to do some building for it. That was basically the business plan.
LISTNUM 1 \l 11319 You are a wireline CLEC, or a wireless carrier from somewhere else in Canada, and you want us to do some building for you, and we will put some fibre in the ground and we will sell you the CDN equipment and services.
LISTNUM 1 \l 11320 That was a large part of Vidéotron Telecom's business plan.
LISTNUM 1 \l 11321 We would sell these services to these companies at a competitive rate, relative to what the ILEC's rates were in those days.
LISTNUM 1 \l 11322 What happened was that, suddenly, the ILECs were mandated to sell those very same services at much reduced rates.
LISTNUM 1 \l 11323 I won't get into whether those much reduced rates ‑‑ on what basis they were calculated and how appropriate that was. What mattered to Vidéotron Telecom at that time was the dramatic reduction in the price at which our customers could get those services from someone else. As a result of a regulatory decision, and as a result of that, Vidéotron lost a considerable part of its customer revenue base.
LISTNUM 1 \l 11324 MR. SCHMIDT: Yes, I was going to ask you about that.
LISTNUM 1 \l 11325 So we see this dramatic reduction in prices for the service you offer. Did it cause you to lose carrier customers?
LISTNUM 1 \l 11326 In sort of a granular way, what did it do to your business?
LISTNUM 1 \l 11327 Did you lose customers?
LISTNUM 1 \l 11328 MR. BÉLAND: It caused an immediate ‑‑ it caused some customers to leave Vidéotron Telecom immediately. It caused other customers to immediately exert substantial pressure on Vidéotron Telecom to lower its rates in order to retain them.
LISTNUM 1 \l 11329 I might note, as well, that one of the issues at the time that particularly offended Vidéotron Telecom was the fact that when the ILECs were mandated to reduce those rates substantially, those wholesale rates, they were kept whole by receiving subsidies from their deferral accounts. Whereas we just took the hit and had to keep on going.
LISTNUM 1 \l 11330 So that was particularly offensive to the company.
LISTNUM 1 \l 11331 MR. SCHMIDT: Are you still in the wholesale business?
LISTNUM 1 \l 11332 MR. BÉLAND: Yes.
LISTNUM 1 \l 11333 MR. SCHMIDT: Has CDN caused you to change the pace or nature of your facility build‑out?
LISTNUM 1 \l 11334 Is your wholesale network static, or is it growing?
LISTNUM 1 \l 11335 MR. BÉLAND: It's still growing, but I think it's fair to say that it's growing at a much less rapid rate than it was prior to CDN.
LISTNUM 1 \l 11336 MR. SCHMIDT: All right. Thank you. I think that's enough on that topic.
LISTNUM 1 \l 11337 Mr. Chairman, I am going to move on to the third of the four topics.
LISTNUM 1 \l 11338 I am going to chat with you a bit about pricing now.
LISTNUM 1 \l 11339 Mr. Béland, would you agree with me that the Commission prices Category 1 competitor services on the basis of Phase 2 costs, plus a markup to recover fixed and common costs?
LISTNUM 1 \l 11340 MR. BÉLAND: I believe that is the definition of Category 1, yes.
LISTNUM 1 \l 11341 MR. SCHMIDT: That seems to be how it works, yes.
LISTNUM 1 \l 11342 Would you agree that the Commission includes interconnection services in Category 1?
LISTNUM 1 \l 11343 MR. BÉLAND: I believe so, yes.
LISTNUM 1 \l 11344 MR. SCHMIDT: Okay. And these services also have rates which include a markup to recover fixed and common costs?
LISTNUM 1 \l 11345 MR. BÉLAND: Yes.
LISTNUM 1 \l 11346 MR. SCHMIDT: Turning to the parties of the proceeding and away from the Commission for a moment, I would like to focus on what the carriers are saying. My question to you is: Would you agree that most of the service providers in this proceeding, the folks who are buying this stuff, the folks who are selling it, generally agree that the Commission should continue to have a markup as part of the price for mandated services?
LISTNUM 1 \l 11347 MR. BÉLAND: I, frankly, haven't reviewed the other parties' submissions on that precise point, so I can't say.
LISTNUM 1 \l 11348 MR. SCHMIDT: In fact, I am going to help you with that review.
LISTNUM 1 \l 11349 If you turn to Tab 6 of the compendium ‑‑
LISTNUM 1 \l 11350 MR. BÉLAND: I'm sorry, could you give me that reference again?
LISTNUM 1 \l 11351 MR. SCHMIDT: Absolutely. It's Tab 6 of the compendium, the black‑covered document you have. Tab 6 is hiding somewhere behind Tab 5.
LISTNUM 1 \l 11352 MR. BÉLAND: Yes.
LISTNUM 1 \l 11353 MR. SCHMIDT: It's the last page of the book.
LISTNUM 1 \l 11354 THE CHAIRPERSON: I presume you are making this an exhibit?
LISTNUM 1 \l 11355 MR. SCHMIDT: Yes, I am. Thank you.
LISTNUM 1 \l 11356 THE SECRETARY: It will be TELUS Exhibit No. 4.
EXHIBIT NO. TELUS‑4: Tab 6 of the Compendium
LISTNUM 1 \l 11357 MR. SCHMIDT: Thank you very much.
LISTNUM 1 \l 11358 In this exhibit, what we have done is, we have excerpted the markup proposals of the major carrier parties and provided paragraph references for them.
LISTNUM 1 \l 11359 I am only interested in ‑‑ would you agree with me, as a general proposition, that the service providers we have set out here ‑‑ they are saying: Gee, my markup proposal is that there ought to be a markup.
LISTNUM 1 \l 11360 MR. BÉLAND: Again, I haven't reviewed the providers' proposals. I would suspect that many of the providers, like QMI, made proposals that distinguished between different categories of services. I would be surprised to see that providers recommended a single markup for all of the services that might be captured by this proceeding.
LISTNUM 1 \l 11361 MR. SCHMIDT: I put it to you that we are not trying to actively misrepresent the record, and you have had this for a couple of days, in any event.
LISTNUM 1 \l 11362 So, subject to check, you would agree that the general view seems to be that there would be a markup for mandated services.
LISTNUM 1 \l 11363 MR. BÉLAND: There seems to be a recommended markup for significant categories of services, yes.
LISTNUM 1 \l 11364 MR. SCHMIDT: Directionally, that seems to be where folks are going.
LISTNUM 1 \l 11365 MR. BÉLAND: Sure.
LISTNUM 1 \l 11366 MR. SCHMIDT: That's fine.
LISTNUM 1 \l 11367 We know what the Commission thinks about markups for mandated services, and we know what a lot of the carriers in this proceeding seem to think about markups for mandated services, but you are not quite there with them. You are not proposing a markup at all, are you, for the large class of services that you call traffic termination services and that I might call interconnection services?
LISTNUM 1 \l 11368 MR. BÉLAND: We have proposed no markup for mandated interconnection services.
LISTNUM 1 \l 11369 MR. SCHMIDT: Okay. I just want to make that clear.
LISTNUM 1 \l 11370 Before I move on, Mr. Chairman, from this topic, in terms of punch lines, all I want to establish is that the Commission has an established and embedded approach to using markups. Most of the folks who sell and buy this stuff for a living say that there should be a markup, subject to check, but QMI holds a different view, at least for interconnection services.
LISTNUM 1 \l 11371 The last thing I want to touch on this morning is your local interconnection region proposal. This is set out at paragraph 40 of your 15 March evidence. It is discussed there briefly.
LISTNUM 1 \l 11372 Commissioner Cram touched on this briefly this morning, and you referred to it in discussing the relationship of AT and DC to your proposal, and you said that this is sort of a restructuring of existing services, if I am characterizing it correctly.
LISTNUM 1 \l 11373 If I open up a Bell Canada or a TELUS tariff book, am I going to find this inter‑LIR service listed in there?
LISTNUM 1 \l 11374 The one you have proposed at paragraph 40 of your evidence.
LISTNUM 1 \l 11375 MR. BÉLAND: Every LEC would have an LIR termination service. We begin with that. And the ILEC would also have a tariffed transport service to non‑competitive LIRs, yes.
LISTNUM 1 \l 11376 MR. SCHMIDT: I have asked you a specific question. If I open up these tariff books, am I going to find a service called "Inter‑LIR Transport"?
LISTNUM 1 \l 11377 Or, is this a proposed service, like a restructure?
LISTNUM 1 \l 11378 It's not the existing services that I see in there.
LISTNUM 1 \l 11379 MR. BÉLAND: No, you don't have that service in your tariff book today, if that's what you are asking.
LISTNUM 1 \l 11380 MR. SCHMIDT: So it's something new that you would like to see as an outcome of this proceeding.
LISTNUM 1 \l 11381 MR. BÉLAND: Yes.
LISTNUM 1 \l 11382 MR. SCHMIDT: And you will recall the Chairman's remarks over the last few days where he said this is a review proceeding to look at existing ‑‑ I underline that word ‑‑ mandated services. Do you remember that?
LISTNUM 1 \l 11383 MR. BÉLAND: Yes.
LISTNUM 1 \l 11384 MR. SCHMIDT: And the public notice is equally clear on this point. You don't have to turn to it, but paragraph 29, looking at services currently provided by the major ILECs?
LISTNUM 1 \l 11385 MR. BÉLAND: Yes, and I think we are running into the preface to my comments to Commissioner Cram, is that this service that we are providing is new, but it is effectively part of a restructuring of access tandem service. In that respect, it is not new.
LISTNUM 1 \l 11386 I am admitting that it is complex. I am admitting that we haven't gone down in a binary fashion, keep that one, get rid of that one, keep that one, get rid of that one. What we have done, because we thought that there was a wish on the part of the Commission to get at first principles, if you allow me, what we have done is we have looked at direct connection access tandem and proposed what amounts to a restructuring of that. Whether you want to categorize that as new or not, I don't think the word really fits. It is a restructuring.
LISTNUM 1 \l 11387 MR. SCHMIDT: I will certainly accept your earlier responses where you twice told me it was new. I won't even sort of get into it with you on the substantive wisdom of the restructure. I might actually agree that this should be done.
LISTNUM 1 \l 11388 But it is new and I don't think, unfortunately, that this is the setting that it can be entertained in.
LISTNUM 1 \l 11389 MR. BÉLAND: I am sure the Commission can resolve that.
LISTNUM 1 \l 11390 MR. SCHMIDT: I am certain they will, in fact.
LISTNUM 1 \l 11391 That concludes my questions, Mr. Chairman.
LISTNUM 1 \l 11392 THE CHAIRPERSON: Thank you very much. I appreciate your brevity in delivering the punch line. That makes it a lot clearer.
LISTNUM 1 \l 11393 Mr. Béland, I just wanted to ask you about your idea of not setting prices and leaving everything subject to negotiation between the parties with ultimate referral to CRTC for arbitration or mediation where necessary.
LISTNUM 1 \l 11394 How do you square that with the reality of when you are trying to sell to the business customer, who is in multiple locations and there is an RFP, there is a time limit, et cetera? Don't you need to, in order to make your bid, know at what prices you are going to buy the services for those territories whom you don't serve but you rely on them?
LISTNUM 1 \l 11395 Just in a concrete way, I don't know how you would do that because your competitor could basically upset your bid by not agreeing to prices and, therefore, make it very difficult for you to speculate.
LISTNUM 1 \l 11396 MR. BÉLAND: Yes. I recall an exchange you had with another party last week, I don't remember which party it was.
LISTNUM 1 \l 11397 Our expectation would not be that these negotiations would happen location by location, facility by facility. We would expect that parties would negotiate what would, in effect, be a standing agreement.
LISTNUM 1 \l 11398 So, if you look at Vidéotron's particular circumstances, we need access on occasion to access facilities, some of which may end up being in the mandated category.
LISTNUM 1 \l 11399 We would not expect to be going off to Bell or TELUS Quebec or Télébec and negotiating with them each time we found a business location at which we need one of these rare accesses. We would expect to have negotiated some form of standing framework agreement with them, which we would employ as required when these situations arise.
LISTNUM 1 \l 11400 THE CHAIRPERSON: So, if I said wonderful, I accept your proposal, it is in place from now on or from whatever target date we take, you would expect there to be a flurry of negotiations to make wholesale framework agreements between yourself and your competitors so you basically have those on a standby basis so you know what they are going to charge you should there be a need to acquire services from them?
LISTNUM 1 \l 11401 MR. BÉLAND: Yes. I think these sorts of negotiations are common in the marketplace. We would have a sense of what quantities we would forecast to need. There would be potentially volume discounts offered on the other side of the table. We would hash that out in negotiations, arrive at a framework agreement, and it would be on standby.
LISTNUM 1 \l 11402 THE CHAIRPERSON: Thank you. If there are no other questions. Thank you very much.
LISTNUM 1 \l 11403 Madam Secretary, who is next?
LISTNUM 1 \l 11404 THE SECRETARY: Thank you very much, gentlemen.
LISTNUM 1 \l 11405 I was just informed that MTS Allstream no longer intends to cross‑examine QMI.
LISTNUM 1 \l 11406 Therefore, we will be moving to Primus Telecommunication, with counsel Ruby.
LISTNUM 1 \l 11407 THE CHAIRPERSON: Good morning, Mr. Ruby.
LISTNUM 1 \l 11408 MR. RUBY: Good morning.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11409 MR. RUBY: Good morning, panel.
LISTNUM 1 \l 11410 If I may, I would like to start by briefly following up on the Chairman's last question with respect to negotiations.
LISTNUM 1 \l 11411 As I understand it, Quebecor's position is that with respect to rates, the parties should have six months to negotiate new rates, and then if they fail to do so, they should have the right to apply to the Commission to set a rate. Do I have your position right?
LISTNUM 1 \l 11412 MR. BÉLAND: No, I don't think that is our position. Where are you taking that from?
LISTNUM 1 \l 11413 MR. RUBY: Mr. Chairman, I apologize. I didn't realize this would be an issue, and I am just following up on your question.
LISTNUM 1 \l 11414 THE CHAIRPERSON: I was referring to paragraphs 53 to 61. They don't mention six months. They just suggest that these prices would be negotiated, and in eventuality that they can't reach agreement, they would go to the Commission for arbitration or mediation.
LISTNUM 1 \l 11415 MR. RUBY: I apologize for not having a copy of it, but what I am thinking of is an interrogatory response, QMI/CRTC 12 April 402, and maybe I can just read the paragraph.
LISTNUM 1 \l 11416 It says:
"As far as rates are concerned, QMI is of the view that wholesale service, which is to be phased out, should transition to negotiated rates within six months. After that date, parties would be required to negotiate rates, and in the event of failed negotiations, they could apply to the CRTC to set a rate." (As read)
LISTNUM 1 \l 11417 It then goes on to talk about how it would work in the transition period.
LISTNUM 1 \l 11418 That is where I take the six months from, Mr. Béland. I apologize for not having a copy but, as I said, I am just following up on the Chairman's question.
LISTNUM 1 \l 11419 MR. BÉLAND: My apologies. You have an accurate quote there.
LISTNUM 1 \l 11420 MR. RUBY: Okay. I just want to get an idea of how this works.
LISTNUM 1 \l 11421 First of all, from QMI's perspective, I gather from what you told Mr. Schmidt, since you don't co‑locate, you both currently and anticipate buying, is it fair to say, relatively few services from the ILEC?
LISTNUM 1 \l 11422 MR. BÉLAND: We don't currently buy many services and we don't anticipate buying many more, that is correct.
LISTNUM 1 \l 11423 MR. RUBY: It is just Bell, when we talk about the ILEC in your case. Right?
LISTNUM 1 \l 11424 MR. BÉLAND: No, in fact our cable territory covers the territories of Bell, Bell Aliant, Télébec and TELUS.
LISTNUM 1 \l 11425 MR. RUBY: Terrific. So, it is those three.
LISTNUM 1 \l 11426 I gather that when you came up with the six months, the way you did it is you figured out what QMI would need to negotiate with those three ILECs for those few services. Is that right? Is that how you did the six months?
LISTNUM 1 \l 11427 MR. BÉLAND: No, not exclusively because we also provide one mandated service, which is TPIA service.
LISTNUM 1 \l 11428 MR. RUBY: So, it is the other way around for that one service?
LISTNUM 1 \l 11429 MR. BÉLAND: This is a general proposition.
LISTNUM 1 \l 11430 MR. RUBY: Let me ask you this. Can you agree with me that with respect to a national carrier, a telecom service provider that operates across the country, it would have to negotiate with each and every ILEC for every service that it buys?
LISTNUM 1 \l 11431 MR. BÉLAND: Yes, I agree.
LISTNUM 1 \l 11432 MR. RUBY: Are we on common ground that six months, in that circumstance, is just not enough for a national operator who uses an extensive amount and different types of currently mandated services to negotiate these agreements?
LISTNUM 1 \l 11433 MR. BÉLAND: Yes, I am not going to argue with you on that point. I can understand that certain providers, based on the quantity of negotiations that they would have to entertain, may require more time. I won't disagree with you on that.
LISTNUM 1 \l 11434 MR. RUBY: A lot more time in fact. Right?
LISTNUM 1 \l 11435 MR. BÉLAND: I won't ‑‑
LISTNUM 1 \l 11436 MR. RUBY: Okay, fair enough. I won't take you any further than that.
LISTNUM 1 \l 11437 Just two other very brief points.
LISTNUM 1 \l 11438 Does Quebecor have many TPIA customers?
LISTNUM 1 \l 11439 MR. BÉLAND: We have a significant and growing base of TPIA customers, yes.
LISTNUM 1 \l 11440 MR. RUBY: I take it that with respect to your internet broadband services and your local telephony, you use the same technology as Rogers roughly. Right? All the cable companies use the same thing so I don't have to go through again some of those issues?
LISTNUM 1 \l 11441 MR. BÉLAND: There are differences between the cable networks. I don't know what conversation you are referring to when you say going through it again, but it depends on what level you are talking about.
LISTNUM 1 \l 11442 MR. RUBY: That is fine. Let me focus you on two things then and see if we can do this quickly.
LISTNUM 1 \l 11443 I take it Quebecor offers no quality of service guarantees to VoIP providers when a VoIP service runs over a Quebecor broadband service. Right?
LISTNUM 1 \l 11444 MR. BÉLAND: We don't even know when a VoIP service ‑‑ an access‑independent VoIP service is running over Quebecor internet service.
LISTNUM 1 \l 11445 MR. RUBY: Will you agree with me that that means that a VoIP provider cannot guarantee the quality of service of the VoIP service to its customer because, of course, it uses your broadband connection?
LISTNUM 1 \l 11446 MR. BÉLAND: The VoIP provider has a lot of factors that it can control in terms of managing the quality of service to its customer, but clearly the access‑independent VoIP provider does not control our underlying internet service, if that is what you are saying.
LISTNUM 1 \l 11447 MR. RUBY: So, it can't make any promises with respect to the quality of the overall service. That is fair, isn't it?
LISTNUM 1 \l 11448 MR. BÉLAND: Any promises that would assume a quality of service beyond which Vidéotron already provides, sure, they can't make those promises.
LISTNUM 1 \l 11449 MR. RUBY: I take it that it is fair, then, to say that access‑independent VoIP, as opposed to the access‑dependent VoIP service that QMI offers, they are not really substitutes for one another. Right?
LISTNUM 1 \l 11450 MR. BÉLAND: They are together in the marketplace and they compete against each other.
LISTNUM 1 \l 11451 MR. RUBY: So, you think that they are just replaceable with their substitutes one for the other? You will agree with me that is not the way you market your products. Right? You don't say, you can choose the other guy's or mine, they are all the same?
LISTNUM 1 \l 11452 MR. BÉLAND: I don't think a lot of people market their products that way, but if you are asking does our marketing team watch what access‑independent VoIP providers are doing in the market and what services they offer and at what prices, of course they do.
LISTNUM 1 \l 11453 MR. RUBY: I will leave it there.
LISTNUM 1 \l 11454 Thank you, Mr. Chairman. Those are my questions.
LISTNUM 1 \l 11455 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11456 Madam Secretary, who is next?
LISTNUM 1 \l 11457 THE SECRETARY: Thank you very much.
LISTNUM 1 \l 11458 Now we will proceed with Cybersurf Corp., counsel Tacit.
LISTNUM 1 \l 11459 MR. TACIT: Thank you.
LISTNUM 1 \l 11460 THE CHAIRPERSON: Good morning, Mr. Tacit.
LISTNUM 1 \l 11461 MR. TACIT: Good morning, Mr. Chairman.
LISTNUM 1 \l 11462 I have handed out a small stack of interrogatory responses from the record, which I would appreciate if we could have circulated, to begin with.
LISTNUM 1 \l 11463 THE CHAIRPERSON: Okay, let's go.
LISTNUM 1 \l 11464 MR. TACIT: Thank you.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11465 MR. TACIT: I am curious as to whether Vidéotron has any plans to put in place a resale offer for its retail telephone service at any time, again looking at the competitive landscape on the retail side. Are there any such plans contemplated?
LISTNUM 1 \l 11466 MR. BÉLAND: I am not aware of any.
LISTNUM 1 \l 11467 MR. TACIT: I am curious about the conditions under which this might in fact occur. If we look at the first interrogatory in that package that I just handed out, which is QMI/The Companies 12 April 07‑17. In part C, The Companies say:
"Vidéotron provides retail telephone services, but does not currently have any resellers for these services. Any proposal to do so would need to be evaluated in terms of the business opportunity it presented and its coherence with QMI's business priorities." (As read)
LISTNUM 1 \l 11468 What I would like you to focus on are the words "and its coherence with QMI's business priorities." What do you mean by that?
LISTNUM 1 \l 11469 MR. BÉLAND: It means that any party that would be wishing to resell ‑‑ to purchase via resale the retail telephone service of Vidéotron would need to bring a value proposition to the table, to Vidéotron.
LISTNUM 1 \l 11470 MR. TACIT: I guess what you would take into account is whether or not there would be too much competition or not with the retail side of Vidéotron's own operations, is that fair, if wholesale was granted?
LISTNUM 1 \l 11471 MR. BÉLAND: I think the value proposition would be looked at on its merits when it is made.
LISTNUM 1 \l 11472 MR. TACIT: We will leave it at that.
LISTNUM 1 \l 11473 Now, my understanding is ‑‑ I am just going to explore for a bit your negotiated regime for setting access prices for SMP access services and the implications of that for pricing. So, I just want to take you through that briefly.
LISTNUM 1 \l 11474 As I understand it, QMI has adopted the definition of SMP contained in the TPRP report. Is that correct?
LISTNUM 1 \l 11475 MR. BÉLAND: That is correct.
LISTNUM 1 \l 11476 MR. TACIT: And that definition, which is at page 3‑19 ‑‑ you don't need to turn to it, but I am just going to read it out so we can discuss it ‑‑ says:
"A service provider with SMP has an incentive to keep prices higher and produce lower quantities than those that would normally prevail in a competitive market. As a result, customers who would have purchased some extra units at competitive prices will not be able to do so. This is a waste from the point of view of society as a whole and, hence, economic efficiency. Such pricing also leads to an income redistribution from customers to the service provider since the price for the quantity of service that is produced and purchased is higher than it otherwise would be in a competitive market." (As read)
LISTNUM 1 \l 11477 That is the passage you are talking about when you talk about the definition of SMP in the TPRP report. Is that correct?
LISTNUM 1 \l 11478 MR. BÉLAND: I don't think that is precisely their definition, but it is a characterization of what they would see as happening when there is significant market power.
LISTNUM 1 \l 11479 MR. TACIT: Sorry, are you saying this is not an accurate quote?
LISTNUM 1 \l 11480 MR. BÉLAND: No, that is an accurate quote, but I don't think it is a definition, but it is a characterization of what is going on.
LISTNUM 1 \l 11481 MR. TACIT: I believe that is the reference you gave in QMI/TELUS 6. It is not part of this package where you were referring to the TPRP report.
LISTNUM 1 \l 11482 MR. BÉLAND: It is an accurate quote.
LISTNUM 1 \l 11483 MR. TACIT: If we look at that as being the concept that QMI has adopted, I would like you now to turn to your evidence, specifically paragraph 55 of your March 15th evidence, if you could.
LISTNUM 1 \l 11484 MR. BÉLAND: Yes, we have it.
LISTNUM 1 \l 11485 MR. TACIT: You say there:
"According to the TPRP, regulatory intervention in interconnection arrangements is required ..." (As read)
LISTNUM 1 \l 11486 I am sorry, I am looking at the wrong ‑‑ I am looking at Cogeco's submission. That is not going to help us very much.
"While QMI believes that SMP access services must be made available on a mandated wholesale basis, QMI is also of the view that the rates for such services should be subject to negotiation rather than tariffing." (As read)
LISTNUM 1 \l 11487 That is the company's evidence still. Correct?
LISTNUM 1 \l 11488 MR. BÉLAND: That is true.
LISTNUM 1 \l 11489 MR. TACIT: I guess what I would like to ask you is this: If, by definition, significant market power means that a price for a service is above competitive levels, isn't leaving rates subject to negotiation going to ensure that the ultimate price at which the service is sold will reflect that significant market power and end up being set at a level that is higher than would occur either in a regulated or competitive market?
LISTNUM 1 \l 11490 MR. BÉLAND: I think that an access provider that would be taking that approach is going to be running into some resistance from the party at the other side of the table. What constrains the access provider, if you will, in terms of negotiating reasonably is the threat of seeing this go to the Commission if they are not negotiating in a reasonable manner.
LISTNUM 1 \l 11491 MR. TACIT: I guess reasonable is a matter of degree. Right? Because the significant market power may be slight, it may be greater. In an ex post scenario the degree of scrutiny might not be as great on a specific kind of rate dispute as it would be when somebody is filing a tariff that is going to be used by potentially a large base of powers.
LISTNUM 1 \l 11492 So it is conceivable that that significant market power would be translated into the rates for the end service, isn't it?
LISTNUM 1 \l 11493 MR. BÉLAND: Well, we believe there are cleared advantages in negotiation that should ‑‑
LISTNUM 1 \l 11494 MR. TACIT: No, I understand that.
LISTNUM 1 \l 11495 MR. BÉLAND: ‑‑ that should not be discarded by going immediately to the Commission.
LISTNUM 1 \l 11496 So we believe that there is a rationale for giving negotiation a chance and that the knowledge that the issue can be brought to the Commission if one or the other party is not acting reasonably is an important discipline.
LISTNUM 1 \l 11497 MR. TACIT: So you don't think it could ever be the case that significant market power could end up being translated into the rates for these services if it is under a negotiated regime?
LISTNUM 1 \l 11498 MR. BÉLAND: Again, I think if there is a party that is entering consistently into negotiations with the rates that are excessive, I think that party would find itself eventually in front of the Commission.
LISTNUM 1 \l 11499 MR. TACIT: All right.
LISTNUM 1 \l 11500 Let's assume for a moment ‑‑ and I know we disagree on this point ‑‑
LISTNUM 1 \l 11501 THE CHAIRPERSON: Let's wait for a moment. Commissioner Cram needs a break.
LISTNUM 1 \l 11502 We will take a 5‑minute break.
‑‑‑ Recessed at 0915 / Suspension à 0915
‑‑‑ Resumed at 0920 / Reprise à 0920
LISTNUM 1 \l 11503 THE CHAIRPERSON: All right, Mr. Tacit. Sorry for the interruption. We have Commissioner Cram with us again, so go ahead.
LISTNUM 1 \l 11504 MR. TACIT: That's fine. I didn't think it was the kind of testimony you would get all choked up about.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11505 THE CHAIRPERSON: Lovely.
LISTNUM 1 \l 11506 MR. TACIT: Before the short break I guess we agreed to disagree about whether the negotiated regime would lead to rates for services that inherently imported or contained some significant market power, in other words were priced above competitive rates, but let's assume for a moment that turns out to be the case.
LISTNUM 1 \l 11507 Would you agree with me that where there is that sort of significant market power according to the very definition the demand for the service would be dampened somewhat?
LISTNUM 1 \l 11508 MR. BÉLAND: I'm sorry, I didn't understand when you said let's assume that to be the case, what is ‑‑
LISTNUM 1 \l 11509 MR. TACIT: That the prices are above competitive levels. Through the negotiation process we end up with prices that are some ‑‑ just take my assumption for a minute and work with it. I know you don't agree with it, but ‑‑
LISTNUM 1 \l 11510 MR. BÉLAND: Sure. So we have had negotiations and we have somehow ‑‑
LISTNUM 1 \l 11511 MR. TACIT: Somehow I have ended up with ‑‑
LISTNUM 1 \l 11512 MR. BÉLAND: You somehow managed to convince this purchaser to pay higher than market prices and the purchaser has not found it in their interest to bring that to the Commission?
LISTNUM 1 \l 11513 MR. BÉLAND: Well, it doesn't matter what the reason is. I don't want to argue about the basis for the assumption. We can do that in final argument.
LISTNUM 1 \l 11514 Just take the assumption for the purpose of the ‑‑
LISTNUM 1 \l 11515 MR. BÉLAND: Okay.
LISTNUM 1 \l 11516 MR. TACIT: So would you agree with me that as a general proposition, according to the very definition of "significant market power", such a situation reduces a reduction in the demand for wholesale services, just by definition?
LISTNUM 1 \l 11517 MR. BÉLAND: The demand ‑‑ yes, the demand from that particular purchaser for those particular wholesale services. I guess if the supply and demand curve slope the way they should, yes, that would be a conclusion.
LISTNUM 1 \l 11518 MR. TACIT: That would certainly hamper, it might even marginalize competitors?
LISTNUM 1 \l 11519 Would you agree with that?
LISTNUM 1 \l 11520 MR. BÉLAND: You are laying on a lot of assumptions here. I mean now we are ‑‑ you have asked me to assume that this competitor is a pretty poor negotiator and you are now asking me to assume that this competitor is such a poor negotiator on a manner on which its business depends.
LISTNUM 1 \l 11521 I can follow with your assumptions ‑‑
LISTNUM 1 \l 11522 MR. TACIT: Again, I don't want to argue with you, but for example there could be a situation where because of an RFP deadline or whatever there just isn't time. I know you said people try to have wholesale agreements in place, but there may be circumstances where this occurs.
LISTNUM 1 \l 11523 MR. BÉLAND: Sorry. What is your question?
LISTNUM 1 \l 11524 MR. TACIT: I'm just asking whether that couldn't end up detrimentally affecting the competitors and even marginalizing them?
LISTNUM 1 \l 11525 MR. BÉLAND: I guess all sorts of things could happen, the competitor could reduce the volumes of services that it sells; the competitor could reduce ‑‑ keep the volumes but reduce its margins. I guess there are all sorts of possibilities.
LISTNUM 1 \l 11526 MR. TACIT: Let's talk about the investment incentives.
LISTNUM 1 \l 11527 One of the benefits that QMI states of a negotiated regime is that it provides an ongoing incentive for new entrants to build their own facilities.
LISTNUM 1 \l 11528 Correct?
LISTNUM 1 \l 11529 MR. BÉLAND: Yes.
LISTNUM 1 \l 11530 MR. TACIT: Okay. But we want those incentives to be based on competitive prices, not supernormal prices.
LISTNUM 1 \l 11531 Wouldn't you agree with that? Because otherwise the investment would be inefficient.
LISTNUM 1 \l 11532 MR. BÉLAND: The best incentives would be based on competitive prices, yes.
LISTNUM 1 \l 11533 MR. TACIT: Thank you.
LISTNUM 1 \l 11534 Now, you used the CDN example and we have been through that before as an example of how incentives can be dampened by regulated price changes, but as I understand it QMI or Vidéotron makes very limited use of ILEC CND services.
LISTNUM 1 \l 11535 Is that right?
LISTNUM 1 \l 11536 MR. BÉLAND: That's true.
LISTNUM 1 \l 11537 MR. BÉLAND: Okay. On the other hand, Vidéotron has a pretty good business providing CDN‑type services of its own.
LISTNUM 1 \l 11538 Correct?
LISTNUM 1 \l 11539 MR. BÉLAND: The business was better before the CDN decisions, but yes, it is a continuing business and we are trying to grow it, yes.
LISTNUM 1 \l 11540 MR. TACIT: So I guess what I would suggest to you is, if my premise bears out that overall prices that are set through negotiations only will be somewhat higher for access services that have SMP, could it not be the case that it would give QMI a price umbrella under which it could price its own CDN services relative to competitive rates?
LISTNUM 1 \l 11541 MR. BÉLAND: I'm having difficulty assuming a price umbrella because there would be presumably other competitors as well that are constraining Vidéotron's prices.
LISTNUM 1 \l 11542 MR. TACIT: Well, then what I'm saying is, if Vidéotron is so sensitive to what the ILEC pricing is in terms of its own ability to sell CDN services, then what I'm suggesting to you is that if somehow through a negotiated regime the Bell prices get set at prices that are above competitive levels, that also provides a bit of extra headroom for Vidéotron in terms of its pricing of its CDN services.
LISTNUM 1 \l 11543 It has to work both ways.
LISTNUM 1 \l 11544 MR. BÉLAND: Again, it has to depend on the ‑‑ I'm sorry.
LISTNUM 1 \l 11545 MR. TACIT: If a price drop for the ILECs is harming your business, then presumably a price increase above competitive levels would benefit your business.
LISTNUM 1 \l 11546 Right?
LISTNUM 1 \l 11547 MR. BÉLAND: But, as I said, it depends on the overall competitive conditions in the market as well.
LISTNUM 1 \l 11548 MR. TACIT: But it could have that effect, could it not?
LISTNUM 1 \l 11549 MR. BÉLAND: Under your narrow set of assumptions it could, yes.
LISTNUM 1 \l 11550 MR. TACIT: The other part ‑‑
LISTNUM 1 \l 11551 MR. TAYLOR: I would just like to add something.
LISTNUM 1 \l 11552 Your assumption on this seems to be that the price that the ILEC is going to be setting for its services is somehow untouched by the activity of competitors such as Vidéotron in the market and it's not. It's not being mandated by the Commission. This would be a negotiated price.
LISTNUM 1 \l 11553 So the purchaser who goes to the ILEC and says "I want that service" and the ILEC says "Well, I have significant market power, you have to pay this much", that purchaser could then go to Vidéotron and say "Well, they are telling me that I have to pay that much", and Vidéotron could go "Well, I will do it lower" and the ILEC could be aware of that and therefore may not sent its price so high.
LISTNUM 1 \l 11554 So where is competition what are you likely to end up with? Competitive rates.
LISTNUM 1 \l 11555 If Vidéotron is not there in the market actively playing, then there would be an increased chance of the ILEC.
LISTNUM 1 \l 11556 But the proposal you are putting before us, to me, if Vidéotron is there in the market competing with the ILEC, I don't see the fact situation arising that you are proposing which would sort of like create this artificial umbrella for Vidéotron.
LISTNUM 1 \l 11557 MR. TACIT: Okay. Well, we will agree to disagree on that.
LISTNUM 1 \l 11558 The other aspect of this is the length of time that it would take to negotiate.
LISTNUM 1 \l 11559 I believe that in Response to a Cybersurf Interrogatory No. 9 QMI actually said that it could take days, weeks, months to negotiate and the same sorts of time periods if it has to be taken to the Commission.
LISTNUM 1 \l 11560 Do you see any prejudice occurring to customers as a result of those sorts of delays?
LISTNUM 1 \l 11561 MR. BÉLAND: Well, there would presumably be transition provisions. That is one of the matters under consideration in this proceeding.
LISTNUM 1 \l 11562 MR. TACIT: I'm not talking about transition, though, I'm talking about when ‑‑ let's assume the regime you have in place is in place and a customer wants your service.
LISTNUM 1 \l 11563 MR. BÉLAND: Okay, so a new ‑‑ let's call it a Greenfield customer.
LISTNUM 1 \l 11564 MR. TACIT: New customer or a new service that just comes out after this negotiated regime is in place. I'm not talking about the transition period any more.
LISTNUM 1 \l 11565 MR. BÉLAND: Again, I think that's a fairly common situation in markets. If you are a business, or you are an entrepreneur who wants to get into a certain line of business, part of your job is to plan your affairs well and to plan ahead for the negotiations that you might require for the various inputs that you need. I think that is a common state of affairs in business. I wouldn't call it a detriment.
LISTNUM 1 \l 11566 MR. BÉLAND: But there is a different situation where the supplier has significant market power, wouldn't you agree? There is an imbalance right at the outset in negotiating.
LISTNUM 1 \l 11567 MR. BÉLAND: But as I said earlier, the difference here ‑‑ the difference between this context and the context we would find in many other markets is the threat, if you will, that if one of the negotiating parties isn't acting reasonably it will find itself before a regulator.
LISTNUM 1 \l 11568 MR. TACIT: Okay, you have made that point.
LISTNUM 1 \l 11569 Now, you also use as an example of this regime, the regime under the Broadcasting Act where BDUs that want to carry certain licensed programming services and the owners of those services negotiate rates for carriage and you used that as an example.
LISTNUM 1 \l 11570 Correct?
LISTNUM 1 \l 11571 MR. BÉLAND: Yes, that's true.
LISTNUM 1 \l 11572 MR. TACIT: But would you agree with me that example is very different in one crucial respect, and that is that the BDU doesn't compete in the end market for the programming service. It is a symbiotic relationship. In other words, both parties have an interest in the carriage of the signal, but the cable company isn't competing with the programming service as well in the retail market?
LISTNUM 1 \l 11573 MR. TAYLOR: There is some accuracy to what you say, but it is not entirely correct.
LISTNUM 1 \l 11574 I mean, in the BDU environment there will be a number of services ‑‑ there often are a number of services that are actually owned by the BDU or an affiliate of the BDU so it is a more complex situation than what you are describing, but it is not as simple in terms of direct competition and nothing but direct competition as in the telecom environment.
LISTNUM 1 \l 11575 MR. TACIT: All right. Thank you.
LISTNUM 1 \l 11576 Mr. Chairman, those are my questions.
LISTNUM 1 \l 11577 THE CHAIRPERSON: Thank you very much, Mr. Tacit.
LISTNUM 1 \l 11578 Madam Secretary, who is next?
LISTNUM 1 \l 11579 THE SECRETARY: The next panel is Telecommunications Xittel Inc., Mr. Denton.
LISTNUM 1 \l 11580 THE CHAIRPERSON: I didn't expect to see you again so soon, Mr. Denton. It's wonderful.
LISTNUM 1 \l 11581 MR. DENTON: The pleasure of showing up every day.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11582 MR. DENTON: It's okay, we can crack a joke.
LISTNUM 1 \l 11583 Good morning, sir. Good morning, gentlemen.
LISTNUM 1 \l 11584 THE CHAIRPERSON: Since you are at the end of the questioning order, that's what I meant. It usually takes longer to come to you. So I'm delighted that we are making good progress.
LISTNUM 1 \l 11585 MR. DENTON: So am I. Thank you.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11586 MR. DENTON: Good morning, Mr. Béland. Good morning.
LISTNUM 1 \l 11587 To frame my questions, Mr. Chairman, they essentially bear on the concerns of the internet service providers to obtain reasonable access through cable facilities to the various services that they seek to get for the sake of their businesses and the problems that are or not associated with getting that access.
LISTNUM 1 \l 11588 Mr. Béland, in percentage or proportion, whichever you choose, how many of the ‑‑ what proportion of the ISPs that deal with your company are buying internet services of the kind mandated by Decision 99‑11 and what proportion are buying the third party internet access in one or another of its various formats, in just one or the other?
LISTNUM 1 \l 11589 What would you say?
LISTNUM 1 \l 11590 MR. BÉLAND: Just for my clarity and the clarity perhaps of the room, 99‑11 is the old ‑‑ we will call it the old high‑speed internet resale regime, mandated resale regime.
LISTNUM 1 \l 11591 MR. DENTON: Yes, sir.
LISTNUM 1 \l 11592 MR. BÉLAND: We certainly have ISPs today that are customers of each regime.
LISTNUM 1 \l 11593 The precise numbers I couldn't give you, but I could take an undertaking.
LISTNUM 1 \l 11594 MR. DENTON: That would actually be interesting factual information for us and I think the Commission. Thank you, I would ask you to do that.
LISTNUM 1 \l 11595 MR. BÉLAND: That information has been provided before, but it has been provided in confidence to the Commission.
LISTNUM 1 \l 11596 But, as I said, I can confirm to you that there are ISPs dealing with us under each regime.
LISTNUM 1 \l 11597 MR. DENTON: Both.
LISTNUM 1 \l 11598 Would you offer some views as to why ISPs would choose to use the older form of services available under the Decision 99‑11 rather than the services under third party internet access?
LISTNUM 1 \l 11599 MR. BÉLAND: Frankly, it's easier, for one thing. Let's call it the old resale regime is a simple resale regime where an ISP can effectively get an end‑to‑end high‑speed access service from Vidéotron at a reduced rate relative to Vidéotron's own retail rates. I think it's fair to call it simple resale.
LISTNUM 1 \l 11600 Whereas TPIA is a much more complex undertaking where the ISP manages important aspects of the end customer service. To give you just but one example, the ISP will go and get its own internet address in blocks from the authorities, the ISP will physically interconnect its router to our router, et cetera.
LISTNUM 1 \l 11601 So it depends on the business priorities and, frankly, the skills of the ISPs. Some ISPs may be more purely marketing oriented and prefer the simpler resale regime and other ISPs may have more confidence in their technical abilities and prefer the TPIA regime.
LISTNUM 1 \l 11602 MR. DENTON: Thank you. That is a useful and informative answer.
LISTNUM 1 \l 11603 For instance, does TPIA offer the functionalities that permit an ISP to track a customer's use of bandwidth?
LISTNUM 1 \l 11604 MR. BÉLAND: Subject to check, I believe that there is a tool that allows Vidéotron's own end users to track their own bandwidth usage and, subject to check, I believe that same tool is available to our TPIA customers.
LISTNUM 1 \l 11605 MR. DENTON: Would you be able to provide that answer for certainty in a later submission, please?
LISTNUM 1 \l 11606 MR. BÉLAND: Yes.
LISTNUM 1 \l 11607 MR. DENTON: Thank you.
LISTNUM 1 \l 11608 I'm going to use the term, Mr. Chairman and Panel, reverse DNS. Reverse DNS performs a function of "look up" which whereby it searches for the IP address and provides the domain name. It bears on the services available.
LISTNUM 1 \l 11609 has Vidéotron or Québecor implemented reverse DNS and is it commercially available now in accordance with the commitment you made to assist to make the TPIA work?
LISTNUM 1 \l 11610 MR. BÉLAND: The service has been implemented by Vidéotron.
LISTNUM 1 \l 11611 It is currently in the testing stage. I believe that we have successfully tested it with at least one ISP.
LISTNUM 1 \l 11612 MR. DENTON: When do you think it will be made commercially available?
LISTNUM 1 \l 11613 MR. BÉLAND: I can't say precisely, but I would think that it would be in very short order.
LISTNUM 1 \l 11614 MR. DENTON: Months?
LISTNUM 1 \l 11615 MR. BÉLAND: Weeks or months.
LISTNUM 1 \l 11616 MR. DENTON: Thank you.
LISTNUM 1 \l 11617 THE CHAIRPERSON: Mr. Denton, just for my information, can you explain to me what the utility of this is and why it would be used? Have the witness explain.
LISTNUM 1 \l 11618 MR. DENTON: I can certainly explain the utility, sir, in relation to the utility of TPIA in terms of making it available and working with the ISPs. They generally want to know, or occasionally want to know with whom they are dealing or how to find a customer or how to find an endpoint. Most of these things deal with the difficulties of finding an end point.
LISTNUM 1 \l 11619 But in this case you take the IP address, which is your end point, and you want to know what customer is associated with that end point.
LISTNUM 1 \l 11620 MR. BÉLAND: Mr. Chair, if I may?
LISTNUM 1 \l 11621 THE CHAIRPERSON: Yes, please.
LISTNUM 1 \l 11622 MR. BÉLAND: In a cable network internet addresses, the numeric address that corresponds to your internet address, are allocated dynamically on an ongoing basis as individual end customers sign up and sign down. So the TPIA providers have expressed an interest in the availability of a tool that would let them know which end user is using which end address at a particular point in time. That is the tool that has been developed.
LISTNUM 1 \l 11623 THE CHAIRPERSON: I see. All right. Thank you.
LISTNUM 1 \l 11624 MR. DENTON: Which goes to the usefulness of TPIA versus other forms of ‑‑
LISTNUM 1 \l 11625 My next question bears on the theme that the ISPs have advanced and will advance that the various incumbents take such measures as they can to dissuade ISPs from making investments in facilities.
LISTNUM 1 \l 11626 So having said that nice soft pitch across the plate, here comes the question. When the ISPs in Montreal were on the point of making a decision to either build or self‑supply their own facilities between the Canix co‑location point and Vidéotron, what was the response of Vidéotron?
LISTNUM 1 \l 11627 MR. BÉLAND: Your question, is this in the context of ISPs that are TPIA customers of ours? I am not sure of the precise context of your question.
LISTNUM 1 \l 11628 MR. DENTON: The context of the question, so far as I am informed, is that the ISPs in Montreal were on the point of supplying their own facilities between the Canix co‑location and exchange point and your Montreal point of interconnection. And you took some action then that was import for those ISPs. Do you recall what it was?
LISTNUM 1 \l 11629 MR. BÉLAND: I don't understand the way the question is being posed. But what I can say is that in our TPIA tariff there are points of interconnection identified. In fact, to be precise, there are five points of interconnection that provide access to the entirety of our network.
LISTNUM 1 \l 11630 In the specific case of the Montreal point of interconnection, my understanding is that there were some discussions around granting the ISPs some flexibility and not necessarily establishing interconnection at the specific point that Vidéotron had identified in its tariff, but rather at a more convenient point and that the parties in question, the ISPs and Vidéotron, managed to mutually agree on an interconnection arrangement that was more convenient to them than the default arrangement outlined in the tariff.
LISTNUM 1 \l 11631 I have the impression that that is a positive thing, that that is Vidéotron demonstrating flexibility in order to permit easier access to its TPIA service.
LISTNUM 1 \l 11632 MR. DENTON: Thank you, Mr. Béland. I think the cooperation was appreciated. I just need to point out that it had certain effects of what the ISPs were incented to do or not. And that is the answer to my question. Thank you.
LISTNUM 1 \l 11633 Thank you, Mr. Chairman, that completes my questions.
LISTNUM 1 \l 11634 THE CHAIRPERSON: Thank you very much, Mr. Denton.
LISTNUM 1 \l 11635 Is there no other questions? I gather this finishes the cross‑examination of Québecor.
LISTNUM 1 \l 11636 Now, let us take a 10‑minute break while Cogeco sets itself up. Thank you.
‑‑‑ Recessed at 0945 / Suspension à 0945
‑‑‑ Resumed at 0957 / Reprise à 0957
LISTNUM 1 \l 11637 THE CHAIRPERSON: Okay, Madam Secretary, let's go.
LISTNUM 1 \l 11638 LA SECRÉTAIRE : Merci, Monsieur le Président.
LISTNUM 1 \l 11639 Nous allons procéder maintenant avec un nouveau panel de témoins représentant la compagnie Cogeco Câble inc.
LISTNUM 1 \l 11640 Monsieur Messier, si vous voulez présenter les témoins, s'il vous plaît.
LISTNUM 1 \l 11641 M. MESSIER : Merci, Madame la Secrétaire.
LISTNUM 1 \l 11642 Bonjour, messieurs les commissaires.
LISTNUM 1 \l 11643 Sont avec moi, aujourd'hui, pour comparaître à l'audience : monsieur François Audet, qui est vice‑président, Télécommunications chez Cogeco; suivi de monsieur David McKeown, qui est président de View Communications, qui nous a assistés dans la préparation; moi‑même, Michel Messier, directeur des Affaires réglementaires, aspect télécommunications...
LISTNUM 1 \l 11644 COMMISSIONER DUNCAN: Excuse me, Mr. Messier. I am sorry, I can't get the translation channel.
LISTNUM 1 \l 11645 M. MESSIER : O.K.
LISTNUM 1 \l 11646 THE SECRETARY: I was informed that the panel members have channel 1 and the remainder of the room channel 8 ‑‑ 7, sorry.
LISTNUM 1 \l 11647 COMMISSIONER DUNCAN: I could try it again to see if it does ‑‑
LISTNUM 1 \l 11648 M. MESSIER : O.K. Alors, est‑ce que vous entendez bien?
LISTNUM 1 \l 11649 CONSEILLERE DUNCAN : Merci.
LISTNUM 1 \l 11650 M. MESSIER : Merci.
LISTNUM 1 \l 11651 LE PRÉSIDENT : Est‑ce que vous pouvez parler un peu plus haut dans le microphone, s'il vous plaît?
LISTNUM 1 \l 11652 M. MESSIER : Oui, c'est ce que je vais faire.
LISTNUM 1 \l 11653 Alors, à ma gauche, près de moi, monsieur Dimitri Stathis, qui est directeur principal au niveau des Marchés commerciaux de Cogeco; suivi de monsieur Robin Lavoie, qui est directeur principal au niveau de l'Ingénierie et du Développement corporatif.
LISTNUM 1 \l 11654 Alors, Madame la Secrétaire, vous pouvez procéder à l'assermentation.
LISTNUM 1 \l 11655 LA SECRÉTAIRE : Merci.
SOUS AFFIRMATION SOLENNELLE : FRANÇOIS AUDET
AFFIRMED: DAVID McKEOWN
SOUS AFFIRMATION SOLENNELLE : MICHEL MESSIER
AFFIRMED: DIMITRI STATHIS
SOUS AFFIRMATION SOLENNELLE : ROBIN LAVOIE
LISTNUM 1 \l 11656 LA SECRÉTAIRE : Merci beaucoup.
LISTNUM 1 \l 11657 Mr. Daniels, you may proceed with the cross‑examination.
LISTNUM 1 \l 11658 MR. HOFLEY: So there is no oath or no ‑‑ I am sorry, I apologize.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11659 MR. HOFLEY: I will be asking you a few questions, gentlemen, and then my colleague Mr. Daniels will be.
LISTNUM 1 \l 11660 My questions relate to your definition and the process for determining whether a facility is an essential facility, and that might surprise you or might not surprise you that I am asking you only these questions because, as I understand it, you have not sought to have regulation maintained for any service save support structure services and interconnection services; is that correct?
LISTNUM 1 \l 11661 M. MESSIER : Avec certitude, c'est exact pour les structures de soutènement.
LISTNUM 1 \l 11662 MR. HOFLEY: Okay.
LISTNUM 1 \l 11663 M. MESSIER : Par contre, notre position pourrait être nuancée en ce qui a trait aux boucles locales.
LISTNUM 1 \l 11664 MR. HOFLEY: Oui. Now, your discussion of essential facilities definition commences at paragraph 19 of your March 15 evidence. I would ask you to turn to that if you need to and your definition can be found at paragraph 21. It is a fairly broad definition and I just want to better understand it.
LISTNUM 1 \l 11665 I am focusing on the first prong of your definition but the second aspect where it starts "or a network access service." Do you see that? Okay.
LISTNUM 1 \l 11666 Now, it says:
"...where a network access service is required to provide retail telecommunications services." (As read)
LISTNUM 1 \l 11667 Is that required by a competitor or is that required by all competitors?
LISTNUM 1 \l 11668 MR. MESSIER: Required by all competitors.
LISTNUM 1 \l 11669 MR. HOFLEY: Now, at paragraph 22, you go on to explain your criteria and you say first that:
"A necessary..." (As read)
LISTNUM 1 \l 11670 It is towards the bottom of the page at page 7 of 42.
"A necessary condition for concluding that access services in the second category is essential is that it is not practical or feasible for competitors to substitute or practically or reasonably duplicate the input in question." (As read)
LISTNUM 1 \l 11671 And after six days of testimony, I think we don't need to ask you any questions about that but I wanted to ask you about the very next sentence and it says:
"If the facility function or service satisfies the first criterion, it is presumed essential and is then assessed under the second criterion." (As read)
LISTNUM 1 \l 11672 So as I understand it, for criterion number 1, the party claiming access under your test must establish that ‑‑ the competitors must establish that they need the service and that it cannot be duplicated; correct?
LISTNUM 1 \l 11673 M. MESSIER : C'est exact.
LISTNUM 1 \l 11674 MR. HOFLEY: And that is what you say at paragraph 26. So that would be in essence an ex post review of an application by a party seeking access to a service; correct?
LISTNUM 1 \l 11675 M. MESSIER : C'est exact, oui.
LISTNUM 1 \l 11676 MR. HOFLEY: Okay. But then in this paragraph you suggest that for the second criterion:
"It is presumed that the party controlling the input has market power [the facility] has market power over the facility to prevent or lessen competition." (As read)
LISTNUM 1 \l 11677 Do you see, that is your second criterion?
LISTNUM 1 \l 11678 M. MESSIER : Pardon, quel paragraphe?
LISTNUM 1 \l 11679 Me HOFLEY : Paragraphe 21, numéro 2, mais...
LISTNUM 1 \l 11680 M. MESSIER : O.K. Oui.
LISTNUM 1 \l 11681 Me HOFLEY : O.K.
LISTNUM 1 \l 11682 So in the second criterion, it flips over ‑‑ the onus flips over because you say:
"It is presumed that the party controlling the input has market power to prevent or lessen competition." (As read)
LISTNUM 1 \l 11683 Now, by "prevent or lessen competition," do you mean substantially lessen or prevent competition like the Competition Bureau says or you just mean prevent or lessen to any degree?
LISTNUM 1 \l 11684 M. MESSIER : Non, de la façon dont on voit, ça doit être substantiellement.
LISTNUM 1 \l 11685 MR. HOFLEY: Okay.
LISTNUM 1 \l 11686 M. MESSIER : Et la façon dont nous avons construit cette définition là, il y a deux composantes. Comme on a démontré, expliqué dans notre soumission, l'analyse doit être conduite en deux étapes, mais les deux sont importantes.
LISTNUM 1 \l 11687 MR. HOFLEY: Okay.
LISTNUM 1 \l 11688 M. MESSIER : Elles sont liées.
LISTNUM 1 \l 11689 Me HOFLEY : Merci.
LISTNUM 1 \l 11690 Now, we are coming to the end. You provide a bit further detail in respect of this and you say ‑‑ it is at paragraph 23 in the middle:
"In short, if through control over the input an incumbent carrier can deny or prevent a competitor's ability to enter a regulated market or to lessen competition in a forborne telecommunications market, the input should be considered essential." (As read)
LISTNUM 1 \l 11691 So that should be read as all competitors, correct? You just testified that it was all competitors?
LISTNUM 1 \l 11692 MR. MESSIER: All competitors, yes.
LISTNUM 1 \l 11693 Me HOFLEY : C'est vrai?
LISTNUM 1 \l 11694 M. MESSIER : Oui.
LISTNUM 1 \l 11695 Me HOFLEY : O.K. Merci.
LISTNUM 1 \l 11696 Those are my questions. There is really a punch line, Mr. Chairman. I am just trying to understand it. It seems that we do have in this test a downstream market power issue built in. It just didn't on the face of it appear to have that.
LISTNUM 1 \l 11697 THE CHAIRPERSON: Okay. Thank you, Mr. Hofley.
LISTNUM 1 \l 11698 Mr. Daniels, you had no questions?
LISTNUM 1 \l 11699 MR. DANIELS: No, I do have some questions.
LISTNUM 1 \l 11700 THE CHAIRPERSON: Okay, thanks very much. Then let's hear from the next ‑‑
LISTNUM 1 \l 11701 MR. DANIELS: No, no, no. Sorry, I do.
LISTNUM 1 \l 11702 THE CHAIRPERSON: I thought you said you didn't, I am sorry.
LISTNUM 1 \l 11703 MR. DANIELS: I do have questions.
LISTNUM 1 \l 11704 MR. HOFLEY: Not that many.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11705 MR. DANIELS: I should have said yes, I do, as opposed to no, I do. I apologize for that.
LISTNUM 1 \l 11706 Mr. Chairman, this part of my cross‑examination is going to deal with some lesser known services that we haven't really discussed yet much in the hearing, although there is a fair amount of record on them.
LISTNUM 1 \l 11707 The first service that I am going to focus on is the transiting service and in order to understand Cogeco's position ‑‑ because there are very few things that we do have disagreement with but I do want to understand their position on the transiting service ‑‑ I am going to ask them to explain a few things for us to see if we can figure out whether it is an interconnection service or if it is an essential facility outside of the interconnection under the market power issue.
LISTNUM 1 \l 11708 So that is the purpose of the first part here but to begin I think it is going to help us both to get a common understanding of what the service is, especially considering some of the commissioners may not be familiar with the esoteric nature of some of these things.
LISTNUM 1 \l 11709 As I understand it, transiting ‑‑ to being, I first want to just clarify how local interconnection generally works.
LISTNUM 1 \l 11710 Is it correct to state that two LECs ‑‑ so they could be an ILEC and a CLEC or it could be two CLECs ‑‑ are required to interconnect with each other in the same local interconnection region, the LIR, as a general rule, that it is their responsibility to interconnect with each other, and that that goes back to the original local 97‑8 decision, although, granted, it is a larger ‑‑ the LIR is a larger area now than originally with the exchange?
LISTNUM 1 \l 11711 But as a general proposition, can we agree that two LECs are required to interconnect to each other in LIRs as set by the CRTC?
LISTNUM 1 \l 11712 M. MESSIER : Dans la décision 2005‑28, il a quand même été reconnu par le Conseil qu'un carrier qui avait des obligations de CLEC pouvait rencontrer ses obligations comme CLEC à travers un autre CLEC. Donc, c'est exactement le cas de Cogeco avec ses ententes avec TELUS.
LISTNUM 1 \l 11713 Maintenant, si on va s'interconnecter directement, le CLEC décide de s'interconnecter dans une région d'interconnexion locale, oui, ça doit procéder selon le modèle qui a été adopté, le modèle par défaut d'interconnexion.
LISTNUM 1 \l 11714 MR. DANIELS: Okay. I am really just trying to ‑‑ it is more for an educational purpose for our conversation. You are jumping to exactly how Cogeco does it today.
LISTNUM 1 \l 11715 I am just trying to establish the general principles that two carriers have to ‑‑ you know, that the CRTC set out regions, the LIR, that two of them are supposed to interconnect to each other and we are going to get into the transiting arrangement as the alternative.
LISTNUM 1 \l 11716 But as a general proposition, can we agree that that is the area?
LISTNUM 1 \l 11717 M. MESSIER : Oui.
LISTNUM 1 \l 11718 MR. DANIELS: You have made reference to a TELUS arrangement. I want to hold off on that for a moment and still concentrate on explaining what transiting is.
LISTNUM 1 \l 11719 In terms of being able to do this, what the CRTC acknowledged is that, at the beginning stages of local competition, it may be difficult, for whatever reason ‑‑ that two LECs wouldn't have to directly connect with each other, but that they could choose, if they wanted, to go through the ILEC to interconnect them.
LISTNUM 1 \l 11720 Is that correct?
LISTNUM 1 \l 11721 M. MESSIER : C'est exact.
LISTNUM 1 \l 11722 MR. DANIELS: And that is what we refer to as the transiting service when it is provided by an ILEC, which basically allows two LECs, rather than directly connecting with each other, to choose to go through the ILEC instead.
LISTNUM 1 \l 11723 Is that a fair description of the transiting service?
LISTNUM 1 \l 11724 M. MESSIER : Oui.
LISTNUM 1 \l 11725 MR. DANIELS: Although the CRTC in Decision 97‑8, when they created local competition, first established that this was not an essential facility, they said that it should be treated as an essential facility in that decision.
LISTNUM 1 \l 11726 Is that an accurate description?
LISTNUM 1 \l 11727 M. MESSIER : C'est exact, oui.
LISTNUM 1 \l 11728 MR. DANIELS: As such, it was set at what has since become to be known as Category 1 rates, and we can agree, therefore ‑‑
LISTNUM 1 \l 11729 Actually, let me take it step‑by‑step.
LISTNUM 1 \l 11730 They are Category 1 rates, the lowest rates possible.
LISTNUM 1 \l 11731 M. MESSIER : Exact.
LISTNUM 1 \l 11732 MR. DANIELS: And we generally refer to these types of services, and this service in particular, as a "near essential service".
LISTNUM 1 \l 11733 That's what we mean by "near essential"?
LISTNUM 1 \l 11734 M. MESSIER : Exact.
LISTNUM 1 \l 11735 MR. DANIELS: Just so we are clear, the purpose, really, is to allow two LECs to not have to bother building or directly connecting with each other. That is what we are saving within the local inter‑exchange region.
LISTNUM 1 \l 11736 That's why the Commission originally mandated this.
LISTNUM 1 \l 11737 Is that a fair description?
LISTNUM 1 \l 11738 M. MESSIER : Je suis d'accord, oui.
LISTNUM 1 \l 11739 MR. DANIELS: I am positing to you that this is a transit service, not an interconnection service. I would like to understand your position on whether you think it is an interconnection service or whether it is a transit service.
LISTNUM 1 \l 11740 M. MESSIER : Notre position, c'est de considérer que tous les services qui font partie du régime d'interconnexion qui a été rendu obligatoire, mandaté par le Conseil, devraient être traités comme des services d'interconnexion.
LISTNUM 1 \l 11741 MR. DANIELS: Let me try to understand this, because I think this is an important distinction that we are wrestling with in this proceeding, calling what I believe is a transiting service an interconnection service.
LISTNUM 1 \l 11742 If a caller wants to make a call from London, England to a Cogeco local customer in, say, Trois‑Rivières, now, imagine that that call originated on British Telecom's network, so it is a British Telecom customer in London, England, now, British Telecom, we can agree, needs to find a way to deliver that call all the way to Cogeco in Quebec; is that correct?
LISTNUM 1 \l 11743 M. MESSIER : Oui.
LISTNUM 1 \l 11744 MR. DANIELS: In doing so, it may contract with another carrier who has an undersea cable to take that call all the way across the Atlantic Ocean to Canada.
LISTNUM 1 \l 11745 Is that a fair description of what would probably happen?
LISTNUM 1 \l 11746 M. MESSIER : Probablement, oui.
LISTNUM 1 \l 11747 MR. DANIELS: And that undersea cable operator would then deliver or make arrangements to deliver that call to Cogeco.
LISTNUM 1 \l 11748 In that scenario, is that undersea cable operator providing an interconnection service?
LISTNUM 1 \l 11749 M. MESSIER : Ce n'est peut‑être pas un service d'interconnexion au sens de... mais il y a eu un échange de trafic entre les carriers pour compléter la communication, et en ce sens‑là, considérons que globalement, ça fait partie des services d'interconnexion, oui.
LISTNUM 1 \l 11750 MR. DANIELS: Would you agree with me that in the scenario I am giving there may be many different options for that undersea cable in terms of who they could get, Cable & Wireless, Teleglobe, a host of different carriers?
LISTNUM 1 \l 11751 There are a whole bunch of different options available in that scenario?
LISTNUM 1 \l 11752 M. MESSIER : Dans le scénario des communications outre‑mer, oui, je suis d'accord.
LISTNUM 1 \l 11753 MR. DANIELS: And yet, if I understand your proposal, if it's an interconnection service, you are proposing that it be regulated as an interconnection service, and, therefore, as an essential facility.
LISTNUM 1 \l 11754 Am I mischaracterizing ‑‑
LISTNUM 1 \l 11755 I am taking the logic of your proposition and putting it in, we may agree, absurd circumstances, but I am trying to carry your logic through.
LISTNUM 1 \l 11756 M. MESSIER : En fait, notre position, telle que nous l'avons soumise dans la réponse supplémentaire que nous avons déposée à la question du CRTC 1002, si mon souvenir est exact, tous les services d'interconnexion, à notre avis, devraient être revus... devraient être classifiés dans une même classe de services et revus dans une instance particulière, prenant en compte le modèle d'interconnexion et tout le régime d'interconnexion qui existe, et dans ce cadre là devrait se faire le choix est‑ce que certains services devraient continuer à être obligatoires à être offerts ou non.
LISTNUM 1 \l 11757 Et notre position à cet effet, c'est qu'on ne peut pas seulement considérer la duplication. Bien sûr que les critères d'options sont certainement importants s'il y a des alternatives qui sont là, mais toute l'efficience du modèle d'interconnexion doit être prise en compte. On pense que c'est à travers cette révision de régime d'interconnexion que doit se faire le choix, tel ou tel service doit continuer à être offert sur une base mandated.
LISTNUM 1 \l 11758 MR. DANIELS: Are you saying that we should look at every individual interconnection service and make that determination?
LISTNUM 1 \l 11759 Is that your proposition, that we should look at transiting and make the determination whether it is essential or not or are you suggesting that transiting is essential?
LISTNUM 1 \l 11760 M. MESSIER : Non. Ce que nous suggérons, c'est d'examiner l'ensemble des possibilités à travers une revue du régime d'interconnexion et de décider quels services doivent continuer à être offerts sur une base mandated. Nous pensons que la définition d'essentiel ici n'est pas particulièrement adaptée pour les services d'interconnexion. Alors, d'où j'hésite à utiliser le terme " essentiel ".
LISTNUM 1 \l 11761 MR. DANIELS: Could I get you to turn to paragraph 21 of your March 15th evidence?
LISTNUM 1 \l 11762 M. MESSIER : Oui.
LISTNUM 1 \l 11763 MR. DANIELS: Now, I don't have any problem, just to let you know ‑‑
LISTNUM 1 \l 11764 M. MESSIER : Mm‑hmm.
LISTNUM 1 \l 11765 MR. DANIELS: ‑‑ of saying interconnection or what falls into Category 5 and Category 6 is not an essential facility. The Companies make that distinction but I am not, and I thought you just agreed to that, except I have to say, when I read your definition of an essential facility here, it says:
"A telecommunications facility, function or service is essential if it is either an interconnection service..." (As read)
LISTNUM 1 \l 11766 I am going to stop there and allow you to clarify. I thought you were suggesting ‑‑
LISTNUM 1 \l 11767 The reason why I kept using the term "essential" is because you were defining interconnection as essential. Therefore, just to carry through with what I thought you were proposing, by saying transiting is an interconnection service, it was essential.
LISTNUM 1 \l 11768 If that is not what you meant, it would be helpful to clarify.
LISTNUM 1 \l 11769 M. MESSIER : La raison pour laquelle nous avons inclus cette classe de services d'interconnexion dans notre définition, lorsque nous avons soumis notre mémoire, est en réponse à l'interrogation qu'il y avait dans l'avis public, à savoir, est‑ce que les services d'interconnexion devraient, sur une base préliminaire du moins, selon l'avis du Conseil, être traités comme services essentiels ou continués à être mandated.
LISTNUM 1 \l 11770 Nous pensons que plusieurs services d'interconnexion, oui, doivent être considérés comme étant essentiels, et c'est pourquoi nous avons inséré toute cette classe de services à l'intérieur de la définition, présumant qu'ils sont essentiels, premier test, comme catégorie. Donc, présumant... la première composante dans notre définition présume que ces services sont essentiels.
LISTNUM 1 \l 11771 La deuxième, après, il faudrait voir quelle est l'utilité de ces services au niveau... dans un market.
LISTNUM 1 \l 11772 Avec la discussion au cours de cette instance, nous en sommes venus, et c'est le sens de notre réponse supplémentaire, que cette classe de services là devrait être considérée dans une catégorie à part de l'application de la définition d'essentiel, de services essentiels.
LISTNUM 1 \l 11773 Et c'est pourquoi nous pensons que la révision et la décision de savoir si tel ou tel service d'interconnexion devrait continuer à être offert sur une base qui est mandated devrait être prise dans le cadre d'une autre instance où on révise et on prend en compte l'ensemble du mode d'interconnexion et l'ensemble des dimensions d'efficience qui existent dans le modèle, dans un modèle donné, dans un régime donné d'interconnexion, et non pas faire le choix service par service, en fonction de l'application de telle définition.
LISTNUM 1 \l 11774 MR. DANIELS: Sorry, I was waiting for the translation to complete.
LISTNUM 1 \l 11775 That is very helpful. Now, I understand that you may be suggesting it could be looked at elsewhere, but it is in scope here in this proceeding so, therefore, I am going to want to go to specific questions about transiting.
LISTNUM 1 \l 11776 But if I understand your analysis correctly, what we are going to look at then is whether transiting provides the firm controlling it with the power to prevent or lessen competition in a, we agreed, substantial manner in a relevant downstream telecommunications market. So let us turn to that question that.
LISTNUM 1 \l 11777 Now, I have provided in the material that we have looked at here, at tab B, you have an interrogatory. And for those of you who do not have our compendium, this is Cogeco‑CRTC‑12‑April‑07‑206. In the second paragraph there, you note that the Commission website shows that in Hamilton ‑‑ are you with me?
LISTNUM 1 \l 11778 M. MESSIER : Oui.
LISTNUM 1 \l 11779 MR. DANIELS: In Hamilton, for example, there are eight CLECs, including Cogeco offering service, plus Bell, for a total of nine LECs. Without Bell's local transit service, each pair of LECs would need a direct physical interconnection arrangement with each other. Instead of virtual connection using Bell's local transit service, the LECs would require approximately 36 unique interconnection arrangements.
LISTNUM 1 \l 11780 So I take it that you are suggesting here in this interrogatory that if the CRTC does not mandate local transit as a service a LEC would require 36 unique interconnection arrangements, is that correct?
LISTNUM 1 \l 11781 M. MESSIER : C'est exact.
LISTNUM 1 \l 11782 MR. DANIELS: Now, is that really the case? I mean, let us say tomorrow transiting service was no longer mandated, would you then build a direct connection in Hamilton to each of the other eight LECs that are mentioned there? Is that what would really happen in practice?
LISTNUM 1 \l 11783 M. MESSIER : C'est une possibilité qui peut exister. Bien sûr, si aucun des autres CLECs accepte de nous offrir un service de transit, nous n'aurons d'autre choix que d'avoir une interconnexion directe avec chacun.
LISTNUM 1 \l 11784 MR. DANIELS: Did I understand, did you say none of the other ILECs or is it none of the other LECs?
LISTNUM 1 \l 11785 M. MESSIER : CLEC, LEC.
LISTNUM 1 \l 11786 MR. DANIELS: LEC. Because anyone could provide it. So let us look at that and see how realistic that could happen.
LISTNUM 1 \l 11787 For that, could I get you to turn over to tab C, which is Cogeco‑TheCompanies 19 July 07‑3. And in this question we asked you who you were directly connected to in Hamilton. And the response was:
"As a CLEC Cogeco Cable Canada Inc. is neither directly interconnected with Bell Canada, the ILEC operating the exchange of Hamilton, nor with any of the other seven CLECs present in this exchange. Accordingly, Cogeco confirms that it has not explored the option to directly connecting any of the other seven other CLECs operating in the Hamilton area. PSTN interconnection is provided to Cogeco by TELUS Communications Inc." (As Read)
LISTNUM 1 \l 11788 So I am just going to stop there. So just as a factual matter, we can agree, firstly, in Hamilton you do not directly connect to Bell?
LISTNUM 1 \l 11789 M. MESSIER : Exact.
LISTNUM 1 \l 11790 MR. DANIELS: And Bell is the ILEC in Hamilton?
LISTNUM 1 \l 11791 M. MESSIER : Exact.
LISTNUM 1 \l 11792 MR. DANIELS: And instead you interconnect with TELUS and through TELUS you are able to make arrangements and, I assume, you are able to terminate calls to all the CLECs as well as Bell Canada in Hamilton. Is that correct?
LISTNUM 1 \l 11793 M. MESSIER : C'est exact.
LISTNUM 1 \l 11794 MR. DANIELS: And do you interconnect with TELUS in Hamilton or do you do it elsewhere?
LISTNUM 1 \l 11795 MR. AUDET: We do it elsewhere.
LISTNUM 1 \l 11796 MR. DANIELS: So is it fair to say that you find it cheaper to interconnect with TELUS outside of Hamilton rather than transit through Bell to get to TELUS?
LISTNUM 1 \l 11797 MR. AUDET: That is correct.
LISTNUM 1 \l 11798 MR. DANIELS: Mr. Chair, I am going to move onto my next set. But to summarize basically, I was just trying to describe how there are other alternatives to transiting arrangements. In fact, Cogeco, who had argued that it couldn't work without it is in fact doing it with TELUS and they are not even doing it on an LIR basis, they just find one place.
LISTNUM 1 \l 11799 I see Commissioner Noël has a question, so I should stop.
LISTNUM 1 \l 11800 CONSEILLERE NOËL : Monsieur Audet...
LISTNUM 1 \l 11801 MR. AUDET: May I add one thing though? We have not had to call on Bell's transiting service because, as mentioned, we interconnect through TELUS. But it is our understanding, however, that TELUS is able to provide the full range of interconnection connectivity to us in part because it does use Bell's transiting service.
LISTNUM 1 \l 11802 So the fact that we have not needed it directly is not to say that it is not needed somewhere in the network.
LISTNUM 1 \l 11803 CONSEILLERE NOËL : Monsieur Audet, vous avez dit que vous vous connectiez avec TELUS ailleurs qu'à Hamilton dans l'exemple qui a été soumis.
LISTNUM 1 \l 11804 Est‑ce qu'on peut savoir si vous vous connectez à TELUS dans une zone où TELUS est une ESLT ou dans une zone où elle est une ESLC?
LISTNUM 1 \l 11805 MR. AUDET: We are only talking about where TELUS is a CLEC here, où elle est une ESLC.
LISTNUM 1 \l 11806 CONSEILLERE NOËL : ESLC.
LISTNUM 1 \l 11807 M. AUDET : Oui. Oui.
LISTNUM 1 \l 11808 CONSEILLERE NOËL : Alors, vous n'allez pas vous connecter à Rimouski pour tout ramener ça vers Hamilton?
LISTNUM 1 \l 11809 M. AUDET : Le cas de Rimouski est différent. Le cas de Rimouski n'est pas visé par le contrat d'interconnexion auquel nos collègues ont référé.
LISTNUM 1 \l 11810 CONSEILLERE NOËL : Je voulais juste comprendre...
LISTNUM 1 \l 11811 M. AUDET : Oui.
LISTNUM 1 \l 11812 CONSEILLERE NOËL : ...parce que vous auriez pu aussi bien vous connecter à Rimouski puis faire ce qu'on appelle du backhaul...
LISTNUM 1 \l 11813 M. AUDET : Oui.
LISTNUM 1 \l 11814 CONSEILLERE NOËL : ...sur votre réseau de fibre.
LISTNUM 1 \l 11815 M. AUDET : Cette option là n'était pas disponible, parce que, dans le cas de Rimouski, Bell (sic) est une ESLT, et par conséquent, le contrat commercial avec eux n'est pas applicable dans cette zone‑là.
LISTNUM 1 \l 11816 CONSEILLERE NOËL : Bell à Rimouski...? Non, TELUS, c'est une...
LISTNUM 1 \l 11817 M. AUDET : TELUS, pardon, oui.
LISTNUM 1 \l 11818 CONSEILLERE NOËL : D'accord.
LISTNUM 1 \l 11819 M. AUDET : Excusez. Oui, oui.
LISTNUM 1 \l 11820 CONSEILLERE NOËL : C'est une ESLT...
LISTNUM 1 \l 11821 M. AUDET : Oui.
LISTNUM 1 \l 11822 CONSEILLERE NOËL : ...alors qu'à Hamilton, c'est une ESLC?
LISTNUM 1 \l 11823 M. AUDET : C'est ça, et le contrat par lequel on donne en sous‑traitance notre service d'interconnexion ne s'applique que dans le cas où TELUS est une ESLC.
LISTNUM 1 \l 11824 CONSEILLERE NOËL : D'accord, merci. C'est ce que je voulais... c'est ce dont je voulais m'assurer.
LISTNUM 1 \l 11825 THE CHAIRPERSON: Mr. Daniels, when you started this line of questioning you tried to make a distinction between transiting and interconnection. And clearly, Cogeco has a different interpretation that you of or those terms and how they are used.
LISTNUM 1 \l 11826 Maybe, just for the record, you could confirm how you use them and make sure that Cogeco agrees or disagrees with them.
LISTNUM 1 \l 11827 MR. DANIELS: Certainly. Although, I did say I was also done on one question, in light of Mr. Audet's comment, I will have one more question on that. But to address directly your question, Mr. Chair, The Companies' position is that interconnection is to be regulated strictly separately from that of a question of an essential facility.
LISTNUM 1 \l 11828 But The Companies limit interconnection to directly ‑‑ what, in this case, would be the two LECs interconnecting directly with each other. So we think that should be mandated, regulated by the CRTC on an LIR basis. No change to the existing regime in that regard.
LISTNUM 1 \l 11829 The Companies' position is that when you are talking about us providing the ability of two LECs to avoid doing that themselves, to transit, that that should be looked at as an essential facility question and asked, on an exchange by exchange basis, can it be duplicated and so on and look at the market power question.
LISTNUM 1 \l 11830 I think the answer I got from Cogeco was ‑‑
LISTNUM 1 \l 11831 THE CHAIRPERSON: Why don't you put it to Cogeco just to clarify? So that is your understanding?
LISTNUM 1 \l 11832 MR. DANIELS: Right. But I think what I understood from Cogeco, which is not terribly dissimilar from The Companies' approach, is that they have included, that you have included interconnection in the first prong of your test, but that nonetheless, because the second prong of their test is a discussion of whether there is a substantially lessening of competition, that there is still a market power test, in which case you will look at whether it can be duplicated and so on and so forth in that regard.
LISTNUM 1 \l 11833 So, although your approach is different, I think at the end of the day ‑‑
LISTNUM 1 \l 11834 THE CHAIRPERSON: The outcome is the same either way.
LISTNUM 1 \l 11835 MR. DANIELS: ‑‑ the outcome would be the same.
LISTNUM 1 \l 11836 THE CHAIRPERSON: That is what I thought.
LISTNUM 1 \l 11837 MR. DANIELS: Yes, but then we had a dispute about the particular outcome of the particular service, which is the transitting service. The last thing Mr. Audet volunteered is that although you directly connect only to TELUS, you believe TELUS needs the service in order to provide its service to you, and Mr. Audet, I would just like to ask you: In light of that comment, TELUS is not seeking such a requirement. Bell provides similar services to competitors out west. We are not seeking such a requirement. There are a number of companies listed on the record of this proceeding, which I am not going to take you through how they directly connect with each other, and the list is quite extensive. MTS has a number of parties who they directly connect with at some point in the country, and so on.
LISTNUM 1 \l 11838 I am at a little bit of a loss to understand why you are worrying about a service that they are not seeking themselves, you are not buying it. So, I am confused as to why you think it is essential that TELUS needs it when TELUS is saying they don't need it, they are prepared to make their own arrangements, as we are saying out west, we offer similar service and we will do that there.
LISTNUM 1 \l 11839 MR. AUDET: I am not sure whether ‑‑ you know, you are making the statement that TELUS never in any location has called on the need for your transitting services. I don't know that for a fact. In fact, it is something I would certainly want to check.
LISTNUM 1 \l 11840 But globally we have considered everything that is done under the interconnection regime, whether it be SS7, whether it be bill and key, PAS trunks, transitting trunks, 911 trunks. We have deemed those to be in a category onto themselves, as interconnection services globally, and to be necessary, and not only necessary.
LISTNUM 1 \l 11841 If any one of these services was not available to competitors, either directly or through sub‑contract, there would not be the possibility for competitive presence in the market. People could not set up.
LISTNUM 1 \l 11842 I mean, if people went to Bell and Bell said, no, I am not allowing you access to my CO, or no bill and key trunks for you, then this would be a very, very serious impediment to the presence of competitors in the market and to competitive offerings.
LISTNUM 1 \l 11843 We have lumped, and I guess this is where maybe you disagree, but we have looked at all of these things that are currently done under the interconnection regime and lumped them in a general category called interconnection.
LISTNUM 1 \l 11844 As Michel has suggested, there may well be grounds for a more in‑depth look at this under a separate proceeding, particularly in light of new technologies that will be available for the interconnection regime of the future, such as IP level interconnection.
LISTNUM 1 \l 11845 But we understood that this is maybe not the time and the place to go into details of how we could do IP‑to‑IP interconnection and, likewise, we thought that transitting is as pointed a subject as IP interconnection is, and maybe it has to be looked at in that frame.
LISTNUM 1 \l 11846 MR. DANIELS: At this point I would like to ask you a couple of questions ‑‑ I am going to turn to a different service. It is regarding your position on the BNS database services.
LISTNUM 1 \l 11847 But before I do that, I want to clarify something related to billing and collection service, and you will see my connection in a moment because I believe the two are intrinsically linked.
LISTNUM 1 \l 11848 In tab E of your material, Cogeco company's 12 April 07‑33, for those who don't have the compendium, in this interrogatory in the first round you said it was your preliminary view that billing and collection service was an essential facility. Is that correct?
LISTNUM 1 \l 11849 MR. MESSIER: Correct.
LISTNUM 1 \l 11850 MR. DANIELS: To be clear, because, again, I don't know if everyone is familiar, billing and collection, very simply, is this service that allows, among other things, an IXC to bill a collect call to a LECG or for Yak, for example, to make a dial around service call.
LISTNUM 1 \l 11851 Let's just focus on the collect call because that is where I want to take us for a moment.
LISTNUM 1 \l 11852 It allows, if an IXC wants to make a collect call, that the LECG will bill it on their behalf and charge the customer and pay them. Is that a fair description of billing and collection?
LISTNUM 1 \l 11853 MR. MESSIER: Exactly.
LISTNUM 1 \l 11854 MR. DANIELS: In the second round, which is in our next tab, tab F, which is Cogeco company's 19 July 07‑4, in our second round, after you had a chance to see the evidence and think about the issue, you said that you determined that it is no longer an essential facility, having had a review. I take it that is still your position today?
LISTNUM 1 \l 11855 M. MESSIER : Exact, dans le cas des services qui sont fournis pour les fournisseurs de services d'appels occasionnels, 10‑10 et autres.
LISTNUM 1 \l 11856 MR. DANIELS: With that in mind because, as I say, I think it is related to the BNS issue, turning, then, to BNS, which I will describe in a minute what the service is, but, again, I am turning to the last tab G of our compendium, this is Cogeco/CRTC 12 April 07‑208.
LISTNUM 1 \l 11857 In the first round you did not take a position on whether or not BNS database access service should be mandated as an essential service. You said you would like to think about that. Is that correct?
LISTNUM 1 \l 11858 M. MESSIER : Dans le cas des services de billing et collection, c'est exact, oui.
LISTNUM 1 \l 11859 MR. DANIELS: No, sorry, I don't know if it was the translation, but BNS database access service is what I am referring to.
LISTNUM 1 \l 11860 MR. MESSIER: Sorry, could you repeat your question?
LISTNUM 1 \l 11861 MR. DANIELS: I am referring to Cogeco/CRTC 12 April 07‑208. I am just trying to capture what you said here.
LISTNUM 1 \l 11862 You were asked whether BNS database service, access service, or BNS database service is an essential service, and you said:
"At the conclusion of this proceeding, Cogeco will be in a position to provide its recommendations regarding treatment of BNS as an essential service in the final argument." (As read)
LISTNUM 1 \l 11863 I take it, at least at that point, you hadn't made a decision about whether BNS should be an essential ‑‑ should be mandated, let's just put it that way.
LISTNUM 1 \l 11864 M. MESSIER : Non, nous n'avons pas de proposition, à savoir si ça doit être obligatoire ou pas. C'est un service que nous voudrions revoir plutôt dans l'ensemble du régime.
LISTNUM 1 \l 11865 MR. DANIELS: I am going to try to help you with that a little bit today and see if I can convince you. This is a test of advocacy skills.
LISTNUM 1 \l 11866 Just so we are clear what this service BNS does and is, the database suite of services allows CLECs to place their numbers in a database so that an IXC can look up those numbers in those databases when they ‑‑ let's say an IXC is about to put through a collect call, and they want to make sure, they want to find out that the person who is going to accept the charges at the end of the call of the phone actually has authority to do that. It may be a kid who doesn't have authority to say, I will accept the call from Argentina or whatever.
LISTNUM 1 \l 11867 In that scenario, what happens is the CLEC goes and puts the number into a database, the BNS database, and that is what we, as the ILECs are mandated to provide, a database where the CLECs can put it in. So, it helps orchestrate the ability to check on a collect call. Is that a fair description of the service?
LISTNUM 1 \l 11868 M. MESSIER : Est‑ce que ce service là ne contribue pas aussi à notre... pas seulement aux fournisseurs de services inter‑urbains qui offrent des services de 10‑10 ou autres, mais à tout type de fournisseurs d'appels inter‑urbains, à savoir s'ils acceptent les frais ou pas?
LISTNUM 1 \l 11869 MR. DANIELS: I believe the service is restricted strictly to collect calls and bill‑to‑third‑party number calls.
LISTNUM 1 \l 11870 M. MESSIER : Donc, si c'est restreint aux services bill‑to‑a‑third‑number, dans ce cas‑là, nous aurions à redéfinir notre position. Notre position n'est pas définitive en rapport avec l'utilité de ça. C'est un service que nous considérons peut‑être qui pourrait continuer à être offert sur une base mandated.
LISTNUM 1 \l 11871 Donc, pour ce qui est des services billing and collection, oui, il y a un lien avec la base BNS, d'accord. On comprend le lien, et notre position à savoir au niveau des services de billing and collection pour un fournisseur d'appels occasionnels, je pense qu'il y a d'autres méthodes, d'autres alternatives qui sont possibles.
LISTNUM 1 \l 11872 Ce service là, en ce sens là, il y a comme une ambivalence au niveau de sa reconnaissance. Est‑ce que c'est un service d'accès? Je pense que oui, on pourrait le considérer. Ça été introduit comme un service accessoire au régime d'interconnexion inter‑urbain. Donc, il pourrait être revu...
LISTNUM 1 \l 11873 Mais notre position par rapport à ce service, non, il existe des alternatives, et clairement, nous avons pris position dès maintenant.
LISTNUM 1 \l 11874 Donc, les liens et l'utilité de la base BNS, étant donné d'autres fonctionnalités qui peuvent être utilisées, notre position définitive devra être prise dans le cadre d'une révision du régime complet.
LISTNUM 1 \l 11875 MR. DANIELS: I think what we are having here is a little bit of a distinction between billing and collection because BNS is only for billing and collection services. That is the only time you would use it.
LISTNUM 1 \l 11876 If billing and collection itself is not essential, then what I am trying to put to you is why would the BNS database service be ‑‑ let alone that there are many alternatives out there, if billing and collection is not essential, why would BNS database be essential? That is really what I am trying to demonstrate to you.
LISTNUM 1 \l 11877 M. MESSIER : Notre hésitation sur le fait des services de billing and collection, la réponse que nous avons faite, en considérant que ça ne devrait pas continuer à être offert sur une base mandated, est strictement en regard des fournisseurs de services d'appels occasionnels.
LISTNUM 1 \l 11878 Maintenant, les services de billing and collection ont une portée plus grande que strictement d'offrir un service à un fournisseur d'appels inter‑urbains qui offre des services occasionnels de service 10‑10, exemple, les appels à frais virés, les appels à un troisième numéro, et autres.
LISTNUM 1 \l 11879 Et dans ce cadre là, nous pensons qu'il y a matière... notre position n'est pas définitive sur est‑ce que ces services‑là devraient être continués, étant donné l'importance qu'ils peuvent avoir et la demande... le fait qu'ils demandent une coopération entre des fournisseurs de services pour établir la communication.
LISTNUM 1 \l 11880 MR. DANIELS: So to that effect though, again, in terms of the BNS database service, you would look again to, if you were going to look at it, you would have to look at it under your prong and fee found, as we submit there are, and there is quite a lot of evidence on this in this proceeding as to the amount of alternative databases out there, that you, as a CLEC can put it in our database, you can put it in TELUS' database, you can put it in other databases, including in the U.S., it doesn't matter, you get all those choices.
LISTNUM 1 \l 11881 In that scenario, then, given that fact, and those facts are on the interrogatories, subject to your confirming the fact, you would agree with me that it is not an essential service, the BNS database service in that situation?
LISTNUM 1 \l 11882 M. MESSIER : Le fait qu'il existe plusieurs alternatives probablement, oui, indique que ce service n'est pas de nature essentielle, compte tenu des alternatives.
LISTNUM 1 \l 11883 Est‑ce qu'il devrait, pour d'autres raisons, continuer à être offert sur une base mandated? Notre position n'est pas définitive à cet égard?
LISTNUM 1 \l 11884 MR. DANIELS: Mr. Chairman, I think that concludes my questions.
LISTNUM 1 \l 11885 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 11886 Madam Secretary, let's go on to the next questioner.
LISTNUM 1 \l 11887 THE SECRETARY: The next panel will be TELUS, front page on the agenda.
LISTNUM 1 \l 11888 THE CHAIRPERSON: Over to you, Mr. Rogers.
LISTNUM 1 \l 11889 MR. ROGERS: Thank you, Mr. Chairman.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 11890 MR. ROGERS: Good morning, panel.
LISTNUM 1 \l 11891 In terms of documents to go through this discussion this morning, it will be relatively straightforward. I have no compendium of documents because I intend to refer solely to your evidence of March 15. So, if you have that handy, that will help move things along.
LISTNUM 1 \l 11892 I would like to start by gaining a clear or clearer understanding of Cogeco's overall perspective in this proceeding across the large assembly of issues. I would ask you to refer to paragraph 2 of your evidence of March 15th.
LISTNUM 1 \l 11893 In paragraph 2 you quote a paragraph. I won't read the whole paragraph, but this is from the final report of the Telecom Policy Review Panel, and the latter half of that quote reads:
"The panel concludes that the scope of wholesale access currently required by the CRTC is too broad and that it undermines incentives for competitive entry, investment and innovation. The scope of such mandated wholesale access should be narrowed." (As read)
LISTNUM 1 \l 11894 Then you immediately follow that with a general statement:
"Cogeco shares this view." (As read)
LISTNUM 1 \l 11895 Do you see that language?
LISTNUM 1 \l 11896 So, you would then also concur, I take it, with a similar view expressed by The Bureau in this proceeding in their July 5 evidence, paragraph 2. They basically expressed the same thing, but they said the current mandated wholesale regime should be circumscribed considerably. You would be in agreement with that general statement?
LISTNUM 1 \l 11897 M. MESSIER : Oui, nous sommes d'accord.
LISTNUM 1 \l 11898 MR. ROGERS: All right.
LISTNUM 1 \l 11899 Moving on from the level of generality, I would like now to talk about your position on local loops and I would ask you to turn to paragraph 66 of your evidence.
LISTNUM 1 \l 11900 MR. ROGERS: Do you have that?
LISTNUM 1 \l 11901 M. MESSIER : Oui.
LISTNUM 1 \l 11902 MR. ROGERS: In that paragraph, Cogeco says:
"Cogeco, however, concedes that a firm found non‑dominant in a downstream market is likely to be non‑dominant in the relevant upstream market with respect to other wholesale services, namely the access services. For example, if an ILEC is deregulated, found non‑dominant in a given local market as a result of the infrastructure test proposed by the GIC..."
LISTNUM 1 \l 11903 That is the cabinet.
"...it is not likely that the ILEC has market power with respect to the provision of unbundled local loops in the upstream market." (As read)
LISTNUM 1 \l 11904 There has been quite a bit of discussion in this proceeding over the last number of days about loops and whether or not they are essential. I would ask you to consider what you said in that quote right there from paragraph 66, consider the case of the residence market, given the forbearance that has now occurred under the new forbearance test.
LISTNUM 1 \l 11905 I take it that it must follow from what you said and the fact that the forbearance has now been put into place since you wrote that, that unbundled loops are not essential.
LISTNUM 1 \l 11906 M. MESSIER : Je dirais que oui, effectivement, sur la base du test d'abstention réglementaire que le CRTC applique et qui a été prescrit par le gouverneur en conseil, lorsqu'un carrier qui fournit, on parle en concurrence, dans un marché local sur la base de ses propres installations, de bout en bout, il nous semble qu'il y a là une preuve évidente que les boucles locales ont été dupliquées...
LISTNUM 1 \l 11907 Me ROGERS : Oui.
LISTNUM 1 \l 11908 M. MESSIER : ...et qu'il y a, donc... elles ne sont pas essentielles.
LISTNUM 1 \l 11909 Maintenant, nous ne dirions pas que ce sont dans l'ensemble des échanges. Je pense qu'il doit y avoir une analyse qui doit être faite marché par marché.
LISTNUM 1 \l 11910 Dans les marchés qui sont semblables, nous pensons que la même détermination devrait être faite, indépendamment du test, puisque le test prévoit, au niveau de l'abstention réglementaire, que le Conseil s'abstient. Il l'a fait, d'ailleurs, sur la base du fait qu'un carrier qui a ses propres installations, mais qui loue ses boucles locales, automatiquement, peut obtenir... sa présence est suffisante pour déréglementer.
LISTNUM 1 \l 11911 A notre avis, s'il est reconnu que dans des marchés semblables, de même nature, au niveau des marchés locaux, au niveau des mêmes bandes, des échanges qui sont dans une même bande, si on peut déterminer qu'un ou plusieurs carriers ont réussi à dupliquer cette facilité ou cette fonctionnalité là, ces échanges là devraient être aussi... c'est‑à‑dire les boucles locales devraient être considérées comme étant non essentielles.
LISTNUM 1 \l 11912 Je prends pour exemple que non seulement la présence des compagnies de câble, qui ont, dans une grande mesure, substitué cette fonctionnalité là, offrent leurs services de bout en bout, mais qu'il y a aussi plusieurs autres fournisseurs de services de télécommunication qui ont réussi à dupliquer cette facilité là à différents degrés d'échelle.
LISTNUM 1 \l 11913 Je prends pour exemple le fait que Rogers a, effectivement, déposé dans son application pour offrir dans nos territoires, servir certains endroits avec des nouveaux développements comme étant, je pense, selon ce qui est dit dans leur application, de déployer eux‑mêmes leurs propres boucles locales...
LISTNUM 1 \l 11914 MR. ROGERS: This is the application west of Toronto? That's what you are talking about?
LISTNUM 1 \l 11915 M. MESSIER : Exact.
LISTNUM 1 \l 11916 MR. ROGERS: Yes, okay. Continue.
LISTNUM 1 \l 11917 M. MESSIER : Bon, pour ce que Rogers... je ne voudrais pas faire... je ne connais pas les intentions de bout en bout de Rogers, mais ce qu'on comprend de ce que monsieur Watt a expliqué, ils voudraient surtout cibler certains territoires où est‑ce qu'il y a des développements avec forte croissance, et je pense que c'est une expérience qui est similaire à celle de Futureway, dont ils sont maintenant les propriétaires depuis juin dernier.
LISTNUM 1 \l 11918 Mais un autre exemple plus significatif, à mon avis, est l'exemple de Maskatel dans la région de Ste‑Hyacinthe. Dans la région de Ste‑Hyacinthe, vous avez là depuis 2000 un CLEC qui a déployé entièrement, de bout en bout dans l'ensemble de cette ville, ses propres installations, ses propres installations qui sont des boucles locales d'accès, autant cuivre que fibre, d'après ce qu'on entend, à un point tel que même récemment, le Conseil, dans un autre échange qui est adjacent à Ste‑Hyacinthe, qui est St‑Thomas‑d'Aquin, qui est sur le territoire de Télébec, le Conseil, sur la seule présence de Maskatel, a considéré suffisant de déréglementer Télébec au niveau de ses...
LISTNUM 1 \l 11919 Donc, vous avez un exemple où est‑ce qu'une entreprise a déployé depuis 2000 l'ensemble de ses boucles locales sur le réseau de Bell, en offrant des services de téléphonie, télécommunication, et maintenant, offre des services à partir de ces mêmes boucles locales là, des services internet, et projette, selon ses dires sur son site web, d'offrir même des services de télévision en 2008, et on sait qu'ils ont fait des arrangements pour...
LISTNUM 1 \l 11920 Plus encore, sur ce propre modèle là, une des affiliés de Maskatel, Téléphone Drummond, est maintenant en train de reproduire ce modèle dans un autre échange, qui est celui de Drummondville.
LISTNUM 1 \l 11921 Donc, il nous semble que cet exemple, plus le fait que, avec la technologie Wi‑Max, rend possible d'offrir des services fixes. Alors, vous avez d'autres fournisseurs de services, et je pense qu'il y a des gens ici... il y a des fournisseurs ici dans la salle qui ont fait des annonces sur le fait qu'ils allaient tester, mais qui voient cette technologie là comme étant un moyen de pouvoir dupliquer ou du moins sortir de la dépendance de louer les boucles locales de Bell.
LISTNUM 1 \l 11922 Donc, dans un certain nombre d'échanges de marchés locaux, nous pensons que les boucles locales devraient être considérées comme étant non essentielles, et selon le marché, avoir une période de transition, peut‑être qui soit différente, d'un an à trois ans.
LISTNUM 1 \l 11923 Peut‑être dans certains marchés... peut‑être nous ferions une distinction dans les marchés où est‑ce que les échanges, où est‑ce que les high‑cost serving area, peut‑être dans ces échanges là pris dans leur ensemble, cette réalité là ou cette possibilité là est moins évidente, et peut‑être que dans ce cas là devraient être considérés plutôt dans la catégorie de conditional essential service.
LISTNUM 1 \l 11924 Mais pour tous les autres, indépendamment du test de fibre end, en appliquant le test de définition essentielle, nous pensons que oui, ces boucles locales là devraient être considérées comme étant non essentielles.
LISTNUM 1 \l 11925 MR. ROGERS: Mr. Messier, I think you have essentially anticipated about eight lines of questions that I intended to go through. I don't mean that as a criticism because it all relevant to exactly where I wanted to take you. I'm just going to follow through what you just said, because that is exactly the subject matter that I want to pursue with you.
LISTNUM 1 \l 11926 What I hear you saying is that as a matter of fact we have forbearance and you point out the existence of duplication of facilities in the local markets which allow the development of an alternative carrier end‑to‑end, which is the basis for forbearance and you say that is occurring.
LISTNUM 1 \l 11927 The most common example ‑‑ and you cited it yourself though of course it comes up all the time ‑‑ is the cable company providing that. But I think I also heard you refer in your answer to a number of other alternatives. You mentioned Maskatel, which is an example of a small ILEC going into alternative territory and, in effect, over building. That would be an example.
LISTNUM 1 \l 11928 I think you may have briefly referred to Wi‑Max or wireless services. They represent also alternatives for the provision of the local loop, do they not?
LISTNUM 1 \l 11929 Are there any others? For example, Inukshuk could possibly, once it finally rolls out. Would that be another alternative to the provision of a local access facility?
LISTNUM 1 \l 11930 M. MESSIER : Je ne peux, avec certitude, me prononcer si Inukshuk pourrait être une alternative, mais c'est certain que les tendances dans le marché, à ce qu'on voit, lorsqu'un fournisseur est capable de fournir des services internet sur ses propres installations, il est de plus en plus évident avec le développement et la convergence des services que ce même fournisseur là pourra, à un certain moment, être capable d'offrir, si ce n'est pas un service access indépendant, pourra sûrement fournir un service access dependant.
LISTNUM 1 \l 11931 Donc, oui, les services... nous pensons que dans un avenir très proche, certains vont vouloir, et c'est du moins ce que l'on... On voit l'entente dernièrement, je pense significativement, de Cybersurf avec... juste un instant.
LISTNUM 1 \l 11932 M. MESSIER : Cybersurf a annoncé le 4 octobre dernier dans un communiqué qu'il avait fait une entente avec Decima. Decima dit que, bon, la technologie Wi‑Max pourrait servir... je cite le directeur des ventes qui dit :
"...manage quality of service and this product line allows us to deploy total quality voice and broadband data on the same network." (As read)
LISTNUM 1 \l 11933 Alors, je pense qu'il y a une évidence ici qu'on pourra offrir probablement les deux services, autant internet que voix, et je pense, significativement aussi, comme alternative, vous avez la déclaration de monsieur Marcel Mercia de Cybersurf qui dit :
"The option would ensure that Cybersurf is able to control the last mile. Providing an alternative to traditional DSL and cable services allows us to compete in otherwise closed market. This is great for Canadians and also very interesting for us as a company by minimizing our reliance on the incumbents." (As read)
LISTNUM 1 \l 11934 Donc, je pense qu'ici, il y a comme une évidence lorsqu'on recoupe les deux que la technologie Wi‑Max est vue par des joueurs comme étant une alternative pour offrir autant un service internet que, éventuellement, de voix sur la technologie Wi‑Max.
LISTNUM 1 \l 11935 MR. ROGERS: The last example that you brought up ‑‑ I think you referred to it very briefly ‑‑ was also cable, but cable extending into the traditional service territory of another cable company. The example that we went over is Rogers proposal to expand its service territory into your current service territory. That would represent another access facility which duplicates the functionality of the loop and of course duplicates the internet access into those residential and business areas.
LISTNUM 1 \l 11936 Correct?
LISTNUM 1 \l 11937 M. MESSIER : Exact.
LISTNUM 1 \l 11938 MR. ROGERS: So I conclude from all of that, consistent with your analysis that we read right at the beginning from paragraph 2, that you would conclude those local facilities are not essential?
LISTNUM 1 \l 11939 MR. ROGERS: They are in the process of being duplicated or have in fact been duplicated and therefore your company takes the position that they are not essential?
LISTNUM 1 \l 11940 M. MESSIER : Comme j'ai dit plus tôt, notre position est que dans l'ensemble de ces territoires là, peut‑être que la distinction... et nous n'avons pas les données pour vraiment affirmer avec certitude que dans les dessertes ou les circonscriptions à coûts élevés que la même réalité peut être présente de façon aussi grande. Peut‑être qu'il y a des difficultés, des barrières à l'entrée sur le plan économique pour dupliquer ces installations là qui devraient être prises en compte.
LISTNUM 1 \l 11941 Je serais tenté de dire, dans ce sens là, si la réalité est là, le Conseil devrait peut‑être plus se pencher... c'est comme un judgment call, comme on dit ici, et comme le Bureau disait, il y a des erreurs de type 1 et type 2.
LISTNUM 1 \l 11942 Peut‑être dans le cas des échanges à coûts élevés, on devrait plutôt tendre à considérer les boucles locales comme étant conditional essential, de façon à fournir une... à permettre qu'il y ait une concurrence qui se développe.
LISTNUM 1 \l 11943 Mais dans tous les autres échanges, les autres bandes, A, B, C, D ‑‑ je pense que ce sont les autres qui ne sont pas dans les high‑cost area ‑‑ je pense que ça devrait être considéré, oui, comme étant non essentiel.
LISTNUM 1 \l 11944 MR. ROGERS: Let's just focus on "les autres."
LISTNUM 1 \l 11945 M. MESSIER : O.K.
LISTNUM 1 \l 11946 MR. ROGERS: Not the high cost serving areas, the ones which are the dominant major markets.
LISTNUM 1 \l 11947 You are okay with the position that I put to you, that for all the reasons we have been describing in terms of duplication and alternative providers, in those areas you take the position that these facilities are not essential?
LISTNUM 1 \l 11948 M. MESSIER : C'est exact.
LISTNUM 1 \l 11949 MR. ROGERS: When you say that, bearing in mind the activities of Rogers, of Maskatel, and so on, we are talking here of both the residential and the business markets? These companies are entering both?
LISTNUM 1 \l 11950 M. MESSIER : Certainement pour le marché résidentiel. Pour ce qui est du marché d'affaires, peut‑être qu'il faudrait y aller avec une granularité plus grande, mais je pense que dans l'ensemble, oui.
LISTNUM 1 \l 11951 Si on considère l'exemple de Maskatel, Maskatel n'offre pas seulement des services résidentiels, mais dessert aussi les... offre des services à toutes les entreprises dans la région.
LISTNUM 1 \l 11952 Et notre position est que, du moins pour les lignes qui sont équivalentes au DS‑0 essentiellement, je pense que la réalité est la même, autant pour le marché résidentiel que d'affaires. La seule distinction est peut‑être que l'atteinte de la couverture ne sera pas, du moins pour ce qui est des câblos, la même que sur le marché résidentiel, naturellement. Mais la duplication est là. Oui, elle est possible.
LISTNUM 1 \l 11953 MR. ROGERS: It is my understanding that your company ‑‑ and you can correct me if I'm wrong ‑‑ you don't use CDNA services?
LISTNUM 1 \l 11954 M. MESSIER : Exact.
LISTNUM 1 \l 11955 MR. ROGERS: If you are able to carry on the business that you are doing now without CDNA, I take it that you are not proposing that it be continued to be mandated?
LISTNUM 1 \l 11956 You don't see it as an essential service?
LISTNUM 1 \l 11957 M. MESSIER : De façon générale, oui, effectivement. Nous pensons peut‑être que la même approche, que les boucles locales devraient probablement s'appliquer au niveau des services CDNA.
LISTNUM 1 \l 11958 Dans la décision récente du Conseil 2007‑35, le Conseil établit un test pour déréglementer selon les... j'ai juste l'expression anglaise, des wire centres. Il a déterminé aussi que, bon, 31 wire centres devaient être déréglementés, de toute évidence, avec un test de présence de concurrent alternatif. Donc, de toute évidence, dans ces marchés là, puisque c'est le... le market déterminé par le Conseil sont les wire centres. De toute évidence, il y a duplication.
LISTNUM 1 \l 11959 Dans une série d'autres wire centres, le Conseil a trouvé qu'il y avait présence de concurrents, mais peut‑être pas suffisants pour déréglementer. Peut‑être une autre évidence que les carriers sont capables de dupliquer.
LISTNUM 1 \l 11960 Est‑ce que dans les échanges où il n'y a aucun... dans les wire centres où il n'y a aucune présence de CDNA on devrait avoir... Nous pensons que c'est possible de dupliquer. Il y a plusieurs joueurs qui ont démontré le fait, mais notre analyse n'a pas été jusqu'à cette granularité là. Mais en général, oui.
LISTNUM 1 \l 11961 MR. ROGERS: To put it in a negative way, you are not prepared to endorse the position of some participants in the proceeding that all of these services, local loops, all business access services, all CDNA are essential now and must remain essential?
LISTNUM 1 \l 11962 You don't take that position?
LISTNUM 1 \l 11963 M. MESSIER : Non.
LISTNUM 1 \l 11964 MR. ROGERS: I would like to continue and move along ‑‑ actually, the next topic I would like to go to is TPIA and I would ask you to look at paragraph 17.
LISTNUM 1 \l 11965 MR. ROGERS: Gentlemen, there you are discussing TPIA and whether or not it needs to be an essential service. You say:
"It fails to qualify on the grounds that there is or there will be alternative sources of supply for TPIA. Wholesale internet access is available from others and therefore this particular service is non‑essential." (As read)
LISTNUM 1 \l 11966 We just went through a similar lengthy discussion about loops. So we have had a discussion about loops.
LISTNUM 1 \l 11967 I won't pursue you on the TPIA, but I will ask you to go to the immediately following paragraph, paragraph 18, and I will read the first sentence. It is a hypothetical:
"However, if as a result of this proceeding the Commission considers adopting a mandated wholesale framework that includes non‑essential services such as unbundled local loops or TPIA, the framework should be applied consistently and not create an undue advantage for any type of carrier or technology used." (As read)
LISTNUM 1 \l 11968 When you used that language I wondered if it was, at least to some extent, inspired by the language of the policy direction. You will recall the policy direction, in a certain paragraph I can point you to, directs that this whole inquiry take into account principles of technology neutrality and competitive neutrality.
LISTNUM 1 \l 11969 I thought that certainly the statement you make in paragraph 18 appears to be consistent with the principles of technology, neutrality and competitive neutrality and I'm wondering if that's how you arrived at the position.
LISTNUM 1 \l 11970 M. MESSIER : Exact.
LISTNUM 1 \l 11971 MR. ROGERS: So when you are considering standing back from this, and when the Commission considers local services like local loops and cable's TPIA service, you are advocating that the Commission do so in a technology and competitively neutral manner.
LISTNUM 1 \l 11972 I think you would be aware that in this proceeding there are some cable companies, not Cogeco, that have proposed that the cable TPIA service no longer be mandated, but the ILEC services such as loops and other business services, they should continue to be mandated. For example, Rogers proposes that.
LISTNUM 1 \l 11973 I would suggest to you that the principles that we have just discussed, that I think you agreed with, both regarding the ability to duplicate and the principles of technology and competitive neutrality, on those grounds you would disagree?
LISTNUM 1 \l 11974 M. MESSIER : Exact, et nous l'avons fait connaître clairement à travers les réponses que nous avons fournies dans cette instance. Nous pensons qu'aucun, autant les compagnies de téléphone que les compagnies de câble ont le pouvoir de marché au niveau des services d'accès internet.
LISTNUM 1 \l 11975 MR. ROGERS: Just in case there is any doubt ‑‑ I don't think there is ‑‑ you are a cable company, but in the telecom field you are, relatively speaking, a new entrant.
LISTNUM 1 \l 11976 M. MESSIER : Exact.
LISTNUM 1 \l 11977 MR. ROGERS: You are not an incumbent telephone company.
LISTNUM 1 \l 11978 M. MESSIER : Exact.
LISTNUM 1 \l 11979 MR. ROGERS: You are a cable company that is a new entrant into telecom.
LISTNUM 1 \l 11980 I would like to move on to another topic and this is transition period.
LISTNUM 1 \l 11981 If you turn to paragraph 128 of your text, which happens to be the last paragraph in your submission, and in that paragraph, I won't read it, but essentially you say Cogeco proposes a 12‑month transition period, and in your view, the 12 months is sufficient for parties to adjust to the new regime, whatever it is.
LISTNUM 1 \l 11982 M. MESSIER : La période de transition de 12 mois que nous avons proposée à ce moment, et nous continuons à maintenir que dans le cas où il est trouvé que pour un marché donné, il y a deux, au moins deux fournisseurs de services qui offrent, qui sont en concurrence sur la base de leurs propres installations, et un fournisseur a accès, qu'une période d'un an est suffisante et que cela ne va pas entraîner... ça ne va pas compromettre le choix des consommateurs. La concurrence va continuer à se maintenir, et les marchés, au niveau de détail, continueront à être suffisamment concurrentiels.
LISTNUM 1 \l 11983 Donc, dans ce cadre là, nous pensons que la période d'un an pour donner le temps de voir si une négociation est possible, à chacun de réorganiser, de prendre une décision s'il veut continuer à offrir ou non ce service là au niveau wholesale, et donner une période suffisante pour aviser les clients, dépendamment d'éventualités de cette négociation ou de cette décision qui sera prise par les joueurs, est suffisante pour procéder à une transition dans ce contexte‑là.
LISTNUM 1 \l 11984 MR. ROGERS: The other part of this paragraph which I want to discuss briefly with you is toward the end of the paragraph, where you indicate that, at the end of that period, the services should be completely forborne.
LISTNUM 1 \l 11985 So while there will be a decision taken by the Commission as to when that is, when the transition period ends, your proposal is that, at the end of that, the services should be completely forborne?
LISTNUM 1 \l 11986 M. MESSIER : C'est exact.
LISTNUM 1 \l 11987 MR. ROGERS: In your view, is it important for the Commission through this proceeding to establish what I would call a hard stop, a really fixed‑in period beyond which the non‑essential services will not be mandated and regulated?
LISTNUM 1 \l 11988 M. MESSIER : Oui, pour nous, c'est important. Il nous apparaît que si on veut vraiment créer un incitatif, soit pour négocier, soit pour les gens de réorganiser leur réseau, il doit y avoir un message, un signal qui est clair, et c'est la lecture qu'on fait de la politique du ministre, qui dit, réexaminer et si les services sont non essentiels, bien, on doit procéder à une transition vers un abandon de ces services là.
LISTNUM 1 \l 11989 Donc, nous pensons que la période doit être claire, le signal doit être clair à chaque partie. Comme j'ai dit, dans le cadre où est‑ce qu'on a deux facilities‑based carriers sur leurs propres installations de bout en bout, une période de transition d'un an serait suffisante.
LISTNUM 1 \l 11990 Dans d'autres cas, nous avons nuancé notre position en clarifiant. On dit dans les marchés où le Conseil a actuellement pris comme décision de déréglementer au niveau de détail, sur la base du fait qu'il y a un autre concurrent mais qui loue des boucles locales, la période de transition devrait être au moins de trois ans, puisque que dans ces cas là, au bout d'un an, il est clair qu'on va probablement... ça serait insuffisant pour reconstruire entièrement, pour rencontrer le test qui a amené le Conseil à déréglementer, et qu'une période de trois ans serait probablement plus appropriée, soit pour réorganiser entièrement son réseau, soit pour décider d'offrir et ainsi éviter... une entente renégociée avec le fournisseur de boucle locale, de façon à ce qu'il n'y a pas une... que le choix pour les consommateurs soit préservé pour une plus grande période et éviter aussi une re‑réglementation de ce marché.
LISTNUM 1 \l 11991 Mais si au bout de cette période là, et à moins que, sur la base d'une application spécifique, un fournisseur qui est en train de déployer son réseau dit, écoutez, j'ai besoin de... je suis en train de déployer, mais je ne veux pas transférer tous mes clients, et j'aurais besoin d'une période supplémentaire, nous pensons que ce serait raisonnable que le Conseil acquiesce dans ces conditions là.
LISTNUM 1 \l 11992 Mais si ces conditions là ne sont pas rencontrées, je pense qu'après un certain temps, le signal doit être clair à chaque partie qu'il n'y aura pas une re‑réglementation des boucles locales, et la seule alternative, à notre avis, qui existe sera de dire, si les forces du marché ne sont pas suffisantes pour protéger les intérêts des consommateurs, bien, il faudra que le Conseil procède à une re‑réglementation des services locaux dans ces marchés spécifiques là.
LISTNUM 1 \l 11993 MR. ROGERS: What I was wondering about your proposal is, in the last paragraph of your text ‑‑ the paragraph that we looked at ‑‑ you say that it should be a year, while there may be some qualifications to the year, and after the end of that period it should be full deregulation, forbearance.
LISTNUM 1 \l 11994 What I think I am hearing from you is, you would like to see a clear signal sent to all participants in the market that they need to get on with their affairs in terms of planning alternatives, negotiating alternatives, building facilities, and that, by establishing both a hard stop ‑‑ whatever it is ‑‑ and forbearance, that is the clear signal that will cause people to act in their own self‑interest and to move forward with commercial negotiations or building.
LISTNUM 1 \l 11995 I think I am hearing that from you, and to contrast that, what I think I am also hearing is that you are not particularly in favour of some kind of open‑ended continual regulation under some quasi‑essential status that continues indefinitely.
LISTNUM 1 \l 11996 M. MESSIER : Exact.
LISTNUM 1 \l 11997 MR. ROGERS: The reason I raise that with you is because, following Decision 97‑8, local competition, we ended up with the category called "near essential", which ultimately, after a sunset period ‑‑ the sun never set, we had this period that continued, and the category expanded and so on. We ended up in, essentially, an open‑ended scenario, with, really, no sunset in sight.
LISTNUM 1 \l 11998 I am reading into your text ‑‑ and you can tell me if I am wrong ‑‑ that you don't want to see that. You want to see a hard stop at some point, and forbearance, and people should get on with their lives on a commercial basis.
LISTNUM 1 \l 11999 M. MESSIER : C'est exact. Nous pensons que le contexte est très différent de celui lorsque le Conseil a émis sa décision sur la concurrence locale et même sur le contexte qui existait cinq ans après, la sunset clause lorsqu'elle a été révisée.
LISTNUM 1 \l 12000 Le contexte est maintenant où les compagnies de câble sont entrées dans le marché de façon importante, sur la base de leurs propres installations, et comme j'ai dit, il y a plusieurs alternatives qui sont possibles pour dupliquer ces installations là. Donc, dans ce contexte‑ci, le signal doit être clair à tous : Organisez vos affaires en conséquence.
LISTNUM 1 \l 12001 MR. ROGERS: In that regard, I will take you back just to close this discussion to the Commission's six‑part framework, which was part of their October 3rd letter. I am sure that you have had an opportunity to look at it.
LISTNUM 1 \l 12002 I will just give you a moment to pull that up.
LISTNUM 1 \l 12003 MR. ROGERS: In light of the discussion we have just been having for the last five minutes, there are a number of points that I think we can establish as non‑contentious. There are some facilities that are essential, there are some public good and some interconnection issues. I am not going to touch any of those.
LISTNUM 1 \l 12004 The third category is the non‑essential services to be phased out over some transition period. You agreed, and you have your own proposal.
LISTNUM 1 \l 12005 MR. MESSIER: Yes.
LISTNUM 1 \l 12006 MR. ROGERS: You also said that, notwithstanding what is in the third category proposed by the Commission, you would propose forbearance immediately.
LISTNUM 1 \l 12007 We understand that.
LISTNUM 1 \l 12008 What I am curious to know about are the other two categories, Category 2 and Category 4. They don't seem to fit quite that strict categorization. They, in effect, are some kind of middle category, with an uncertain and perhaps indefinite status.
LISTNUM 1 \l 12009 What I am suggesting to you by that is, I realize from your earlier comments that you would like to see a very clear regime, with a fixed deadline, and forbearance afterwards, and I think you agreed with me that you do not want to see some kind of rolling, ambiguous, middle status, in which it is unclear and parties can keep coming back.
LISTNUM 1 \l 12010 If that is what we end up with, all we have done is re‑labelled some services and taken them out of essential and stuck them into other boxes and given them new names.
LISTNUM 1 \l 12011 I am wondering whether or not you have any misgivings about Category 2 and Category 4 in light of the discussion we have just had.
LISTNUM 1 \l 12012 M. MESSIER : Comme j'ai dit tantôt, au niveau des boucles locales qui sont dans les marchés comme des échanges à coûts élevés, the high‑cost serving area, je pense que la Catégorie 2, conditional essential, pour nous, ne pose pas de problème telle qu'elle est définie.
LISTNUM 1 \l 12013 Là où actuellement dans un échange, par exemple, dans une bande B ou C, où il n'y a aucun, présentement, fournisseur de services qui est présent, sur cette base là, que des boucles locales soient offertes sur une base de... soient considérées comme étant conditional essential. Nous pensons que plutôt dans cette catégorie là, si ce sont des marchés similaires dans la même bande, peu importe qu'il y ait... la présence ou non de concurrents dans ces échanges là ne devrait pas être un facteur.
LISTNUM 1 \l 12014 Le facteur ici, c'est que dans des marchés similaires, selon notre approche, on devrait considérer qu'il y a possibilité pour un carrier d'entrer, de dupliquer, de se servir de ses propres facilités.
LISTNUM 1 \l 12015 C'est le message, je pense que... à travers la période de transition, clairement, le message, c'est de... si le Conseil doit errer, ça serait plutôt dans le sens de ne pas mandater ces boucles locales là, pour créer un incitatif à l'investissement, à la construction d'un nouveau régime. S'il y a une erreur à faire, ce serait plutôt dans ce sens là, au niveau de ces bandes là.
LISTNUM 1 \l 12016 Donc, en ce sens là, nous avons, oui, des préoccupations par rapport à 2.
LISTNUM 1 \l 12017 Pour ce qui est de la Catégorie 4, le problème pour nous, c'est le fait que les boucles locales soient obligatoires dans les marchés où on a déréglementé sur la base du fait qu'un transporteur louait les boucles locales.
LISTNUM 1 \l 12018 Comme j'ai dit tantôt, nous pensons plutôt qu'une période de transition... si on se retrouve dans un marché, dans les mêmes bandes avec des caractéristiques similaires où d'autres ont démontré que les boucles locales pouvaient être dupliquées, dans ce sens là, nous pensons qu'une période de transition de trois ans, avec un signal clair, et si après trois ans...
LISTNUM 1 \l 12019 Donc, il devrait y avoir une période, et non pas indéfinie, jusqu'à temps que les conditions s'appliquent, et si après cette période là de trois ans, il se trouve qu'il n'y a pas de... aucun carrier n'est entré sur la base de ses propres installations de bout en bout, suffisantes pour continuer à offrir une déréglementation, bien, le Conseil devrait ré‑réglementer.
LISTNUM 1 \l 12020 Maintenant, j'ai un commentaire. Dans le test prescrit par le gouvernement, il y a quand même trois branches dans le test. Je considère que le test, the threshold, de 75 pour cent est un peu un test binaire ou un bright line test, si on peut prendre l'expression, pour dire automatiquement oui, il y a présomption qu'il n'y a aucun marché qu'on peut déréglementer.
LISTNUM 1 \l 12021 Mais il y aussi le test si aucun de ces critères là... le test qui doit être basé sur les critères élaborés par le Bureau de la Concurrence. Donc, quel sera le nombre ou dans quelles conditions d'autres critères doivent être pris en compte pour savoir dans quelle mesure ou sous quelle échelle un transporteur, une entreprise de télécommunication qui utilise ses propres installations peut contraindre le pouvoir de marché pour amener le Conseil à déréglementer. Il n'y a pas de décision qui a été rendue.
LISTNUM 1 \l 12022 Je pense que le Conseil aura à, sûrement, faire face à des applications en ce sens et à déterminer les conditions qui pourront peut‑être guider sur...
LISTNUM 1 \l 12023 MR. ROGERS: Mr. Messier, I think that helps to clarify the concerns or the issues that you have with regard to that structure. And I am not going to deconstruct your analysis that you just gave, I just want to be sure that I understood one thing and I believe this was raised in interrogatory responses that you had filed as well and I think it is consistent with what you just said.
LISTNUM 1 \l 12024 You are interested in ensuring that the Commission take into account facilities‑based construction in one market or exchange when it is considering the possibility of duplication or entry in another similar economic market or exchange. You look for that kind of transference and you encourage the Commission to look for it as well.
LISTNUM 1 \l 12025 M. MESSIER : Nous pensons que c'est une approche que le Conseil devrait utiliser pour déduire est‑ce que les installations peuvent être dupliquées dans d'autres marchés et créer un incitatif pour la construction et l'investissement au niveau des réseaux concurrentiels.
LISTNUM 1 \l 12026 MR. ROGERS: So if they were thinking about doing a wire centre in Elosys(ph), for example, and ignoring what is going on in all other similar wire centres you would say that is not the right way to do it?
LISTNUM 1 \l 12027 M. MESSIER : Exact.
LISTNUM 1 \l 12028 MR. ROGERS: Okay, those are all my questions.
LISTNUM 1 \l 12029 Thank you, Mr. Chairman.
LISTNUM 1 \l 12030 THE CHAIRPERSON: Thank you, Mr. Rogers.
LISTNUM 1 \l 12031 Madam Secretary, who is next? I gather MTS is not ‑‑
LISTNUM 1 \l 12032 THE SECRETARY: You are correct, Mr. Chairman. And I believe Mr. Ruby has some questions, yes.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 12033 MR. RUBY: Mr. Messier, all the information that you just testified to about Maskatel, the situation in Ste‑Hyacinthe, none of that was pre‑filed by Cogeco, right?
LISTNUM 1 \l 12034 M. MESSIER : Cet exemple là a été repris et indiqué dans notre évidence.
LISTNUM 1 \l 12035 MR. RUBY: Well, I am not sure what you just testified to was, but we can check the pre‑filed record extensively. The Cybersurf document you read, that certainly wasn't pre‑filed or even circulated in the last few days to anybody here.
LISTNUM 1 \l 12036 M. MESSIER : Non, exact. Exact.
LISTNUM 1 \l 12037 MR. RUBY: Mr. Chairman, I am loathe to do this, but I have to raise an objection here. What we just heard was an extensive very friendly cross‑examination, other than the last part dealing with the Commission's own six‑part framework, which I have no objection to.
LISTNUM 1 \l 12038 But the danger in friendly cross‑examination was illustrated with what we have just seen with new information being brought up that nobody has had an opportunity to look at and examine before having an opportunity to cross‑examine. And early in the hearing, Mr. Chairman, you quite properly pointed out to me that new information should not be brought up in cross‑examination.
LISTNUM 1 \l 12039 THE CHAIRPERSON: Mr. Ruby, please, the panel relies on counsel. Said objection should not be made now, but at the moment that Mr. Messier raised something that hadn't been pre‑filed I would have gladly ruled on it. Now that you have chosen to listen to it all and make the objection we have ‑‑ as you know, this is not a judicial tribunal. It goes to weight, et cetera, and obviously since you have pointed it out now it was not pre‑filed, we will attach next to no weight to it for the very reasons that you mention.
LISTNUM 1 \l 12040 But next time may I ask you to make your objection timely, at the time, not afterwards? We have just, according to you, wasted 15 minutes listening to evidence that wasn't pre‑filed and we shouldn't have listened to.
LISTNUM 1 \l 12041 MR. RUBY: I apologize. Because it wasn't a court I decided to wait, but I take your point and next time will deal with it differently.
LISTNUM 1 \l 12042 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 12043 MR. RUBY: I have no other questions of this panel.
LISTNUM 1 \l 12044 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12045 The next one is Cybersurf, Mr. Tacit?
LISTNUM 1 \l 12046 THE SECRETARY: Yes, Mr. Tacit, yes. And followed by Mr. Denton, if he is still intent to cross‑examine.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 12047 MR. TACIT: Thank you. I am going to be very brief. And I see that the package of a few interrogatories is being passed out.
LISTNUM 1 \l 12048 I guess I am curious as to whether or not Cogeco has turned its mind about whether or not it would place a resale offer for its telephone service at all?
LISTNUM 1 \l 12049 M. MESSIER : Non, nous n'avons pas envisagé aucune approche pour la revente de nos services téléphoniques.
LISTNUM 1 \l 12050 MR. TACIT: Is it likely to happen, in your view, at all?
LISTNUM 1 \l 12051 MR. AUDET: In the longer term, admittedly, I have no idea. But certainly, as you can probably appreciate, we are still relatively new at this. I mean, our service has been up for two years and a third and we are still working very hard to expand the footprint.
LISTNUM 1 \l 12052 You know, for us to be looking at ways to resell the service through third parties when we admittedly still have our hands pretty full ourselves is, you know, it would probably be premature.
LISTNUM 1 \l 12053 MR. TACIT: Okay. And could you give me a sense of when you are likely to turn your mind to it, is it a year, two, three and so on, just roughly speaking?
LISTNUM 1 \l 12054 MR. AUDET: I am sorry, it is not something we have given any significant thought to, so I can't provide you a reasonable answer at this point.
LISTNUM 1 \l 12055 MR. TACIT: Thank you, those are my questions.
LISTNUM 1 \l 12056 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 12057 MR. DENTON: I have no questions, sir.
LISTNUM 1 \l 12058 THE CHAIRPERSON: Okay, thank you, Mr. Denton. I guess that finishes Cogeco then, Madam Secretary.
LISTNUM 1 \l 12059 THE SECRETARY: Yes. And I suggest perhaps we could maybe recess five minutes to change the panel.
LISTNUM 1 \l 12060 THE CHAIRPERSON: Yes, okay. We are going to take a five‑minute break while Shaw sets itself up. Thank you.
‑‑‑ Recessed at 1130 / Suspension à 1130
‑‑‑ Resumed at 1145 / Reprise à 1145
LISTNUM 1 \l 12061 THE CHAIRPERSON: Let's go.
LISTNUM 1 \l 12062 THE SECRETARY: Counsel Milton.
LISTNUM 1 \l 12063 MS MILTON: Good morning, my name is Leslie Milton. I am counsel to Shaw Communications Inc. in this proceeding. I am here to present the Shaw witness panel.
LISTNUM 1 \l 12064 Seated closest to me at the end of the table is Cindy McClocklin, Director, Inter Carrier Affairs, Shaw Communications Inc.
LISTNUM 1 \l 12065 Beside Ms McClocklin is Jean Brazeau, VP Telecommunications, Regulatory Affairs, Shaw Communications Inc.
LISTNUM 1 \l 12066 Finally, closest to the Commissioners' panel is Esther Snow, Regulatory Analyst, Regulatory Affairs, Shaw Communications Inc.
LISTNUM 1 \l 12067 Madam Secretary, the witnesses are ready to be sworn.
LISTNUM 1 \l 12068 THE SECRETARY: Thank you very much.
SWORN: JEAN BRAZEAU
SWORN: CINDY McCLOCKLIN
SWORN: ESTHER SNOW
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 12069 MS MILTON: Mr. Brazeau, can you confirm that the evidence filed by Shaw in this proceeding was prepared by you or under your direction?
LISTNUM 1 \l 12070 MR. BRAZEAU: I do.
LISTNUM 1 \l 12071 MS MILTON: To the best of your knowledge and belief is the evidence true?
LISTNUM 1 \l 12072 MR. BRAZEAU: It is.
LISTNUM 1 \l 12073 MS MILTON: Madam Secretary, the witnesses are ready to be cross‑examined.
LISTNUM 1 \l 12074 THE SECRETARY: Counsel Hofley, you may proceed.
LISTNUM 1 \l 12075 MR. HOFLEY: Thank you, Madam Secretary. Thank you, Mr. Chair.
EXAMINATION / INTERROGATOIRE
LISTNUM 1 \l 12076 MR. HOFLEY: Good morning. I think it is still morning. Yes, it is.
LISTNUM 1 \l 12077 I will have some questions for you with respect to the definition of essential facility in your evidence. I am only going to be referring to your evidence, that is your March 15th evidence, perhaps with the exception of one document, depending on where we go. Actually, no, there will also be one document I will be referring to as well.
LISTNUM 1 \l 12078 I believe that the Secretary, Mr. Chairman, has a compendium of materials for this panel.
LISTNUM 1 \l 12079 THE SECRETARY: Yes, we do.
LISTNUM 1 \l 12080 MR. HOFLEY: I might ask if that could be distributed, please.
LISTNUM 1 \l 12081 My colleague, Mr. Daniels, will also have a series of questions for you.
LISTNUM 1 \l 12082 Do you have the compendium, Mr. Brazeau?
LISTNUM 1 \l 12083 MR. BRAZEAU: I do.
LISTNUM 1 \l 12084 MR. HOFLEY: If I could take you to paragraph 20 of your March 15th evidence, this is where you begin your discussion of and definition of an essential service.
LISTNUM 1 \l 12085 In paragraph 21 you say in the first sentence:
"If this is effective competition in a downstream market for competitors that do not rely on the firm's wholesale service, then the firm will not have the ability to prevent or lessen competition in a downstream market absent mandated access to the wholesale service." (As read)
LISTNUM 1 \l 12086 Do you see that?
LISTNUM 1 \l 12087 MR. BRAZEAU: I do.
LISTNUM 1 \l 12088 MR. HOFLEY: When you use the words "effective competition," I just want to confirm that what you mean by that is that where competitive discipline will apply to the party, that would be effective competition, where downstream there is no market power?
LISTNUM 1 \l 12089 MR. BRAZEAU: It is a market power, absolutely.
LISTNUM 1 \l 12090 MR. HOFLEY: That would be something that one would look at both actual and potential competitive restraints, correct, typically in a market power assessment?
LISTNUM 1 \l 12091 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12092 MR. HOFLEY: So, your basic point is here, like the Competition Bureau, you say if there is no market power downstream, then there is no need to mandate access?
LISTNUM 1 \l 12093 MR. BRAZEAU: That is correct. The only proviso I would add is, again, ensuring that a proper market power test has applied, the proper geographic definitions and product definitions, and, in that case, yes.
LISTNUM 1 \l 12094 MR. HOFLEY: We will come to that. You set that out in detail in one of your interrogatory responses, I believe, and we will come to that.
LISTNUM 1 \l 12095 THE CHAIRPERSON: Why is there reference to "absent mandated access to the wholesale service?" Doesn't that seem to just negate what you said in the first part of the sentence? Are you suggesting that mandated wholesale services gives the company market power?
LISTNUM 1 \l 12096 MR. BRAZEAU: Mandated wholesale services?
LISTNUM 1 \l 12097 THE CHAIRPERSON: Look at that sentence in 21, the first sentence. I understand it until you say "or lessen competition in a downstream market."
LISTNUM 1 \l 12098 But then you have a qualifier there: "Absent mandated access to the wholesale service." What is that qualifier for?
LISTNUM 1 \l 12099 MR. BRAZEAU: I think all we were trying to say here is that if there is downstream competition and even without mandated access to wholesale services, then the market is competitive. I think that is what we were ‑‑
LISTNUM 1 \l 12100 THE CHAIRPERSON: Do you agree with me that you could take out the words "absent mandated access to the wholesale service" and the sentence still would make sense?
LISTNUM 1 \l 12101 MR. BRAZEAU: I think that is correct.
LISTNUM 1 \l 12102 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 12103 MR. HOFLEY: Thank you, Mr. Chairman.
LISTNUM 1 \l 12104 I would like to take you to paragraph 23 of this evidence, where you set out your criteria or your test, I guess. I would like to look at part 1 to start off.
LISTNUM 1 \l 12105 There you say, and I am going to paraphrase, if there are no competitors in a downstream market that do not rely on the wholesale service, I understand that part, the no competitors part, but I confess I am having a little trouble with the if there are a "limited number" of competitors in a downstream market that do not rely.
LISTNUM 1 \l 12106 You would agree with me that two parties who own facilities downstream, their own facilities, can compete vigorously, don't you?
LISTNUM 1 \l 12107 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12108 MR. HOFLEY: Because you describe the competition in the retail internet market as vigorously competitive.
LISTNUM 1 \l 12109 So, I am wondering about why it is if there are a limited number of competitors in a downstream market that do not rely on the wholesale service?
LISTNUM 1 \l 12110 MR. BRAZEAU: I think you may be reading a little too much in the "limited." I think the point was that there is at least one.
LISTNUM 1 \l 12111 MR. HOFLEY: Okay. So, again, we probably could get rid of the words "or a limited number" because if there are no competitors in a downstream market, if the answer to that is no, you would have at least one. Correct?
LISTNUM 1 \l 12112 MR. BRAZEAU: That is right.
LISTNUM 1 \l 12113 MR. HOFLEY: I would like to take you to 2, and this might go quickly actually, because you use the same language. There you say:
"Where there are no or a limited number of competing suppliers..."
Obviously I understand what no means.
...of the wholesale service..." (As read)
LISTNUM 1 \l 12114 Again, I was confused by the words "limited number." Can we get rid of that, as well, and the definition would be acceptable to you?
LISTNUM 1 \l 12115 MR. BRAZEAU: Yes, in the sense that as long as you ensure that the exercise of market power can be controlled by one or more.
LISTNUM 1 \l 12116 MR. HOFLEY: Yes, I understand that.
LISTNUM 1 \l 12117 Mr. Chairman, my punch line has been taken away again because we have had a clarification that I think now I follow and I am fine with.
LISTNUM 1 \l 12118 So, I am just going to take us to what I believe is tab A of the blue folder that you have been given. It is Shaw/CRTC 12 April 07‑103. There, Mr. Brazeau, as we just discussed very quickly, is kind of a detailed explanation of Shaw's vision for an essential facilities assessment. Do you recall this interrogatory?
LISTNUM 1 \l 12119 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12120 MR. HOFLEY: In this, as you quite properly indicated, you have provided considerable detail as to the factors going to this proper assessment of market power. Correct?
LISTNUM 1 \l 12121 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12122 MR. HOFLEY: You have suggested that they should look in detail ‑‑ they, pardon me, the Commission ‑‑ should look in detail at demand conditions, and you list those on page 10 of 70, second page of the tab; and then supply conditions. Do you see that, page 11?
LISTNUM 1 \l 12123 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12124 MR. HOFLEY: On the supply side, you suggest that the CRTC should consider whether rivals can expand their output in response to a price increase by the ILEC. Right?
LISTNUM 1 \l 12125 MR. BRAZEAU: Yes, within certain time lines, yes.
LISTNUM 1 \l 12126 MR. HOFLEY: Right. And whether competitors have enough or could easily add new capacity to accommodate a substantial number of new customers?
LISTNUM 1 \l 12127 MR. BRAZEAU: Given a price rise, yes.
LISTNUM 1 \l 12128 MR. HOFLEY: You suggest that the CRTC would put interrogatories to the parties concerning the services and the technology and the industry structure. Correct?
LISTNUM 1 \l 12129 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12130 MR. HOFLEY: So, this is a highly fact‑specific, I would suggest, and market‑specific assessment you are calling for. Is that a fair statement?
LISTNUM 1 \l 12131 MR. BRAZEAU: That is a fair statement.
LISTNUM 1 \l 12132 MR. HOFLEY: Would you agree with me that you are calling for the same kind of highly fact‑specific and market‑specific assessment in respect of likelihood of entry into the market, barriers to entry and evidence of rivalrous behaviour?
LISTNUM 1 \l 12133 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12134 MR. HOFLEY: Would you agree with me that this kind of a detailed competition analysis would be best accomplished on an ex post basis, Mr. Brazeau, on application by someone seeking to have a facility declared so that then in the specific market, for the specific product, this kind of assessment could be done?
LISTNUM 1 \l 12135 MR. BRAZEAU: I guess it could. The Commission is looking at, I think the Chairman talked about the existing services today, and so in that sense it would be an ex ante review of the facilities. Down the road it could be an ex post review.
LISTNUM 1 \l 12136 MR. HOFLEY: But the kind of analysis you are talking about would be more conducive to focusing in on a given market and a given product. I think that is a fair statement, isn't it?
LISTNUM 1 \l 12137 MR. BRAZEAU: That is a fair statement.
LISTNUM 1 \l 12138 MR. HOFLEY: I turn it over to my friend, Mr. Daniels, Mr. Chairman.
LISTNUM 1 \l 12139 MR. DANIELS: Mr. Brazeau, generally our proposals for services that should be mandated are pretty much aligned. So, I am just going to focus on the one big difference between our companies and yours, and that will be your statement that CDN is an essential facility.
LISTNUM 1 \l 12140 I am sure that is not much of a surprise for you in preparing for today.
LISTNUM 1 \l 12141 Before, though, I want to clear something up that bothered me when I read it. Again, I am going to ask you to turn to, in the compendium, to tab B. This is Shaw/CRTC 19 July 07‑3001. There is just a sentence that struck me, and I want to get some clarity around it so that we can limit our discussion.
LISTNUM 1 \l 12142 In the third line of the last paragraph you say:
"Therefore, Shaw's cable plant that is used to provide digital phone service does not pass or access many business locations." (As read)
LISTNUM 1 \l 12143 What I wanted to first clarify is the "does not pass." I understand there has been evidence, and we can have lots of dispute about accessing, but I just want to clarify, is it your evidence that you don't pass many business locations?
LISTNUM 1 \l 12144 MR. BRAZEAU: I think ‑‑ I will just clarify ‑‑ it was in reference to the specific bands that were under discussion in this interrogatory.
LISTNUM 1 \l 12145 MR. DANIELS: Therefore, what you are saying is in bands E and F you are suggesting you do not pass, or may not pass, many locations, but there is no suggestion that you don't pass in bands A through D. Would that be a fair statement?
LISTNUM 1 \l 12146 MR. BRAZEAU: That is a fair statement.
LISTNUM 1 \l 12147 MR. DANIELS: With that clarification, and I appreciate that clarification, if I could get you to go to tab C, which is Shaw/The Bureau 12 April 07‑23. When I read this interrogatory, I see that:
"Shaw presently does not purchase CDN access service to service the business market." (As read)
LISTNUM 1 \l 12148 I am taking that straight out of your answer in A:
"At this time Shaw does not use any ILEC CDN access service to provide business local exchange services." (As read)
LISTNUM 1 \l 12149 Is that still the case and did I correctly, fairly state Shaw's, the factual situation?
LISTNUM 1 \l 12150 MR. BRAZEAU: It is a fair statement. We may be leasing a few circuits, but it would be fairly insignificantly currently.
LISTNUM 1 \l 12151 MR. DANIELS: Just so we are clear, when you say you may be leasing a few circuits, even those that are insignificant, are they used to provide business local exchange services as an access directly to a customer or are you talking about where I see later on that there may be some circuits you use for CDN for 9‑1‑1 and so on?
LISTNUM 1 \l 12152 MR. BRAZEAU: Sorry, could you repeat that?
LISTNUM 1 \l 12153 MR. DANIELS: I am just trying to draw a distinction. Do you actually lease any business ‑‑ a CDN access service directly to a customer in order to provide them service?
LISTNUM 1 \l 12154 MR. BRAZEAU: None.
LISTNUM 1 \l 12155 MR. DANIELS: None. Okay, so but as you do acknowledge, you do purchase some DS‑1 and DS‑0 access circuits from a third party, is that correct?
LISTNUM 1 \l 12156 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12157 MR. DANIELS: So, just so we are clear, when you say from a third party you are buying DS‑1 and DS‑0, I just want to make sure that there is no misunderstanding, that you are not suggesting that you are buying it from TELUS. The third party is referring to someone else other than TELUS?
LISTNUM 1 \l 12158 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12159 MR. DANIELS: And then we come to, if you turn the page over, the heart of the matter, I believe, behind your proposal here for CDN regulation, and that is Part F. In a sentence there you say:
"At this time, Shaw does not use ILEC CDN access service to provide business local exchange services. However, it is quite possible that Shaw will need to rely on such services in the near future in order to serve commercial clients." (As Read)
LISTNUM 1 \l 12160 Now, the first thing I just want to clarify, when you say business local exchange services here are you referring to voice and data or just voice? I am not quite sure.
LISTNUM 1 \l 12161 MR. BRAZEAU: We were discussing voice in this instance.
LISTNUM 1 \l 12162 MR. DANIELS: Okay. So we see here that Shaw does not purchase or need CDN today, but it may in the future and that is basically why you are arguing it is essential?
LISTNUM 1 \l 12163 MR. BRAZEAU: No, I think it comes back to our basic test. And, you know, we are certainly planning to enter the business market, we have a Shaw Business Solutions division that is in the market and will be expanding. We try to rely on our facilities as much as we can in this marketplace. But the nature of business demand requires ubiquitous access and, because of that we, in many instances, have no choice but to lease circuits, access circuits for voice services from the incumbents.
LISTNUM 1 \l 12164 We serve in fairly large urban centres like Calgary, but also in smaller centres. And so we need a carrier that has this ubiquitous access so we can provide the services to the business customer. And our test, if you follow the logic of our test, would be to apply a market power test on an appropriate geographic definition for the analysis. And based on that, we come to the conclusion that this CDN is either essential or nonessential.
LISTNUM 1 \l 12165 MR. DANIELS: Mr. Brazeau, I am wondering if you could just clarify for me. Are you suggesting then therefore that we should be looking at CDN access in terms of, as you said, I heard a couple of things that were interesting, there are some areas, there are major centres, there is other areas and it may be other areas that we may need this and so, therefore, this is a geographic request, it is not an all‑encompassing CDN?
LISTNUM 1 \l 12166 MR. BRAZEAU: No. You know, the analysis that we would find appropriate in order to assess the essentiality of CDN would more or less follow the framework that the Commission set out in its Decision 2007‑35 on the forbearance of high‑speed DNA and, there, the Commission sort of set out a general approach for forbearance for these facilities and I think that would be an appropriate approach to use for CDN services.
LISTNUM 1 \l 12167 MR. DANIELS: I will come back to that.
LISTNUM 1 \l 12168 CDN has existed since 2002, but you haven't ordered a business access circuit as of yet?
LISTNUM 1 \l 12169 MR. BRAZEAU: No, we were not in the access business until recently.
LISTNUM 1 \l 12170 MR. DANIELS: But you are in the business of selling alternatives and, in that regard, I refer to tab D of our material that we handed out, the pre‑filed material, this is Shaw‑Companies‑12‑April‑07‑17. And there I am looking at your answer B(3) where Shaw business solutions offers DS‑0 transport, DS‑1 transport and private line services. So can we agree that those are alternatives to CDN?
LISTNUM 1 \l 12171 MR. BRAZEAU: Not necessarily. What we are selling is the facilities that Shaw Businesses Services operates from Big Pipe. So Shaw Business Services is a child of Big Pipe where the company owned a number of fibre facilities and it is really the sale of these services more as transport services to other carriers that we are selling and not really into the retail business market perse.
LISTNUM 1 \l 12172 MR. DANIELS: But my question really was about CDN, which is not a retail offering, it is a wholesale and it includes transport, does it not?
LISTNUM 1 \l 12173 MR. BRAZEAU: That is correct, but you use the facility in order to provide retail business services, that is what I meant. You would use CDN to get access into a building in order for you to sell retail services to that business in that building.
LISTNUM 1 \l 12174 MR. DANIELS: Okay, so what you are doing, if I understand correctly, is you are drawing a distinction between CDN access and CDN transport?
LISTNUM 1 \l 12175 MR. BRAZEAU: We think that both would be required.
LISTNUM 1 \l 12176 MR. DANIELS: Okay, and I was going to come back to that. But just while we are here, it is going to force me to jump around a little bit, but while we are here let us just make sure we are clear on the difference.
LISTNUM 1 \l 12177 CDN access, and tell me if I am properly characterizing it, runs from an ILEC's central office into a business location. Is that correct?
LISTNUM 1 \l 12178 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12179 MR. DANIELS: And transport would be running from one central office another central office, ILEC central office, that is what CDN transport is?
LISTNUM 1 \l 12180 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12181 MR. DANIELS: And it is your position that both of those should be mandated, is that correct?
LISTNUM 1 \l 12182 MR. BRAZEAU: That is correct.
LISTNUM 1 \l 12183 MR. DANIELS: Okay. And so then I am going to have to ask you again, Mr. Brazeau, when you say that Shaw business solutions offers DS‑0 transport, DS‑1 transport and private line services, can you at least agree with me that those are equivalent to CDN transport?
LISTNUM 1 \l 12184 MR. BRAZEAU: Absolutely, I agree.
LISTNUM 1 \l 12185 MR. DANIELS: Okay, so you do offer an alternative to CDN transport?
LISTNUM 1 \l 12186 MR. BRAZEAU: Yes. I think the emphasis I was making was that in limited areas and the importance CDN is the ubiquity of its availability and we do not provide ubiquitous services that you just listed.
LISTNUM 1 \l 12187 MR. DANIELS: Just so we are clear, when you say ubiquitous you are talking about the access, not the transport?
LISTNUM 1 \l 12188 MR. BRAZEAU: That is right.
LISTNUM 1 \l 12189 THE CHAIRPERSON: As a follow‑up from that then, when we are talking about CDN transport, do you still think it should be mandated?
LISTNUM 1 \l 12190 MR. BRAZEAU: Well, again, we certainly do provide alternatives and substitute services to those. The challenge we face is that if you want to be a significant competitor in the business market, then you have to have ubiquitous access and that might require, in certain routes, in certain areas, to also lease CDN transport.
LISTNUM 1 \l 12191 So again, coming back to your analysis, the question is would there be all of the necessary conditions to prevent the exercise of market power within those certain geographic areas? And, you know, the Commission can make that analysis and that determination and say for these areas transport should also be included.
LISTNUM 1 \l 12192 THE CHAIRPERSON: Using your definition as refined as Mr. Hofley's, really you start off there is no other possibly available, whatever the wording is, there actually isn't when it comes to transport. In the wholesale market there is another provider available?
LISTNUM 1 \l 12193 MR. BRAZEAU: Yes, but I come back to your definition here where I think the issue is not so much if there is one, but whether that one can prevent the abuse of market power. I think that is really the test, in our mind.
LISTNUM 1 \l 12194 THE CHAIRPERSON: All right.
LISTNUM 1 \l 12195 MR. DANIELS: We are going to have to jump around a little bit here, but to keep up with the flow if I can get you turn to Tab G, Shaw/The Bureau 12 April 07‑24.
LISTNUM 1 \l 12196 This is when you were asked a series of questions about Ethernet. I really just want to focus on your answer to "G" as in George.
LISTNUM 1 \l 12197 There you say:
"Shaw self‑supplies Ethernet transport facilities within the Calgary exchange because those facilities are currently owned by Shaw." (As read)
LISTNUM 1 \l 12198 So can we agree, because you said here with my friend here Mr. Hofley, that you went on a market‑by‑market basis. So let's talk the Calgary exchange.
LISTNUM 1 \l 12199 Can we agree in that area, transport there is an alternative and therefore it is not an essential facility in that. Let's just take it one of the time.
LISTNUM 1 \l 12200 Can we agree with that?
LISTNUM 1 \l 12201 MR. BRAZEAU: Yes.
LISTNUM 1 \l 12202 MR. DANIELS: All right.
LISTNUM 1 \l 12203 That is the case regardless of whether the CRTC's test for access, for DNA access forbearance is met, which is the 30 per cent of buildings. Because here we are just talking about the transport.
LISTNUM 1 \l 12204 So can we agree that the test has to be something different for transport than the test that you have alluded to before, which is an access test?
LISTNUM 1 \l 12205 MR. BRAZEAU: That's correct.
LISTNUM 1 \l 12206 MR. DANIELS: All right.
LISTNUM 1 \l 12207 MR. DANIELS: Mr. Brazeau, I'm going to turn back to access now. Is it your position that CDN access at DS‑3 and above should be mandated or is your request for CDN access limited to DS‑0s and DS‑1s?
LISTNUM 1 \l 12208 I guess I should explain, I'm asking because specific reference, although you make general reference to CDN in Shaw/CRTC‑202, which is at Tab F, you only refer to:
"Shaw believes that DS‑0, DS‑1, CDN access and transport services should be mandated." (As read)
LISTNUM 1 \l 12209 Granted that was the question, so I just want to put it out for clarification.
LISTNUM 1 \l 12210 MR. BRAZEAU: So your question is should we include DS‑3 and the answer is no.
LISTNUM 1 \l 12211 MR. DANIELS: No?
LISTNUM 1 \l 12212 MR. BRAZEAU: No.
LISTNUM 1 \l 12213 MR. DANIELS: All right. So only for DS‑1 and DS‑0 at the access level.
LISTNUM 1 \l 12214 Now, you have had an opportunity to hear earlier today the testimony of both QMI and Cogeco and both of them have taken the position that they don't need CDN access at DS‑0 and DS‑one. They are saying that they can do it or they can find alternatives.
LISTNUM 1 \l 12215 So my simple question is: If they don't need it and don't need regulation of it, why do you?