ARCHIVÉ - Transcription, Audience du 31 octobre 2011

Volume 5, 31 octobre 2011

TRANSCRIPTION DES AUDIENCES DEVANT LE CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUJET:

Instance en vue d’examiner les questions liées à l’interconnexion des réseaux

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

31 octobre 2011

Transcription

Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique.

Conseil de la radiodiffusion et des télécommunications canadiennes

Transcription

Instance en vue d’examiner les questions liées à l’interconnexion des réseaux

DEVANT:

AUSSI PRÉSENTS:

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

31 octobre 2011

- iv -

TABLE DES MATIÈRES

PAGE / PARA

ARTICLES AVEC COMPARUTION

PHASE II

RÉFUTATION VERBALE

COMPARUTIONS INDIVIDUELLES

- v -

ENGAGEMENTS

PAGE / PARA

Gatineau (Québec)

--- L'audience reprend le lundi 31 octobre 2011 à 0859

4336   LA SECRÉTAIRE : À l'ordre, s'il vous plaît. Order, please.

4337   THE CHAIRPERSON: Good morning, everybody.

4338   I hope you all read over the weekend the declaration that was made by the FCC regarding changing the Fund from an Interconnection Fund to an Internet Connection Fund, but the last sentence of that says very clearly:

"We recognize the importance of interconnection to competition and the associated consumer benefits. We anticipate that the reforms we adopt will further promote the deployment and use of IP networks, and seek comment in the accompanying FNPRM regarding the policy framework for IP-to-IP interconnection. We also make clear that even while our FNPRM is pending, we expect all carriers to negotiate in good faith in response to requests for IP-to-IP interconnection for the exchange of voice traffic."

4339   So obviously it's not only a concern of ours but of our brothers to the south, and since our economy is always very much influenced by the U.S. economy, I think it's very timely that the Americans are looking at this too and I'm sure they will watch what we do with great interest.

4340   And so I just wanted to make everybody aware that what we are doing will not only affect us but will probably be a model for all of North America -- hopefully can be.

4341   With that, Madam Secretary, you have some announcements to make, I understand.

4342   THE SECRETARY: Thank you, Mr. Chairman, et bonjour à tous.

4343   We will now proceed with Phase II of the hearing, where parties will appear in the order set out in the revised agenda.

4344   Before we start, I would like to go over a few housekeeping matters to ensure the proper conduct of the rebuttal phase.

4345   Veuillez noter que les membres du Conseil peuvent poser des questions en français et en anglais. Le service d'interprétation simultanée est disponible durant l'audience. L'interprétation en français se trouve au canal 2.

4346   Please note that Commission members may ask questions in either English or French. Simultaneous interpretation is available during the hearing. The English interpretation is on channel 1. Channels can be selected from the left side of your microphone base.

4347   During this phase, regardless of whether they are presenting oral rebuttal argument, participants may be called upon at any time to answer questions from members of the Panel in light of another participant's submission.

4348   For technical reasons and in order to facilitate the work of the court reporter and interpreters, I would ask that those participants who are not sitting at the front presentation table identify themselves every time they are asked to respond to questions from Commissioners.

4349   It is also important that you turn off your microphone after each intervention in order to avoid interference on the audio system. We appreciate your collaboration in this matter.

4350   Now, Mr. Chairman, we will proceed with the Canadian Independent Telephone Company Joint Task Force (Association des companies de téléphone du Québec (ACTQ)/Ontario Telecommunications Association (OTA)/Tbaytel).

4351   Please reintroduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument. Thank you.

RÉFUTATION VERBALE

4352   MR. HOLMES: Thank you.

4353   Good morning, Mr. Chairman and members of the Commission Panel. My name is Jonathan Holmes and I am Executive Director of the Ontario Telecommunications Association.

4354   To my far left is Rob Olenick from Tbaytel; to my immediate left is Ian Stevens from Execulink Telecom; and to my immediate right is Rick Banks from Mornington Communications.

4355   We are before you representing the 30 companies of the Canadian Independent Telephone Company Joint Task Force.

4356   Here are the three network interconnection principles we presented in our initial evidence:

4357   - Principle 1: The incumbent LECs, regardless of size, are the lynchpins of the network-of-networks;

4358   - Principle 2: SILEC operating territories are interconnection areas in their own right, not merely extensions of the large ILEC networks; and

4359   - Principle 3: Interconnection technologies must be chosen on a rational basis and the move to an IP interconnection model must be an evolution, not a revolution.

4360   MR. OLENICK: First, we would like to clarify one area of our oral presentation from last Tuesday. Our evidence speaks to three distinct situations dealing with local traffic and we propose a different set of interconnection options for each.

4361   Situation 1 is where TSPs operating outside our territories have local traffic that they need to terminate in our territories.

4362   In these cases, we are not asking TSPs to directly interconnect with us; rather, we can agree that this traffic could be sent to us over existing SILEC-ILEC local trunks.

4363   Situation 2 is where a Wireless Service Provider wishes to operate within our territories and compete directly for our customers with telephone numbers from exchanges outside our territories.

4364   In this case, based on arguments put forward at this hearing and since any other solution would disadvantage our customers, we are now prepared to agree that this continue to be permitted.

4365   Situation 3 is where a WSP wishes to compete in our territories using our local numbers by means of our tariffed WAS service, or if the WSP wants wireless number portability in our territories, it must directly interconnect with us.

4366   As a result, we are requesting that you vary your findings in Telecom Decision 2008-122 that mandated wireless number portability in SILECs' territories without any requirement to directly interconnect with us.

4367   In this way, you will ensure that the starting point for wireless number portability in the SILECs' territories is symmetrical with the starting point for portability in the large ILECs' territories.

4368   If CLECs and IXCs also want to compete for our customers in our territories, they too must directly interconnect with us via the established interconnection regimes as modified by our proposals below.

4369   You've asked all parties whether there is a need to consolidate the three current interconnection regimes. We came into this hearing saying that there is no need to do so, and after listening to the other oral presentations, our viewpoint hasn't changed.

4370   It is very clear to us why WSPs and CLECs want consolidation, and it's equally clear why large ILECs do not. However, the stakeholders that matter the most are the customers and, frankly, we see absolutely no potential benefits of regime consolidation to consumers living in SILEC operating territories.

4371   MR. STEVENS: We turn now to the SILEC toll regime. Here we are talking about terminating toll calls, not local calls, into our territories. Toll bypass and the resulting loss of critical subsidy dollars remains a significant issue for us.

4372   We note that there is support for the proposal we made to you in two previous proceedings, namely, that the subsidy generated by toll should be transferred to the national contribution fund. In our minds, fixing the contribution regime in our next framework review is the best long-term solution to the toll bypass problem.

4373   You asked us last week for evidence regarding the size of the toll bypass problem. We provided you with some anecdotal confirmation, but we explained that we have no window into Bell's network to gather the data we need to scope out the problem.

4374   On reflection, we now think that the best way for the Commission to get some answers is to ask some questions right here and right now.

4375   Mr. Chairman and Commissioners, the rebuttal phase of this proceeding presents you with an unparalleled opportunity to gather evidence on toll bypass. We urge you to take the opportunity to ask each of the parties that follow us over the next two days a simple question:

4376   "Do you route all long distance traffic destined for customers within SILEC territories over SILEC long distance trunks?"

4377   In addition, parties should provide an undertaking within seven days explaining how they are currently routing this traffic.

4378   The final aspect of toll bypass we need to emphasize relates to bill-and-keep trunks and the fact that they can carry toll traffic under the CLEC interconnection regime.

4379   If that regime is simply transferred to the territories of the SILECs, it would actually increase toll bypass through the use of bill-and-keep trunks. The toll traffic on these trunks would not be assessed the tariffed, Commission-approved, SILEC toll interconnection rates.

4380   You have recently taken specific steps to ensure that SILECs receive toll revenue from CLEC toll traffic sent from outside our territories. CLEC entry into SILEC operating territories is no reason to deviate from the toll regime.

4381   To permit CLECs and other telecom service providers to bypass the toll regime via bill-and-keep trunks would be completely inconsistent with the CRTC's 2010 decision.

4382   As a result, we are requesting that in your decision in this proceeding you specifically exclude toll termination across SILEC bill-and-keep trunks or any new type of trunks under any consolidated regime that may be established by this proceeding.

4383   MR. BANKS: Certain competitors have argued that there should be only a limited number of points of interconnection per province for interconnection to the large ILECs. We haven't been able to tell if these parties have thought through their proposals with regard to interconnection with SILECs.

4384   Regardless of our joint proposal in this proceeding, we are 30 separate companies. We are widely distributed throughout Ontario and Quebec in both rural and northern areas.

4385   Requiring the creation of a very limited number of provincial POIs to cover off interconnection for all competitors is unworkable for a number of reasons, most importantly because of the feasibility and cost of establishing the required transport network. The distances are huge and the companies are small.

4386   We have listened to the concerns of other parties and we have developed a modified proposal.

4387   We propose to establish a single POI within each SILEC LIR. TSPs that want to compete in our operating territory would interconnect at that location and that single POI would facilitate all three regimes: local, toll and wireless.

4388   This would be the default interconnection model within SILEC operating territories. However, SILECs would remain open to negotiating different interconnection arrangements.

4389   Some parties will undoubtedly argue that this proposal does not go far enough and still results in high interconnection costs. To that we can only respond "this is our reality."

4390   We are small businesses operating in rural, high-cost areas, sometimes in very rough conditions. Our priority is on fulfilling our obligation to serve even the most remote customer down the longest back road in our operating territories.

4391   Competitors cannot demand interconnection models based on their urban densities and distances. It just doesn't make sense where we operate. No other LECs in this country would put up with anything less than direct interconnection within their operating territories, and why should we?

4392   When it comes to IP-to-IP interconnection, we think that the best approach is evolution, not revolution. Evidence presented at this hearing indicates that as many as 65 percent of customers continue to be serviced with TDM. There is no strong evidence that IP-to-IP voice interconnection provides any better service or at a lower cost.

4393   For now, we think that interconnection with SILECs via TDM should remain the default interconnection model. Many companies have made substantial investments in TDM technology that represent a significant embedded cost base. Layering IP equipment on top of TDM will be very expensive and will impose significant new workloads to ensure the smooth operation of the different sets of equipment.

4394   We don't rule out IP-to-IP interconnection as an option, but it has to be commercially driven and it has to work for both sides.

4395   We agree with parties to this proceeding who have argued that you should review all regulatory measures and model agreements that would stymie the rollout of IP-to-IP interconnection for voice services and clear the way for IP interconnection from a regulatory perspective.

4396   You should direct CISC to review any issues that need to be resolved in order to facilitate IP interconnection.

4397   We also agree that you should encourage all parties to consider IP-to-IP interconnection going forward and review the status of IP-to-IP interconnection in the industry in three to five years.

4398   MR. HOLMES: That concludes our presentation today.

4399   Once again, we respectfully request that you resolve the longstanding issues that we have discussed with you in this proceeding and we are now open for your questions.

4400   THE CHAIRPERSON: Thank you very much.

4401   Your last point, IP-to-IP, do any of you offer IP-to-IP interconnection with any other carrier?

4402   MR. STEVENS: Yes, we do.

4403   THE CHAIRPERSON: Which ones are they? They are the IXCs?

4404   MR. STEVENS: No. It's a local -- two local carriers are connected on IP and I think we filed the names of the companies in confidence.

4405   THE CHAIRPERSON: Right. That is you. What about the other companies in your organization? You represent 35 different companies.

4406   MR. STEVENS: I'm specifically speaking for the entire organization.

4407   THE CHAIRPERSON: I see. Okay, thank you.

4408   Now, in paragraph 10 you ask us to use this hearing to ask the ILECs here: "Do you route all long distance traffic destined for customers within SILEC territories over SILEC long distance trunks?"

4409   I can gladly pose that question but I thought the answer I got last week was that they cannot distinguish whether this is an IXC or not. The way it comes in, it doesn't necessarily reveal the nature of the call. Did I get that wrong?

4410   MR. HOLMES: No. I think that's a technical detail you did get correct, but I don't think we heard from everybody in the room whether they're routing the traffic accordingly.

4411   THE CHAIRPERSON: Well, just for argument's sake, Bell, what's your answer to this?

4412   MR. DANIELS: Good morning. This is Jonathan Daniels from Bell Canada.

4413   We route all of our traffic, all of our toll traffic that we have, on the toll trunks to the SILECs.

4414   I think the issue is that when we receive traffic from other parties, if they tell us it's toll -- and there is a special regime, they are supposed to interconnect to us with toll -- we send it to the SILECs as toll.

4415   Where we've had problems in the past is that the other parties, some IXCs through CLECs, have sent us traffic that we didn't know was toll, and that was the issue that we came --

4416   So we totally support the JTF in this because we live by the rules and we think that everyone else should have to live by the same rules.

4417   And I think the JTF question really goes to other IXCs and I think the Commission has directed IXCs -- there's two circumstances and the Commission has directed IXCs that they're not to send through local transit toll calls because tolls have an extra subsidy.

4418   But I think there's concern that maybe some are still doing it and also there's concern that some would buy local lines from us and send us toll traffic which we don't know about.

4419   So there's two circumstances, I think, that JTF has brought.

4420   But from Bell, we send everything toll. I can assure you that.

4421   THE CHAIRPERSON: What do you say to that?

4422   MR. HOLMES: Great from Bell's perspective.

4423   THE CHAIRPERSON: But if I understand Mr. Daniels correctly, the traffic comes from a CLEC. He doesn't know if it's an IXC or not and he has no ability to assume. Therefore, he will send it as CLEC traffic even though it may be a long distance call.

4424   I understand you want to collect the long distance tariff, but what do you expect him to do? I don't quite get it.

4425   MR. HOLMES: Oh, I see. I think it's not necessarily what we expect Bell Canada to do, it's what we expect the other service providers to do, is adhere to the toll interconnection regime.

4426   THE CHAIRPERSON: How would we monitor that? We just assume that if we give an order to that effect they will abide by it? Is that the idea?

4427   MR. HOLMES: I believe that monitoring it isn't practical or isn't really possible in every instance. So it gets to a fundamental problem with the existing regime and that's one of the reasons we made the proposal in other proceedings to just deal with toll subsidy right from the National Contribution Fund.

4428   THE CHAIRPERSON: This brings me to -- we have announced that we will have a SILEC review. Which of these items that you put here are really interconnection and which ones should be more properly dealt with in the SILEC review?

4429   MR. HOLMES: I believe the only one that comes to mind would be our proposal for toll, our issue with the toll subsidy regime.

4430   THE CHAIRPERSON: The toll subsidy regime should be handled in the SILEC review. Everything else should be handled here; that's what you're saying?

4431   MR. HOLMES: I think for this proceeding, from an interconnection perspective we would like parties to -- I would say everything but the toll issue is an issue for the Commission in this proceeding.

4432   THE CHAIRPERSON: I see. Okay.

4433   Suzanne, you have some questions?

4434   COMMISSIONER LAMARRE: Yes. Merci, Monsieur le Président.

4435   On the question of point of interconnection, in paragraph 15 of your presentation you propose to establish a single point of interconnection within each SILEC LIR and that this would be the default interconnection model within SILEC operating territories. And you finish off the paragraph by saying:

"However, SILECs would remain open to negotiating different interconnection arrangements."

4436   Should the Commission mandate those negotiations and act as the arbitrator ultimately when agreements cannot be reached between a SILEC and another party?

4437   MR. HOLMES: I think you have that power right now. If we wouldn't be able to come to a negotiated settlement or an agreement between the two parties, one of those two parties could bring it before you and we would look to you for a ruling.

4438   COMMISSIONER LAMARRE: Except if we do set up a default interconnection regime, the answer to a dispute would be, well, you know, if we don't agree, then it goes to the default, but if the default is not agreeable to the other party, not the SILEC, then how would we get around it if we don't mandate negotiations?

4439   MR. HOLMES: So I guess you could mandate negotiations between the two.

4440   COMMISSIONER LAMARRE: And would you be agreeable to that?

4441   MR. HOLMES: I think our first -- I think our preference is the default regime, and then if negotiations can work after that, that's fine. But I think our preference would be the default.

4442   COMMISSIONER LAMARRE: Okay.

4443   Bell, if I could go back to the answer you gave the Chairman about toll interconnection, am I to understand that there's no way from your end you can recognize whether or not somebody is identifying the traffic they're sending through you to the SILEC correctly?

4444   MR. HOLMES: It's Jonathan Daniels from Bell Canada again.

4445   I have to answer this a little -- we took the position -- there is a way on the transit trunk that we can look at what comes from the LEC that interconnects to us.

4446   And in the message set -- not to get technical, but there's this thing called SS7 that tells you the details of the call, including it should tell you the originating number of where the telephone came from. So we can look at that number.

4447   We can look at that number and we even at one point last year applied to the CRTC when there was a dispute because we wanted to block calls where it had any number that wasn't local to it.

4448   Originally, the CRTC agreed with our position, but then there was a challenge, led by my friends at TELUS right beside here, pointing out there were certain circumstances when you can't rely on just looking at the telephone number.

4449   I think the example that was given was if there was, say, a customer from Calgary with a TELUS wireless number from Calgary, sitting in its SILEC territory making a local call, it would appear to us as toll because of the number that was hidden inside.

4450   So because we couldn't be a hundred percent certain, we were told not to block. So that's why the CRTC reversed its decision and said there is no hundred percent failsafe method to rely on, looking at that originating number.

4451   So based on that conclusion that the Commission made, I would have to say you found, the Commission found that there is no perfect solution.

4452   And there's also the risk, to be honest, that you could change that telephone number as well if you wanted to game the system. I'm not saying anyone was doing that, but that is a theoretical possibility.

4453   So there's no perfect solution to be able to know where the call originated from.

4454   I hope that answers your question.

4455   COMMISSIONER LAMARRE: But you could ultimately -- without blocking calls, you could ultimately at least estimate just how much of it is --

4456   MR. DANIELS: Yes, we could by looking at the NXX.

4457   And after the Commission made its ruling, we have done a quick couple of samples to see if the problem has decreased, which we noticed before we saw a lot of toll, and the Commission said even though Bell, you're not allowed to block, they reminded other parties they're not allowed to do this and we have seen a decline as a result of the Commission order.

4458   COMMISSIONER LAMARRE: You have seen a decline as a result. Okay.

4459   MR. DANIELS: Yes, but it's not an extensive test. We just did a very quick glance.

4460   COMMISSIONER LAMARRE: Okay. Well, thank you for that.

4461   Those are all my questions. Thank you.

4462   THE CHAIRPERSON: Tim?

4463   COMMISSIONER DENTON: Good morning, gentlemen.

4464   What kind of switches do you use and how old are they?

4465   MR. HOLMES: I will turn that over to the operators on the panel.

4466   MR. STEVENS: I think within the JTF there's Nortel DMS-100s and DMS-10s. There's also some maybe Alcatel switches and Lucent switches, so traditional TDM switches. Some operators have invested in IP switches as well.

4467   COMMISSIONER DENTON: But the preponderance would be TDM. How old are they?

4468   MR. STEVENS: Speaking for myself, I think ours was one of the first DMS to go in. It went in in 1984 but has gone through various upgrades over the years.

4469   COMMISSIONER DENTON: Well, so that if they're -- 1984 to now is a good length of time for any piece of equipment, and surely the people who know how to operate them must be getting near retirement age, aren't they?

4470   MR. HOLMES: Yes, they are, but there's new blood that comes through.

4471   In terms of age, I know the DMS went in in 1984, but we've replaced the front end at least once, maybe twice, and a lot of the peripheral stuff has been upgraded over the years. So it's an embedded investment that is approaching end of life, but it's not there yet.

4472   COMMISSIONER DENTON: How long? If you were able to amortize it over the length of -- what is the desirable lifespan left in these switches?

4473   MR. STEVENS: We amortize them over 20 to 25 years. I think the Phase I guys could tell you the exact number, but it's about that long, and if we bought something in 2000 --

4474   COMMISSIONER DENTON: 1984 plus 25 brings it to 2009, which was several years ago.

4475   MR. STEVENS: The heavy iron might have gone in in 1984, the box that it's in, but the cards have to be replaced. If you want to do -- we had to add PRI capabilities to upgrade it. If we want to add more services because the customers are demanding them, you have to do upgrades.

4476   So the life gets written off at some point in the future. I don't know --

4477   Do you want to speak for your company?

4478   MR. BANKS: One of the biggest costs is changing out the access lines to access a different switch.

4479   So if line packs are still working in a TDM situation, and the customer is only taking telephone services from you, to switch that person to IP -- there is really no drive for that.

4480   Our switch was purchased in 1988, and it's a DMS-10. We also have a softswitch, as well, but the real cost is switching those access lines.

4481   COMMISSIONER DENTON: When you have IP capacity through your system, you are not bound to offer only telephone calls, because, clearly, you have the multi-functionality of an IP system. Surely you would be able to get revenue of a different sort out of an IP infrastructure.

4482   MR. BANKS: Some of my Amish friends don't really want any other kinds of services. They are quite happy with just telephone.

4483   COMMISSIONER DENTON: I know, but with all due respect to the Amish, they are not driving telecom policy.

4484   MR. BANKS: No.

--- Rires

4485   COMMISSIONER DENTON: Gentlemen, I haven't heard the words "toll bypass" since 1991. We are talking old language here, and I am not sure whether you understand that, at some point within this decade, it is highly likely that the last TDM switch will be turned off, because the people to maintain it and the software package upgrades are just not going to be there.

4486   The delay you are asking for is basically the delay for everybody to line up the regulatory standards -- get their ducks in order -- so that when we migrate to IP, there are going to be the standards and protocols in place, accepted, agreed upon and negotiated.

4487   I am not really hearing you say that it's not moving to IP, I am just saying line up all of the regulatory issues, so that it can move.

4488   Am I hearing wrong?

4489   MR. STEVENS: I think you are hearing right, from our perspective. Get your ducks in a row, and then we can review it in three to five and make sure they are in a row.

4490   In terms of toll bypass, I agree with you, you haven't heard it from many since 1991. The regimes for the other ILECs were changed about a decade ago. Ours is still plugging along.

4491   COMMISSIONER DENTON: Right. I just didn't want to leave you with the impression that -- you know, I hear you, I hear your concerns, but I just wanted to hear from you that you know that the world of TDM is coming to an end.

4492   I see your nodding faces, I'll take that for a "yes".

4493   Thank you, those are my questions.

4494   THE CHAIRPERSON: Len...

4495   COMMISSIONER KATZ: Thank you, and good morning.

4496   I want to take you to paragraph 8 on page 2, where you say that there is no benefit to consumers of regime consolidation.

4497   So that I don't presuppose what your views are, where you say, "It is very clear to us why WSPs and CLECs want consolidation," could you just spell it out for us, so we have it on the record?

4498   MR. STEVENS: In terms of the CLECs and WSPs compared to the ILECs, we see it as a simple push of cost from the competitors over to the incumbents.

4499   We pointed out earlier that about 65 percent of lines are still TDM, and the consumer products -- we heard about HD Voice. I have tried HD Voice, and it isn't a game-changer from my perspective.

4500   So we don't really see the consumer benefits. We see a lot of TDM infrastructure in place, and a big cash grab by the competitors to get the incumbents to pay for a simplification of the competitors' networks.

4501   COMMISSIONER KATZ: So you are saying that the reason WSPs and CLECs want consolidation is to reduce their operating costs, and the reason the large ILECs do not is because they see some erosion of those costs -- of those revenues.

4502   MR. STEVENS: Yes, in terms of your first point, the CLECs and WSPs can reduce costs. To achieve that, though, the reduce costs, the ILECs have to increase their costs to achieve that for the competitors.

4503   COMMISSIONER KATZ: The ILECs have to increase their costs?

4504   MR. STEVENS: If the ILECs need to install a TDM-to-IP gateway, they need to buy it from somewhere, and it costs them money to do that.

4505   In terms of regime consolidation --

4506   COMMISSIONER KATZ: At the end of the day, regime consolidation results in lower costs. It may also result in lower revenues to some of the incumbent ILECs, but it results in lower costs to the marketplace, and I would have thought that lower costs would be beneficial to consumers.

4507   MR. STEVENS: You are supposing that the costs get passed along to the consumers in a competitive marketplace.

4508   COMMISSIONER KATZ: Or that other costs that go up would be offset by these costs going down.

4509   But, presumably, in a competitive market, consumers benefit by costs going down. They may not be dollar-for-dollar, and in an unregulated environment it may happen in mysterious ways, but I think for the economy it is good that costs go down.

4510   So I find it hard to accept your notion that costs going down -- consolidation drives costs down, and yet there is no benefit to consumers, which is what you are saying here, I think.

4511   Let me take it one step further, because when I go to paragraph 16, you talk about reducing some of the infrastructure costs, or increasing them, and then you say: "Some parties will undoubtedly argue that the proposal does not go far enough and still results in high interconnection costs. This is your reality."

4512   But the reality is that consumers will be paying for that.

4513   I understand your particular situation, but because of your particular situation and you wanting local interconnection, as opposed to a more efficient, broader interconnection regime, it drives costs up, and presumably consumers pay for that at the other end.

4514   So, on the one hand, you don't want to recognize that there are benefits to consumers of prices going down, and then you don't want to recognize that the by-product of what you are asking for is that the consumers will pay the freight.

4515   MR. HOLMES: I think we agree that there will be costs for -- some service providers will save money, some service providers will incur money. Where it nets out in the end, we are not exactly sure.

4516   But with regards to your first point, we don't see any huge consumer benefit to regime consolidation.

4517   COMMISSIONER KATZ: Okay. Those are my questions.

4518   THE CHAIRPERSON: Thank you.

4519   You made the suggestion of a single point of interconnection in each SILEC territory. I would like to hear from the wireless service providers whether that is meaningful to them or not, because we heard all last week people suggesting that there should be one or two POIs per province once we go to IP.

4520   This, obviously, would mean that, let's say in Ontario, you would have --

4521   How many of you are there in Ontario?

4522   MR. HOLMES: Twenty, twenty-five in Ontario.

4523   THE CHAIRPERSON: Okay. So let's assume two POIs for Ontario plus 22. So there would be 24 POIs for Ontario for the wireless service providers to connect to, if I understand you correctly.

4524   MR. HOLMES: That's correct.

4525   And if I could clarify things just a little bit, what our position is now is that we are only requesting interconnection if the WSP wants us to provide a WAS-type service for them, or wants us to implement WMP in our operating territories. If those two conditions aren't there, then we are not proposing that they have to interconnect with us directly.

4526   THE CHAIRPERSON: Quebecor, I saw your hand up.

4527   MR. BÉLAND: Yes, it's Dennis Béland from Quebecor Media.

4528   From a wireless perspective, the key paragraph here is, in fact, paragraph 5, which is what Jonathan, I believe, was just referring to.

4529   Paragraph 5, from our perspective, is a significant advancement in the position put forward by the SILECs in this proceeding, and it is something that we would support.

4530   The practical effect of what they are saying there is that a wireless carrier, such as Vidéotron, would be able to have radio coverage everywhere, including over the territories of the SILECs, but we would not be required to have direct interconnection with the SILECs until such time as we wanted to provide our wireless customers with telephone numbers that were native to that SILEC exchange.

4531   So, in practise, what you are going to find is a company like Vidétron -- say we expand into Upton. We will have radio coverage in Upton, we will sell phones to people who live in Upton, but they will have telephone numbers from one of the neighbouring exchanges.

4532   The only people that will be disadvantaged by the proposal put forward by the SILECs will be the people in Upton who may want, for example, to port their wireline Upton number to a wireless phone.

4533   So that narrow segment of individuals would be disadvantaged by this proposal, but in the broader context of things, it is something that, at least from Vidétron's perspective, I think we could live with. The advantages are large enough that, if the Commission can live with that narrow group of people not being allowed to port their numbers, I think we have the makings of a reasonable solution here.

4534   THE CHAIRPERSON: Thank you very much for that clarification, I appreciate it, and the practical example that you gave to illustrate it.

4535   Is there any other wireless provider who wants to talk about it?

4536   MR. ANTECOL: Ed Antecol from WIND Mobile.

4537   The modified SILEC proposal that was just tabled works fine for WIND, and it is consistent with the position that Yak and WIND together put forward in their opening comments.

4538   One of the most common situations where this occurs for us is when we, say, build along a highway, so that consumers can have access to wireless services between cities, and it is possible for a wireless cell sector to overlap into an independent's territory in those circumstances.

4539   It would be unreasonable, just because of wireless overlap, and having a sector overlap with ILEC/SILEC territory, that we would be required to have interconnection.

4540   Therefore, I think the proposal on the table now is reasonable.

4541   THE CHAIRPERSON: Okay. Thank you very much.

4542   THE CHAIRPERSON: Let's go on to the next one, Madam Secretary.

4543   THE SECRETARY: I would invite Rogers Communications Partnership to come forward.

RÉFUTATION VERBALE

4544   MR. WATT: Good morning, Mr. Chairman, Commissioners and Commission Staff.

4545   I won't go through the lengthy introductions. I am David Watt, Vice President, Telecommunications, for Rogers. With me today are, Alexander Adeyinka, Simon-Pierre Olivier, Bogdan Tanasie and Brenda Stevens.

4546   In these reply remarks we will be addressing five substantive issues arising from last week's proceedings. There are also two smaller, very specific items that we would like to clarify.

4547   Last Thursday, the Chairman identified the key issue as being how to implement voice IP interconnection to promote our country's digital economy developing in a way that is fair and equitable to both the ILECs and service providers who are predominantly IP-based.

4548   In response to this direct question, Rogers submits that timely IP implementation can best be achieved by mandating that parties must accept IP interconnection requests based on the specific triggers that we will identify later in our reply.

4549   After a request, parties will negotiate the specific implementation details with a clear understanding that failure to agree in a reasonable timeframe will result in application to the Commission and regulatory intervention.

4550   With regard to fairness, we submit that the current regime is not fair, as it violates the concept of a true co-carrier shared cost regime. Currently, the IP operator is absorbing all of the conversion costs.

4551   As we discuss later in this reply, the TDM operator and their customers do benefit by the absolutely fundamental fact that they are able to communicate with the end users of IP-based networks.

4552   What we are proposing is fair. We are not proposing to restructure the TDM regime, for example, by consolidating LIRs. We are recommending an evolution to quickly implement voice IP interconnection where there is a mutual benefit to parties. This is the most important aspect of our submission.

4553   We do suggest a compromise solution with regard to conversion costs, as will be described later in these remarks.

4554   Turning now to the triggers, the Commission asked on a number of occasions about the criteria to be used to determine when a carrier is ready to offer IP-to-IP voice interconnection and, hence, should start negotiations. We propose the following.

4555   First, based on the evidence thus far in the proceeding, virtually all wireless networks are or soon will be IP-based and, therefore, ready to implement IP-to-IP interconnection.

4556   Second, where the IP wireline network operator is providing voice IP interconnection to an affiliate, a division of its operations, or an unrelated service provider, or;

4557   Third, where the IP wireline network operator is providing voice services to end users via IP switches, rather than legacy TDM switches.

4558   In this scenario the obligation to provide IP interconnection will be limited to the geographical coverage of the operator's voice IP switch and the end users served by that switch.

4559   In order to enable parties to identify if and where the conditions in Trigger No. 2 are present, all carriers should be directed to post on their websites the existence of agreements under which they provide voice IP interconnection.

4560   Further, the complete agreements should be filed in confidence with the Commission, so that the Commission may consult them in the event of a complaint of unjust discrimination or undue preference.

4561   Such agreements will also be useful in cases where voice IP interconnection disputes are referred to Staff mediation under Part 2 of the rules.

4562   Similarly, in order for parties seeking interconnection under Trigger Condition No. 3 to know the geographical availability of an operator's voice IP interconnection, each operator should post on their websites which LIRs are served by IP switches.

4563   Rogers does not propose that operators publish or file agreements that are solely for trials.

4564   These website publication and Commission confidential filing approaches are similar to what the Commission has done with respect to MDU access agreements and, more recently, certain off-tariff telecom agreements.

4565   Turning now to the conversion issue, first, we want to stress to the Commission that, contrary to the remarks of Bell and TELUS, in fact the terminating ILEC's customers benefit significantly from protocol conversion. Simply, if neither carrier converts traffic to the appropriate protocol, their respective customers will not be able to talk to each other.

4566   Today, Rogers bears the cost of protocol conversion for both traffic terminating on its IP network and traffic terminating on the ILECs' TDM networks. Our proposal is that conversion costs be shared, with the IP-based network being responsible for converting TDM traffic received from the ILECs to IP, and the ILECs being responsible for converting the IP traffic they receive to TDM.

4567   It is more efficient for the terminating carrier to convert traffic to its service protocol, since only the terminating carrier can determine accurately if conversion is even necessary.

4568   While we believe that our proposal is fair and consistent with co-carrier shared cost requirements, we recognize the concerns raised in relation to imposing conversion costs on the ILECs at this time.

4569   For example, suggestions were made last week that possibly the ILECs should be responsible for conversion at their end, but that a tariff should be put in place to allow them to recover the costs.

4570   Rogers does not support this idea because it does not reflect cost sharing, it is one-way cost recovery, with the ILECs being paid by IP-based companies for conversion. If Rogers is going to have to pay all conversion costs, it would rather do the conversion itself, with full control over its own costs.

4571   All this said, as a compromise on the matter of conversion costs, if the Commission mandates voice IP-to-IP interconnection in the circumstances that we described earlier in this reply, we are willing to take the risk of leaving conversion arrangements to bilateral negotiation. Mandating voice IP-to-IP interconnection where the ILECs are IP-ready, as per the criteria described earlier, will accelerate this type of interconnection and, therefore, reduce the need for protocol conversion -- a win-win for the ILECs and IP-based competitors.

4572   But we urge that the ILECs should not be allowed to have it both ways. They cannot refuse responsibility for protocol conversion of terminating traffic on their TDM networks and also refuse direct IP-to-IP voice traffic exchange where their networks are IP-ready.

4573   Turning to the WSP issue, we reiterate that WSPs should have a new option that would permit any WSP to interconnect with LECs within an LIR, on a shared-cost basis with bill and keep, without having the obligation to provide equal access.

4574   There is broad consensus in this proceeding that the Commission should not impose equal access requirements on WSPs. The remarks from Yak, Public Mobile and Mobilicity strongly corroborate the evidence from Fido that there is no economic demand for wireless equal access, and that it will be a very costly endeavour with no consumer benefit.

4575   We think that, in light of the evidence, it would be contrary to the Policy Direction to impose equal access on WSPs. We do not think there is any need for the Commission or industry to deploy scarce resources to further examine this issue.

4576   During the presentation by Bell, the Chairman asked the question why we have an elaborate regulated voice regime when data interconnection has flourished without such regulation.

4577   We want to emphasize that there is a fundamental difference in the manner the internet developed. There were no legacy network investment and revenue streams to be protected. There were no incumbent network operators with the incentive to dictate how the internet pieces would interconnect, and possessing market power to dictate the terms and pace of interconnection. Therefore, there was no need to mandate parties to behave in any particular manner. This, of course, is not true of voice IP-to-IP and IP-legacy TDM interconnection.

4578   Turning now to two very small specific points, regarding the number of WSP direct connect points, the JTF claimed that their WSP proposal would require 40 direct connections, rather than the 100 referenced by us.

4579   Just diverting from the text, we heard a little bit about this this morning. I think their proposal is that they define an LIR as each SILEC would have 1 LIR, and they would then tandem, I guess, the traffic to their non-contiguous exchanges. I think they said something like 24 LIRs this morning.

4580   All that said, we do think direct connection would be uneconomic in that fashion. That said, we also agree with Videotron's comments this morning that the JTF proposal as amended in paragraph 5 would be acceptable to Rogers.

4581   Simon-Pierre...?

4582   M. OLIVIER : Suite à une question de Madame la Conseillère Lamarre concernant l'acheminement de nos appels dans les territoires des petites ESLT, nous avons présumé qu'un appel entre Gatineau et Upton était un appel local.

4583   Nous aimerions clarifier ce matin que nous utilisons nos circuits de transit interurbain. L'appel sera ainsi transféré de Rogers vers le commutateur de Transit d'Accès de classe 4 de Bell pour être terminé dans Upton (voir le diagramme de l'Annexe 1).

4584   Suite à la Décision 2010-908, Rogers envoie tout son trafic destiné aux petites ESLT sur des circuits interurbains parce que nous ne sommes pas en mesure de distinguer les appels locaux des appels interurbains à nos points de terminaison dans nos réseaux sans fil et IP.

4585   De fait, Rogers subventionne de façon démesurée les petites ESLT en ce moment. Rogers est d'avis que ce régime doit disparaître et que toute subvention accordée aux petites ESLT devrait être transparente et devrait provenir du Fonds de contribution national.

4586   Nous sommes heureux de constater ce matin que le Joint Task Force est du même avis.

4587   Dave.

4588   MR. WATT: This concludes our reply comments and we would be pleased to answer any questions you may have.

4589   THE CHAIRPERSON: Thank you for a very interesting submission.

4590   And tell me, do I read this right that you are suggesting two triggers, right? Although you have paragraph 4, it is really three sub-paragraphs. The first sub-paragraph is really just an --

4591   MR. WATT: Yes, then that's correct. We just wanted to highlight the wireless issue.

4592   THE CHAIRPERSON: So there are two triggers -- three is what you are suggesting. Okay.

4593   And then you say they should publish everything on their website. Then in paragraph 6 you said they should not publish or file agreements that are solely for trials. Why is that?

4594   MR. WATT: We think trials, publishing information regarding trials may well be premature that people try a variety of activities that we don't think necessarily would be helpful to the industry. They might but we think it should be the actual formal agreement and, actually, the evidence that they are interconnecting in an IP to IP basis on commercial terms.

4595   THE CHAIRPERSON: Educate me. When you have a trial and let's say it's an unsuccessful one, the lessons learned, the technical knowledge that you gained from something, do you share that with CISC so that the whole industry benefits from that or is this basically your knowledge and other people may have to make the same bitter experience?

4596   MR. WATT: My understanding is it is our knowledge. It is not shared with CISC.

4597   THE CHAIRPERSON: Wouldn't it make sense to do that, I mean you people at the giving end and the receiving end?

4598   MR. WATT: No, I see your point. Let me just check with my technical person to see if there is a reason that I haven't conveyed properly to you.

--- Pause

4599   MR. WATT: We take your point. We are willing to amend this position if the Commission wishes to go forward on this basis and make the information available.

4600   THE CHAIRPERSON: Okay, thank you.

4601   You main proposal in paragraph 9 about basically that each one is responsible for converting the traffic that they receive, this works for Bell -- for Rogers, obviously. Would this -- do you see any problem of it working for small new entrants too into the wireless market or would that trial -- is there a balance here that's in effect and would apply equally to a large wireless carrier like you and a small one like, say, WIND?

4602   MR. WATT: I believe it would apply equally to both in proportion to their size.

4603   THE CHAIRPERSON: Right.

4604   Can I hear from the small new entrants, wireless carriers how they feel about that?

4605   WIND...?

4606   MR. ANTECOL: Ed Antecol, from WIND Mobile.

4607   One of our biggest problems is that if we wanted to do a trial with one of the incumbents we would probably be at the bottom of the priority list because there is just not that much traffic involved compared to some of the larger carriers.

4608   So there is a fear that if it's left up to the ILECs to decide who they are going to do trials and who they are going to work with and who they are going to negotiate with, that we're going to end up at the bottom of the pile. So that's a continuing concern.

4609   THE CHAIRPERSON: I actually had moved on from trials. I was talking about paragraph 9.

4610   MR. ANTECOL: We don't have a problem disclosing our trials or the protocols that we are using and with whom we are engaged with.

4611   THE CHAIRPERSON: Okay.

4612   Tim, you had some questions?

4613   MR. THOMPSON: If I can just comment from Mobilicity, we support paragraph 9.

4614   THE CHAIRPERSON: Okay, thank you.

4615   Quebecor...?

4616   MR. BÉLAND: Yes, Dennis Béland, for Quebecor Media.

4617   I'm a little confused by the question because paragraph 9 I was reading as having implications primarily for the wireline environment and, in particular, for interconnections with the TDM incumbent.

4618   Regarding wireless, if you look at Rogers' trigger number ii in paragraph 4, that's the item as I saw as having an important impact on the wireless environment because basically, given that virtually all wireless today is already IP, the consequence of Rogers' proposal as a whole and particularly trigger ii in paragraph 4 is that effectively you will see all wireless networks in the interconnecting IP to IP or negotiating IP to IP right away.

4619   So I hope I didn't confuse you more than I intended, but paragraph 9 is really a wireline implication paragraph.

4620   THE CHAIRPERSON: Okay, Mr. Béland, you have to walk me through this.

4621   Now, I thought I understood paragraph 9. Doesn't paragraph 9 say:

"Our proposal is that conversion costs be shared with the IP-based network being responsible for converting TDM traffic received from the ILECs to IP and the ILECs being responsible for converting the IP traffic they receive to TDM."

4622   MR. BÉLAND: Yes. So if what we are talking about are two wireline carriers sitting down together -- sorry -- if what we are talking about are two wireless carriers sitting down together in practice neither of them have TDMs so these sorts of considerations I don't think apply.

4623   THE CHAIRPERSON: And when one of the -- is paragraph 9 meant to be directed only to wireline carriers?

4624   MR. WATT: I think at the current time it applies to both wireline and wireless. We do have to convert to TDM today but the point is, as Mr. Béland said, the wireless -- and as we have said here, the wireless networks they are -- if they are not today they very soon will be IP capable and then this issue of conversion should go away.

4625   In fact, that is the essence of our proposal here this morning that we describe it as a compromise with respect to the conversion costs. But we think that the potential way to solve this problem is to move quickly to IP interconnection.

4626   And under those circumstances we are willing as Rogers to bear the conversion costs even though we think the fair way is a proposal -- is what is written here in paragraph 9.

4627   But we are prepared to continue to pay those costs if we move quickly to IP to IP interconnection because then those costs would be less.

4628   You may ask, what do you mean by leaving the costs of conversion to bilateral negotiation -- as we said later on under this circumstance. How on earth do you think you'll be able to negotiate anything with the ILECs and get them to share some of these costs?

4629   THE CHAIRPERSON: I'm just trying to understand.

4630   MR. WATT: Okay, sorry.

4631   THE CHAIRPERSON: It might be it's too early in the morning and my brain isn't here. But I thought, "Our proposal is that conversion costs be shared with the IP-based network", i.e. Rogers, as your mobile arm is certainly IP-based -- "being responsible for converting" IP traffic they received from the TDMs.

4632   So you would -- any traffic that you receive on TDM basis you would be responsible for converting. Conversely, anything that you send out on IP and it goes to a TDM carrier they would be responsible for converting.

4633   That's what I understood you are saying here.

4634   MR. WATT: That is correct. That is what we think would be the appropriate way to do it.

4635   THE CHAIRPERSON: And I wanted to know, that's what makes for you. Does it also make sense for the new entrants and I heard "yes".

4636   Now, I don't know what Mr. Béland's point is. I'm sorry. I missed it. Can you repeat?

4637   MR. BÉLAND: I am sorry. I will take another shot at that.

4638   The point I'm trying to make is this arrangement that's described in paragraph 9, I believe would be overtaken by what is described at trigger ii in paragraph 4 because as a result of trigger ii in paragraph 4, if a company like Bell Canada is already offering IP interconnection to an affiliate, a division or an unrelated service provider, it must start offering that IP interconnection to others.

4639   So therefore, the new interim wireless carriers aren't worried about TDM conversation anymore. It goes directly to the point and negotiates IP to IP with Bell. That's how I was reading Rogers' proposal.

4640   MR. WATT: I agree with that. Now, does that help you?

4641   THE CHAIRPERSON: Yes. Now, I understood.

4642   Thank you, Mr. Béland, for pointing that out to me.

4643   But Tim, did you have a -- is there something?

--- Pause

4644   THE CHAIRPERSON: Okay, thank you.

4645   Tim, you have some questions?

4646   COMMISSIONER DENTON: Yes. At your considerable indulgence, Mr. Chairman, I want to ask Mr. Watts some questions here because I'm not sure.

4647   We have got a nicely framed little discussion going here about translation costs between TDM and IP and who should bear them, and that's fine. But I keep muttering in this discussion whether we are salami slicing a very large question that we need to open our minds to if not settle in this time around but start thinking about.

4648   Now, when we start thinking about the translation question it's merely who pays and what's fair. But once you get an all IP thing going -- to speak more accurately, when your networks become entirely IP it seems to me that there is no basis for the physical infrastructure. Plain old telephone service has disappeared, is that correct?

4649   MR. WATT: Eventually it will. I think the switching infrastructure and certainly all the transmission facilities and so on and so forth remain and are used in a different format. But the physical fibre, so on and so forth remains in place.

4650   COMMISSIONER DENTON: Is that a "yes" or a "no" to the question of the physical infrastructure of plain old telephone service disappearing?

4651   MR. WATT: Well, I don't think -- the physical infrastructure that provides plain old telephone service today is made up of transmission switching and various layers over top of the physical plant. The physical plant in terms of the transmission remains.

4652   COMMISSIONER DENTON: Right.

4653   MR. WATT: The format of switching will differ and then the transmission application over the physical layer will change.

4654   COMMISSIONER DENTON: Right.

4655   So I am trying to understand this point. This seems to be about interconnection of networks and protocol conversions but obviously this must be a first step in the gradual elimination of the time division, TDM network. Correct?

4656   MR. WATT: Correct.

4657   COMMISSIONER DENTON: Okay. And when that network is finally shut off we have an all-IP infrastructure, right?

4658   MR. WATT: Yes.

4659   COMMISSIONER DENTON: Okay. And when we have an all-IP infrastructure we don't have telephone service quite as we have come to know it, to say the least.

4660   MR. WATT: It will be different than what we know. It will give us all that we had before plus more.

4661   COMMISSIONER DENTON: Plus a whole lot more, yeah.

4662   So are we now engaged on a process possibly now, possibly in a few years' time as we have made progress -- are we not now engaged in the process of thinking what of the old social policies attendant upon telephone service can or should remain when, you know, the switches that made it have disappeared?

4663   MR. WATT: I am not sure which social policies you have in mind there. I would think you know very important 9-1-1 service functionality would remain. Social...?

4664   COMMISSIONER DENTON: Well, the universal service fund and those kinds of activities of subsidy of certain kinds of uses and users.

4665   MR. WATT: In terms of the contribution fund I guess, really, it would be a question as to -- I look at it a bit more simply or with respect to the technology used, whether the provision of service in those locations has revenues that exceed the costs or whether the costs will remain in excess of the revenues, regardless of the technology.

4666   In which case a case could be made for arguing for a continuance of the contribution fund, although you know generally Rogers is in favour of changing the rates and eliminating the contribution fund.

4667   COMMISSIONER DENTON: Yes. But in your mind therefore what is implied?

4668   Is it merely a question -- is the question of translation from IP into TDM and who bears the costs, is that a contained and bounded question or are we engaging in a much -- beginnings of a much larger transformation?

4669   MR. WATT: Well, I think the narrow costs of -- the issue of the converging costs is a narrow transitional issue that isn't something that would go on forever. In terms of the broader change of movement to IP technology and what it will bring, I agree.

4670   It's a landscape-changing event that will certainly change telecommunications. It allows for integration of wireline and wireless services in many imaginative ways and lots of different services and functionality. But that is when IP is implemented in its fullest.

4671   I see the converging issue, which is an issue that's been around since 2002-3 when IP-based wireline and some of the wireless networks -- it might be a bit early for them -- came into existence and that conversion has had to take place and will continue to take place until we move to the IP-IP interconnection world.

4672   We are advocating that we move there fairly quickly. A compromise solution is that we are willing to continue the current regime of converging costs as it stands today.

4673   COMMISSIONER DENTON: Well, Mr. Watts, what is your best guess at the moment -- and I will just say guess because no one knows -- when do we turn off the last TDM switch?

4674   MR. WATT: I don't know when we would turn off the last TDM switch. If I had to hazard just a wild guess --

4675   COMMISSIONER DENTON: Oh, be bold. Be bold.

4676   MR. WATT: Pardon me?

4677   COMMISSIONER DENTON: Be bold.

4678   MR. WATT: Be bold, yeah.

4679   No, I think it could be as long as 10 years.

4680   COMMISSIONER DENTON: As long as 10 years so that within the last --

4681   MR. WATT: No, I'm thinking of even the Rogers' situation. It took us a very long time to pull the plug on our first analog cellular offering long after PCS came into place. It was just a wide range of circumstances across this country.

4682   So, yeah, I could conceive of it being 10 years. But that's based on a wild guess of an economist/accountant. So take it for what it's worth.

4683   COMMISSIONER DENTON: Okay, good. Thank you.

4684   THE CHAIRPERSON: Len?

4685   COMMISSIONER KATZ: Thank you.

4686   You have made some proposals here and I want to try and understand how we would operationalize some of these.

4687   For example, in paragraph 2 you talk about specific triggers and then you say some negotiations would take place within a reasonable timeframe after which an application to the Commission and regulatory intervention can result.

4688   I guess we can define what "reasonable" is. But I'm just wondering why would there be an incentive for both parties to reach an agreement if one of them knows they can ultimately go to the Commission to get a decision? So they can't do any worse than the last offer and they can certainly do better.

4689   I guess my question is, interjecting us into this picture, I don't think facilitates it. I think it actually is filtered down.

4690   MR. WATT: No, I recognize that complication that when you have another last recourse you are often encouraged to go to it and hope to get a better offer than the last offer.

4691   We hope in this case that the benefits for both parties are more self-evident than in many other circumstances because here we truly believe that both parties reach more rational interconnection arrangements in an IP world that will save costs we think.

4692   You could argue on the other hand that, well, since you are offering now to continue to pay the converging costs you are taking away the incentive from one party to move more quickly. But, again, we are hopeful that we all want to lower costs. We are all sensitive to the criticism, unfair criticism that our prices are too high in the country as a whole, certainly on the wireless industry. We want to move those down.

4693   We think there can be a meeting of the minds here. The reason we said a reasonable timeframe, we are hesitant to put a firm timeline even on the negotiations.

4694   It's our experience in negotiating lots of things, that very frequently you can tell after a period of two or three weeks that this isn't going anywhere. These people's hearts are not in it; in which case we would like to move more quickly than, say, a six-month negotiating timeframe that some people are suggesting.

4695   With respect to an ultimate deadline of when it would be in place, we are hesitant again even there to put a timeframe on it. Because although we have heard, and we fully agree with the comments that we think were really well explained by the Cogeco witnesses, that you know the different SIP iterations are mended together by the section border controllers, there can be interoperability issues that we may not be able to predict that would have to be sorted out in trials -- not trials but operational testing.

4696   So I'm again hesitant to put a firm date on it.

4697   COMMISSIONER KATZ: With regard to these bilateral negotiations you refer to on conversion in paragraph 11, that you are willing to leave to a later date, do you see that ultimately evolving to our now famous baseball arbitration if you guys can't agree it comes back to us and there is a baseball-type arbitration that takes place?

4698   MR. WATT: We don't think that baseball arbitration lends itself to the types of disputes that would occur here. We don't really see it as a financial debate which I think baseball arbitration lends itself best, to financial offers.

4699   Here what we have in mind is we'll be negotiating the IP-to-IP interconnection. We will be moving along.

4700   We would hope that we would be able to speak to the ILEC and say, "Look, if we can get this done three weeks sooner we don't have to buy another conversion box. That saves us the money. We are still doing the conversion.

4701   Maybe it's a hopeful optimistic approach to this issue but that's the proposal.

4702   COMMISSIONER KATZ: Okay. My last question, you suggest that all these agreements be filed with the Commission in confidence so that in the event of a complaint we have got them or in the event of a dispute and mediation we have got them.

4703   Can they not be filed in a dispute or a need for mediation to take place rather than us becoming a custodian of all of these agreements in anticipation of something that might one day come before us?

4704   MR. WATT: Yes, they certainly could adopt that approach.

4705   COMMISSIONER KATZ: Okay. Those are my questions.

4706   THE CHAIRPERSON: Candice?

4707   COMMISSIONER MOLNAR: Good morning.

4708   MR. WATT: Good morning

4709   COMMISSIONER MOLNAR: I want to make sure I understand the two situations that you would say would trigger an IP to IP negotiation. I think I understand your point three where you're talking about the fact that in fact the ILECs have IP services within their local exchange and they are providing IP services.

4710   I'm not certain I understand the full scope of your item (ii) where you say that if they are providing IP interconnection to an affiliate, a division or an unrelated service provider.

4711   Could you just explain that better to me what all is encompassed in there?

4712   MR. WATT: What we had in mind there is if, say for example, Bell's wireline, Bell's wireline service had an agreement with Bell Mobility to transfer traffic on an IP to IP basis or if Bell had, say, for example, a long distance agreement to transfer say toll traffic say with TELUS on an IP to IP basis.

4713   Well, maybe I should have gone through this in order. This might not legally actually be the right phrase "affiliate", but we had in mind Bell Canada transmitting or exchanging traffic with Bell Aliant on an IP basis and then in terms of a division it would be Bell Mobility with other arms of Bell.

4714   And then an unrelated party would be -- the example with TELUS that may actually be a wireless example where over their joint network they are transferring traffic on an IP basis between them.

4715   COMMISSIONER MOLNAR: So when you say this are you suggesting like types of traffic? I mean that's a little bit of a difficult world or, you know, phrasing in this world of IP because it's all like types of traffic, but an interconnection of two mobility networks.

4716   Is that what you are suggesting here or are you suggesting if you are interconnecting a mobility network --

4717   MR. WATT: Interconnecting by IP so that the exchange of traffic takes place between the two parties using IP.

4718   Maybe Bogdan, could you also help --

4719   COMMISSIONER MOLNAR: I am just trying to understand if there is fences here, like are we saying under the same conditions or if there is any interconnection of traffic then you are opened up for interconnection.

4720   MR. WATT: I think we are really saying any interconnection of traffic that took place via IP. So it wouldn't matter the different flavours of SIP, the different possibly retail offers that if the traffic was being exchanged on an IP basis.

4721   MR. TANASIE: Yeah, I agree with that. I mean I think that's what we are saying here, is if for example Bell Mobility connects with TELUS Mobility over IP we should be able to interconnect with either of them over IP as well.

4722   COMMISSIONER MOLNAR: For purposes of your wireless voice traffic?

4723   That's what I'm trying to understand. Are you saying for purposes of your wireless voice traffic or are you saying if you have an interconnection with a party on an IP basis then you should have an interconnection with us regardless of whether it's the same conditions?

4724   MR. WATT: Bogdan will correct me if I am wrong, but I think the ability to exchange on an IP basis, the wireless sets of traffic, I believe we should be able to then interconnect our wireline and exchange our wireline traffic with that wireless entity on an IP basis.

4725   COMMISSIONER MOLNAR: Okay, thanks. I think I understand that.

4726   Do you see any role -- and you are suggesting that the agreements be made public and these should be negotiated. So would you see a need for the Commission to be establishing a model IP agreement or any of those sorts of you know activities that were done in the existing interconnection arrangement?

4727   MR. WATT: We didn't think that model agreements would be necessary. It may be that we want to move quickly.

4728   It may be that after three or four agreements have been struck between major players that maybe it would make sense later then from those agreements craft a model template that might be of benefit to people who come in later down the line.

4729   But we don't see that as something that we propose.

4730   COMMISSIONER MOLNAR: How about work of CISC in establishing standards? You mentioned interoperability issues. Do you see some work for CISC in the -- you know that we need to ensure is done or all this can just be managed amongst the carriers?

4731   MR. WATT: Again, we think it could be managed amongst the carriers. Again, there may be a role for CISC to -- after these agreements have been struck to setup the narrow technical agreements and make them available or make them default standards. But we don't see at the outset a role for CISC.

4732   COMMISSIONER MOLNAR: Okay, thanks.

4733   Just one more question. Under your proposal where there is IP-to-IP interconnection of true IP traffic, if you will, you have proposed ultimately -- I wrote it down here -- Rogers is willing to bear the costs of the conversion. And that's a change from where you were last week.

4734   It is, if I understand, consistent with the position that Videotron put forward to us last week. I just wondered if the other carriers who are here also believe that's a reasonable approach as a transitional measure as we move to the IP interconnection regime.

4735   If any you would like to bring forward? I mean I'm interested, you know, Shaw as an example, where are you on that?

4736   THE CHAIRPERSON: Okay, we'll let someone -- Cogeco first.

4737   M. MESSIER : Un commentaire sur la question de la conversion du trafic.

4738   Nous avons un certain inconfort avec la terminologie utilisée par Rogers qui met l'accent sur le " terminating carrier. " Qu'arrive-t-il avec le " originating carrier "?

4739   Actuellement sous le régime TDM lorsque nous recevons le trafic TDM, nous devons le convertir en IP pour le terminer à nos utilisateurs. Mais lorsque nous le donnons sur cette interconnexion TDM, nous devons aussi le convertir pour le donner en TDM.

4740   Ce que nous avons proposé -- et c'est qu'est-ce que sous-entend la terminologie ici; c'est pour ça que nous n'aimons pas la terminologie " terminating " -- dans une interconnexion IP de bout en bout, il nous apparaît que c'est à chacun de s'organiser avec la conversion. Donc, si dans une interconnexion complètement IP, nous le donnons en IP, ce sera à celui qui le reçoit, oui, à le terminer en TDM, mais ce sera aussi à lui à le convertir et à nous le donner en IP.

4741   Nous, ce que nous disons, c'est que nous sommes dans une période où on va vivre une transition. Actuellement, sous le régime TDM d'interconnexion, nous allons continuer à convertir, bien sûr, mais nous ne voulons pas être obligés de maintenir deux régimes.

4742   Si on évolue vers un régime complètement IP-IP et si tout notre trafic devient échangé sur une base IP-IP d'interconnexion, eh bien, ce sera à celui qui aura besoin de faire cette conversion-là à assumer les coûts de la conversion.

4743   THE CHAIRPERSON: Let's stick to the question, you know, rather than -- you will have your turn when we come to it.

4744   Shaw, you had...?

4745   MR. BRAZEAU: We would support Cogeco's point. I think there should be -- the traffic should be exchanged on one language and one language alone, and that's IP. I don't quite understand Rogers' position.

4746   I thought that was the question, whether we agreed with Rogers' position?

4747   THE CHAIRPERSON: Right, yes.

4748   COMMISSIONER MOLNAR: Yes. That was my question, that Rogers' position as I heard them today is that we want to accelerate and do all we can so that pure IP-to-IP interconnection can go forward and in as rapid a manner as possible.

4749   While that is occurring they would be willing to maintain the status quo as it regards conversion costs where you are doing an IP-to-TDM conversion.

4750   So correct me if I'm wrong; Rogers, but I heard that.

4751   MR. WATT: No, that is absolutely correct; the emphasis on moving quickly to the IP-to-IP world.

4752   MR. BRAZEAU: But we would agree with Cogeco that the best way to approach -- to change that would be for carriers to exchange the traffic on an IP basis and then if you want to do the conversion internally, if you need to do the conversion internally, then that carrier can go about and do the conversion.

4753   In our case, if we get IP traffic we would not need to convert that traffic.

4754   COMMISSIONER MOLNAR: Okay. Well, thanks.

4755   I think that was Rogers' position last week and they moved from it. So that's why I was just wondering if any of the others had also given it some thought over the weekend and thought of perhaps a compromise.

4756   Go ahead, WIND --

4757   THE CHAIRPERSON: Did Rogers -- did they move from it? I'm confused now. I thought you said this was your fall-back position. What is your main position today?

4758   MR. WATT: The main position is as Commissioner Molnar expressed it. Our presentation might have been a bit confusing in that we laid out what we thought was the correct rigorous approach, which was our position last week.

4759   But we recognize your -- certainly the ILECs' difficulty with it, and we sense your difficulty with it in terms of raising the spectre of having a tariff so they could recover all of -- the ILECs could recover all or some of those conversion costs were they to do it.

4760   So, as I say, our prime interest here is to try to get IP-to-IP interconnection moving as quickly as possible. Therefore, we are willing to compromise, so change our position and not require or ask for what we did last week which is that each terminating party would do the conversion but, rather say to the assumption that our criteria could be accepted which we think would move IP-to-IP interconnection quickly, that we would be willing then to continue the status quo.

4761   So we would change our position and be willing to accept a continuation of the status quo or we pay the conversion costs.

4762   THE CHAIRPERSON: If I understand it, if we buy the triggers (ii) and (iii) that you set out, you are willing to live by what is in paragraph 11, i.e. you will negotiate by that arrangement which in your interpretation means you will eat it.

4763   MR. WATT: That is absolutely correct.

4764   THE CHAIRPERSON: Thank you.

4765   Suzanne, you have some questions?

4766   COMMISSIONER LAMARRE: I have one question on your routing of calls to the SILEC territories.

4767   You mentioned that you route them, all of them through toll circuits, because at this point in time you cannot yourself distinguish which ones are local and which ones are toll. So as a matter of fact, assuming that some of them are not toll you are overpaying a little bit or a lot. That remains to be determined as far as the subsidy is concerned.

4768   Now, would it be fair to assume that if you are doing it that way it's because you feel it's cheaper to overpay on the subsidy than it would be to try and make that distinction for your calls?

4769   MR. WATT: I will ask Simon-Pierre to respond to that.

--- Pause

4770   MR. OLIVIER: That's a good question.

4771   COMMISSIONER LAMARRE: Okay. Well, if you don't have the answer that's a fair answer also.

4772   MR. OLIVIER: No, but let me try something. We had to move fast after the decision in 2010-908. Obviously, that was for us the fastest way to compensate the small ILEC.

4773   COMMISSIONER LAMARRE: Okay.

4774   MR. OLIVIER: I don't know whether this is cheaper than trying from a technical standpoint to segregate local from toll calls.

4775   What I can say today is that for us in IP or in wireless networks, the originating party, the calling party or outside information is irrelevant at the terminating switch. When we receive a call we don't look where it comes from. We just want to terminate the call and use what we could say least cost routing.

4776   If, for example, we have the bill and keep junction in Upton, we will send up -- we would like to send all of our calls, local and toll, over that bill and keep. If we have a POI with Bell just beside Upton, we would like to use our local trunk, local transit trunk with Bell and mix local and toll traffic. Because we cannot do that, we send everything over toll networks.

4777   From a technical standpoint maybe we could ask Bogdan, but I'm pretty sure that we would not be able to segregate tolls from -- so it's not even an option for us.

4778   COMMISSIONER LAMARRE: Okay, so what I take away from your answer is that you wanted to be on the safe side and make sure you -- you were acting as per the Commission's decision and that's the way you went.

4779   But that being said, you feel there would be a more equitable way to provide the subsidy to the SILECs and that would be by transferring this to the national contribution fund. So, in that sense, you agree with the SILEC's position that this should be reviewed.

4780   MR. WATT: We do agree with our position today because we noted -- I forget which paragraph or what is in the comments today but they did suggest that the national contribution fund should ultimately be the answer to the issue.

4781   COMMISISONER LAMARRE: Okay, thank you. That was my question.

4782   THE CHAIRPERSON: We will discuss that at the SILECs review.

4783   We will take a 10-minute break now. Thank you.

--- Suspension à 1028

--- Reprise à 1041

4784   THE CHAIRPERSON: Okay, Madam la secrétaire, would you get people to sit down, please? Let's go.

4785   THE SECRETARY: Order, please. À l'ordre, s'il vous plaît.

4786   We will now proceed with Bragg Communications Inc., carrying on business as EastLink.

4787   Please reintroduce yourself for the record, after which you will have 10 minutes for your presentation. Thank you.

RÉFUTATION VERBALE

4788   MS. MacDONALD. Good morning, Mr. Chairman, Commissioners and Commission staff.

4789   My name is Natalie MacDonald, and I'm VP, Regulatory, for EastLink.

4790   Our comments here today will clarify a few key aspects of our opening presentation and will address the topics suggested by the Commission.

4791   First, EastLink would like to clarify our position on the need for regulatory intervention and the establishment of rules for IP-to-IP interconnection.

4792   In our response to the Commission's interrogatory EastLink(CRTC) 30th of Jun '11, No. 6, we said:

"EastLink generally agrees with Rogers that IP-to-IP interconnection should be encouraged...and it therefore makes sense that any carrier should be able to connect to any other carrier's IP network, but only when that carrier uses IP-IP interconnection for voice traffic on its internal network."

4793   EastLink considers this comment is in line with the Rogers' proposal, submitted in its opening presentation last week, that basic rules for IP-to-IP interconnection should:

"ensure that they permit IP to IP interconnection on their networks at least wherever they themselves have rolled out IP voice functionality."

4794   Our proposal is also consistent with Cogeco's recommendation, submitted in its opening presentation last week, that:

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

4795   In our opening presentation last week, EastLink submitted that:

"...for new interconnections, carriers should have the right to interconnect on an IP-to-IP basis."

4796   We broadened the mandate from our interrogatory response because the opening presentations of the Bell Companies, SaskTel and TELUS had indicated that all three ILECs were already IP interconnected with other carriers.

4797   To be clear, EastLink continues to support that IP interconnection only be required in cases where a carrier is IP interconnected with either itself or an unaffiliated carrier. We simply expect that all large ILECs would meet this test today.

4798   EastLink's proposal regarding IP-to-IP interconnection and the distribution of gateway costs is consistent with Cogeco's proposals. Mandating IP interconnections in this way would allow for immediate gains in network efficiency through reduced points of interconnect and reduced traffic carriage costs. It would improve call quality by keeping IP calls on an IP basis for as long as possible, and it would end a situation where CLECs are being required to invest in legacy equipment we know is soon to reach its manufacturing end of life, despite the ILECs' rollout of IP-based fibre to the home service.

4799   We would only add that, for now, CLECs should continue to have the right to opt for ILEC transiting services instead of direct interconnection where the economics favour transiting.

4800   EastLink will now address the three issues that the Commission requested we consider.

4801   First, you asked us to consider a trigger that would indicate the network of networks had become, as EastLink described it last week, "fully IP". EastLink had submitted that it may eventually be appropriate to review the existing interconnection regulatory regime and, when the network is fully IP, to consider removing some obligations and regulations.

4802   EastLink expects that a trigger would be based on a certain level of IP-based network interconnections, paired with a certain level of IP access lines deployed.

4803   In Cogeco's opening presentation last week, they said that roughly a third of the access lines in Canada are already IP-based, and that the number could climb to 50 percent within two years given the rapid increase in wireless adoption and considering that ILECs are deploying fibre to the home.

4804   Public Mobile has suggested that 53 percent of access lines, when including wireless, are already IP-based.

4805   EastLink expects that a fully IP world would include adoption levels not too much higher than that, although we cannot suggest a specific threshold at this time.

4806   Cogeco also proposed a review of progress made under a mandated IP interconnection regime in three years' time. EastLink agrees that, in three years, the Commission would be better able to gauge how quickly IP adoption is happening, both in terms of new interconnection arrangements and in consumer adoption of IP access services.

4807   At that time, carriers and the Commission would have more visibility into the evolution of IP networks and would be better positioned to either set a specific threshold or to decide if the time had already come to consider removing certain regulations and obligations.

4808   Second, you asked that we consider whether transit should be forborne, as Bell had suggested.

4809   EastLink submits that there may be some LIRs where that could make sense when the ILEC is able to meet an appropriate forbearance test, but that transiting services should not generally be forborne. For example, in Toronto where there are several LECs operating, those wishing to take advantage of the benefits of IP technology could interconnect with each other directly and secure transit services from a fellow IP-based LEC.

4810   However, in LIRs outside of core areas where there may only be one or two CLECs of varying sizes operating, it would not be appropriate to forbear regulating transit service.

4811   In these non-core area LIRs, where one ILEC and one CLEC may generally split the market, direct connection with the ILEC continues to make the most sense, and since the ILEC is interconnected to other ILECs and to its own LIRs, it makes most sense for that ILEC to provide transiting service at the regulated rates.

4812   Regulated transit services should remain in place during the early days, at least the next three years, of mandated IP-to-IP interconnection.

4813   As EastLink noted earlier, the next review of the IP interconnection regime would be a good place to consider whether, in the world of mandated IP interconnection, CLECs are successfully making alternative arrangements even in small or rural operating areas, in which case, perhaps transit services could be forborne under the IP-to-IP regime.

4814   As existing circuit-switched interconnection will generally remain in place for the next few years while carriers recoup the cost of their existing infrastructure, it will not make sense to forbear from regulating TDM-based transit services until such a time as the Commission sees fit to forbear from regulating circuit-switched interconnection altogether.

4815   Third, the Commission asked Shaw and others to consider incentives that may accelerate IP interconnection rather than relying on mandates.

4816   EastLink submits that ILECs already have a number of incentives to support IP interconnect. For example, they acknowledge that IP interconnection is the reality of the near future, they acknowledge that their circuit-switched technology is nearing its manufacturing end of life. They already have IP interconnections with unaffiliated carriers. They are rolling out their fibre to the home service, and they acknowledge that an IP-based regime will eventually lead to reduced interconnection costs. Nonetheless, the ILECs remain reluctant to entertain IP interconnection requests.

4817   EastLink submits that, whatever the ILECs' disincentive is regarding IP interconnection, it is likely that only a clear mandate from the Commission will overcome that disincentive.

4818   Finally, EastLink would like to address Rogers' proposal that wireless service providers be given four interconnection options: using the wireless access service; interconnection with an affiliated LEC; alternative arrangements with an unaffiliated CLEC, or shared-cost interconnection with LECs.

4819   EastLink does not agree that any changes to the circuit-switched wireless interconnection regime are warranted at this time. However, we do agree that ILECs should be able to make off-tariff arrangements with wireless service providers which would include shared-cost interconnection.

4820   EastLink maintains that, under this regime, CLECs would retain the right to refuse direct interconnection with any CLEC or wireless service provider, and would retain the right to negotiate off-tariff arrangements with wireless service providers.

4821   As EastLink said earlier, it may be appropriate to review the mandated IP interconnection regime in three years, at which time the Commission could also consider consolidating the wireless and LEC IP-based interconnection regimes.

4822   Thank you.

4823   THE CHAIRPERSON: Thank you.

4824   You were here in the room when we just had talked to Rogers, and they mentioned these two triggers, and if those two triggers apply as far as they would negotiate the internal connection regime for IP-to-IP connection with them, and presumably pay for most of it.

4825   How do you feel about that proposal?

4826   MS. MacDONALD: Well, as I understand it, their proposal, the two triggers would be the two different scenarios where IP-to-IP would be mandated or negotiations will be mandated, and we would generally support that. And in that case, each party would bear its own costs of the IP-to-IP interconnection.

4827   I think where we may have -- it has come as a surprise to us is Rogers' recent position on the transition costs. And in that respect, we would have to consider that a little further, but our initial views are still as they were at our oral presentation, which is that the TDM operator would pay the gateway costs.

4828   THE CHAIRPERSON: Okay. Candace, I believe you have some questions?

4829   COMMISSIONER MOLNAR: Good morning.

4830   Sorry. It's just taking me a minute to -- so you are aligned that we would mandate that negotiations proceed and we would look later at whether there's a need to mandate or to create, for example, IP MALI or set any regulatory terms, that we have -- I think you use a period of three years to allow things to proceed under a directive that IP-to-IP -- pure IP-to-IP interconnection should proceed?

4831   MS. MacDONALD: Yes. So just to be clear, we support mandating IP-to-IP interconnection where both parties -- where a LEC seeking IP-to-IP interconnection is seeking it from a LEC that already has IP in its network in the two scenarios proposed by Rogers.

4832   In terms of consolidation or changing the rules in an IP environment, we see that review taking place in about three years.

4833   COMMISSIONER MOLNAR: Thank you.

4834   And you have said that you believe that transit -- TDM-based transit service should continue to be regulated and generally not forborne, although there may be certain circumstances where that could occur, if I understand this correctly.

4835   MS. MacDONALD: That's right. And that's consistent with our position that we don't do an overhaul to the current TDM-based regime. So under the current regime, transiting is in place through the ILEC.

4836   COMMISSIONER MOLNAR: And do I understand that you're suggesting under a new IP interconnection regime you would propose that there be essentially a mandated IP transit service?

4837   MS. MacDONALD: What we're proposing is that, in these early days of IP interconnection, that the Commission not forbear from transiting service through the ILEC. But certainly in the future and perhaps at the three-year review time, there may -- it may be worth looking at whether those requirements are necessary any longer.

4838   COMMISSIONER MOLNAR: So you're not proposing a mandated IP transiting service.

4839   MS. MacDONALD: We would be proposing -- I guess -- I don't know if you could say it either way.

4840   I guess we would be proposing today that a LEC, a CLEC faced with a request for IP interconnection, could choose to have the other LEC who wants to interconnect with them transit through the ILEC. So I guess that would be a mandated transiting arrangement through the ILEC.

4841   So the current regime would be in place even with IP interconnections until a review in three years. I hope I'm making that clear.

4842   COMMISSIONER MOLNAR: Yeah. Maybe you could explain to me why you believe that's a role that would need to be conducted by the ILECs.

4843   I mean, what we've heard here is that we have potentially up to 50 percent of access today being IP and the outliers, the ones that aren't IP, are essentially the ILECs. So when we're talking pure IP-to-IP, why would that be an obligation imposed on the ILECs, to provide that service?

4844   Why couldn't we, in a pure IP-to-IP world, see someone -- some other carriers, some carriers who are predominantly IP today, step up to offer those sorts of services and why wouldn't that make sense?

4845   MS. MacDONALD: And I think it just goes to the point that, today, any LEC looking to interconnect to serve a local area typically will be assured that the ILEC always has the connections with every other LEC. And so to establish new rules for all LECs in today's environment where they would be forced to direct connect isn't necessarily efficient at this point in time.

4846   In a fully IP environment -- and also keeping in mind that our proposal includes opportunities for parties to negotiate arrangements that aren't mandated, it may be that the evolution of interconnection is such that other opportunities will simply be available through other LECs. But we just don't propose mandating that CLECs be required to transit. We think that the ILECs should continue to.

4847   COMMISSIONER MOLNAR: Okay. I think I understand your position.

4848   I want to make sure I understand what you're saying in paragraph 14 here when you say:

"EastLink does agree that LECs should be able to make off-tariff arrangements with wireless service providers which could include shared-cost interconnection."

4849   So just tell me again what it is you're saying here about wireless access services?

4850   MS. MacDONALD: I think the end result may not be that different, you know, with the different positions put forward. But basically, EastLink's view coming into this proceeding was that we don't think there is a need to provide -- to require LECs to interconnect on a shared-cost basis with WSPs because there were three different scenarios that were happening in the marketplace today under the WAS tariff, arrangements with CLECs and also -- sorry.

4851   And the third arrangement being --

4852   COMMISSIONER MOLNAR: Partner CLECs, I think.

4853   MS. MacDONALD: Yeah. So with regard to mandating the shared-cost facility, we don't think that it's absolutely necessary given those alternatives. But certainly a number of parties have come to the Commission indicating that they would be willing to negotiate off-tariff arrangements and, in that case, there may be some shared-cost facilities builds. And so we would support that.

4854   We just don't think it's necessary to mandate that WSPs have the right to shared-cost facility when there are options available to them today.

4855   COMMISSIONER MOLNAR: Would this have some implications for EastLink that I'm missing here?

4856   If -- I mean, if you're going to enable shared-cost interconnection as off-tariff arrangements, I'm not sure that that would be so different than simply enabling shared-cost interconnection.

4857   So is there a consequence of us moving to enabling shared-cost interconnection that I don't understand?

4858   MS. MacDONALD: Not necessarily. I think we're just basically -- the outcome may very well be the same and there isn't any specific advantage to EastLink, or disadvantage. It's just on the principle of -- that we don't think there's any need to mandate it because there are those opportunities available.

4859   So you know, that would be -- our position on it is that it just doesn't need to be established as a rule that WSPs have a shared-cost access. They already have those opportunities today to enter as a CLEC, and there are negotiations happening between CLECs and WSPs that aren't affiliated.

4860   And in that regard, if ILECs are encouraged as well to negotiate other arrangements other than under the WAS tariff, then there will be opportunities for WSPs to enter the market on a basis that could allow for negotiations of shared cost.

4861   COMMISSIONER MOLNAR: Thanks. That's my questions.

4862   Thank you.

4863   THE CHAIRPERSON: Okay. You have been very clear. I think that's all our questions for you. Thank you.

4864   Madam la secrétaire, who's next?

4865   THE SECRETARY: Thank you, Mr. Chairman.

4866   I would invite MTS Allstream to come forward.

--- Pause

4867   THE SECRETARY: Please reintroduce yourselves for the record, after which you'll have 10 minutes to make your oral rebuttal argument.

4868   Thank you.

RÉFUTATION VERBALE

4869   MS. GRIFFIN-MUIR: Thank you.

4870   Good morning. I'm Teresa Griffin-Muir and I am the Vice-President, Regulatory Affairs, for MTS Allstream. And back with me again today is Mike Strople, our Chief Technology Officer.

4871   In our opening presentation, we advocated a regulatory regime that would encourage effective and efficient deployment of new technology and competitive business models. And we provided the Commission with a concrete proposal for a framework that meets these criteria, what we called our transitional POI regime.

4872   After listening to all of last week's presentations, we are more convinced that our proposal is workable, meets the public policy objectives underlying the regulation of interconnection, and will facilitate the natural evolution to IP-based networks in Canada.

4873   We also believe that our proposal offers a practical, efficient middle ground between those parties seeking to preserve or roll back the status quo and those seeking to prematurely mandate IP interconnection and shift costs in the name of unproven and ill-defined gains.

4874   Under our proposal, the Commission would be taking positive steps to ensure that the evolution to IP-based technologies is facilitated, rather than either hindered or forced, by the regulatory regime.

4875   A technologically and competitively neutral transitional POI regime would be instituted that would eliminate existing inefficient and biased interconnection requirements, thereby enhancing competition for the benefit of consumers.

4876   Due to consolidation of traffic over interconnection facilities and the potential to take advantage of larger interconnection areas, carriers will be encouraged to voluntarily enter into interconnection arrangements that will include IP-based interconnection where warranted. These arrangements would be based on a mutually beneficial business case, thereby providing an incentive for other carriers to increasingly deploy IP-based technology.

4877   Mandated IP interconnection in a particular geographic area would be triggered when an ILEC implements IP-to-IP interconnection in its operating territory. At that point, the ILEC in question will be mandated to provide the same interconnection standards, on a non-discriminatory basis, to other carriers within its operating territory. This will ensure that neither the establishment nor sustainability of competition is impaired.

4878   And while the business case for broad-based mandated IP-to-IP interconnection continues to develop, the CISC process can and should be used to ensure that appropriate standards are established.

4879   Before addressing the issue of mandating IP-to-IP interconnection, I would like to clear up some misconceptions regarding our proposal for reforming the existing local, wireless and long distance interconnection regimes.

4880   As you observed, Mr. Chairman, our proposal is very simple and straightforward. That is because it was designed to reflect the actual interconnection experience in the marketplace.

4881   We note that there was broad consensus during the hearing in favour of the type of changes we are proposing to the wireless interconnection regime.

4882   Briefly, under the MTS Allstream transitional proposal, all carriers, LECs, WSPs and IXCs, will be able to deploy shared cost POIs for the exchange of traffic.

4883   Permitting all types of carriers to deploy POIs and thereby consolidate their traffic will naturally facilitate the movement towards larger geographical interconnection areas. But to be clear, MTS Allstream is not proposing to consolidate geographic interconnection areas at this time.

4884   While we agree that this type of consolidation will occur over time, we believe that this should happen naturally with the evolution from TDM to IP technologies and increased IP-to-IP interconnection.

4885   Our proposal will not result in stranded investment for either the ILECs or competitors using existing WAS tariff or access tandem facilities. These facilities need not be replaced; rather, these arrangements would be grandfathered.

4886   We have attached a one-pager showing the steps necessary to implement our proposal that you asked us to prepare. This shows that our proposal can be implemented with minimal changes to the tariff for the existing regulatory framework.

4887   We do not believe that imposing equal access on WSPs would be necessary if the Commission were to adopt our proposal. In fact, there is broad consensus that the imposition of equal access is no longer necessary. And as you, Mr. Chairman, observed during TELUS' initial appearance, imposing equal access obligations on stand-alone wireless providers places these entrants at a disadvantage relative to their vertically integrated counterparts.

4888   These latter carriers are able to benefit from their related LEC operations to interconnect in an efficient manner without being encumbered by an equal access obligation.

4889   While there is relatively broad consensus regarding the benefits of reassessing the wireless interconnection regime, opinion is divided on the Commission's role in mandating IP interconnection. We believe that there is a middle ground that facilitates the natural evolution towards IP networks while ensuring all carriers are able to interconnect their networks in an efficient and competitively neutral manner.

4890   In this sense, the difference of opinion among those advocating mandated IP-to-IP interconnection is largely about the appropriate timing of such a requirement.

4891   Under the cable carriers' proposal, the obligation to provide broad-based IP to IP voice interconnection services would arrive virtually immediately. Some, such as Rogers and Cogeco, have proposed that this obligation be triggered simply by the use of IP technology in a carrier's network, although I note Rogers changed their proposal this morning.

4892   Given that, today, all carriers deploy some IP-based technology somewhere in their networks, in effect, their proposals -- or at least Cogeco's now -- is no different from the proposals made by Shaw to mandate IP to IP interconnection six months following your decision in this proceeding.

4893   Unlike other large ILECs, we believe the Commission does have a role in regulating IP-based interconnection. This role is to ensure that all carriers with market power are not able to discriminate in the provision of interconnection services. That is why we have proposed that mandated IP-to-IP interconnection for an ILEC within its operating territory be triggered when that ILEC has provided IP-to-IP interconnection to another carrier within this same operating territory.

4894   This trigger strikes a balance between allowing the ILECs to use market power to impose discriminatory terms or to prevent certain carriers from interconnecting to their networks on an IP basis, while not forcing ILECs to absorb additional costs or make uneconomic investment simply to accelerate the conversion of their networks from TDM to IP.

4895   This conversion will, as it should, be driven by technological advances and competitive market forces.

4896   It follows then, that we think it is not appropriate for the Commission to forbear from regulating voice interconnection services generally. Our approach is consistent with the Act as well as the government's policy reflected in the Policy Direction.

4897   There will come a time when mandating IP-to-IP interconnection on a broad basis will be appropriate; however, it is premature to do so today.

4898   MR. STROPLE: We say it is premature because voice networks today remain predominantly TDM, and interconnection via IP is best left to commercially motivated parties.

4899   Those seeking to mandate broad-based IP-to-IP interconnection at this stage of the deployment of an IP-based technology appear to be pursuing one of two goals. The first is the simple desire to shift costs of translating the traffic; the second is the mistaken belief that mandating IP-to-IP interconnection will foster the rollout of IP-based networks generally.

4900   Continual questioning of proponents of mandated IP-to-IP interconnection by Commissioners revealed that these participants were largely seeking to shift translation costs on to the ILECs.

4901   As Rogers' Mr. Watt confirmed in response to a question by Commissioner Molnar, however, they don't see any benefit to the system as a whole from transferring the costs of translation from IP carriers to TDM-based carriers.

4902   All market participants want to interconnect their networks to those of the ILECs, which in effect serve as the "hub" of the public network. These networks, in which ILECs have long invested significant capital, are predominantly TDM-based at this time.

4903   It seems reasonable to us that those wishing to interconnect with these ILEC networks should be required to make some accommodation. This accommodation is the requirement to translate IP traffic to TDM.

4904   Indeed, the capital costs of this accommodation have largely already been made by IP-based carriers. Accordingly, the cost of continuing this accommodation pales in comparison to the cost of now requiring ILECs to incur new capital costs in order to begin translating traffic in the other direction.    When pressed for evidence of a market failure, CNOC cited "lost innovation" and provided the example of HD calls. Yet others cited the interest in encouraging adoption of IP technology. Shaw stated it was "self evident" that mandating IP-to-IP interconnection will enhance the digital economy.

4905   With respect, it is not self evident that that is the case. IP interconnection for voice alone does not enhance the digital economy because, for the time being, networks will remain predominately TDM.

4906   The level of deployment of technology, in this case, IP technology, is driven by technological evolution to some degree. But the principal driver of investment and innovation is competition.

4907   For example, MTS Allstream was motivated to deploy IP-based technologies in its network in order to deliver internet and television distribution services in competition with its cable competitor. The Commission recognized this dynamic in the Wholesale high-speed access services decision. You stated:

"The Commission considers that competition in retail service markets drives innovation and provides end-users with the greatest choice of service providers and service characteristics, including pricing, service features and customer service quality."

4908   The same dynamic applies here. If IP-based networks offer advantages in the way of the ability to provide innovative new services, owners of these networks, including the cable carriers, enjoy a competitive advantage over carriers deploying primarily circuit-switched networks.

4909   Significantly, this competitive advantage is not hampered by their inability to interconnect with the ILECs' networks using IP-based technology.

4910   Currently, and under MTS Allstream's proposal, cable carriers are free to deploy IP-based services over their own networks. They can also enter into voluntary IP-based interconnection arrangements with other carriers similarly deploying IP-based networks to provide these services across their respective networks. In fact, we were surprised to learn that companies such as EastLink and Rogers have chosen not to take advantage of this opportunity already.

4911   Competition from any successful new IP-based services will be far more likely to drive the ILECs' deployment of IP-based end-to-end networks than an obligation to prematurely provide IP-based interconnection services to these carriers. Motivation for such deployment will increase even as the costs of this technology continue to come down.

4912   But the imposition of such an obligation at this stage in the deployment of IP-based technologies throughout our network will force us to simply translate all traffic received over IP-to-IP based interconnections back to TDM protocol.

4913   As we have already said, the continued translation of traffic seems to us to be a reasonable accommodation to require of those seeking to interconnect with the ILECs' networks.

4914   Leaving aside the flawed rationale for these proposals, they remain, as we have said, premature.

4915   During the course of the hearing, the question of whether there exists a sufficient development of, understanding of, or interoperability between IP standards was debated. It was suggested that session border controllers were the answer to the interconnection challenge.

4916   They are a necessary component of any voice IP interconnect but they don't address the complexity of making an IP interconnect work exactly the same way that hundreds of TDM interconnections have worked between carriers for decades.

4917   A number of participants claim they have not experienced any problems with the varied interpretation of IP standards. That is not our experience. That is not to say that IP interconnection is not possible, practical or desirable. It is all of these.

4918   The interoperability challenges, however, are real. They are also entirely solvable. We believe that they are best solved by mutually motivated parties rather than parties complying with a regulatory mandate.

4919   Proposals such as that of Rogers requiring us to translate IP traffic back to TDM in order to terminate on our network would in fact force us to incur the cost of translating this traffic from a multitude of different IP implementations back to TDM, which represents a robust and exceptionally well understood standard. This will shift significant and, in some cases, increased costs, but it will not advance any public policy objective.

4920   We believe the distinct improvements we have advocated to the interconnection framework will accomplish the Commission's important goals for this proceeding.

4921   In particular, our proposal to move today towards a transitional POI-based interconnection framework will increase the efficiency of the industry at the same time as it and other measures facilitate an ongoing evolution towards increased use of IP technology and eventual mandating of IP-to-IP interconnection.

4922   These improvements are progressive and virtually costless. Moreover, they are demonstrably in the public interest.

4923   THE CHAIRPERSON: Thank you.

4924   And your one-page summary at the end is what would have to be done to implement the proposal that you made last week?

4925   MS GRIFFIN-MUIR: That's right, the proposal for the existing interconnection regime to allow WSPs to be part of -- and IXCs to the extent they want -- to be part of the shared cost arrangements.

4926   THE CHAIRPERSON: Didn't you also propose to combine the three connection regimes into one?

4927   MS GRIFFIN-MUIR: I think that was maybe a misunderstanding.

4928   What we were suggesting was the WAS Tariff and to a lesser extent the Access Tandem Tariff could be grandfathered so that eventually it would all naturally work into one.

4929   But we weren't suggesting that we had to stop doing one and mandate everybody to immediately go to the shared cost.

4930   THE CHAIRPERSON: Okay. I'm looking at Rogers' proposal this morning and the two triggers which it clearly explained.

4931   And then you in paragraph 14 say:

"...we have proposed that mandated IP-to-IP interconnection for an ILEC within its operating territory be triggered when that ILEC has provided IP-to-IP interconnection to another carrier within this same operating territory."

4932   What's the difference? I mean it seems to me that your trigger and Rogers' trigger says the same.

4933   MS GRIFFIN-MUIR: I think it says the same thing, that once -- I'll use MTS as an example -- once MTS actually interconnects over the shared-cost network IP-to-IP with, for example, Shaw, then we would be mandated to offer that form of interconnection to all other carriers.

4934   THE CHAIRPERSON: But do you, for instance, interconnect with MTS Mobility that way right now?

4935   MS GRIFFIN-MUIR: No.

4936   MR. STROPLE: No.

4937   THE CHAIRPERSON: So you would not right now qualify under the Rogers proposal.

4938   MS GRIFFIN-MUIR: Neither Rogers' nor our proposal actually would be --

4939   THE CHAIRPERSON: Okay. I'm sorry, there's something here that escapes me. Tell me again what it is that would trigger it for you, using MTS as an example.

4940   MS GRIFFIN-MUIR: Okay. Using MTS as an example, within our operating territory in Manitoba, if we were to interconnect with Shaw, as an example, on an IP-to-IP basis over a shared-cost facility, that would mean we would have to offer IP-to-IP interconnection in that same geographic region to everybody else.

4941   THE CHAIRPERSON: And right now you do not have any IP interconnection within your territory?

4942   MS GRIFFIN-MUIR: No, we don't.

4943   THE CHAIRPERSON: Not even with an IXC?

4944   MS GRIFFIN-MUIR: Not to my -- no.

4945   THE CHAIRPERSON: I'm looking at the every same page:

"Given that today all carriers deploy some IP-based technology somewhere in their networks..."

4946   That's your statement on that very page in paragraph 13.

4947   MS GRIFFIN-MUIR: Right, but --

4948   THE CHAIRPERSON: You are a carrier.

4949   MS GRIFFIN-MUIR: We are a carrier.

4950   THE CHAIRPERSON: We both agree.

4951   MS GRIFFIN-MUIR: We both agree.

--- Rires

4952   THE CHAIRPERSON: And you say:

"... all carriers deploy some IP-based technology..."

4953   MS GRIFFIN-MUIR: Right. So you backhaul some transmission facilities but not your access architecture, and for voice we would convert everything back to TDM. So we don't actually have any IP-to-IP interconnection or 100 percent IP all through our network.

4954   What we were trying to say is the criteria that Shaw and Cogeco are suggesting just means that you have some elements of your network, some of your transmission facilities are IP-based and that should be the trigger, we're saying that's a little premature, that it's a gradual deployment. Our switches are still TDM switches, they're not IP.

4955   THE CHAIRPERSON: So using some IP does not trigger it, but having an interconnection agreement with somebody else, even with one of your own divisions, let's say in your case MTS Mobility, which I believe last time you told me it's not a separate company but just a division --

4956   MS GRIFFIN-MUIR: That's right.

4957   THE CHAIRPERSON: -- that would trigger it?

4958   MS GRIFFIN-MUIR: Actually we didn't propose that, but --

4959   THE CHAIRPERSON: I'm posing it as a question.

4960   MS GRIFFIN-MUIR: Okay. That's not how we looked at it. We looked at it more as with another carrier, not ourselves.

4961   THE CHAIRPERSON: Okay.

4962   Then in paragraph 18, you say that seeking a broad-based mandate is driven by two motives, number one, to shift the costs of translating the traffic, and second:

"...the mistaken belief that mandating IP-to-IP interconnection will foster the roll-out of IP-based networks generally."

4963   Why is that a mistaken belief? Surely if you have -- wouldn't this automatically -- and I certainly heard nothing last week to suggest this is a mistaken belief.

4964   MR. STROPLE: If by mandating IP-to-IP interconnection for voice, to the extent that I will take that IP interconnection, I will convert it right back to TDM immediately, you don't get any of that benefit of driving what might be presumed from an end-to-end IP networking proposal.

4965   So when you're just talking about the interconnect, to the extent that it gets converted back to TDM, you don't really drive IP any further.

4966   THE CHAIRPERSON: Sure. But wouldn't the fact that you have to do that drive you to re-examine your network and say, well, if I have to do this anyway, do I really want to reconvert or isn't it time here to put this part of my network or this functionality or whatever we're talking about on IP?

4967   MR. STROPLE: That decision will more largely be driven by what can I commercially -- by converting the rest of my network to IP, what can I do in terms of revenue, in terms of services, not just by the simple fact that well, I have to interconnect, so I might as well.

4968   It's such a big proposition that the requirement to interconnect will probably be met with the minimal approach to say, well, how do I interconnect.

4969   THE CHAIRPERSON: Well, is that really true? I mean it wouldn't be the sole driver, I agree with you, but surely it would be one of the drivers in your decision-making.

4970   MR. STROPLE: It would be a driver. We would look at how do I meet the obligation, but it would be highly unlikely to drive or tip the scale on the balance. I mean that investment on the balance of the network, everything from equipment through service change, is much more significant.

4971   THE CHAIRPERSON: Okay.

4972   In paragraph 20, you say at the very bottom of page 6:

"This accommodation is the requirement to translate IP traffic to TDM. Indeed, the capital costs of this accommodation have largely already been made by IP-based carriers."

4973   So are you suggesting that if we mandate IP-to-IP in any form, we're actually giving them a relief from costs they're already incurring right now?

4974   MS GRIFFIN-MUIR: Actually we were looking at it from our own perspective, just what the incremental cost is. I'm not sure. I'm assuming that they wouldn't have to on an incremental basis continue to incur translation costs.

4975   But up to this point, anybody who is currently interconnected with an ILEC has already incurred those costs. So to a certain extent they would get some relief if they no longer have to incur those costs.

4976   THE CHAIRPERSON: I see.

4977   MS GRIFFIN-MUIR: We were looking at it more from the perspective that because the incumbent is the hub -- and thus far this morning and last week you heard that everybody does still continue to wish to translate their traffic through the incumbent -- that's many interconnections as opposed to one interconnection with the incumbent in a territory.

4978   So we were just saying the cost for us would be greater than the cost that they would incur.

4979   THE CHAIRPERSON: If I adopt your proposal, is there not a possibility that it has a perverse effect of delaying conversion to IP-to-IP?

4980   Because basically once you do it for one, you have to do it for everybody, if I understand you correctly. So therefore, you may hesitate and delay that step for as long as you can because it does have significant cost implications for you.

4981   MS GRIFFIN-MUIR: That is true.

4982   I don't think I would delay it though because I really think it -- like everything else that's happened recently in the market, the demand for higher bandwidth, our investment in television, the investment that we're making and others have made in LTE -- is all driven by what the market wants.

4983   So if there is something different or better that can generate greater revenues or is just generally demanded by customers, to the extent that the cable operators, because they're all IP-based, begin to interconnect with each other and demonstrate this, that will be the biggest motivation for us, because otherwise, we would either lose a bigger share or have the potential to earn greater revenue.

4984   I think that if you mandate, as Mike was saying, it would just be a question of if there isn't a business case for us to convert, we would continue to translate back to TDM because that's a very big investment on our part.

4985   So to the extent that there is a market-driven reason for us to make that investment -- and of course it's easier to explain that to your shareholders then too.

4986   THE CHAIRPERSON: Okay. So if I say MTS, you convinced me, we'll adopt your proposal, when are you going to do it? When are you going to connect the first carrier on an IP-to-IP basis, exercising your trigger?

4987   MS GRIFFIN-MUIR: Well actually, I don't know when exactly.

4988   THE CHAIRPERSON: But I mean we all have to do some forecasting here, some crystal-ball-gazing, et cetera.

4989   MS GRIFFIN-MUIR: Right.

4990   THE CHAIRPERSON: My colleague Tim just asked Bell -- how long it would take -- I think Rogers -- and they said roughly 10 years. So obviously that's a very long time in this fast-moving IP world.

4991   So here you put a proposal forward and, you know, you believe in it. You reiterated it today. So put it in some context for me.

4992   MS GRIFFIN-MUIR: Well, I guess, as the products develop within, I wouldn't -- I think Mr. Denton's question dealt with the end of the TDM regime as opposed to the beginning of the IP regime.

4993   THE CHAIRPERSON: We are all addressing the same thing, the timetable of conversion.

4994   MS GRIFFIN-MUIR: Right, except the end is probably a while away, whereas the first conversion is probably quite a bit closer.

4995   THE CHAIRPERSON: Okay. How close?

4996   MS GRIFFIN-MUIR: Well, I don't think we've received any requests within Manitoba.

4997   MR. STROPLE: That would be the first part, is you would need someone on the other side to say I'm interested in doing it.

4998   THE CHAIRPERSON: Surely, Shaw is operating in your -- they're at the table. They would love to connect with you on an IP-to-IP basis.

4999   Shaw, I don't want to speak for you, but I assume that is correct?

5000   MR. BRAZEAU: We have an application here, Mr. Chairman.

--- Rires

5001   MS GRIFFIN-MUIR: And in a few years we'll fill that application for them.

--- Rires

5002   MS GRIFFIN-MUIR: Actually I don't know the answer to that. I'm not sure exactly when that would take place.

5003   THE CHAIRPERSON: I'm not trying to put you on the spot but I really need some context.

5004   MS GRIFFIN-MUIR: Context, yes.

5005   THE CHAIRPERSON: I mean the Rogers, if I understand -- I still am not quite sure that I see any difference between you and Rogers.

5006   But maybe Rogers can -- can you point out to me, do you see your trigger being the same as MTS or do you see your trigger being exercised earlier?

--- Pause

5007   MR. WATT: My apologies, I didn't hear the question.

5008   THE CHAIRPERSON: Okay.

5009   MR. WATT: I see you're looking at me.

5010   THE CHAIRPERSON: MTS tells me their trigger is basically you have to have an interconnection agreement with another carrier.

5011   You say that's one of yours. You say interconnection to an affiliate division of its operation or an unrelated service. So you're much more specific.

5012   So MTS, if they actually did interconnect with their own MTS mobile system, it would count as a trigger under yours; it wouldn't under theirs.

5013   MR. WATT: Yes, it would.

5014   THE CHAIRPERSON: And the other one you have is providing voice service to end users via IP switches rather than legacy, i.e. MTS is serving its customers directly through IP, et cetera.

5015   I'm trying to get out what it would take -- when would this be likely to happen because I'm worried about the perverse effect. If I adopt MTS' proposal, they would be hesitant to enter into an interconnection regime because it would trigger everything.

5016   Now, if I look at your triggers, are they likely to happen earlier or is this the same timeframe we're talking about?

5017   MR. WATT: We think they would happen earlier because, for example, they have an HSPA network. In their wireless network they'll be going to LTE.

5018   We do think they will have an interconnection on an IP basis between their wireline and their wireless, and that would trigger under our criteria sooner than under their criteria, as I understand it.

5019   THE CHAIRPERSON: Okay.

5020   MTS, do you agree with that assessment?

5021   MS GRIFFIN-MUIR: Well, to the extent that our proposal does not have a trigger for an internal, so between divisions of ourselves, and to the extent if we did that sooner rather than later within our own network, Rogers is correct.

5022   THE CHAIRPERSON: Okay.

5023   And I can't get a timeframe out of you.

5024   Can I get a timeframe out of you, Rogers? When do you think this trigger would -- or are you suggesting it already would apply to MTS right now?

--- Pause

5025   MR. WATT: I believe they said last week and reiterated today that they do not exchange traffic on an IP basis between their mobility arm and their wireline arm.

5026   Then I guess it would not apply today, but I expect it soon would apply and -- well, we're not privy --

5027   THE CHAIRPERSON: Forget about MTS, but generally, when do you expect those triggers to start being sort of operational or start to in effect allow you to avail yourself of them?

5028   MR. WATT: We think next year.

5029   THE CHAIRPERSON: Next year, okay.

5030   Thank you.

5031   Len, did you have some questions?

5032   COMMISSIONER KATZ: Thank you.

5033   Good morning.

5034   Ms Muir, a comment and it is a question but I'll let you respond to it.

5035   I think this is probably the first time in at least 10 years that I've heard MTS come before us as an ILEC as opposed to as a CLEC --

--- Rires

5036   COMMISSIONER KATZ: -- taking the position you're taking. So you can respond to that.

5037   But clearly, you're being motivated by cost here more than anything else and you're simply saying you don't want to be forced into incurring costs that your shareholders won't see a return on, rather than looking at the broader picture, going back to when John MacDonald was running your company saying IP is the future and IP is going to be the panacea for everything always, and your company has taken that position forward in all the appearances before us until today.

5038   So I'll leave that comment out there and let you respond to it if you can.

5039   MS GRIFFIN-MUIR: Actually I have to disagree with you.

5040   We looked at it really broadly over the whole company and even if you took our national division, we're not interconnected IP-to-IP.

5041   We do believe that all the networks are going to IP and that's why we have what we like to think anyway is a balance between the extreme of don't mandate this to having a trigger, but we haven't worked out all the interoperability issues and we know it does take time.

5042   I think even Cogeco was saying it works well now, but it took them a few years to work out.

5043   So we understand there's some investment and we try to look at the interconnection issue as something that requires mandating but at the right time, not simply asking everybody to make large investments because somewhere down the road we're going to convert from TDM to IP switching.

5044   So we just looked at it as a continuum and obviously we had to balance some of the costs associated with TDM switching.

5045   CONSEILLER KATZ : C'est tout.

5046   THE CHAIRPERSON: Tim?

5047   COMMISSIONER DENTON: In paragraph 4, one of your points is that mandated -- you say:

"Mandated IP interconnection in a particular geographic area would be triggered when an ILEC implements IP-to-IP interconnection in its operating territory."

5048   Does this -- it seems to me that the ILEC then chooses the time in which it's ready to have IP interconnection with anyone else. I mean it's triggered. I mean when the ILEC actually does something, then it triggers -- what is the use of -- all right, let me try to get to the question.

5049   It seems to me that you're just saying that you will do this when you bloody well want.

5050   MS GRIFFIN-MUIR: Actually, no. No. It's when there was a business case to make an investment in that kind of switching equipment.

5051   And that's not just us, though. We are not just looking at it from MTS' operating territory perspective. We look at it also where we might seek IP interconnection with another incumbent who might offer IP interconnection to Rogers, for example, but not wish to offer it to us. So I mean we looked at it from both sides.

5052   And once an incumbent has made the investment in IP switching, we would like it to be non-discriminatory interconnections. So that's not only from MTS' perspective, that's from our perspective as a national operator as well.

5053   We would like to be able to interconnect with incumbents who do have IP switches and not be excluded from that outside our operating territory.

5054   So I mean it works both ways from our perspective.

5055   And as I said earlier, it's really -- we look at it from a business case perspective so that if there are really great services and a lot of customer demand that can only be generated by interconnecting IP-to-IP, we would expect to see that in the market today. And so far, no one has sat here and told you guys about this great service that you can get or the revenues they can generate.

5056   I'm sure there's potential, but today the business case is not there. That's all we're saying.

5057   COMMISSIONER DENTON: Noted.

5058   One of the principal complaints of those who resist the inevitable future is that the costs of translating traffic from IP to TDM should not be shifted onto those on remaining TDM networks.

5059   Have you, or has anyone else, to your knowledge, presented evidence of what these costs might consist or, and what size in order of magnitude they might be?

5060   MS GRIFFIN-MUIR: No, we haven't submitted any specific costs, and I am not aware if any of the proponents of IP -- they may have submitted costs, but I am not aware of them.

5061   COMMISSIONER DENTON: I just note that for people such as yourselves who have to make this, apparently, important decision as to whether to proceed or not with imposing or not imposing these translation costs, we are left with evidence-free policymaking on this point.

5062   I would really appreciate anyone in the room who has some views or thoughts on this to start telling us what these costs might consist of.

5063   Thank you, Mr. Chairman, those are my questions.

5064   THE CHAIRPERSON: Thank you.

5065   I have now had the chance to look at your one-pager, and you say: "To allow 'new' interconnections to be established at agreed `meet-me' points of interconnection, per LIR or larger area as mutually agreed..."

5066   They would be different for each carrier with whom you have an agreement, or would the larger area, et cetera, apply across the board?

5067   MS GRIFFIN-MUIR: Yes, that would just be negotiated, some geographic area that might be larger than the LIR.

5068   THE CHAIRPERSON: Why would it be different for different carriers?

5069   MS GRIFFIN-MUIR: I understand the question now.

5070   We are not suggesting that it would be different for other carriers. If they wanted, also, to interconnect to a larger area, they could.

5071   THE CHAIRPERSON: Secondly, why do you insist on another carrier? Isn't this all a question of capability?

5072   If you are capable of interconnecting on an IP-to-IP basis with MTS Mobility, why couldn't you then do the same thing and interconnect with WIND?

5073   Surely it's a question of either you have the capability or not. Whether it's in-house or with another company is irrelevant.

5074   MS GRIFFIN-MUIR: I think, actually, you are right, that once we have the capability to interconnect with ourselves, we could probably do it with others.

5075   THE CHAIRPERSON: Okay. I should read that as, "and provide internet connection to another carrier or to a division of its own, where it carries on another line of business," or something like that.

5076   MS GRIFFIN-MUIR: Yes.

5077   THE CHAIRPERSON: Okay. Thank you, those are our questions.

5078   Madam Secretary, let's proceed with the next intervenor.

5079   THE SECRETARY: Thank you. I would now invite TELUS Communications to come forward.

5080   THE CHAIRPERSON: I'm sorry, there is a flag up. Stay seated for a second, this question may be related to you.

5081   CNOC...

5082   MR. HOLMES: Thank you, Mr. Chairman. Actually, it's Jonathan Holmes from the Joint Task Force. I was wondering if we could just get a response from MTS Allstream to our question from earlier this morning about toll traffic into our territories.

5083   THE CHAIRPERSON: Do you want to repeat the question?

5084   MR. HOLMES: The question was: Do you route all long distance traffic destined for customers within SILEC territories over SILEC long distance trunks?

5085   MS GRIFFIN-MUIR: The answer is, to the best of our knowledge, we do. There may be a small number of calls that filter through another way, but to the best of our knowledge, we do use the toll trunks.

5086   THE CHAIRPERSON: Thank you.

5087   THE SECRETARY: We will now proceed with TELUS Communications Company.

5088   Please reintroduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument.

5089   Thank you.

RÉFUTATION VERBALE

5090   MR. WOODHEAD: Thank you, Madam Secretary.

5091   Good morning, Mr. Chairman and Commissioners. I am Ted Woodhead, Vice President, Telecom Policy and Regulatory Affairs. With me on the panel from TELUS, to my left, is John MacKenzie, Senior Regulatory Advisor. To my immediate right is Zouheir Mansourati, Vice President, Network Technology and Planning, and next to Zouheir is Orest Romaniuk, Vice President and Controller, Finance.

5092   We thank you for the opportunity to make this oral rebuttal.

5093   After observing and listening to all of the presentations made by the parties last week, we believe that two major policy issues have become the focus of this proceeding.

5094   The first is if, and when, the implementation of IP interconnection should be mandated as part of the regulatory framework for voice telecommunications, and which entities should bear IP to TDM traffic conversion costs.

5095   The second major question relates to whether all wireless service providers should be granted shared-cost bill and keep interconnection in a manner previously reserved for LECs.

5096   These are the two questions that TELUS will focus upon today.

5097   In order to make a determination on the need for mandated IP interconnection, there must be a common understanding of the evolution to IP networks. Zouheir will comment on this issue.

5098   MR. MANSOURATI: For over 10 years, TELUS' strategic intent has been to unleash the power of the internet to deliver the best solutions to Canadians at home, in the workplace, and on the move. This has not been a mere slogan. TELUS has invested close to $2 billion on the development and deployment of internet-protocol-based fixed and mobile networks from the core to the end user.

5099   This investment was made based on sound technical reasons and dynamic economic factors, while clearly meeting TELUS' regulated obligation to serve.

5100   We would like to stress the need to address this proceeding on IP interconnection with the proper perspective and for the right reasons, be they economic or technical in nature.

5101   This proceeding is about IP interconnection for voice services, more specifically, voice over IP. Consistent with TELUS' strategic intent, we believe that the transition to ubiquitous and seamless IP-to-IP interconnection is only a matter of time, and that ILEC and non-ILEC networks alike are naturally evolving in this direction in all segments.

5102   However, we have to recognize that less than 2 percent of ILECs' wireline voice services are provided over IP access technology. Therefore, it is reasonable to expect that an inflection point in the deployment of voice over IP services is still a few years away.

5103   To be clear, TELUS believes that, for the foreseeable future, the majority of ILECs' customers will continue to receive their telephone services over traditional circuit-switched technology, particularly in rural and remote areas, where alternate service providers do not serve and are under no regulatory obligation to do so.

5104   Looking more closely at the network, one can discern distinct dynamics taking place in the three access media: copper, fibre, and wireless.

5105   First, despite the wide deployment of broadband services over copper loops, it is difficult to justify the retirement of well-established TDM switches that still represent the most reliable and best-performing platforms for voice services. This approach remains the reference, with over five 9s in availability, and does not suffer from any shortage of features and capabilities.

5106   Furthermore, this is the service upon which our public safety organizations rely today.

5107   Second, in all Greenfield areas, TELUS is currently deploying fibre to the home and offering VoIP, high-speed internet access, and Optik TV. Additionally, where it is economically feasible, we are deploying FTTH in Brownfield areas.

5108   Third, with the evolution to LTE in the wireless network, we will see the emergence of VoIP over LTE. I would like to remind the Commissioners that while voice is packetized on 4G wireless networks, it is still transported in a circuit-switched manner. True VoIP over 4G networks is still under development in standard bodies such as 3GPP.

5109   Clearly, the timing of the inflection point after which transition to VoIP will accelerate is driven by the expansion over fibre and wireless media.

5110   TELUS notes that, as part of the CRTC annual monitoring report process, all carriers already provide statistics regarding their number of IP voice access lines. As a result, the Commission will always have a complete and up-to-date view on the state of IP voice deployment in Canada.

5111   If an IP voice provider wishes to offer some enhanced VoIP service, such as HD voice, it is free to do so for its customer base, and the service would be available when its customers call each other.

5112   In addition, it is free to negotiate a direct interconnection with any other IP voice provider to transmit the service across those networks.

5113   As technology progresses, TELUS believes that offering feature-rich services creates an incentive for the company and for other ILECs to continue to invest in IP voice access, so that its customers would be able to receive the equivalent service, and this, in turn, provides a basis for parties to negotiate IP voice interconnection. Put another way, letting market dynamics work is the right approach.

5114   MR. WOODHEAD: Carriers that wish to negotiate direct IP interconnection arrangements with each other should be encouraged to do so. There are many reasons why commercial negotiations will be successful for IP voice interconnection. First, more and more service providers are deploying IP voice services within their networks, meaning that service providers will have many parties with which they can discuss potential direct interconnection.

5115   Second, as ILECs such as TELUS deploy an increasing amount of IP-voice-capable access lines, they will have additional incentives to enter into IP voice interconnection arrangements with other carriers.

5116   TELUS commits to the Commission that we will enter into all interconnection arrangements on non-discriminatory terms and conditions, where facilities are available.

5117   TELUS has shown a willingness to enter into such agreements in the past. As mentioned last week by Cogeco, Cogeco and TELUS entered into a commercial arrangement where TELUS provides Cogeco access to the PSTN in an IP interconnection arrangement. Cogeco, as part of this commercial arrangement, pays for the IP to TDM conversion costs. These types of arrangements should continue to be available to parties, should they wish to negotiate their own interconnection arrangements.

5118   TELUS will support any CISC activities that examine outstanding standards and other issues related to IP voice interconnection, including 9-1-1 services.

5119   It is interesting to note that the CISC committee dealing with IP issues has been suspended during the last six meetings for lack of agenda items.

5120   These CISC activities would feed into the CRTC, which could re-examine the need for IP voice interconnection regulation in three years' time.

5121   If an examination is warranted, the CRTC can also examine whether any changes should be made to the points of interconnection, regulated transit and EAS services, and any other interconnection rules as a result of the change to IP voice interconnection.

5122   To be clear, TELUS is proposing that the Commission not make any changes to the existing interconnection regime at this time, including the points of interconnection. TELUS submits that the Commission struck the appropriate balance when it established LIRs and should not undo these interconnections now. The proposed LIR consolidations will do nothing in the TDM environment except shift costs to the ILECs and possibly to regional CLECs that may not wish to interconnect in major cities.

5123   MR. ROMANIUK: TELUS would like to address the question of conversion costs. At present, any IP voice call must be converted to TDM, with the costs borne by the IP voice provider. This fact was well known and incorporated into the business plans and roll-out strategies when the cable carriers entered the voice marketplace. Despite this conversion requirement, the cable companies and others chose to deploy IP, as it was still cheaper than the deployment of circuit-switched network.

5124   As a result, the cable companies and other carriers have cost advantages, particularly since they have no obligation to serve.

5125   Nevertheless, these providers are now looking for the Commission to mandate an unnecessary layer of complexity and non-value added costs on ILECs.

5126   The witness for Shaw agreed with Commissioner Denton that what it was looking for was that the translation job of IP to TDM be done by the party receiving the IP traffic, in essence requiring a duplication of existing capabilities.

5127   This issue has nothing to do with any enhanced IP voice service, or the deployment of IP technologies and networks. Parties are seeking a shift in costs to ILECs only to reduce their own costs of interconnection.

5128   The Commission should ask itself if this is the time to shift conversion costs to ILECs, while they continue to have significant costs associated with, and investments in, TDM facilities. VoIP providers have the advantage of being able to deploy all IP networks, while having the full knowledge that the incumbent voice networks were TDM-based and would be required to pay for their customers' voice calls to be converted.

5129   In addition, in the Obligation to Serve decision, the CRTC recognized that the cable companies generally do not offer residential phone services in the higher-cost locations within regulated high-cost serving areas, and that only ILECs in regulated exchanges have the obligation to provide these services.

5130   We ask that the Commission consider whether it is just and reasonable that voice over IP providers, mainly the cable carriers, should be able to pass on conversion costs to the ILECs, when the Commission has recognized the cost and benefits of their network, and network deployment, as well as the fact that they do not assume any of the obligations to serve.

5131   MR. WOODHEAD: The second major question in this proceeding relates to the wireless interconnection regime and whether all wireless service providers should be entitled to shared cost interconnection when they interconnect with LECs.

5132   As TELUS noted previously, it does not believe that consolidation of the wireless interconnection regime with the local interconnection regime is warranted, unless WSPs agree to assume all of the same obligations that LECs undertake.

5133   That said, during the oral proceeding it was clear that many parties advocated that WSPs should be relieved of the obligation to provide long distance equal access, even if they were to get shared cost interconnection. TELUS is willing to accept this position, provided that the WSPs still fulfil the other LEC obligations.

5134   The simplest way to achieve this would be to remove the equal access obligation from wireless LECs. Doing so would allow the use of established processes, documentation and standards, and would not be disruptive to the industry.

5135   Wireless LECs would still have the obligation to, one, interconnect with other LECs, WSPs and IXCs, as reflected in the CLEC model tariff, including shared-cost interconnection with other LECs; two, separate outgoing traffic by terminating carrier and by terminating switch; and three, to tandem calls where high-usage bill-and-keep trunks do not exist.

5136   Note that even if WSPs do not have to offer equal access, that is, PIC and casual calling, they must still offer interconnection to IXCs for call termination.

5137   The obligation to interconnect pursuant to tariff is very important. Without this obligation, a wireless LEC could charge excessively high termination rates or enter into an exclusive interconnection arrangement with a LEC, forcing other carriers to pay the LEC unregulated transit rates to reach the wireless LEC. This would not be in the public interest.

5138   The CLEC model tariff would require amendments to reflect the absence of PIC and casual calling, but not many other changes to existing processes and standards would be required.

5139   TELUS further submits that given this concession to co-carrier status for WSPs, all LECs should be relieved of the equal access requirement one year from the date of the decision in this proceeding.

5140   Finally, it is TELUS' position that there should be no changes to the SILECs' interconnection regime at this time.

5141   This concludes our rebuttal presentation. We would be pleased to answer any questions that the Commissioners may have.

5142   THE CHAIRPERSON: On the last point of equal access, which you are willing to let go as an obligation for the WSPs, I remember that there was also the whole question of directories; that CLECs have to publish directories, and WSPs obviously don't, because people don't want to give out their wireless number.

5143   I assume that you don't insist on that either.

5144   MR. WOODHEAD: We don't insist on it. There are very good reasons, because most wireless customers -- well, many wireless customers are charged for incoming calls.

5145   THE CHAIRPERSON: Explain to me what your paragraphs 21 and 22 are really talking about. There is too much "telecomese" for me to figure it out.

5146   I understand the issue about the directories. We clarified that, but I thought that the wireless carriers all said that they would be prepared to live up to the CLEC obligation, other than equal access and directory publishing.

5147   MR. WOODHEAD: It is merely -- if that is the understanding, which it was not clear to me, we are simply trying to clarify that if equal access is done away with, all of the other obligations would adhere to them.

5148   THE CHAIRPERSON: Okay. Thank you.

5149   In paragraph 17 you refer to -- you continue to have significant costs associated with, and investments in, TDM facilities.

5150   It's the investments in TDM facilities that I am asking about. Given that TDM is clearly on the way out, are you still investing in it?

5151   Are you not, whenever you can, switching over to IP?

5152   MR. WOODHEAD: Very much so.

5153   If I could just briefly give you an example, on Friday I was on a rather long conference call regarding a community -- one of the Gulf Islands in B.C. This community has no commercial power. It relies on generators and solar power. We have a TDM network in that location that serves 350 homes. There are issues with the quality of service in that location, and we are trying to address them.

5154   So we have choices, but really one choice. We can spend approximately $5 million upgrading the carrier facilities on that island. We investigated wireless, but this is a high-cost serving area, so we can't use wireless, because it is not, for regulatory purposes, seen to meet the basic service objective.

5155   So our choice is -- and this is just one location within TELUS' serving territory, and consistent with our obligation to serve in those areas, we have to invest in TDM facilities. That is one proactive way in which we have to spend real money to augment those systems when they begin to deteriorate.

5156   Within our network generally, we continue to invest in TDM, because as features come along that TDM supports, which is virtually all of them, we will invest in upgrading those switches with the appropriate line cards. We add line cards as communities grow.

5157   So, if that gives you a flavour, yes, we do.

5158   MR. ROMANIUK: Ted, if I may; as an example, since 2005 we have invested in the wireline side circa $35 million to $40 million in TDM switches.

5159   THE CHAIRPERSON: And TDM switches are still being produced and they are readily available, or do you relocate within your network?

5160   Take your island example. Do you put a switch from somewhere else in there and use that area on a --

5161   MR. MANSOURATI: So classical --

5162   THE CHAIRPERSON: -- basis?

5163   MR. MANSOURATI: So classical TDM switches are not being manufactured to the extent they were.

5164   Some companies have acquired rights to build certain line cards and support certain line cards. But, generally, what we do is harvest within the network. As we migrate people off TDM we redeploy those line cards or other pieces of equipment.

5165   THE CHAIRPERSON: Okay.

5166   Len, you have some questions?

5167   COMMISSIONER KATZ: Yes, thank you, Mr. Chairman.

5168   Good morning.

5169   Like everything else, timing is everything and in paragraph 5 you basically say it appears to be premature to obligate parties to migrate to an IP-to-IP platform at this time because IP-to-IP in voice is still in its infancy.

5170   This Commission has been criticized many times for taking too long to get involved in things. I'll ask the question this way.

5171   Is the time not when the industry is about to move towards a new regime for this Commission to make sure that all parties are treated fairly and equitably, not just consumers but also carriers as well?

5172   If that is the case, wouldn't this be the right time for us to sort of make a declaration in this regard rather than waiting two years or three years and then after the fact dealing with what might be considered to be discrimination or undue preference or favouritism or whatever?

5173   MR. WOODHEAD: I guess my response to that would be if in fact that was the sort of underlying assumptions of your point, if I agreed with them I then would agree with you. But consumers -- if you were to move today to a mandate for IP voice, consumers would see no benefit.

5174   There is no compelling IP voice feature application that any of these customers that I'm talking about of the predominant wireline voice customers who are TDM, there is nothing that they would see tomorrow if you mandated it today that they do not see today already.

5175   So I guess I'm not sure that -- well, I don't agree that IP voice is upon us. IP data and IP other arrangements are certainly. I mean we have invested as Zouheir said, $2 billion in various IP kind of data things including optic TV and all kinds of other data things. But the consumers themselves would not see any benefit today.

5176   Hence, our proposal that -- we are not closing our eyes or our minds to the fact that IP voice will evolve. That's why we are suggesting this two to three-year you know period in which you monitor. You get the data through the monitoring report. You look at what's going on and then you are in a position to move.

5177   You may be in a position to move earlier than that if there is some shift that you perceive, but today that just isn't the case.

5178   COMMISSIONER KATZ: And yet there are other jurisdictions, other countries. The Chairman mentioned the FCC proclamation last week which may still take years to see the light of day but even they have recognized publicly that there is a need to move to IP-to-IP interconnection for voice and they emphasis voice as well, simply because transitions take a long time and we all know that as well.

5179   Waiting two or three years or five years to make a proclamation simply means you are putting off something another period of time after that as well.

5180   MR. WOODHEAD: It depends, I guess, what proclamation you are talking about. I understood that the FCC said it encouraged -- it encourages the evolution to IP voice interconnections or IP voice interconnections, and we would agree.

5181   I am not suggesting that you -- I guess I was faced with a proposition that you are -- where do we mandate it today or do we encourage it and let the market and commercial arrangements sort this out? That was the dichotomy I saw.

5182   If you are just talking about encouraging it, we are all there.

5183   COMMISSIONER KATZ: Yeah. In the next paragraph, on paragraph 6, you actually make a very interesting comment about the service upon which public safety organizations rely on and the fact that if there is a migration to an IP-to-IP regime what does that do to public safety?

5184   Is this a real issue for us to worry about or is it just transparent and will automatically happen and the public safety folks will be able to operate as they operate today?

5185   MR. WOODHEAD: I will take a crack, and then the technical folks can correct me.

5186   Today, as I understand it, the public service answering points, the people, the first responder-type organizations that aggregate those calls and disseminate them to the various first responder agencies, don't have the ability to accept calls in an IP format. Therefore, those are down converted or converted to TDM. That was my only point.

5187   So there is again the shifting of the costs that we would bear as the parties that primarily -- through which others primarily interconnect. As you know the PSAPs have generally taken the position that they want calls to come through the ILEC.

5188   Within these proposals that we are hearing, the costs of that, I was taking it to mean would be borne by us.

5189   COMMISSIONER KATZ: Do you believe that there is a need for the public safety industry to have to get involved in IP-to-IP issues now in order to be able to provide the services that they provide or do they just watch from the side lines and suddenly when this thing happens it's all transparent to them?

5190   MR. WOODHEAD: Well, certainly they have been active in maybe my history anyway. They have been active in the emergency services working group that has looked at different providers offering services and different technologies. So I think that they probably do have an interest in it.

5191   Although, to the extent -- and this is sort of related to my previous point -- to the extent that what we are talking about here is voice there is no whiz bang thing that anyone is talking about here. The change is this. It's voice.

5192   So if I'm a PSAP, in fairness, I'm sure they would love that there might be some whiz bang thing that would help them do their jobs better but it doesn't exist yet. And I'm sure they are happy as long as they get a voice on the other end of the call.

5193   So I guess that would be my response to you.

5194   COMMISSIONER KATZ: Okay. My last question is a comment you make here on paragraph 9.

5195   I think the message obviously is let the marketplace take care of itself. If there are carriers out there that want to provide enhanced services they can do that to their own customer base. And if there are customers that want it that are on the other end of a network or somebody else's network, you can migrate them to your network and they can get the benefits of it.

5196   Is that the essence of what you are saying here?

5197   MR. WOODHEAD: That is the essence of it.

5198   COMMISSIONER KATZ: Okay. The complicating factor here is this industry has done a fine job in bundling services and getting customers into long term deals.

5199   So it isn't that easy as a customer at the other end who may want a value-added service that's being added to migrate a bunch of other people over as well, friends and family or whatever the case may be, because they may be locked into other deals and are bundled in as well.

5200   So there is an issue there that the market forces can't work readily simply because of something that this industry has done and the market has worked effectively from that perspective.

5201   MR. WOODHEAD: I mean I take your point that you know I think that there is stickiness to customers, if you will, when you have them in a bundled environment. That's part of the reason people bundle.

5202   But on the other hand from our perspective, we don't actually bundle wireless. I don't know that you were referring specifically to wireless but we don't bundle it.

5203   And for a wireline customer they have options of, you know, standalone PES for regulatory reasons.

5204   From our perspective, the bundling that goes on with some of the other competitors, we don't actually engage in it to the extent that they do.

5205   COMMISSIONER KATZ: Okay.

5206   Those are my questions, Mr. Chairman.

5207   THE CHAIRPERSON: Candice?

5208   COMMISSIONER MOLNAR: Thanks, and I guess now it's good afternoon.

5209   I would like to understand paragraph 7 where you talk about reminding us that voice is that "voice is packetized on 4G wireless networks" that while it:

"...is packetized...it is still transported in a circuit-switched manner."

5210   Could you explain to me what you are saying there?

5211   MR. MANSOURATI: It's simply to say that VoIP today doesn't exist on wireless. What is happening for example in the HSPA 3G/4G, what is happening is that you don't necessarily have a VoIP client on the handset.

5212   What is happening is for transport purposes the voice signal is being transported on packets carried to the wireless switch and then carried to what is called MSS in the mobile switching point and then transferred to a Class 4 switch, the SIP trunks, and then taken to the TDM or another -- possibly voice-over-IP customer on the other end.

5213   But so the point is that the handset that you hold in your hand does not carry a VoIP client. That would make it a VoIP, a true VoIP call.

5214   COMMISSIONER MOLNAR: Thank you. So I got it when you told me about the handset.

5215   But there is obvious efficiencies within your network about using IP and I think it was identified last week that in fact you have IP-to-IP interconnection arrangements, which I have to assume are because it's mutually beneficial from a cost perspective because it's not a product perspective.

5216   But from a cost perspective, regardless of the fact that there is not a VoIP handset or a VoIP product, at the end for the consumer there is a benefit to IP interconnection. You would agree?

5217   MR. MANSOURATI: There is a benefit to IP transport in terms of it being efficient.

5218   I will leave to one of my colleagues the question of existing IP-to-IP interconnection that we have with outside entities. But, yes, IP transport is an efficient means of transport relatively.

5219   MR. WOODHEAD: If I may, Commissioner Molnar, just in terms of the last part of the question referred to by Zouheir, there are two aspects to -- sorry, let me start over.

5220   Technically, there are benefits to IP interconnection when there are two parties that are in something of a similarly-situated position.

5221   Our position is that we are not in that position today because although we are moving in that direction because of the paucity of IP access in our wireline network, although growing, we are in the process of conversion. So there are advantages that would accrue as that IP access increases.

5222   My second point -- and not to belabour it -- is simply that the other element or the other elephant in the room around this is who bears the cost of that conversion.

5223   COMMISSIONER MOLNAR: Okay. I don't want to belabour conversion either because I think that you know we had parties come before us and Rogers just this morning with a proposal as it related to interconnecting of true IP-to-IP networks.

5224   For example, this 4G network while it may not have an IP application at the end is a data IP network. I shouldn't say data but it's an IP network that's interconnected with other IP networks. And they have proposed as a consequence it would make sense that you also interconnect with them on an IP basis.

5225   So you know conversion of IP-to-TDM aside, if we're talking about interconnection of IP-to-IP networks which is what I understood the Rogers' submission to be -- did you understand the Rogers' submission to be the same?

5226   MR. WOODHEAD: Yes. I mean, to an extent.

5227   I understood the Rogers' proposition to suggest that where a wireline operator has an IP interconnection arrangement either with itself, an affiliate or an unrelated service provider that would be the first triggering event.

5228   The second triggering event which I found a bit more disturbing was where any end-user in a network is served by an IP switch that even if it was one customer that that would therefore trigger this right and cost which I know you have put aside for the moment, but this cost shifting to occur.

5229   So I have issues with the Rogers' proposal in that respect and I don't think that it's necessarily understood.

5230   COMMISSIONER MOLNAR: Okay. So I think it's important that we do understand because you have come forward, as have the ILECs before, speaking of the entire TDM network and the great costs of conversion and so on.

5231   Yet, what I believe I have heard from some of the other parties here is proposed transition. So it's not -- it's not an all or nothing event and it's not you know all the conversion costs get passed to you because -- but they are talking about a transitional basis where we first focus upon the interconnections that makes some economic sense.

5232   For example, in IP-to-IP network such as I believe and, you know at the end Rogers needs to make sure I don't mistake their proposal, but such as you know mobility networks that are in place today.

5233   And then as a second step you know, this notion that within an LIR if you have an IP switch within that LIR it is a first step. And you think that on its own is too onerous an obligation?

5234   MR. WOODHEAD: I don't think that's Roger's proposal, but in respect of those who would suggest that there should be a transitional regime and where part -- if you have an interconnection arrangement with somebody including yourself, that others should have access to it on a non-discriminatory basis, I agree with that.

5235   That there should be a transitional period of two to three years and let's have a look at this again, I agree with that. And that would go to Rogers triggering event (ii) which incidentally, Rogers' triggering event (ii) is not a transitional period. It's today.

5236   If I have a couple thousand fibre-to-the-home customers under the Rogers' proposal this is all done.

5237   THE CHAIRPERSON: You keep referring to Rogers.

5238   Can we hear from Rogers? I want to make sure that both you and Commissioner Molnar have the right understanding of what Rogers says, like this last point.

5239   Right now TELUS has a lot of fibre-to-the-home customers presumably getting this. Does that mean as far as you are considered, trigger number (ii) of your proposal has been triggered?

5240   MR. WATT: Yes, it is. As I said this morning, triggered in the geographic area where they have the soft switch. We would only be able to transmit IP-to-IP traffic with respect to their end-users who are served by that soft switch.

5241   THE CHAIRPERSON: So, for argument's sake, if it is Calgary then you would be able to then cover.

5242   MR. WATT: That is correct, to those end-users who are attached to that switch. I'm not quite sure what their trigger point is to move people in a particular neighbourhood from that TDM switch to that soft switch.

5243   But our proposal is that those users who weren't attached to that soft switch would be reachable by us through IP-to-IP, end-to-end through that switch.

5244   I think Commissioner Molnar has described our position very accurately where there is IP interconnection and they are -- and the 4G example then we would be looking to interconnect for that service on a 4G IP-to-IP basis.

5245   We are not quite sure what the cost of conversion there is. We view the cost of conversion as relating to when you have to translate from IP-to-TDM and vice-versa.

5246   I think TELUS is using conversion costs to also encompass their movement from a TDM environment to an IP environment. We see that as being each party bears their own cost to provide their IP functionality.

5247   COMMISSIONER MOLNAR: So, understanding that Rogers is saying access to those customers served off of the IP switch through an IP interconnection, are you feeling more comfortable with their proposed approach?

5248   MR. MANSOURATI: There is a challenge in this in the sense that when we talked about the soft switch, I guess the approach to serving customers with a soft switch is radically different from a classic TDM switch, physically speaking.

5249   So you could -- if you don't have a sufficient demand you could choose to have a single soft switch serving a very large area.

5250   COMMISSIONER MOLNAR: But wouldn't that be one of the benefits and values of moving to an IP interconnection because potentially you could create the interconnection rights to the soft switch versus in every LIR or something to that effect?

5251   I mean that's the benefit and also of negotiating these arrangements now versus mandating them under the existing TDM regime.

5252   MR. MANSOURATI: Understood. All I am saying is that there is an imbalance because if I -- let's say I'm starting today and I'm serving one building with VoIP, therefore I have one soft switch entity sitting say in Calgary serving the ILEC territory, it will be quite an imbalanced approach to force TELUS to have IP-to-IP interconnection for the whole Alberta and B.C. territories simply because I have one building being served for VoIP because it's infinitely safer.

5253   COMMISSIONER MOLNAR: What I understood is, they are saying if you have the soft switch we want to interconnect with the soft switch and you know share our traffic. We want to -- I don't know if share is the right word but, you know, transfer the traffic from your IP end-customers to our IP end- customers where there is a pure IP-to-IP call.

5254   So I'm not quite sure what the problem is for you. They are not suggesting that they want to transfer their TDM-based or the calls that go on to your TDM-based over that IP interconnection. They are saying, "We want a pure IP-to-IP interconnection".

5255   So what would be the problem for you whether you are serving the province or a single geographic area?

5256   MR. WOODHEAD: We don't actually particularly have an issue with that. Where we do then have an issue is with the costs of conversion and their allocation.

5257   COMMISSIONER MOLNAR: And they have proposed that they would continue to pay those costs in the conversion under their proposal.

5258   Correct, Rogers?

5259   MR. WATT: Correct.

5260   COMMISSIONER MOLNAR: All right.

5261   MR. WOODHEAD: Then I am a bit confused.

5262   Perhaps Dave can educate me here as to what you were talking about where we -- you had different -- you would share costs with us to convert your traffic down and we would bear all of the costs of converting TDM up. In what circumstance does that apply?

5263   MR. WATT: Okay. That was the circumstances of last week.

--- Rires

5264   MR. WATT: Is probably the best way to put it.

5265   MR. WOODHEAD: But it appears in today's comments?

5266   MR. WATT: Precisely, described as our original proposal. And then we went to two or three more paragraphs and then said: All that said we as a compromise position, recognize that people are uncomfortable with that as you are right at the current time.

5267   So we said as long as our criteria for IP-to-IP interconnection are adopted, we think that will move things along quickly. We would then be willing to continue to bear all of the costs of the conversion.

5268   THE CHAIRPERSON: Somehow the same thing, like I read the first part and I couldn't tell so you -- may I suggest to you this is key for us. I don't want to put you on the spot.

5269   Why don't we break for lunch and you have a discussion with Rogers and then you come back and tell us what your decision is now that you understand their proposal better which, admittedly, was poorly worded.

--- Rires

5270   THE CHAIRPERSON: So we will continue with Commissioner Molnar after lunch. Let's take an hour break. We will resume at 1:30.

--- Suspension à 1224

--- Reprise à 1332

5271   THE SECRETARY: À l'ordre, s'il vous plaît. Order, please.

5272   THE CHAIRPERSON: Well, Mr. Woodhead, I hope you had a good lunch and inspiration has kissed you.

--- Rires

5273   MR. WOODHEAD: I wish something had kissed me.

5274   Well, Mr. Chairman, I'm happy to report that we have had an opportunity to speak to Rogers, and we are in, I think, agreement with the Rogers proposal, subject to -- and this isn't a barrier, really. There may be some details associated with this proposal that may need to be worked out either at CISC or bilaterally between the parties, but at a high level we are in agreement with Rogers' proposal.

5275   THE CHAIRPERSON: Thank you very much for that response.

5276   Candace, do you have any more follow-up questions? Tim?

5277   COMMISSIONER DENTON: Good afternoon, Mr. Woodhead.

5278   I just wanted to offer you the opportunity to expand on paragraph 12 in relation to issues -- outstanding standards and other issues related to IP voice interconnection and -- because I imagine that if we're going to pave the way for this new world of IP-to-IP interconnection, there may be issues that you think we should be addressing or that CISC should be addressing and that we should be aware of them.

5279   Do you have your bucket list?

5280   MR. WOODHEAD: Given what I just said about the Rogers proposal, there may be issues around how traffic is identified and routed, be it IP and TDM. These are technical issues that I think would be worthwhile discussing through the CISC or bilaterally.

5281   But primarily, I think if you want an industry-wide kind of consensus through the CISC, my colleague has just passed me a list of a few other items. Some of them we've discussed, 911, which there may be -- because of the nature of the service, we may want to make sure that the technical specifications ensure a very, very high degree of stability on that service over IP. SIP-I, SIP-T, which you have discussed, there may be issues related to that.

5282   All of these are CISC issues, again.

5283   Automatic call, automatic callback screening, list editing, call waiting, selective call acceptance and some voice mail issues.

5284   The one that was raised earlier --

5285   THE CHAIRPERSON: Is this an exhibit, the one that you just --

5286   MR. WOODHEAD: I certainly can.

5287   THE CHAIRPERSON: Why don't you do that? Then that can be shared with everybody.

5288   MR. WOODHEAD: Can I do that as an undertaking, or would you --

5289   THE CHAIRPERSON: Whichever way you --

5290   MR. WOODHEAD: If I could do it as an undertaking because it's part of another document.

5291   THE CHAIRPERSON: Okay.

Engagement

5292   MR. WOODHEAD: I believe, Commissioner Denton, there was a discussion with you around ENUM and public ENUM structure, and you had a very --

5293   COMMISSIONER DENTON: Or private ENUM, whatever you --

5294   MR. WOODHEAD: Or private ENUM.

5295   COMMISSIONER DENTON: Yeah. Because what interests me particularly is how, you know, local number portability and a whole bunch of things related to TDM technology are probably not going to exist in future and how do we do addressing, et cetera, et cetera.

5296   MR. WOODHEAD: Right. And I don't have for you today proposals, necessarily, on each and every one of these issues. We've simply identified them.

5297   Geographic number portability would be one of them.

5298   COMMISSIONER DENTON: Yes.

5299   MR. WOODHEAD: And then there may be quality of service and some other parameters that we mutually or as an industry want to establish.

5300   COMMISSIONER DENTON: Okay.

5301   MR. WOODHEAD: That would be my kind of bucket list.

5302   COMMISSIONER DENTON: Does anyone else in the room have a -- at any time, I just -- all the other participants, I would be interested in the list of issues that CISC should be addressing as we transition to this future environment.

5303   THE CHAIRPERSON: Just a sec. Let's do it by process here.

5304   Why don't we ask all the parties so they have until the end of this week to give us their list of issues that they should feel CISC should be addressing, same as Mr. Woodhead is going to do?

5305   And I was somewhat put out by your comment earlier that the last two meetings of CISC had -- were cancelled for lack of an agenda, so I mean, I think as a result of this meeting obviously there will be an agenda -- of this hearing.

5306   But we should have -- it will be very helpful for us to see what the issues are that people feel should be addressed.

Engagement

5307   COMMISSIONER DENTON: That's it, then.

5308   THE CHAIRPERSON: Okay. Thank you very much.

5309   I think let's proceed with the next intervenor, Madam Secretary.

5310   THE SECRETARY: Mr. Chairman, I would now invite Canadian Network Operators Consortium Inc. to come forward.

--- Pause

5311   THE SECRETARY: Please reintroduce yourselves for the record, after which you'll have 10 minutes for your oral rebuttal argument.

5312   Thank you.

RÉFUTATION VERBALE

5313   MR. TACIT: Thank you.

5314   My name is Chris Tacit, and with me once again is Mr. Bill Sandiford, President of CNOC.

5315   Mr. Chair and Commissioners, in this rebuttal statement we will address two main issues. First, the state of the existing local and toll interconnection regimes and the modest changes that CNOC is proposing for those regimes, and (2) the need for a mandated IP-based interconnection regime and the migration path to such a regime.

5316   As before, we will not be addressing interconnection issues relating to WSPs or SILECs. We will also not be addressing how interconnection should unfold in the joint operating territory of Northwestel and SSI Micro, in recognition of the special considerations that may apply to that region.

5317   MR. SANDIFORD: After hearing the submissions of parties in the oral hearing to date, CNOC remains convinced that the local and toll interconnection regimes should remain distinct, irrespective of whether TDM or IP technologies are employed.

5318   Melding the two regimes together would create significant inefficiencies in traffic routing, stranded investments for competitors and potential inequities with respect to compensation of carriers for the carriage of voice traffic.

5319   We also continue to be of the view that only minor changes need to be made to the existing interconnection regimes. To summarize, these changes are: CLECs and ILECs should each be responsible for their respective multiplexing/de-multiplexing costs whether interconnection is completed through shared cost facilities or through leased facilities.

5320   A corollary of this is that IXCs should be able to connect with LECs at the DS-3 level rather than have to lease DS-3s and buy multiplexing to the DS-1 level to connect to the LEC.

5321   Facilities leased from an ILEC for local network interconnection should be made available at one-half of the normal tariffed rates for such facilities.

5322   CLECs and ILECs should be permitted to use bill and keep trunks for EAS traffic outside the LIR.

5323   The routing of toll transit traffic should be permitted on shared cost facilities that are employed for local network interconnection.

5324   The MALI should be updated to include traffic imbalance compensation for IP-to-IP bill and keep traffic.

5325   Before leaving this topic, we wish to address a few other related points raised during this oral hearing.

5326   The first point relates to imbalance payments. The ILECs complain that they are net payers to CLECs with respect to traffic imbalances on bill and keep trunks. What they fail to mention is that when it comes to EAS and local transit traffic, they are very well compensated. And when ILECs do have to make imbalance payments, some of them take a very long time to do so.

5327   Commissioner Molnar asked us to address the issue of why local transit services should not be forborne.

5328   In CNOC's view, such forbearance would inevitably lead to a situation in which the ILECs would either withdraw such services altogether or make them too expensive or impractical for CLECs to use. CLECs would then all be forced to interconnect with each other. This would have two immediate negative impacts.

5329   First, interconnection among CLECs would become much more expensive and less efficient, especially in light of the fact that ILECs already interconnect with all of the CLECs serving some or all of the same geographic areas.

5330   Second, smaller CLECs that cannot afford to interconnect with all other CLECs would either be prevented from entering the market or would be forced to exit the market.

5331   The net result would be market failure in the form of an undue lessening of competition in the provision of local services.

5332   We also wish to clarify that CNOC does not necessarily oppose any expansion of LIRs, but any such expansions must be moderate in nature and implemented following careful study so as not to impose on competitors unnecessary costs or operational obstacles with respect to the carriage of voice traffic.

5333   Finally, we wish to stress that whatever the Commission ultimately decides in the case of WSPs, equal access should not be eliminated for wireline carriers.

5334   When it comes to the issue of IP-to-IP interconnection, CNOC is of the view that a LEC that has entered into such an arrangement with one carrier in a geographic area should be required to enter into similar arrangements with any other carrier in the same area on terms that are no less favourable upon demand.

5335   We also urge the Commission to require CISC to update the existing reports related to IP-based interconnection and produce any additional reports that may be required to facilitate such interconnection within three months of a decision in this proceeding based on information solicited from the industry.

5336   To mandate the orderly rollout of IP-based interconnection by ILECs according to tariffed arrangements that follow the principles of the existing LEC and toll interconnection regimes, with the rollout to be completed by the first anniversary of the decision.

5337   And to permit other types of voluntary IP interconnection arrangements outside of what the Commission mandates to be implemented as well.

5338   CNOC is of the view that the adoption of IP-based interconnection will also genuinely benefit ILECs. However, to the extent that the acceleration of the rollout of this type of interconnection imposes costs on the ILECs that would be otherwise deferred, the cost of accelerating the rollout net of any benefit to the ILECs could be collected from the industry using a temporary charge levied on traffic that uses the IP-IP interconnection interfaces.

5339   Some ILECs have suggested that IP interconnection standards are not sufficiently crystallized to permit mandated IP-based interconnection. However, it is clear that this is not the case and that any variations in such standards among vendors and evolution of standards can be readily handled through the use of session border controllers.

5340   Some parties have also suggested that the voice world is not much different than the data world, and since data interconnection is working well without any regulatory intervention, no such intervention is required in the case of voice services, either.

5341   While there is some truth to this, it is important to note that when it comes to data interconnection, all service providers are working with similar vintages of technology. However, in the case of voice services, the large amount of legacy TDM equipment serves as a disincentive to the rapid adoption of IP-based interconnection by the ILECs.

5342   In addition, even where the ILECs have implemented IP-based interconnection for data, there are shortcomings that should not be allowed to occur in the case of voice.

5343   For example, neither Bell Canada nor TELUS exchange traffic at the main Canadian traffic peering exchange known as TORIX. Instead, such traffic, even if routed to a Canadian destination, is usually routed via the U.S. This is not the case for all competitors, such as Rogers. The exhibit attached to this rebuttal argument will show this comparison.

5344   Even those other ILECs, such as MTS Allstream and SaskTel, who do exchange traffic via the TORIX peering exchange, only do so selectively. On the other hand, competitors typically interconnect with all other parties that desire such interconnection.

5345   Varying from the statement here, there's a very important point that we're trying to make here because we've heard several times over the course of this proceeding to date several references to we just -- you know, everything's working so well in data and why do we need this for voice.

5346   And we don't believe that it's working well in data, and the exhibit will show you as well. We're fearful that what the exhibit shows you might happen to voice if you don't mandate those services.

5347   Finally, CNOC wishes to stress that it is not enough for ILECs only to offer IP interconnection by way of IP-to-TDM conversion. Although this type of arrangement is definitely desirable and should be required, true mandated IP-based transit services are necessary if end users are to obtain the full benefit of IP technologies.

5348   MR. TACIT: We thank you for your attention.

5349   THE CHAIRPERSON: Explain to me on paragraph 11 why should this be -- equal access should not be eliminated for wireline carriers.

5350   We've heard fairly extensive testimony last week that equal access is really something that has been overcome by developments, et cetera, and certainly we shouldn't impose it on WSP.

5351   And why do you still feel it needs to be maintained for wireline?

5352   MR. TACIT: Bill's going to mention that because he has firsthand experience on that.

--- Pause

5353   MR. TACIT: He meant for me to take it. Sorry. I thought he wanted to take it.

5354   So from a -- for one thing, we don't have any evidence in this proceeding that -- the proceeding wasn't really aimed at eliminating equal access, so I mean, I think we'd certainly have to study the issue formally and properly in a proceeding if the Commission was to even contemplate doing that. That's number one.

5355   THE CHAIRPERSON: It's out of scope. I'd agree with you. There's no question of that. You're making this bold statement here, so I'm asking you what --

5356   MR. TACIT: Well, second, I think that the experience of choice that's provided either on a casual calling or long distance carrier basis still today in the current environment suggests that there is still an important role for these carriers to provide in terms of promoting competition.

5357   I'm just fearful that if we try to do this experiment and eliminate this, the -- what's really going to happen is we're going to start seeing further market consolidation below the point that we have today and prices for consumers are going to rise to unreasonable levels.

5358   But as I say, we're all agreed that it's out of scope, so I don't think I need to say much more about it at this juncture.

5359   THE CHAIRPERSON: In paragraph 12, you say where CLEC have entered into an agreement it should be required to enter into similar arrangements with other carriers in the same area on terms that are no less favourable.

5360   There are two words here which are very heavy, "similar arrangement" and "no less favourable".

5361   How would you -- I mean, aren't -- couldn't this lead to an endless question and debate as to whether they are similar or they are functionally similar and --

5362   MR. TACIT: Well --

5363   THE CHAIRPERSON: -- it all winds up at our doorstep?

5364   MR. TACIT: I was just trying to put in lay words what "undue preference" is.

5365   I mean, if we're more comforted because we know, you know, more precisely what "undue discrimination" and "undue preference" mean under 27(2) of the Act, you can replace those words with, you know, the statutory words that have some legal precedent behind them. But that's really what we're getting at here.

5366   THE CHAIRPERSON: And in paragraph 14:

"...the cost of accelerating the rollout net of any benefit to the ILECs could be collected from the industry using a temporary charge levied on traffic that uses the IP-IP interconnection interfaces."

5367   Do you have any idea of what you're -- of the quantum of what you're talking about?

5368   MR. TACIT: No, we don't, and that's the problem. Nobody does because we haven't really had -- all we've had is scare mongering by the incumbent saying it's going to cost a gazillion dollars and, you know, take this amount of time, which is the usual thing we hear whenever we're trying to promote innovation.

5369   So what we're saying is, you know, the reality is that this proceeding has been largely a policy and not an implementation proceeding, so we don't have a lot of the data that we need. But what we did want to make is a couple of points in that paragraph that are important.

5370   The first is that there will be cost savings and efficiencies for incumbents if they do this, and those should certainly be credited against any costs that they claim.

5371   The second thing is, I think pretty much everybody's in agreement that the world is moving to an IP environment, so what we're talking about isn't subsidizing the actual costs of IP implementation per se, but rather, the cost of subsidizing the acceleration of those expenditures. And that's a very different quantum of costs.

5372   Whatever the cost of implementation is, the cost of accelerating that expenditure is only going to be a fraction of.

5373   And the third point that we're making is, you know, sensing the objections that have been raised by incumbents to doing this and sort of taking the temperature of the room, we realize that if we are going to get a mandated, proactive, forward-looking regime we need to address the legitimate issue of how to help the ILECs basically recover that acceleration in costs in a way that doesn't penalize them.

5374   THE CHAIRPERSON: Candice, over to you. Maybe you can figure out what the cost of acceleration is. I find that a very difficult concept to get my head around.

5375   MR. TACIT: Well, let me just clarify that, then.

5376   What we're talking about is the time value of money, so that's all we're saying there. So if I have to spend $10 in 10 years, the real cost of that is less to me than if I have to spend $10 today. So that's what we're really talking about.

5377   COMMISSIONER MOLNAR: Thank you.

5378   I will get back to your issues related to the existing regime, but let's just continue with the IP to begin with.

5379   I see today that your position is very similar to last week in that you want a mandated rollout with set time frames and everything else. And as you know, this morning there was quite a significant, I think, consensus in that there has been a proposal for an evolutionary movement to IP that was proposed by Rogers and, just now, TELUS seemed to believe it was a reasonable approach.

5380   And so I would very much like your views on that approach as an alternative to what you've laid out here.

5381   MR. TACIT: Well, we see that approach not so much as an alternative, but as a complement. In other words, we would take the approach that's there and say for those areas where there is IP-to-IP interconnection, for those areas where customers are being served by an IP switch and, therefore, we mandate others -- we mandate the carriers to do it for other interconnected carriers.

5382   They shouldn't be entitled to cost recovery for that. That's the way we look at it.

5383   For all other IP interconnection cases where we are, through mandated requirement, accelerating that cost, then the industry has to find perhaps if that cost is significant. And we don't know if it's real or what it is. But if it exists and it's significant, find a way for the industry to deal with it.

5384   But we don't think that just leaving it up to a purely negotiated market is going to give the kind of competitive outcomes that we want for the country and that consumers need. And the reason for that is the same reason that we put forward last week, which is that of all of the carriers, the incumbents have the most ubiquitous networks, but they also have the oldest equipment and are least motivated to do the interconnection in a timely fashion. Not for any nefarious reasons, but just as a business issue.

5385   And we recognize that, but that isn't what we need to enable IP-to-IP interconnection country-wide and to give consumers the benefit of those capabilities.

5386   COMMISSIONER MOLNAR: Do you see that this could be -- proceed this way on a sort of stepped approach?

5387   I mean, there is some question if -- if we were to follow a proposal such as Rogers', I think what you'd see is as the ILECs moved more and more of their customers onto IP-enabled switches, there would be a natural progression and, you know, more of the traffic would be on the IP interconnections and less on the old TDM converted interconnections.

5388   So is it possible that it would make sense to begin with the one approach, see how quickly that transition is occurring before we step in and say, you know, the ILECs are not going to do this without regulatory intervention?

5389   Could we give them an opportunity to see how they do before we intervene?

5390   MR. TACIT: You know, the problem is regulatory lag, and the problem is that even when a decisive course of action is taken by a regulator, as this Commission, it takes a good long time to implement it.

5391   My fear is that Canada will be harmed, competition will be harmed if we don't start being more proactive. The internet world and the IP world is moving at lightning speed. The rest of the world isn't going to wait, you know, for us, either. And my sense is that I think we have to be a lot more proactive.

5392   So if we're saying we're going to be proactive, then yes. And if that causes a cost for the incumbents, then let's find a way to deal with that.

5393   You know, Canadians are very good at solving problems through striking commissions and subsidy mechanisms. And you know, and I'm not suggesting that subsidy mechanisms is something that would be permanent, but that's a way to deal with it instead of hoping that these things will sort themselves out when, so far, we've seen no evidence of that.

5394   What we've seen is it's going at a snail's pace from the incumbent's perspective, and yet, more and more other competitors have predominantly, if not solely, IP connections to their customers.

5395   So there's a really big disconnect there that needs to be addressed, I think, more quickly rather than later.

5396   MR. SANDIFORD: And to add to Chris' point, as one of the smaller carriers that are out there, our organization, we've wanted an IP-to-IP interconnection since day one, which for us was 2006. And the CISC reports that -- the CISC TIF that worked on IP-to-IP interconnection has been around for quite some time. And it's still not there, I mean.

5397   So we're -- you say, you know, are you not willing to work and see how it works out and then see if we need to mandate it. And from my personal view is I've already been waiting five years for it to sort of work out, and it hasn't happened. Hence the reason why I think it needs to be mandated.

5398   COMMISSIONER MOLNAR: Okay. Is there anything particular that would relate to the size of your organizations that we need to consider in this final?

5399   It appears that you are in agreement with the notion of, as you said, the supplementary or complementary, as you've noted it, agreements that could be reached today and then if they're available on a non-discriminatory basis, you're comfortable that you will be included in those processes.

5400   MR. TACIT: As long as there's a base requirement as an anchor point, then I think the chances of that are better.

5401   Even with regards to these kinds of voluntary arrangements, we have to be careful because it's easier for the smaller players to be discriminated against and to be left out.

5402   But you know, we'll see what happens. But I think we need a core set of rules.

5403   And so when I said I was comfortable and complementary, what I meant by that is that as far as compensation, if everybody agrees that those things should happen, then to the extent that you have a rule that says if you interconnect by IP with a carrier you have to provide it to all or if you provide service to a subscriber with an IP-enabled switch you have to interconnect to give that capability to everybody within that geographic area, that's fine.

5404   All we're saying there is you don't need to compensate them for that.

5405   But we're not saying we're leaving that solely to the market. Let me be clear. We do need a basic set of rules and a tariff in place as a backstop precisely to ensure that carriers of all sizes have equal opportunity to access these arrangements because, frankly, that's where the innovation's coming from.

5406   It's the Telnets of the world that are, in fact, bringing a lot of the innovation to end users first. And a lot of it is, yes, because they have -- they're smaller. They have newer networks, newer technologies and so on. And that's fair.

5407   But nevertheless, they're the ones who are doing it. And so we don't want to lose that.

5408   COMMISSIONER MOLNAR: Okay. I want to move back then to the old network, the TDM network, and ensure I'm understanding your first bullet of minor changes.

5409   And I know that you spoke about this as well last week, this issue of responsibility for multiplexing and demultiplexing costs. If I remember correctly, this is not something that's being handled consistently among the different carriers you --

5410   MR. TACIT: That's correct. Some will require you to pay for it and some won't. That's my understanding.

5411   COMMISSIONER MOLNAR: Is this a secret as to who does and who doesn't?

5412   MR. TACIT: I don't know personally. I've just been told that some do and some don't. I don't know if Bill knows specifically who does and who doesn't. It's not a secret as far as I'm concerned.

5413   COMMISSIONER MOLNAR: Because they're in the room and we could ask them if they're willing to change their minds.

5414   MR. SANDIFORD: Well, I can tell you that in the case of Telnet we're only dealing with one of them. They're sitting behind me to my left.

--- Rires

5415   MR. SANDIFORD: And they absolutely are one of the ones that make us pay these fees for the multiplexing.

5416   You would o ask the others in the room because I don't have personal experience with them.

5417   COMMISSIONER MOLNAR: And you are also interconnected with some that do not make you pay the fee?

5418   MR. SANDIFORD: I am not personally interconnected with some of those that do not pay, but I do know that we do have members at CNOC that are and they tell me that there are some that do not make them pay.

5419   COMMISSIONER MOLNAR: You didn't put up your hand, but I would very much like to hear Bell on this item.

5420   MR. DANIELS: It's Jonathan Daniels from Bell Canada.

5421   Mr. Sandiford is correct in this description.

5422   Our basic approach on this is that when a CLEC comes to us and they want to interconnect to us on a bill-and-keep basis and we build towards a meet point, if at that point we're exchanging traffic on a DS3 level, for example, we have to ourselves undergo and demux and we will pay for that.

5423   But if it comes to a situation where the CLEC comes to us and says, Bell, let's not jointly build, we'll lease from you your facilities, then they have to lease based on the way our structure of our network is set up.

5424   And right now we don't have the peripherals and the ability to do -- on a large scale to be able to break it down. We require it in our own network to be at the DS1 level.

5425   So if they're leasing facilities, they have to pay in accordance with the way our network is structured. If they are doing it on a shared-cost basis where we're building to a meet point, then that's our problem and we don't charge them.

5426   So this only applies when they're leasing facilities. And that's a choice that every CLEC has. And some CLECs meet with us and we don't charge them because they do it on a DS3 basis. But if they lease from us, that's a requirement.

5427   COMMISSIONER MOLNAR: Okay, we will take it away.

5428   I just have one more question for you.

5429   You have identified a number of things such as the ability to carry EAS traffic through the bill-and-keep trunks and so on.

5430   As we're looking to IP interconnection and a different set of rules for the future, do you believe if we were to enable off-tariff arrangements for the existing interconnections under the existing interconnection regime that you would be able to sort some of this out yourself?

5431   MR. TACIT: I don't think so because there has really been no appetite, frankly, in any discussions we've had with incumbents, you know, for them to agree to come forward to the Commission jointly and create variations to the existing regime.

5432   You know, everybody sees this as an obligation and, you know, they fulfill the obligations for the most part, and we're grateful for that, but it is viewed as an obligation. And so, you know, offering a choice of voluntary arrangements is fine, but again, I don't think you can just rely on that and say that will fix it.

5433   If this Commission finds that some of these, some or all of these things should be addressed, then I would encourage the Commission to just do it because it will still take time.

5434   Even if we had a decision today that said IP-to-IP interconnection go in a year or two or whatever, it's still going to take time and these things are a lot quicker to fix and change and would provide immediate efficiency benefits pretty much for everybody.

5435   MR. SANDIFORD: If I may, I just wanted to -- with regards to your previous question and Mr. Daniels' reply, I just wanted to add one more point to it.

5436   That I'm aware of, from my experience, we've had three ways of interconnecting with the incumbents when it came to our local network and our connections.

5437   There's the shared-cost build and the lease facilities, as Mr. Daniels mentioned, but there's also the co-location option in the event that we are actually co-located in the main serving office of the LIR.

5438   And in our case, even in the event of co-location, which is, by their own definition when I spoke to them, considered a shared-cost build in the terms that when we pay for our co-locate to be built that's our portion of the shared cost, they're requiring us at the DS1 level as well and forcing us to either pay for multiplexing or not have it and do it at the DS1 level.

5439   So even in the case of a shared-cost build, in our opinion, we're being forced to pay those multiplexing costs.

5440   COMMISSIONER MOLNAR: Go ahead. Quickly, please.

5441   MR. DANIELS: Just to be clear, we have no obligation to allow someone to declare when they're located in our central office a co-location, that that be their POI, but we agree to do it because it makes sense for both parties.

5442   So for us to do that in a way to avoid them having to lease extra facilities is something that we do because it makes sense. We have no obligation to do it. And then to turn around and say, ah-ha, now it's a shared-cost build, so therefore, you have to pay for the benefit of your network.

5443   We're saving them a lot of money by allowing them to do that and we don't see a reason not to do that, we're agreeable to it, but then to say, oh, you have to now pick up the extra costs because we want to interconnect at the DS3 level, that's where we stop.

5444   We say: You can do that, we're fine to do that, but we have these extra costs and in this case you have to pick up that extra cost because we're saving you all this other money.

5445   I don't know that others allow co-locations to be that, but we do.

5446   THE CHAIRPERSON: Okay. Len?

5447   COMMISSIONER KATZ: Thank you.

5448   Good afternoon. I have two questions.

5449   The first one is we've heard a lot about the potential benefits of IP-to-IP interconnection for voice purposes and I guess the jury is still out as to whether the economics justify it or not from what I heard from some people this morning like MTS.

5450   The other side of the coin is the innovation, and the only product or service that I've heard mentioned all last week and this week was HD voice as a possible new service on the horizon.

5451   Given where you're coming from and the business you're in, what are some of the innovative products and services that are on the horizon that are already on the development board, so to speak?

5452   MR. SANDIFORD: I have seen a few. As my colleagues in my office tell me, I travel far too much to trade shows looking for these types of things.

5453   But some of the ones that I've seen recently involve using the IP communications layer for data transmission handset-to-handset. So, for example, in the case of a customer that has an IP-enabled handset and the customer at the other end has an IP-enabled handset, that applications could run for any purpose on those handsets and use the SIP or the voice messaging to transmit data back and forth in those messages.

5454   I saw a unique scenario recently that was being tested in Florida, where they were trying to use these enabled handsets, IP-enabled handsets, for public safety information, storm warnings, et cetera. So a call would go out and as part of the call going out the handsets would be updated with storm warnings, other public safety information, Amber alerts, et cetera.

5455   There's lots of stuff that is evolving. It is new and certainly HD voice is one of the driving ones, but there certainly are other ones, some that are known, some that are not yet known.

5456   COMMISSIONER KATZ: Okay.

5457   My second question is a "timdentonism."

5458   Can you unpack the statement in paragraph 4, where you say:

"Melding the two regimes together would create significant inefficiencies in traffic routing..."

5459   I always thought when you bring things together you become more efficient, not less efficient.

5460   MR. TACIT: Yes. Well, since it's Hallowe'en, it's only fitting that you should be impersonating Commissioner Denton.

--- Rires

5461   MR. TACIT: But in terms of the inefficiencies, you know, toll traffic by definition is imbalanced as opposed to local traffic, which can be balanced or people can strive to balance it. Toll traffic by definition traverses vaster distances than local traffic.

5462   In terms of stranded investments for competitors, investments have been made and these trunking arrangements and so on.

5463   COMMISSIONER KATZ: That, I understand. It was the issue of the inefficiencies.

5464   MR. TACIT: Okay.

5465   COMMISSIONER KATZ: So you're simply saying the issue is one of imbalance of the traffic --

5466   MR. TACIT: Well, that's part of it and how much you have to pay to take the traffic to a certain point, how far do you have to take the traffic. If I only want to make a call, you know, from Ottawa to Cornwall, do I have to be forced now because of a consolidation of the regimes to take my call to Thunder Bay or Toronto or whatever the place is?

5467   COMMISSIONER KATZ: Okay. So the issue is forced versus unforced? If it's voluntary and it allows you to be more efficient, there's benefits.

5468   MR. TACIT: Right.

5469   COMMISSIONER KATZ: So the question only is where the obligation is and where the flexibility is?

5470   MR. TACIT: That's right. So we're saying, you know, a lot of money has been spent, a lot of businesses have been organized around a certain understanding of what the regime is.

5471   So to just sort of make it go away and change it radically overnight, especially if we are in agreement that TDM is, you know, in the next few years going to decline over time, it doesn't make a lot of sense for us.

5472   Instead, we should be looking at minor tweaking to enhance efficiency, but we have no problem with allowing other arrangements on a voluntary basis.

5473   COMMISSIONER KATZ: Thank you.

5474   THE CHAIRPERSON: I believe those are all our questions. Thank you.

5475   MR. TACIT: Thanks.

5476   THE CHAIRPERSON: We will go on with the next intervener.

5477   THE SECRETARY: I would now invite Saskatchewan Telecommunications to come forward.

--- Pause

5478   THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument. Thank you.

RÉFUTATION VERBALE

5479   MR. HERSCHE: Mr. Chairman, Commissioners, good afternoon. I am Bob Hersche, the Director of Regulatory Affairs in SaskTel.

5480   I would like to reintroduce Doug Grant, our Senior Planner from our Network Planning Division, and introduce Kevin Spelay from our Regulatory Affairs Division.

5481   As we reviewed the evidence given at this hearing over the last week there seem to be very few arguments which demonstrate that market forces are not working in voice interconnection. Companies utilize a myriad of different kinds of connections to suit their needs. Even when they have complaints, they are seemingly too small to take to the Commission.

5482   SaskTel remains of the view that there is no need for major changes to the interconnection regime.

5483   Before I give our description of the Chairman's suggestion of how to advance IP voice connection, there are just a couple of points that I would like to clarify.

5484   First, while all agree that the Canadian voice network is in the process of becoming IP-based, mandating the implementation of IP interconnection will do very little for the consumer, for innovation or for the digital economy.

5485   We must not confuse the interconnection of wireline services on an IP-to-IP basis with the provision of IP-based services to the end user.

5486   And we should also not confuse the undoubted benefits of digital data services with the questionable consumer improvements available when voice calls are fully digital.

5487   We must also remember that the existence of IP in various stages in a transport network is absolutely irrelevant and transparent to the consumer until that consumer has an IP-based access line and IP-capable terminal devices.

5488   The argument that somehow changing the mode of interconnection between carriers will spur ILECS to make millions of dollars of investments in fibre-to-the-home or other IP-based access technologies is ludicrous.

5489   ILECS are undertaking these investments as the business case develops to provide more advanced data intensive services. Until that business case is made, IP will be translated into TDM to reach the end customer.

5490   Even in a 100-percent IP transport and access network there will be some in-home conversion for years as many terminal devices will still be analog.

5491   Now on to the question asked by the Chairman at the end of the first phase of this hearing, how to spur on IP interconnection.

5492   I believe that we all recognize that wireless as a medium for a newer and more dynamic set of services is ahead of wireline in the application of IP. However, even within our wireless arm, SaskTel has no IP switch for our CDMA wireless services. What must be addressed is how to interconnect with the legacy system.

5493   It has been noted that we do connect IP-to-IP in our 4G wireless with Bell and TELUS. That being said, we are willing to negotiate similar connections to our 4G switch with other wireless service providers. That negotiation, however, still requires arrangements and translations to reach our wireline and our CDMA wireless networks.

5494   With that in mind, I would like to quickly make a few suggestions to the Commission on how to promote the use of IP connection without throwing the entire network into chaos.

5495   First, don't touch the existing TDM and LIR structure. It needs to be recognized that there will be TDM existing in some parts of the system for some time even as we move towards an IP network.

5496   Secondly, change the MALI to be technologically neutral. Parties should be allowed to negotiate either TDM or IP interconnections if they are of mutual benefit.

5497   Third -- and this is surprisingly similar to Rogers' and TELUS' proposals earlier -- create an obligation to negotiate IP interconnection in any LIR where the combined competitor and incumbent wireline accesses are predominately served by IP.

5498   As an example, in Saskatoon, Shaw is totally IP and SaskTel is rapidly moving towards IP. Together we will soon reach a threshold where IP interconnection is most beneficial to both companies.

5499   Assessing whether an area is predominantly IP based on the current LIRs will result in a faster adoption of IP than if the Commission moved to one or two LIRs in an entire province because the rollout of IP from both ourselves and competitors will be a targeted process affecting more heavily populated areas much more quickly than more rural areas.

5500   In those LIRs where IP is not yet predominant there will be much less potential consumer benefit from IP-to-IP interconnection. And in our opinion, at least in Saskatchewan, the current structure of eight LIRs does not create an onerous burden.

5501   As the companies negotiate in a predominantly IP LIR, any residual translation of IP to TDM would be cost-shared.

5502   Lastly, the Commission should not mandate anything beyond the obligation to negotiate and refer the issue of IP standards to CISC at this time. SaskTel would concur with those who have suggested that this whole interconnection issue be brought back before the Commission in two or three years. We firmly believe that the market will have taken care of most of the issues here before you by then. IP interconnection is still not at the stage of TDM where we can implement the equivalent of plug and play.

5503   Some participants would seem to have mastered the interconnection between different kinds of IP switches and have replicated this many times. The first time they interconnected, however, would have taken time and trial and error.

5504   Today this trial and error and experimentation is something that would have to occur with each connection between two different companies. Even Shaw agrees that the so-called "session border controllers" do not allow value-added services to work as well as they should.

5505   The bottom line is that you should continue to allow us to negotiate and work with others as IP develops. The evidence before you indicates that the marketplace is already handling this. If, as some suggest, the Commission may want to give the company an obligation to negotiate in good faith, we have no problem with that.

5506   Before I close, I would like to deal quickly with certain questions raised by Commissioners either as undertakings or as helpful hints.

5507   Commissioner Katz asked SaskTel to compare long distance rates for wireline and wireless services between Regina and Saskatoon, presumably based on the assumption that the lack of equal access would result in higher rates for wireless consumers.

5508   As with MTS, this has proven not to be the case. A basic wireline toll call for a customer with no other long distance plan would cost $0.37/minute at peak time and $0.24 in the evening. For wireless, a post-paid rate would be $0.25/minute. Of course, almost no one pays these rates. They have a myriad of choices of plans and alternate providers.

5509   Overall, SaskTel's wireless long distance minutes have continued to rise every year. Yet, our revenues from wireless long distance have continued to fall.

5510   SaskTel agrees with WIND and others that requiring wireless service providers to introduce equal access would result in significant investments which would not benefit either business or the consumer.

5511   Commissioner Molnar asked if transiting services should be forborne.

5512   SaskTel believes they could be. When providing transit for multiple CLECs, there is no benefit to the ILEC or its end users. And the CLECs have options of interconnecting directly with each other, thus potentially avoiding a conversion to TDM in the ILEC's network, or one of them could become a transit service provider.

5513   Indeed, for a reasonable return, SaskTel would be willing to investigate undertaking an IP transiting service. Technically there is no problem that cannot eventually be resolved; it is only a matter of cost and return.    Today we have no business case or expressed demand for such a service and I admit we would resist creating this at essential service rates of cost plus 15 percent. Customers should pay for the true value of the service.

5514   In conclusion, I reiterate, market forces within the interconnection regime are working well. Companies have shown tremendous innovation in seeking a variety of arrangements for bringing their voice services to consumers.

5515   SaskTel is also working as quickly as possible to expand new high-bandwidth capabilities to the people of Saskatchewan. Voice interconnection is only a very small part of that move to developing the national digital economy.

5516   With that, thank you very much.

5517   THE CHAIRPERSON: Thank you for your presentation.

5518   I am not quite clear what the difference is between the Rogers proposal, which seems to be gathering a lot of momentum, and yours, which you say is essentially predominantly served by IP.

5519   The clarity of the Rogers proposal is somewhat attractive because we discussed it and it's pretty clear what happens. If you have a connection with an affiliate or a division, you have to offer it to another carrier, or if you already end services via IP switches in a certain area like you seem to be doing in Saskatoon, then you have to offer it.

5520   Why can't you sign up to the Rogers proposal?

5521   MR. HERSCHE: The only difference we're really saying is -- and looking at the predominant -- is we go back to one of TELUS' earlier statements. If I only have one or two end accesses that are actually IP-enabled, that's really not -- it's the same as having IP somewhere in my system someplace.

5522   So all we're suggesting is that between Shaw and ourselves, if you look at the whole environment and how many accesses, then we should begin to interconnect in IP.

5523   THE CHAIRPERSON: What I understood Rogers to say is if you only have two, then on those two you have to offer it to another carrier. So only where you serve your end customer on an IP basis would you also have to offer it.

5524   And, Rogers, if I'm misquoting you, please correct me.

5525   MR. HERSCHE: If that is true, we can do that.

5526   THE CHAIRPERSON: Okay. Thank you.

5527   Suzanne, I believe you have some questions?

5528   COMMISSIONER LAMARRE: No, Mr. Chair, it's been covered. Thank you.

5529   THE CHAIRPERSON: Okay.

5530   Does anyone -- Candice?

5531   COMMISSIONER MOLNAR: I am pleased to know you can do that because we're getting some consensus around an item and that's always good to have.

5532   I have just a couple of questions.

5533   First, I just need to make a comment that providing us something in like a 7 font isn't really helpful to me.

--- Rires

5534   COMMISSIONER MOLNAR: At my age it doesn't work very well.

5535   But I have a different question here. You continue -- you know, your proposal as you laid it out in 9(c), that if there is IP in an LIR, one of the things that concerns me somewhat is that some of these proposals are coming forward and they still seem to be attached to the old TDM interconnection regime. We don't want to carry the old interconnection regime that was created in TDM, and somehow, through the rules put in place, carry it forward to the new.

5536   Do you see in a new IP interconnection regime -- and the example we used before lunch is, well, they will just simply interconnect with your IP switch, with the softswitch.

5537   So how important are factors or elements such as an LIR in a new IP interconnection environment?

5538   Can we just put those away? Can we allow you folks to interconnect fully?

5539   What makes most sense?

5540   And perhaps things like LIRs are the old TDM and not relevant to the future.

5541   MR. HERSCHE: There are two aspects to that, if I understand your questions correctly.

5542   First, you are asking why we are looking at just the cities and not around the towns and this kind of thing; that we would, all of a sudden, be able to carry all of this forward.

5543   We will be putting fibre to the home in Saskatoon and 10 major centres, if you will. We are probably going to have, still, a TDM base in our rural for quite some time.

5544   COMMISSIONER MOLNAR: But we are only talking about interconnecting here IP-to-IP.

5545   MR. HERSCHE: Yes.

5546   The second part is, if, for example, you wanted to connect to -- let's say, once we are ready in Saskatoon, as opposed to going to each of the LIRs.

5547   We have no problems if you only want to connect in one place or two places in Saskatchewan, as long as there is some consideration for the transit that goes out to some of those other outlying cities, as an example.

5548   We have some congestion in the North Battleford area. So, all of a sudden, I have all of this traffic that is going up to the North Battleford area from my switch there. It makes a difference.

5549   So what we have to do is look at that kind of transiting, and what we do with transiting if we only have two switches in the entire province.

5550   COMMISSIONER MOLNAR: Thank you.

5551   THE CHAIRPERSON: Okay. Thank you very much, those are our questions.

5552   We are moving right along, Madam Secretary.

5553   THE SECRETARY: I would now invite Bell Aliant Regional Communications, Limited Partnership, Bell Canada and Télébec, Société en commandite, to come forward.

5554   Thank you.

--- Pause

5555   THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument.

5556   Thank you.

RÉFUTATION VERBALE

5557   MR. DANIELS: Good afternoon, Mr. Chairman and Commissioners. I am Jonathan Daniels. I am pleased to be back with the rest of our panel, Denis Henry from Bell Aliant, to my right, Martin Cullum from Technology -- Bell Canada, and to my left, and beside him, Michelle Bourque from Wholesale -- Bell Canada.

5558   It seems to us that the case for mandating IP interconnection has not been made. At the same time, it's clear that the Commission does not want the industry to drag its feet. You have also stressed the importance of IP interconnection becoming available to both large and small carriers.

5559   Mr. Chairman, at the end of last week, you asked us to reflect on what was said during the week and to consider how to move towards IP interconnection "in a way that's fair and equitable to both the ILECs and the new entrants." You asked for "...help and inspiration...to find the right solution." We heard you, and so, if I may add, did Rogers.

5560   You have been asking parties about not mandating IP interconnection, but requiring any LEC that offers it in one area to offer it to all LECs in that area. Unfortunately, as you yourself pointed out today in questioning with MTS, this approach has the potential to create a disincentive for ILECs to offer IP interconnection if it means that, once they do, they have to be ready to offer it to all players. However, we think this rule can be refined to encourage deals rather than the opposite.

5561   As such, we propose the following local IP interconnection framework.

5562   First, IP interconnection services would be offered by LECs off-tariff, but remain subject to the undue preference requirement under subsection 27(2) of the Telecommunications Act. The relevant TDM tariff would remain in place.

5563   Second, if a LEC offers IP interconnection to another LEC, it must be prepared to offer it to all other LECs, but the requirement to match would be limited to:

5564   (a) Commercially implemented arrangements, not trials;

5565   (b) The specific service implemented;

5566   (c) The specific type of traffic over the IP interconnection;

5567   (d) The geographic area serviced by the IP interconnection; and

5568   (e) The specific technical solution implemented.

5569   IP interconnection agreements, although not subject to Commission approval, would still be filed with the Commission in confidence. However, a description of the areas, the type of traffic, and the technical details would be public.

5570   Under this approach, the Commission would have a record of what is offered across the industry, since all IP interconnection agreements would have been filed with it. This would give the Commission a broad perspective and allow for speedy resolution in the case of disputes. In addition, technical details would also be shared with CISC, easing everyone's learning curve.

5571   Mr. Chairman, to anticipate your first question, the answer is: Yes, this approach is almost identical to that of Rogers.

5572   And I hope this is a case of great minds thinking alike and not the alternative.

5573   But where it differs is in two parts. First, we don't propose mandatory triggers based on having IP access end users. Instead, we are focused on offering IP interconnection.

5574   We have created a regime that focuses on creating incentives, to make IP interconnection happen quickly.

5575   And below, as we go back into the text, I will explain what that means.

5576   The second big difference between us and Rogers -- and I shouldn't say big, because there are not huge differences -- is that once we offer IP interconnection to one party, like Rogers and, actually, MTS said today, we say that we have to offer it to all.

5577   But our proposal is, I think, a little bit more fleshed out, because it has limitations, such as those listed in paragraph 2 that we just went through.

5578   By limiting the obligation to match the type of service traffic and geographic area, we can ensure that ILECs, including Bell especially here, would have the incentive and desire to make IP interconnection a reality. We are going to want to do it, because we are not going to be opening the floodgates by just doing one, as is the case today.

5579   With that, I will turn it over to Dennis, to continue with page 3, at paragraph 7.

5580   MR. HENRY: Thank you, Jonathan.

5581   Mr. Chairman, we think it's important to keep in mind that IP interconnection can refer to three different things in this proceeding. First, you have IP interconnection where someone converts IP to TDM and vice versa. Second, you have IP-to-IP interconnection where the voice traffic between two end users travels in IP form the whole way through, with no conversion. Third, you have IP transit, where a third party connects together two IP carriers.

5582   Let's talk first about IP conversion. The main outcome of mandating IP conversion is really a shift of costs from IP operators to TDM operators, and in fact an increase in those costs.

5583   Some parties have suggested that forcing the ILECs to pay the costs of conversion in the network will encourage us to move to IP services faster. In fact, the opposite is true. I can tell you that, in Bell Aliant for example, we are intensely focusing our energy and capital on expanding our FTTH footprint, and we are leading the country in that regard. However, in the financial realities of today's world, the amount of total capital that a public company like ours can spend each year -- on everything -- is fixed. Capital markets dictate that.

5584   So any CRTC requirement to invest in TDM conversion equipment will actually have the effect of forcing us to reduce our FTTH program. This would be an incredible and perverse outcome -- one that surely the Commission must avoid.

5585   Rogers assured you that there are services that people will be able to realize in an all-IP world. This confirms our point that it's end-to-end IP that brings benefits. Shifting the responsibility for IP conversion, as many carriers propose -- fewer today, I guess -- does not bring any benefits to end users, because the benefits would need both callers to be on IP access lines and also need the callers to have the right equipment.

5586   MR. DANIELS: So what about truly ensuring that innovation happens? Everyone seems to acknowledge that it makes sense to have IP interconnection, but some parties are worried that our evolution to IP-to-IP interconnection will be too slow, delayed until enough of our voice customer base is on fibre to the home. We have given this a lot of thought.

5587   The key is to enable end-to-end IP between the two networks, as Rogers suggested earlier today. If we could do that while continuing to exchange our TDM traffic under the existing TDM arrangements, both CLECs and ILECs would save money and be able to expand the interoperability and attractiveness of IP innovations to IP end users. And we would not have to wait for some "tipping point" before we start to do IP-to-IP interconnection.

5588   To get technical for a moment, for end-to-end IP involving our end users, the way for this to work is for the originating LEC to be able to recognize a call to see whether it is IP or TDM end user. A national Carrier ENUM database may be the way to achieve this. However, we think there may be a simpler -- and even faster -- solution which involves capitalizing on the existing Local Number Portability Database. I would like to explain this issue further during questioning.

5589   As for IP transit, we now turn to that. We do not believe that you should be regulating TDM transit, but setting that aside, we were astonished that some parties proposed to have you mandate ILECs to provide IP Transit. From a policy perspective, why would the Commission impose an IP transit obligation on ILECs when they do not even have the IP infrastructure in place to do this?

5590   From a legal standpoint, how can the Commission mandate us to provide IP transit when local voice IP interconnection is not a service we provide even to ourselves?

5591   However, we heard last week that there may be a business case for us to create such a service on a commercial basis. To that end, if forborne, we propose to conduct an IP transit trial, if we find other parties interested in joining us in this experiment.

5592   As for the issue of POI consolidation, we don't believe that the Commission should mandate any change to the current framework for TDM or IP. Most carriers prefer interconnection where their switches are located. For CLECs, typically with one to three switches per province, the large areas make sense. In our case, with over 300 switches in our ILEC territories, much smaller areas are preferred.

5593   The LIR regime, set by the CRTC in 2004, after a five-year process, reflects a compromise between these two interests.

5594   In this proceeding, the CLECs are basically attempting to, in effect, review and vary that compromise to make it more favorable to them. But in the TDM world, there has been nothing new since 2004 to justify larger interconnection areas.

5595   Moreover, more consolidation will cost us more and force us to invest further in TDM equipment because it will increase our TDM backhaul from our existing switches to the centralized POIs.

5596   If a CLEC thinks that it would benefit from POI consolidation in the TDM context, we would be happy to explore if there could be a commercial benefit to both parties. But to make this work, we need to be able to go off tariff, which we are not allowed to do today. That is why, when anyone has ever approached us before for this, we have said no, because we can't change the financial terms.

5597   Under our proposal, IP interconnection would be negotiated off-tariff, obviating the need for the Commission to pronounce on this issue.

5598   MR. HENRY: Mr. Chairman, you know our position on wireless interconnection, and we maintain that position. However, we do have a proposal related to Yak's and Vidéotron's "High Usage Trunk" issue that may reduce the need for direct WSP interconnection on a bill and keep basis, and we would be happy to explain that proposal during questioning.

5599   If WSPs, nonetheless, were to become entitled to bill and keep, then we reiterate that wireless interconnection should take place at the LIR level, not at the LCA level, and only after a suitable implementation period. To give WSPs access at the LCA, but LECs at the LIR, would not be competitively neutral, would risk creating gaming opportunities, and would increase the complexity of the interconnection regime.

5600   Finally, a number of other issues were raised over the course of the hearing last week, and we didn't have time to address them all today in this statement today. In particular, though, we would be pleased to expand on the following in questioning. Specifically: Our proposal on end-to-end IP interconnection using the LNP database;

5601   Why imbalance payments usually favor CLECs;

5602   Our WSP proposal, including the need for a transition period; and

5603   Vidéotron and Yak's High Usage Trunk proposal.

5604   Thank you very much.

5605   THE CHAIRPERSON: Let me go in reverse order, with the wireless regime here. If I understand paragraph 20, unwilling recognition from a user, given the temperature of the room for the last few days, you feel that it's pretty clear that wireless service providers will be relieved of the need for equal access, and you say that, if you do that, okay, I can live with that, but interconnection has to be at the LIR level.

5606   Do I read that correctly?

5607   MR. HENRY: Yes, I think so.

5608   If you are going to do it, we don't think that you need to -- I am not going to repeat all of our arguments against that, but if you are going to do it, then it is pretty important to get it right.

5609   And currently they connect at the LCA, and CLECs, of course, connect at the LIR.

5610   We think, for competitive equity reasons, that you have to allow them -- or force them to go at the LIR, as well.

5611   In fact, you could create a perverse incentive, because at the LCA you don't have to pay EAS transport and transit. So you could have affiliated CLECs now who have wireless affiliates, but now might have a reverse incentive to connect behind their wireless carrier, to avoid paying EAS.

5612   So now you have given integrated players kind of a reverse incentive, the thing you are trying to get away from.

5613   THE CHAIRPERSON: Let's stay with the non-integrated one. If I adopt your proposal saying that, yes, they are relieved of equal access, but they have to interconnect at the LIR level, are you actually imposing more costs on them than they are facing right now?

5614   Is that the effect?

5615   MR. HENRY: Are you imposing more costs on them?

5616   THE CHAIRPERSON: Yes.

5617   MR. HENRY: I don't know. I am not sure that you could say for sure that you are imposing --

5618   THE CHAIRPERSON: We have some in the room, I can ask them.

5619   Mobilicity or WIND, why don't you speak up on this one?

5620   MR. ANTECOL: We don't have a problem, as WIND Mobile, connecting at the LIR level, in which case we would have to split our traffic between EAS local transit and bill and keep. But, as I say, we have no problem adapting to the same regime that CLECs have to do, in terms of parceling up their traffic and interconnecting.

5621   THE CHAIRPERSON: Mobilicity or Public Mobile, does the same apply to you?

5622   MR. THOMPSON: For Mobilicity, we don't really have a problem at the local interconnection region.

5623   We do support WIND and Yak's position, however, that, for EAS, we think that should be over bill and keep trunks.

5624   MR. O'SHAUGHNESSY: Brian O'Shaughnessy, with Public Mobile.

5625   We don't see any advantage or reason to change the interconnect to the LIR level. If it's necessary to do so, it can be done, but it doesn't produce any technical or regulatory reason to do so, or any advantage for doing so.

5626   So we don't see that making sense.

5627   MR. HENRY: Mr. Chairman, I did have a couple of other qualifications as to how, if you are going to do this, to do it right.

5628   THE CHAIRPERSON: Please, go ahead.

5629   MR. HENRY: The other was that, first of all, this should be optional, so that a WSP who wants to take advantage of the LIR bill and keep connection has that option. But, of course, if it doesn't want that option, then it would continue with the options that it has today, to either continue to go behind a LEC or have a WAS tariff, should it continue to be available, as well.

5630   And I say a WAS tariff. Of course, in our view, WAS should be forborne.

5631   That brings me to the second point. We have described this in an interrogatory, I think it is CRTC-4.

5632   This couldn't be a flash cut. There are a number of network modifications, systems modifications, some facility builds, that would have to be put in place. So we would not be able to convert -- because we are not set up today to do WSPs on that basis.

5633   They connect at the LCA, so you would have to build new trunks, you would have to be able to measure those trunks, you would have systems work to do and so on.

5634   So there would be a need for a transition period. Perhaps during that period WAS --

5635   THE CHAIRPERSON: I don't understand that. You are connecting CLECs on that basis right now.

5636   You just told me that when you have a WSP that is integrated and has a CLEC which it can hide behind, they do it at the LIR level.

5637   So, if they do it directly now, why should there be an extra cost to you?

5638   MR. HENRY: Because, first of all, we are not set up to do it that way, and there would be system work once we started implementing this for wireless carriers.

5639   THE CHAIRPERSON: I am sorry, what is the magic about wireless? If you are doing it right now for CLECs, why can't you do it for wireless?

5640   MS BOURQUE: It's Michelle Bourque. I think, converting from an LCA interconnection to an LIR interconnection, from a wireless perspective, we would require some transition time, in terms of converting the trunk groups over.

5641   That period of time today is relatively short when a new CLEC comes on board, but doing something en masse, as a flash cut, would require more transition time. That is merely, I think, what we are talking about.

5642   The only other component is around the Q of S obligations that we have on 1.11, I believe, and there are certain intervals that have to be met on Q of S which would need to be taken into consideration if you were doing any large-scale migration to a new interconnection.

5643   THE CHAIRPERSON: What are you talking about when you say "some transition time"?

5644   MR. HENRY: I think, in our interrogatory -- CRTC-3, I think it was -- there are a number of scenarios in there, and it goes through it in detail, and I think it varied from 13 to 23 months, depending on -- and it lists all of the activities there that would need to be done.

5645   As I say, as a concession I would say that perhaps during that transition period, whatever transition period you would choose, WAS could remain regulated. That's a possibility. But, of course, once you have the bill and keep regime in place, then I think it is even a stronger case for WAS to be forborne, because we don't need two default interconnection regimes.

5646   THE CHAIRPERSON: Why do I hear this from you and I didn't hear it from TELUS? Wouldn't they be in exactly the same boat?

5647   MR. HENRY: You would have to ask TELUS.

5648   THE CHAIRPERSON: Well, go ahead, TELUS.

5649   MR. WOODHEAD: Our view was, in terms of WAS. While I understand from a principled point of view what Bell's position is, WAS has decreased in significance to such an extent that it wasn't really an issue for us.

5650   THE CHAIRPERSON: Okay. Does anybody else want to want to -- I saw some flag up there? Go ahead.

5651   MR. O'SHAUGHNESSY: Yes, Brian O'Shaughnessy with Public Mobile. Just to clarify and to continue on our previous statement. That to implement at the LIR basis would require network reconfiguration, as was just mentioned by Bell, and would take time and cost to do so.

5652   And we look at being it is only the independent WSPs that would have to do this because all the integrated WSPs today take full advantage of that today through their integrated nature of their companies. So it is a cost for basically two parties in the industry.

5653   THE CHAIRPERSON: The upshot being..? The upshot of what you just said is what?

5654   MR. O'SHAUGHNESSY: We are saying that there is a cost to ourselves as an independent WSP for having to interconnect at the LIR level that would not have to be borne by anyone else because they get full advantage of the regime without doing so.

5655   THE CHAIRPERSON: Okay, let's move on.

5656   MR. WOODHEAD: Mr. Chairman, sorry.

5657   THE CHAIRPERSON: Yes, go ahead.

5658   MR. WOODHEAD: Just a brief -- that actually isn't correct. We actually interconnect at the LCA level in many areas outside of our operating territory where we are not a CLEC, so it isn't just isolated to Public Mobile and Mobilicity.

5659   THE CHAIRPERSON: But I don't understand Public Mobile's intervention. They asked to be relieved and on the other hand they tell me now it is a cost. So I mean, isn't that what you asked for in the first place? So that is why I asked twice now, what is the upshot? I don't get an upshot, fine, I will move on.

5660   You know, unless you can give me -- what is your position here?

5661   MR. WOODHEAD: Yes. Our position was that we want to have the existing WSP regime with bill-and-keep requirements. We are not looking to have to change our interconnection arrangements to be at the LIR, which adds cost for no reason. We want the WSP regime -- we will get into it in our submissions shortly -- to continue, but at a bill-and-keep basis.

5662   THE CHAIRPERSON: But you want to be relieved of the obligation of equal access?

5663   MR. BORON: That is correct, Mr. Chairman. It is just that it is a nuance, which we can get into in more detail in our rebuttal submission. But we had always proposed that the WSP regime be revamped as opposed to us taking on the CLEC regime modified.

5664   THE CHAIRPERSON: Okay. Then let's move at the beginning where your qualification, Mr. Daniels, let's go through these one by one. I would like to understand the impact. You are saying you are close to Bell, but you are not quite the identical -- it says to Rogers, sorry.

5665   MR. DANIELS: Sure.

5666   THE CHAIRPERSON: If you wanted to (inaudible) trials, that I understand. Now, the specific service implemented. What is the import of this?

5667   MR. DANIELS: Let me give it to you in terms of trying to explain both sort of B and C together, because they sort of overlap, but they are a separate concept.

5668   Take, for example, that we go with the idea that Rogers has that we ourselves also propose, which is that in Quebec City we have fibre-to-the-home customers, so they are on VoIP. And we want to interconnect with Videotron in Quebec City and exchange local traffic, but we are limiting it to only our end-to-end VoIP customers.

5669   So right now, if you look at the Rogers rule, Rogers says it only applies to -- this is where they said it only captures and covers the customers that are VoIP. So in that respect Rogers is similar. MTS and the way it was characterized last week says, once you do it in an area, or once you do it I think MTS said in your entire region, you have to do it for all your customers.

5670   So we are talking about limiting it to a subset, whatever the subset is. But that subset may only be limited to a particular service or it may be limited to type of customers. So, example, in terms of the type of service. We may only do that direct connection IP at the beginning with Videotron in my scenario I am giving for bill-and-keep traffic, but we don't do it for our transport traffic or for toll traffic, for example.

5671   So what we are trying to do, and I think this is similar to the questions that Commission Molnar was asking before from Rogers, was trying to say, look, we want to do it in a way that makes sense, but we want to limit it to the services and only to the extent that we do it there. And as we expand, we have to expand it for everybody. That is really what we are saying, as opposed to a blanket rule.

5672   Because if we had a blanket rule, we wouldn't do it -- it would be a disincentive for us to even do it where it made sense. So that is what is behind B and C.

5673   So in the examples there are maybe at the beginning we do it for wireless access service, but not bill-and-keep services. That is the difference between the service or the type of traffic, if it is wireless traffic only or VoIP wireline traffic. So it is sort of consistent with the concept behind Rogers, but it is specific and it is limited by the geographic area, which is item D.

5674   THE CHAIRPERSON: And the geographic area, I understand, the specific technical solution implemented. Isn't that a rather large potential loophole? Because no two solutions are the same. You have told me that now for all last week, that they all have to be worked out on a case by case basis. Doesn't this basically allow you to obviously say, well sorry, it is not the same specific technical solution?

5675   MR. DANIELS: It is not meant to be a big loophole. I guess when we sat down and were discussing what kind of commitment. For example, right now it has been suggested on the pubic record that we have arrangements for our wireless arm, the HSPA, with TELUS and Sasktel. Now, those arrangements I think it was described to you someone else's -- work right now because we all have the exact same equipment and we don't have to get into the issues of having a different IP basis for doing it.

5676   We are actually interested in expanding that to cover, to move to do it with other wireless carriers. But there may be a reason that it works with one technology that it may not with other technologies. And so we were just a little reticent to put in here and say there would be a straight obligation without saying, well, if there is a specific technical limitation as to why you only do it one way.

5677   An example may be if we do it with everyone on a SIP basis -- I don't really know what the difference, to be honest, between SIP, SIP-I and SIP-T is, but I know that they are different. And so it may be that if we do it, we will do it with anyone on a SIP basis. But that doesn't mean that someone can come to us and do SIP-I, demand SIP-I.

5678   It may work, I don't want to say no, but we are a little worried about a rule that says, oh, you have to do it no matter what the technology they have on the other end. So we are looking for a little bit of flexibility there.

5679   And again, this is subject to the 27-2 so, you know, if there is a dispute about this, the Commission could intervene. I don't think you are going to need to though, because what we are trying to do here is to do it and make it make sense for us and them, so let's get going with it.

5680   THE CHAIRPERSON: Can I hear from the people who are going to use this service?

5681   Yes, Mr. Tacit?

5682   MR. TACIT: Thank you, Mr. Chairman.

5683   Chris Tacit for CNOC. The danger with this, and I understand that there are some valid concerns that Mr. Daniels has raised, but on the flipside of that there is also a real danger that by taking this approach, what Bell could end up doing is just ensuring that all of its competitors are cookie cutters and stifling some of the innovation and diversity that IP interconnection is meant to foster.

5684   So we have to be very careful about putting too many constraints on the type of interconnection that is required.

5685   THE CHAIRPERSON: Quebecor?

5686   MR. BELAND: This is Dennis Beland from Quebecor Media. We have two concerns with the additional constraints that Bell is proposing here.

5687   The first concern relates to constraints B and C. In effect, what these are attempting to do, they are attempting to carve out wireless from wireline. So in effect, I am simplifying a little, but Bell would offer something to a wireless carrier and they would be obliged to offer that to other wireless carriers, but not wireline carriers and vice versa. That is the effect I read here.

5688   I think that runs counter to what has been a generalized movement over the past week and a half to recognizing that distinctions between wireless and wireline for the purpose of interconnection are largely gone or should disappear. So that is a concern we have with conditions B and C.

5689   Also condition D, which brings in geography now, our concern with this would be, to use a concrete example, imagine there is a carrier who operates exclusively in the Island of Montreal. Bell reaches an agreement with that carrier for an IP-IP interconnection covering the Island of Montreal. Yet perhaps Bell's IP switch, the same switch, covers parts of the north and south shore of Montreal.

5690   Now a second carrier comes along with the same characteristics, same circumstances, yet that second carrier covers a much larger area and Bell would say to them, well, sorry this offer only applies to the Island of Montreal. Whereas perhaps there is no technical reason whatsoever to not extend it to the broader greater Montreal area.

5691   So this bringing in the concept, the geography, the feeling we have right now is we would prefer to go more along the lines of what Commissioner Molnar was asking a couple of times this morning, of looking more at the switching entity itself that you are connecting to and what does that entity cover?

5692   THE CHAIRPERSON: Bell, what do you say to that?

5693   MR. DANIELS: Okay, so let me break these down a little. I will do what you did, go in reverse order.

5694   So talking about the geographic area. I mean, what we are concerned about here is being forced to do -- is creating something that is going to be disincentive for us to agree to doing something.

5695   Now, in the example that Mr. Beland gave, I have no idea if -- we are interested in doing IP to IP connection for end-users. It is going to work for both of us, this is the whole beauty of the proposal of Rogers, ours, whoever you want to call it. Is it creates an incentive to get together to actually do it and workout the proper geographic area.

5696   But Mr. Beland says, well, wait a minute, we are worried that you are going to limit it to the Island of Montreal and not other areas. If it served off the IP switch I am not sure why, except maybe in the first place there may be reasons that we want to test it, keep it small and let it grow.

5697   But the alternative is to have a rule that basically says, oh, you do it in Quebec, you only have one IP soft switch, because you are just starting up, that covers Quebec and Ontario, so you now have to offer it everywhere in Ontario as well. So it doesn't make sense to us. What we are trying to do is say, look, we are interested in doing it, we are interested in making the deals because it is going to save us both money and we are going to have extra services that go over it.

5698   And we appreciate the Commission's got this worry about us favouring one carrier to another. So as long as we treat everyone the same, within the same confines, then this is going to encourage us to do the agreements. So that would be my response.

5699   THE CHAIRPERSON: I still don't understand what Mr. Beland said and Commission Molnar says, if you do it on that switch for somebody else, why can't you do it for everybody?

5700   MR. DANIELS: It may be that we can do it on the switch for others but we may, at the beginning, want to limit it to a geographic area because we are going to do it on a manual --

5701   THE CHAIRPERSON: Yes, but that is exactly the point. You want to have all the cards. And now we are trying to say no, you know, that the three conditions are the same for everybody. You still have the right to -- you still will negotiate everything.

5702   MR. DANIELS: Yes. I mean, the key things I have -- everyone is passing me the same note -- is to say what we are trying to do is create a regime that gets us moving quickly. For example, when we start this, right, we probably have a bunch of -- if we were to offer this on a universal basis or something, we would have to build the ISIT systems to support it. Initially, we think it would make sense to get going, let's set it up somewhere, we will do it on a manual basis, for example.

5703   And to do that, we may want to limit it to -- and the example that Mr. Beland gave, the Island of Montreal, right, to make it manageable at the beginning and as you build the systems.

5704   I mean, I guess the key point here is we are trying to design a system that makes sense to us to have the incentive to do it. And yet, we are putting a rule around it. And I am worried that if we try to capture every situation and put all this pressure you are going to create a situation where we don't have the incentive to do it. And that is really the issue I have about the geographic area limitation. And we are still adhering to the 27-2 obligation under our proposal.

5705   THE CHAIRPERSON: I understand that, I hear you.

5706   MR. DANIELS: Okay, so would you like me to address the other Videotron about the carve out for the wireless and wireline?

5707   THE CHAIRPERSON: Right.

5708   MR. DANIELS: Quite simply, I have to agree and disagree with Dennis there. Agree in the sense of if it makes sense for us to do it for a wireless to wireless directly, which is the most logical place to get going on this. Then, yes, we can now -- under this rule we would be able to do wireless to wireless directly without having to get involved in figuring out how to do this on the wireline side.

5709   Because Bell Mobility is an IP carrier and probably can get going a lot quicker on this if it doesn't have to worry about accommodating Bell Canada in this.

5710   But the second issue, right from the get-go our plan is about getting fibre-to-the-home customers connected on an IP basis with other carriers; wireline to wireline, wireline to wireless, we are totally open to that.

5711   So it is not correct characterization to say that this is specifically designed to cut out wireline. It is actually designed to make wireline happen in a way that doesn't have some impossible trigger that makes us hold off on doing it.

5712   THE CHAIRPERSON: Now, you said in your presentation, I wrote it down, "No mandatory triggers." Is what you have in paragraph 2 not a trigger?

5713   MR. DANIELS: You are talking about when I went off my cuff?

5714   THE CHAIRPERSON: Off -- yes.

5715   MR. DANIELS: What I hope I said is no mandatory triggers based on having IP access and users. The difference between --

5716   THE CHAIRPERSON: I am trying to figure out whether you are playing lawyer with me or not. Because saying, "prepared to offer," is that different than being a mandatory trigger?

5717   MR. DANIELS: Rogers, as I read the Rogers proposal, they are saying, where we offer fibre-to-the-home and, therefore, have customers on VoIP, we have to under their -- it is a rule -- have to do IP to IP.

5718   Our position is, for example, we would start maybe in Quebec City where we actually have fibre-to-the-home customers. I also have some fibre-to-the-home customers in Greenfield areas in the outskirts of Toronto. I don't want to have an obligation from day one that I have to do those areas.

5719   So my difference is they are saying you have to do it everywhere you have an IP end-user and I am saying, no, it should be when I offer IP interconnection, that is the trigger that makes the responsibility to everyone else. There is the distinction, if I understood the Rogers proposal correctly.

5720   THE CHAIRPERSON: So you basically took away the second trigger. They have two triggers and you basically wiped out the second trigger?

5721   MR. DANIELS: Well, if I can look at it for a second --

5722   THE CHAIRPERSON: ii and iii, as far as what I -- you just told me is you take away iii, you just do ii.

5723   MR. DANIELS: Except to say what iii has in it that wasn't mentioned in ii, which I think is important, is that -- which goes to my caveat, is that in iii it does say that it is only limited to the VoIP customers themselves. So I suppose I am taking their bottom of their iii and moving it into the second one. It is only to the extent that you do it, so whatever you do to yourselves.

5724   THE CHAIRPERSON: Let's return to Roger's proposal then, because it is very clear cut. It says, whether you have an interconnection, you have to offer it.

5725   You have no problem with that?

5726   MR. DANIELS: Just to be clear, to the extent that we offer it for the particular services, that is the issue. Because the way I read ii, where an IP is providing voice IP interconnection, it has to offer it and it doesn't limit it to a particular service under number two or geography. So I am not in total agreement with number two. Number two, I like the concept, but I am limiting it to geography and the service, the discussion we had previously about our aspects.

5727   If I read number two the way Rogers have wrote it here, that would say, oh, as soon as I offered it anywhere I would have to do it everywhere in my whole territory to anyone for all services. That is the way I read number two. Number three is written slightly different.

5728   But I read number two as saying, as soon as I offer it anywhere I would have to do it anywhere, I would have to do it everywhere in my territory to everyone for all traffic types. And I think they even gave the example that if I do it on a toll basis crossing a border -- well, they didn't say cross -- but I am putting in, you know, with AT&T in the U.S. that suddenly I have to do it for local interconnection.

5729   So I think number two is vastly overstated. And if we have number two as the rule, we are not going to want to do it.

5730   THE CHAIRPERSON: I thought you would have to do it anyway. I thought the economy and the development of technology is moving. Are we only talking about the speed at which you are going?

5731   MR. DANIELS: Oh, absolutely. Don't get me wrong, I am not trying to say that. But if we went strictly with the way I read ii, then I would have a big disincentive if I am doing my first IP interconnection because the minute I finally did it, I would have to provide it to everyone everywhere in my territory. And there is places where that just doesn't make sense at all. And so that would cause me to significantly delay.

5732   But I think I am trying to capture the spirit behind the Rogers proposal and say this is how we can actually sign up to it and make it happen and make it, you know, right away get going with IP.

5733   THE CHAIRPERSON: And iii or the second trigger or whatever you want to call it, your problem with it is you would like to do it selectively, if I understand you correctly?

5734   MR DANIELS: Yes, I have to agree with that. Except, when you say selectively it makes it sound like I am going to pick and choose --

5735   THE CHAIRPERSON: No, I am not imputing any motive here.

5736   MR. DANIELS: Right. Because this makes sense to us and we want to get going with this. But, yes, we are not ready to do it everywhere right from the get-go. And I don't even think the other carriers want it everywhere right from the get-go. It would be too much for all of us. But I could be overstating and I don't know, I don't speak for them.

5737   I just got handed a note that maybe sort of summarizes what we are saying, which is that our proposal is designed to be the starting point. In some ways Roger's proposal is the mid-point or even the end point that that we are trying to get to. Our proposal is designed to make it get going right now and to start seeing IP interconnections happen on a voluntary basis.

5738   THE CHAIRPERSON: But isn't Rogers really stating the concept? And we all realize there will be implementation problems and little technical problems, et cetera. But that is what they are saying.

5739   And you are not doing that, you are just trying to pick it up and put little reserve here and qualifications there to really make it go at your pace and nobody else's pace?

5740   MR. DANIELS: I guess I came back to, you said, how do we create the incentives to make it happen?

5741   THE CHAIRPERSON: Right.

5742   MR. DANIELS: And so you say do it at our pace. But our pace, this is designed to make it happen quickly at our pace. So I guess it is just a different characterization. I can't disagree with the facts that you are saying in it, but I think it is a different characterization, because we think our proposal is, in essence, the same as Rogers, but we have put the meat on the bones of actually how to make it happen and happen quickly.

5743   THE CHAIRPERSON: And in paragraph 13, you end it by saying "We would like to explain this issue further during questioning."

5744   MR. DANIELS: Yes. So I would like to explain it, not only for the benefit of the Commissioners because I think it is important, but even for the rest of the room because we have an idea that came up on the weekend and it needs to be tested out. But I would like to throw it.

5745   To do it properly, if you would bear with me, I am going to just explain to you how local number portability works today, and then I will explain that. So sorry about that.

5746   In the old days, in the monopoly days, before we had local competition, you would have your telephone number. Let's say in Toronto 416 then there would be 223, that is called sometimes the -- and then four digits afterwards.

5747   And what the Bell company switches and all the company switches in North America would do is you would route based on the telephone number. If the telephone number would tell every company in every switch where you would look at the telephone number and that would tell you where to send the call.

5748   So, for example, at my house growing up, (416) 223 whatever the last four digits, 223 meant it was a switch to serve my -- the area of my house.

5749   Now, that meant for example at the time if you lived -- if you wanted to move two doors down you could probably keep your telephone number but if you moved across town you had to give up your telephone number. That used to be the old regime.

5750   When you mandated local competition and you said it's important to be able for carriers to be able to -- for individual end-users to keep their telephone number what happened is you said, "All right. We are going to create local number portability".

5751   So how local number portability works means that in Toronto no longer can carriers route based on (416) 223 because 223 could be Rogers. It could be anything.

5752   So what happens is we have a national database. Every time a call is made -- so if we get a call and that caller is calling (416) 223, instead of just routing it, we go into the database, we look up that number and we get something back that's called an LRN. But we get back a digit number that tells us, "Oh, it's Rogers at this switch at this location".

5753   So that's how LNP works today. We all do it in areas that have LNP.

5754   So when we sat down and said, "Here is the problem. The problem is we want to interconnect".

5755   Take my example, Videotron in Quebec City for our fibre-to-the-home customers separate, have an IP interconnection for some of our calls and a TDM for our other calls. How does Videotron know when they make a call if that call is going to be TDM or IP?

5756   It's the same problem with Rogers' proposal. For this to work, Videotron has to know is that an IP call or TDM because if it's an IP call they send it to us on the IP interconnection. If it's TDM they send it down the TDM. So they need a method. They need a method to know.

5757   So we have heard throughout this proceeding people talk about ENUM. The reason people are talking about ENUM is because that's a special new database that may be created that are going to allow you to go and say --

5758   THE CHAIRPERSON: Hang on.

5759   MR. DANIELS: Yeah.

5760   THE CHAIRPERSON: I am sorry. I walked right into this but you are taking me out of the scope of this proceeding.

5761   You are really suggesting some things that might be doable, might be workable. We probably -- and I have to run it by CISC, et cetera. But you wouldn't expect us to make a decision on this point here at the end of this hearing?

5762   MR. DANIELS: What I say is that our proposal and Rogers' proposal can only work by kicking this issue for CISC -- I agree. But we have an easier solution than building a whole new database.

5763   THE CHAIRPERSON: Okay. And I mean I'm not poo-poohing your idea.

5764   MR. DANIELS: Yeah.

5765   THE CHAIRPERSON: It may be a solution but it's not something that I can decide here.

5766   MR. DANIELS: No, no. So in order for this to work you need to be able to distinguish the IP from TDM calls. So how can you do that?

5767   And, as I say, you have heard people talk here about ENUM. What's ENUM? It's a bunch of things but it's a database that would, among other things, you would go into and look up and say, "Oh, it's a TDM caller or it's an IP". It would be creating a whole new database. That would take a long time to build in Canada.

5768   What we thought about as we came up with our proposal for the weekend and, I guess, the same way that Rogers probably had to wrestle with this, is how can we set up a rule today so that Rogers would know when to send our calls to IP, to TDM?

5769   THE CHAIRPERSON: I understand and you have an idea and you should send it to the Secretary.

5770   MR. DANIELS: Yeah, all right, so get to the idea.

5771   So the idea is --

5772   THE CHAIRPERSON: No, no, but I can't deal with the idea here, if I understand it. It would not be subject to our decision at the end of this process. So --

5773   MR. DANIELS: No, that's true. I guess what I'm trying to say --

5774   THE CHAIRPERSON: We are under severe time pressures so we had better get to the issues that are before us.

5775   So you have a solution involving number portability which you would like to send us; to CISC. Let's leave it at that, okay?

5776   MR. DANIELS: Fair enough. My point though, is until you resolve that issue you cannot adopt ours or Rogers' rule. That is a precondition because you cannot separate traffic. You need a solution for that.

5777   So regards all the other things that need to be worked out for IP and so on, that can easily be solved, you can't have this rule, either our rule or Rogers' issue, until this is solved although, as I say, we think we have a pretty simple solution that would require very quick resolution.

5778   THE CHAIRPERSON: Can I hear from Rogers, because he just said we couldn't implement your rule without this being resolved?

5779   MR. WATT: We agree with Mr. Daniels. We think the LRN identification will allow us to separate and identify -- separate -- identify the IP traffic that can be terminated on an IP end-customer on the ILEC soft switch and then we would be able to identify where the traffic would be destined to a TDM.

5780   So we agree. We think this is the solution.

5781   THE CHAIRPERSON: If we say, Rogers, we adopt your solution; we mandate it, we will have to say it shall be implemented subject to the issue of -- this issue being first worked out by CISC first of all?

5782   MR. WATT: We think the more efficient way would be to have it worked out between Rogers and Bell on a bilateral basis. The results could go to CISC and it could be standardized.

5783   But we think it would move more quickly if our engineers deal directly with Bell's engineers and make it work.

5784   THE CHAIRPERSON: Okay.

5785   Mr. Béland, you had your hand up.

5786   MR. BÉLAND: Yes, Dennis Béland from Quebecor Media.

5787   You will be happy to know that we had the same idea as well on the weekend of basing this all on LRNs.

--- Rires

5788   MR. BÉLAND: That's the good news.

5789   The better news is, in our opinion you don't need to refer this to CISC in order for it to be standardized. All it requires is communication between the two interconnecting carriers as to which of their switches are of which type and have which LRNs. It's an exchange of information. It doesn't require a new standard or process to be developed.

5790   THE CHAIRPERSON: So the upshot of that being if we adopt Rogers' solution for argument's sake, it would be something that the carriers have to work out between themselves. Okay.

5791   I'm getting messages here for a health break. I think we have come to a logical -- so let's take a 10-minute break and then we will continue with this.

5792   Thank you.

--- Suspension à 1518

--- Reprise à 1531

5793   THE SECRETARY: À l'ordre, s'il vous plaît. Order, please.

5794   THE CHAIRPERSON: Okay. I am going to ask my colleagues to continue questioning.

5795   Let me just say I'm disappointed in you. I really think what Rogers put on the table and what TELUS endorses makes a lot of sense.

5796   What I have heard from you is basically all sorts of qualifications and clarifications which basically means not at all an incentive to move faster but you move at the speed at which you are moving. But anyway, I think you might want to rethink your position.

5797   But, anyway --

5798   MR. DANIELS: Mr. Chairman?

5799   THE CHAIRPERSON: Yes.

5800   MR. DANIELS: I am perhaps not articulating it so Mr. Cullum just wanted to say something quickly to describe our proposal in a sentence.

5801   THE CHAIRPERSON: Okay.

5802   MR. CULLUM: Thank you. Martin Cullum.

5803   I'm new to this process and it might seem a little bit suspicious to a lot of people with Bell putting proactive positions on the table. But, quite honestly, Mr. Chairman, all we are trying to do is get the ball rolling with IP-to-IP interconnection agreements sooner than later.

5804   If we were to wait to have all services defined and all IT systems developed and in place, the ENUM was another example of that, having the numbering schemes all set out, we could find ourselves in a very long time of development before we would actually start to realize the outcome that we are all sitting around discussing over the last week.

5805   So in the spirit of getting things going, all we were saying is if I now have a service that's operational between another carrier and myself, why not make that available to other people? Even though it may not be completed we will make that available rather than saying, "Let's hold off until we have all the services working over that IP connection before we make that available". That was really the context of Jonathan's proposal.

5806   What Jonathan was saying at the beginning was it's a starting point. We recognize that we all want to reach the proposal that was put on the table by Rogers. We want to be there as well. And if you wait for that to take place it could take longer than what we are suggesting.

5807   That's all we are trying to --

5808   THE CHAIRPERSON: I guess I am delighted to hear what you are saying. I just -- the way it came out in the exchange with Mr. Daniels, and maybe I misunderstood him, but it was not that way. I'm glad to hear that that is your intention. But, yeah, it seems to me that obviously you are in the best position to work it out with other carriers, et cetera.

5809   We don't want to get involved in the negotiations and administration, et cetera. But the concept that Bell put forward and you know what TELUS endorsed and Quebecor, at least through its intervention at that time, strikes to me it's exactly -- I realize there is a lot of problems and a lot of working out, et cetera, et cetera.

5810   But to lead the impetus and get this thing going, it struck me as a very positive move until I heard from you as putting all these qualifications which appears to be a pullback. If it's not meant as a pullback I'm delighted to hear it. Let's make sure we work along the way of getting momentum and getting this thing going.

5811   Candice, you had some questions?

5812   COMMISSIONER MOLNAR: Well, Mr. Chairman, that was the issue I wanted to identify and discuss as well.

5813   But let me just, since I do have the microphone right now -- you have suggested this in the spirit of getting things moving. I think we all understand that there are issues that need to be resolved in making these IP-to-IP connections work and that you care about the customers on your end and you know the co-carriers also care.

5814   So I would think that there is also a mutual benefit in ensuring that these interconnection arrangements are done in a manner that is logical, that there is a systematic process towards this and, you know, it's not done so quickly that any customer or carrier is put in jeopardy in doing it.

5815   So don't you believe that, instead of putting out all of these parameters, that is something that would logically be addressed in the negotiations with the parties?

5816   MR. DANIELS: I think all of this stuff would be addressed in the negotiations with the parties.

5817   The issue is what we are proposing here is a rule that says whatever I do for one, I have to do for the others so that -- to make it fair to all. And all we are really trying to put on the bones is say, okay, if I do that for one it's that which I have to provide to the others.

5818   It's really just an attempt to articulate the 27(2) and to make sure, because if I go back to my company and say "I have made a deal with Videotron" -- or it's not going to be me, but if we made a deal with Videotron to do end-to-end IP they are going to say, "Okay, well, that makes perfect sense. Does this mean we have to do it to everyone else?" "Well, yes, for end-to-end IP customers." "Okay, we can move that."

5819   But if the rule is the way Rogers articulated we would have to do it for all traffic -- I shouldn't say Rogers -- MTS articulated. So that's the distinction that we are trying to make.

5820   We are really just trying to put bones on what the 27(2) difference is so as to be very clear what the rules are.

5821   Again, to Martin's point, it was really about -- so that we could get doing this now and not wait and delay and hold off, but to make an incentive so that we want to do it now, negotiate. All of this stuff would be negotiated.

5822   COMMISSIONER MOLNAR: So just to be clear, you are trying to explain how you would view 27(2) to work. We don't -- you are not expecting us to come up with a decision that defines this for you? We can just allow that to work through negotiations?

5823   MR. DANIELS: So the only -- if your question is, is it good enough to adopt this rule and say it's just a 27(2) obligation, stay out and let the parties decide, the only risk for that is -- let me give you just an example.

5824   If you only say 27(2) we come and we do this in Quebec because it makes sense in Quebec but we are not ready to do this in Ontario. And then someone comes to us and says, in Ontario, internally I give the opinion 27(2) geographic areas probably not an unjust discrimination. We can justify it but I can't promise you, you won't be ordered to do it in Ontario.

5825   So I think adopting these parameters as explanations as guidelines to the industry would be helpful.

5826   COMMISSIONER MOLNAR: Help me understand if you don't mind, why you wouldn't be ready to do it in Ontario if you have an IP-enabled switch there, you have IP accesses there and somebody is wanting to interconnect to get those? I mean the economies of that interconnection are going to be there for both parties. So why is it you wouldn't be ready?

5827   MR. DANIELS: Why start in one area? It really has to do with to get going the --

5828   COMMISSIONER MOLNAR: So it's just you getting going.

5829   MR. DANIELS: Exactly. There would be no --

5830   COMMISSIONER MOLNAR: Again, both parties are going to be there.

5831   MR. DANIELS: Absolutely. It's going to make sense for us to do as much IP interconnection in Ontario and in Quebec and out east in all of our territories where we have IP and we have IP customers all throughout. It's going to make sense. It's going to make sense not to do it on bigger areas than the LIR.

5832   Like there is a lot of things that can all be agreed to make sense. But I have a job in where I have to give judgment calls if I do this, are we ready to do it everywhere all the time? And that's why we try the parameters on it so that you can build out and do it in the way.

5833   Initially, just to give you a sense, in Quebec because I think that would be the first place that may make sense to do it, we are probably going to have to do manual systems to put this all into place. That's people. That's manual until we build the IS/IT systems.

5834   We are not going to want to do that right across everywhere right from the get go, but once we built the IS/IT systems, yes, it would make sense to do it everywhere because we'll save money and so will they.

5835   COMMISSIONER MOLNAR: Okay. Those are my questions.

5836   THE CHAIRPERSON: How do we go about doing this then? I mean you are expressing willingness but you don't want the rules. I don't know what the upshot of this is.

5837   MR. DANIELS: I thought we were proposing a rule, to be quite honest with you.

5838   And I know you said you were disappointed. I thought our rule says if we do this for one, we have to do it for everyone else.

5839   THE CHAIRPERSON: But you just -- as an example with Commissioner Molnar you just went through you will be doing it in Quebec but you don't want to do it in Ontario.

5840   MR. DANIELS: I guess the point is that we are trying to say we want to get moving. I don't want to delay doing it everywhere because -- I'm not ready to do it anywhere because I'm not ready to do it everywhere.

5841   So I think the rule that we articulated on page 2 is the rule. I think it's very similar to Rogers' rule. It's just recognizing and filling out some of the details that I don't think Rogers has thought through every aspect of it.

5842   So I think that would be the rule.

5843   THE CHAIRPERSON: Anybody else want to weigh in on that before -- yes, Rogers...?

5844   MR. WATT: Well, I wonder why we wouldn't want to go with the Rogers' rule. It's a broader rule.

5845   Bell has carved out a number of qualifiers here. Why wouldn't those things then be left to negotiation? You would have the overall broad rule and then in the course of negotiation Bell would say, well, we can do it in such and such and area but we cannot do it in another area because of these billing issues, and they could make their case.

5846   Rather than sending out the more prescribed rules heavily qualified at the outset, you know in negotiation you are only going to then probably whittle down further, why wouldn't you start off with the broadest rules at the outset or broadest principle?

5847   THE CHAIRPERSON: Somebody will have to come after you on the 27(3) and make us a case and depending on what the scenario is most likely, if that's -- you will probably discourage it through negotiation and try to solve it in negotiation. But if it actually came to that then you know if you cannot do it then you have a perfect defence.

5848   I don't quite understand what -- why in answer to Rogers' proposal, why you couldn't adopt the broad rule and leave the details to be worked out?

5849   MR. DANIELS: I mean we totally support the notion that we want to be able to negotiate all the commercial arrangements on it. I think what you are asking me is it good enough to just adopt the Rogers' rule?

5850   Again, I think I told you under the way I read the Rogers' rule, if I offer IP interconnection with AT&T for toll, I have to do it everywhere in my territory. That can't be right.

5851   But where we are coming from is just saying we think that these aspects here provide a little bit of clarity to encourage us not to worry, to say we don't have a reason to say no if you take -- if you adopt -- give some clarity on it. It's just -- you know that would be -- it goes to the issue of like for like.

5852   That's really what we are after and we want to make -- the clarity upfront will encourage us to make more deals without worrying about saying no because we can envision how other people -- not the person you are negotiating with, the third party who comes in and says, "Oh, I want this but I want it differently over here". It may not make sense in that situation.

5853   THE CHAIRPERSON: Okay. I think we have beaten the issue to death. You might want to reflect and we will do too.

5854   Okay, let's go on to the next intervenor.

5855   THE SECRETARY: Thank you, Mr. Chairman.

5856   I would now invite Mobilicity to come forward. Thank you.

--- Pause

5857   THE SECRETARY: Please re-introduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument. Thank you.

RÉFUTATION VERBALE

5858   MR. THOMPSON: Madame Secretary, Mr. Chairman, Commissioners, and Commission staff, my name is Stewart Thompson and with me is Gary Wong, Legal Counsel. We appear on behalf of Data & Audio-Visual Enterprises Wireless Inc., doing business as Mobilicity.

5859   As a new entrant, standalone mobile wireless carrier, our primary focus in this proceeding and in Phase I last week was on needed reform of the current, TDM-based wireless-to-LEC interconnection regime, as follows:

5860   (a)   There is no good reason to deny wireless carriers shared-cost interconnection and bill-and-keep treatment of local voice traffic exchanged with LECs, while imposing no further regulatory obligations on wireless carriers;

5861   (b)   Notwithstanding the foregoing, there will be a continuing need for mandated baseline LEC wireless access services tariffs to guarantee seamless and ubiquitous exchange of traffic.

5862   Commissioner Lamarre specifically asked us to come back in this phase of the oral hearing with our position on wireless-to-local interconnection in SILEC territory and in particular, for our position on the feasibility of negotiated direct interconnection arrangements with SILECs.

5863   In this regard, the Joint Task Force has now revised its position by limiting the request for direct connections between SILECs and wireless carriers to situations where the wireless carrier wishes to provide service to subscribers in SILEC territories using local SILEC numbers and with LNP. This is acceptable to Mobilicity and we thank the JTF for this revised proposal.

5864   While we would be pleased to address any remaining questions that the Commission may have in relation to the "wireless interconnection issues", we will not be dwelling on these in this oral rebuttal statement.

5865   Rather, we will be focussing our comments in this second phase on IP-to-IP interconnection and the regulatory regime that should be put into place in order to promote innovations in price and service offerings in a competitive environment as the Canadian telecommunications system transitions to a fully IP-based network of networks.

5866   IP-to-IP interconnection: The orderly development of efficient and transparent interconnection arrangements is essential to competition in both wholesale and retail telecommunications markets. It follows that unless carriers can complete calls on a non-discriminatory basis with ease and efficiency, full interoperability, price and service innovation will suffer.

5867   The fact that a new transmission technology is being used does not fundamentally alter the nature of interconnection services or the need for same on a certain and timely basis. There is no good reason to think that IP has broken down the need for guaranteed interoperability between different operators' telecommunications networks.

5868   Mandated Regime for IP-to-IP Interconnection: Parties have acknowledged that there may be a need for a mandated regime; where they have differed is in the timing and the "mix", that is, the degree to which mandated oversight should be combined with private negotiations or industry-led initiatives.

5869   In Mobilicity's view, the time to establish a forward-looking framework for IP-to-IP interconnection is now, and while there will be a need for industry-led discussions on technical and operational issues, interconnection is far too pivotal to competition to be left to market forces alone.

5870   Mobilicity knows from experience that large carriers lack incentives to enter into commercial arrangements with smaller carriers. We have some experience with "mandated right but negotiated term" regimes, and it has not been positive at all.

5871   What is even more revealing is the evidence on the record of this proceeding that the two largest cable companies in Canada have sought and been refused IP-based interconnection, presumably by one or more LECs. As technology evolves and networks migrate to IP-to-IP-based interconnection, the regulatory framework cannot afford to let certain players move ahead while leaving others behind.

5872   As a result, we believe that a model IP-to-IP interconnection agreement should be developed and mandated along the lines of the Master Agreement for Local Interconnection that is mandated under the current TDM-based regime.

5873   For convenience, Mobilicity's list of minimum basic principles to govern the development of a model tariff and model IP-to-IP interconnection agreement are set out in Appendix "A" to this rebuttal statement.

5874   In relation to the question of fairness in the apportionment of costs to transition to IP-based networks, Mobilicity believes that the criterion of having entered into at least one IP-to-IP based interconnection agreement speaks directly to the issue.

5875   Where a carrier has entered into at least one IP-to-IP based interconnection arrangement, this means that they have the capability to (a) convert TDM-based traffic to IP and (b) convert IP-based traffic to TDM for termination on its TDM-based accesses. As a result, such a carrier has the capacity within its networks to exchange traffic on an IP-to-IP basis.

5876   (B) Aspects to Be Resolved in CISC or through Party-to-Party Negotiations.

5877   As stated in our opening statement, while we believe that there should be a clear, mandatory order for IP-to-IP interconnection and the development of a model agreement, we recognize that there are aspects of the regime that are better left to industry-wide discussion and party-to-party negotiations.

5878   Mobilicity notes that in Local Competition, Decision 97-8, the Commission established the basic principles of mandatory, shared-cost, bill-and-keep local interconnection but requested CISC to study and make recommendations on several issues, including the following.

5879   Criteria for designation of ILEC switches as gateways for interchange of traffic. Recommendations concerning the location and implementation of LEC CCS7 points of interconnection. Identification of technical interface standards. Identification of operational or process-related modifications, and development of a model agreement and consideration of any required amendments to existing tariffs.

5880   In this regard and further to our discussion with Commissioner Denton last Thursday, we note that the CISC has already done some work to identify technical interface standards for IP-to-IP voice interconnection.

5881   Attached as Appendix "B" is an excerpt from the CISC Network Working Group's Consensus Report on IP Interconnection Profile for Interconnection Between Service Providers Under the Jurisdiction of the CRTC, dated November 7, 2006, which identified a number of "Requests for Comments", or RFCs, relevant to the exchange of voice traffic and associated information on an IP-to-IP basis while recognizing the evolutionary nature of these internationally developed standards.

5882   What imports is that the Commission establish the principle that carriers should use industry standard network interfaces to the greatest extent possible, and limit reliance on proprietary standards to truly exceptional circumstances.

5883   In addition, Mobilicity indicated that it would further consider and come back with a position on the possibility of negotiated, off-tariff arrangements.

5884   Mobilicity notes that, under the current TDM-based regime, parties are permitted to enter into non-standard MALIs and other arrangements on condition that such off-tariff arrangements are filed for approval.

5885   Once a baseline IP-to-IP interconnection model agreement and tariff framework are in place, parties should be free to negotiate off tariff, provided that any such arrangements are filed for approval with the Commission and a basic level of disclosure of the names of the parties, the date of execution and the nature of the services provided is disclosed on the public record.

5886   Conclusion.

5887   Mobilicity submits that the fundamental inequities of the TDM-based wireless-to-LEC interconnection must be corrected by the Commission in its determinations in this proceeding, without imposing any additional obligations on wireless carriers and without removing the baseline WAS tariffs that continue to be required to enable competition in retail mobile wireless markets.

5888   Looking forward, the challenge facing the industry and the Commission is to set the groundwork for IP-to-IP interconnection. We hope that the Commission will look back to the interconnection framework and processes established by the Commission in order to implement local competition as a useful basis for implementing an orderly transition to an efficient, non-discriminatory and transparent IP-to-IP interconnection regime.

5889   This concludes our prepared statement. We would be pleased to take any questions.

5890   THE CHAIRPERSON: Let me make sure I understand your submission.

5891   You basically endorse the Rogers proposal, if I state it correctly, but with the qualification of what you say here, what you've listed in Appendix A, Mandatory Principles for IP-to-IP Interconnection which, if I put it all together, would mean the threshold is the triggers that Rogers suggests, then IP-to-IP interconnection has to be done using existing CISC interface and containing -- addressing the various points that you have here in Appendix A?

5892   MR. THOMPSON: Yes. I guess we don't see the point to reinvent the wheel. There is an existing MALI, there are existing tariff agreements that can be modified for IP-to-IP interconnection.

5893   We agree with the trigger -- triggers as suggested by Rogers last week. There was a little bit of complexity, I think, today.

5894   But the net of it is, we're okay with mandated tariffs and agreements and off-tariff agreements in addition to that.

5895   We think it provides transparency, clarity and, frankly, I think that can move things faster than a bunch of independent agreements being negotiated.

5896   THE CHAIRPERSON: Yeah, but this is where -- in paragraph 22 you say:

"Once baseline IP-to-IP interconnection model agreements and tariff frameworks are in place, parties should be free to negotiate off-tariff..."

5897   Why? Why do they have to be in place?

5898   I mean, if we mandate, you have to provide interconnection on the basis of, let's say, Rogers but anything that you work has to be cognizant of the points 1 to 7 that you have in here, et cetera, and use the existing CISC standards to the extent it's helpful and further.

5899   Why do we have to then wait 'til that, in effect, the agreements are in place before people can negotiate off tariff? I don't understand that.

5900   MR. THOMPSON: Okay. Well, I guess there's a couple of things here, anyway, from a timing perspective. I think we'd want CISC working on these agreements and tariffs right away.

5901   THE CHAIRPERSON: M'hmm.

5902   MR. THOMPSON: I don't think anybody's suggesting that IP-to-IP interconnection is going to happen tomorrow.

5903   If we actually wait for the LECs to implement an IP agreement with another carrier, if you listen to MPS Allstream, that could be years away. So there's an argument as well for a time line on that.

5904   But if we have this all in place by January 2013, I don't think that would be out of line.

5905   THE CHAIRPERSON: Okay. January of 2013.

5906   So we -- what would you see coming out of this decision?

5907   MR. THOMPSON: The big thing for us is the mandated tariff agreement and interconnection agreement.

5908   And again, this is about transparency, being a smaller player.

5909   THE CHAIRPERSON: We mandate interconnection, we mandate the CISC to develop an amended MALI and we have a tariff, presumably. What's the tariff of IP-to-IP?

5910   Once that's in place, people either apply it or they can make off-tariff arrangements. That's what you're suggesting.

5911   MR. THOMPSON: That is correct.

5912   THE CHAIRPERSON: And that basically you feel the tariff has to be there why?

5913   MR. THOMPSON: Well, as I alluded to, you know, we've had challenges with mandated agreements but negotiated terms.

5914   I mean, something as simple, I'll tell you, as a non-disclosure agreement and a mandated agreement process took me three months to get in place, so there's lots of barriers to actually getting mandated agreements in place.

5915   THE CHAIRPERSON: But isn't the reality here slightly different if you're an ILEC and you come on as a new competitor than -- delay is the name of the game. Any delay works in their favour; not yours.

5916   MR. THOMPSON: That's correct.

5917   THE CHAIRPERSON: Yeah, but now we're talking about IP. IP is something that the market is going, they have to do that, anyway, et cetera, so therefore, why does it work in the ILEC's favour to hold you back because by doing that, they hold themselves back?

5918   MR. THOMPSON: Well, I suspect that they're going to approach negotiations with the parties to whom it is most favourable to do business with.

5919   I think our own experience is that it's very difficult as an independent wireless carrier to receive support or focus from incumbent LECs and our competitive wireless participants.

5920   THE CHAIRPERSON: And I -- so that you think bilateral arrangement would be -- or IP-to-IP interconnection deals might be cut with others before they are cut with you. That's your take on it.

5921   MR. THOMPSON: I think that's one of the risks. We are certainly open and, frankly, I think the first place that IP-to-IP could take place is between the wireless carriers.

5922   And that actually does offer some benefit to the ILECs as well.

5923   If you think today if we're sending traffic to Rogers wireless and Rogers is sending traffic to us, that's actually going through transiting services on Bell.

5924   If we can cut an IP-to-IP interconnection agreement between ourselves, we're taking that transiting traffic off Bell, so we're not asking them to spend any more money on TDM or TDM-to-IP conversion, so that actually works for Bell as well.

5925   So I would suggest that wireless-to-wireless might be good.

5926   THE CHAIRPERSON: Assume there is a Bell proposal. If they then -- and so the first agreement is between Bell Mobility and Rogers, and they have to offer it to you, too, so why are you worried that you -- I guess you're worried that the negotiations with you will be much lengthier and slower than they have been with Bell and that Bell will get the first move advantage here.

5927   MR. THOMPSON: Sure. And there could be carve outs in terms of territories, as we've heard. And it's interesting that all of the competitive intensity in wireless is around the markets that all of the new entrants serve.

5928   So we think there's lots of risks for negotiated agreements.

5929   THE CHAIRPERSON: And if we went the first step but not the second step, what do you see that would mean for you?

5930   If we adopt the Rogers proposal and said yes, you have to do that, we do that within an existing interface agreement that's just developed, we ask them to complete that. We don't mandate a tariff. We're saying, you know, we expect you to work those things out.

5931   Obviously, if there's a violation of Section 27, you come to us. But other than that, this is really something that we don't feel -- we don't see it as an intervention necessary.

5932   Why would that not do the -- you just feel that given your size and given that you have -- are a single activity carrier, i.e. mobile carrier, you would be left behind, I gather.

5933   MR. THOMPSON: That, and I also think it's going to be much simpler. I think it's going to reduce the regulatory burden overall once the tariff's in place. That's a default tariff, it's a fallback. Everybody's protected. And if you want to negotiate something different, so be it.

5934   And I think it's simple, elegant and doesn't impose any undue obligations on any party.

5935   Really, what we're talking about is what's the bill-and-keep arrangement more than anything in a tariff.

5936   THE CHAIRPERSON: Okay. Do any of my colleagues have any questions?

5937   Okay. I guess your proposal is so clearcut we know where we stand.

5938   Is there anybody from the audience that wants to comment on what Mobilicity just put forward?

5939   Bell?

--- Pause

5940   THE CHAIRPERSON: No comment?

5941   MR. DANIELS: I think we do not support the idea of mandated tariffs. I think that from an IP all you need to do is to have a default TDM tariff, you keep those in place, and parties will negotiate that, subject to the non-discrimination obligation that you mentioned.

5942   THE CHAIRPERSON: And do you think the January 2013 deadline that -- or objectives for achieving both the tariff and the CISC and an amended MALI is reasonable?

5943   MR. DANIELS: We believe that IP interconnection, subject to how we see it, would happen by January 2013, no problem. There is some CISC work; that's not very much to be done.

5944   But as again, we're opposed to the tariff issue.

5945   THE CHAIRPERSON: Okay, thank you very much.

5946   Let's move on to the next intervenor, Madam la secrétaire.

5947   THE SECRETARY: Merci, Monsieur le président.

5948   I would ask Public Mobile Inc. to come forward.

--- Pause

5949   THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your oral rebuttal argument.

5950   Thank you.

RÉFUTATION VERBALE

5951   MR. BORON: Thank you, Madam Secretary.

5952   Mr. Chairman, Commissioners, and Commission staff, good afternoon.

5953   Public Mobile welcomes this opportunity to rebut and clarify certain matters placed before the Commission during the submissions in the oral hearing and as heard earlier today.

5954   My name is Bob Boron, and with me today is Brian O'Shaughnessy, our CTO.

5955   How can the industry transition from TDM to IP efficiently and effectively?

5956   We believe that without clear direction and strict timelines whereby industry players collectively work together to implement IP interconnection, the ILECs will delay the transition. The ILECs need a bit of a stick, and not a carrot.

5957   The Commission has heard from numerous large carriers that they have not been able to negotiate commercial IP interconnection with the ILECs, and it is highly unlikely that small wireless entrants like ourselves with no market power would be any more successful.

5958   Small carriers would be put into the unenviable position of either having to agree to inequitable terms or face undue delays if IP interconnection is not mandated quickly. Most parties, including Public Mobile, have stated that they are ready to interconnect using IP currently.

5959   The "trigger" the Commission should consider is not ILEC retail readiness. The appropriate triggers have, in fact, already occurred.

5960   A greater percentage of end users are served by IP today than by TDM across wireline and wireless subscriber bases. IP interconnection is present in a multi-vendor environment between both affiliated and unaffiliated companies, and ILEC retail customers are served via FTTH and other IP technologies.

5961   There are no significant technical impediments to the transition to IP. The Commission has heard from Cogeco and others about the effectiveness of session border controllers to overcome technical concerns raised by the ILECs. We believe that the ILECs have overstated the cost and complexity of deploying IP interconnection.

5962   With respect to the time line for mandating transition to IP, Public Mobile has provided an exhibit, which has since been called Exhibit No. 4, to the Hearing Secretary with our suggested time line that we believe is reasonable for mandated IP interconnection coming out of this proceeding.

5963   As you will see from the exhibit, we propose for markets where ILECs have either retail IP services or IP interconnections with affiliates or others, that the Commission direct CISC to develop IP interconnection framework within four months and the ILECs file tariffs addressing mutual compensation, EAS and transit in support of the CISC IP interconnection framework within one to two months after that.

5964   For secondary markets, we're proposing that once the ILEC has either IP interconnections or retail services that they be required to notify the Commission of their readiness and make IP interconnection available to all within one month.

5965   So Public Mobile disagrees with Bell that they would see no return on capital investments to enable IP interconnection. ILECs need to invest in technology to facilitate protocol conversion between their IP and TDM switches within their own networks as they transition to IP.

5966   Further, ILECs will receive reasonable compensation through tariffs for IP interconnection.

5967   So I think, in a nutshell, we are on board and can put our voice behind the so-called Rogers proposal with the exception that, like Mobilicity that went before us, we believe that there are benefits, certainly, for small players like ourselves that such be mandated through tariffs.

5968   And one other nuance in that from a costing perspective, we believe that if there are truly causal and incurred costs as a result of IP connection borne by the ILECs, let the ILECs make that argument in the tariff approval process as opposed to hold up moving forward in this proceeding on that basis.

5969   With respect to POI interconnection geography and location, the two issues under consideration regarding POIs are the appropriate geographic region for IP POIs, and whether there is a need to mandate location.

5970   On the latter issue, we propose that the location should be left to bilateral negotiation. On the former issue, parties have suggested that the entire country, the province, the NPA or an amalgamation of contiguous LIRs be used.

5971   There is no technical need for numerous POIs across the country. However, a POI per ILEC per province may ease concerns of regional ILECs and would lead to effective and efficient interconnection, in our submission.

5972   Further, we propose that the current guidelines for facilities and POI diversity outlined by CISC be applied to the IP interconnection regime.

5973   During the Oral Hearing, in response to a question from the Chairman, we stated that we use the WAS tariff to connect with the ILEC as well as negotiated arrangements with a CLEC. We want to further clarify the economic implications to Public Mobile, an independent WSP, of such arrangements, and to make sure that we don't leave you with any misapprehensions.

5974   The negotiated agreement for interconnection with a third party CLEC provides a slight discount off the WAS tariff. However, it is much more expensive than the costs borne by integrated WSPs, who effectively pay the LEC rate.

5975   Some parties have argued that vertically integrated carriers reap benefits of LEC interconnection because they invested in the CLEC business and that WSPs should not be granted the rights without the responsibilities. We believe this is a spurious argument.

5976   The Commission accorded shared-cost interconnections to LECs thus far, and not WSPs. It is not appropriate for parties to maintain the loophole that exists as a result of vertical integration between the WSP, ILEC or CLEC operations. There is no public policy to support different interconnection rates for integrated versus independent WSPs.

5977   Under the WAS tariff, as we said in our oral submission last week, we can pay up to 20 times more than our competitors. Negotiated arrangements with unaffiliated CLECs offer a discount, but we still pay significantly more than affiliated WSPs.

5978   Public Mobile is prepared to file our rates for the negotiated agreement in confidence with the Commission if that was felt to be useful.

5979   And I'm just going to go off the prepared text here for a second to address some issues that came up in the submissions by TELUS and Bell earlier today.

5980   We just want to make sure that the Commission understands that we do not support the mechanism proposed by TELUS this morning.

5981   In our evidence and in our submission at the oral hearing last week, we proposed changes to the WSP regime to be extended to shared cost and bill-and-keep to WSPs.

5982   Taking TELUS' proposal would impose, in our view, solely on the independent WSPs and not on the integrated WSPs, costs with absolutely no consumer benefits that would be associated with things like migrating our current interconnection arrangements, physically and commercially, from WSP regime to the CLEC regime, the filing of tariffs and agreements which really are not necessary, as we argued last week, and some potentially ill-founded reason to interconnect with IXCs, even though we would not have to support equal ease of access.

5983   And it could also exacerbate the current situation with Central Office Code exhaustion.

5984   And furthermore, we think that interconnecting on an LIR as opposed to LCA basis would sort of perpetuate the situation where everyone except the independent WSP, all the integrated WSPs, would be able to connect as they are today, whereas we would have to move, as I said, the commercial and physical arrangements for interconnection.

5985   Again, just to reiterate our position, and I'm back on page 7 of our prepared text now, a position taken by nearly all parties in this consultation, WSPs should have access to shared cost interconnection without having to provide equal ease of access.

5986   We disagree with Bell with respect to forbearance, that the mere presence of another CLEC in an exchange is the right trigger for forbearance.

5987   For real competition to exist, the alternative supply must be a suitable replacement for the ILEC service, taking into account variables that include the footprint, stability, technology and readiness to support wholesale interconnection.

5988   There is ample evidence on the record that many CLECs who are vertically integrated with WSPs do not offer services to unaffiliated WSPs today.

5989   Further, and related to this issue, voice interconnection is currently regulated due to the historical monopoly of the ILECs in the provision of local exchange voice services. The ILECs are still the dominant provider of services for both retail voice and wholesale interconnection to CLECs and WSPs.

5990   However, such advantages have not existed in the data market which developed with numerous competitors and, as a result, is more competitive at a retail and wholesale level.

5991   There is simply not sufficient competition to forbear from voice-related interconnection services, whether for WAS or future IP interconnection tariffs.

5992   In response to a question from Commissioner Lamarre, we indicated that there shouldn't be additional inefficiencies introduced into the SILEC regime.

5993   We believe that the SILEC proposal attempts to address a subsidy problem with an interconnection solution. We do not support changes that effectively raise interconnection costs and reduce interconnection efficiency.

5994   Requiring WSPs to interconnect to both the ILEC and the SILEC when technically only one connection is needed would have that effect. This would also lead to the inefficient use of CO Codes.    Currently, many carriers are connected via transiting arrangements and port numbers between themselves. Contrary to the SILECs' position, there is no requirement that carriers deploy direct connections in order to port numbers.

5995   We do not believe that requiring WSPs to interconnect with the SILECs is an appropriate solution.

5996   This concludes our rebuttal comments. We would be pleased to take any questions that you have.

5997   Thank you.

5998   THE CHAIRPERSON: You were here this morning when the SILECs amended their proposal.

5999   Does that amendment do something for you?

6000   MR. BORON: We think that it was movement in the right direction, but we still think that there's the possibility of inefficiencies and additional costs to be injected into the regime which, at the end of the day, could just have the result of us foregoing or delaying our entry into those markets.

6001   THE CHAIRPERSON: Regardless of the proposal, nothing stops you from going to SILECs territory. The only thing is, you don't have to interconnect with them or anything. The only thing is, you couldn't have number portability.

6002   MR. BORON: Which I guess, at the end of the day, affects the offering that we can make to customers in that territory.

6003   Again, we think that it's positive movement, but we would like to see it go further.

6004   THE CHAIRPERSON: And I'm sorry. You lost me totally when you were commenting on TELUS.

6005   I thought TELUS was basically suggesting that -- after questioning from me that you would be treated like a -- you would no longer have the obligation for equal access or for directories. And that's essentially what you were looking for.

6006   MR. BORON: Well, as I recall TELUS' submission -- I'll ask Brian to help me here if I've gotten it wrong -- but they basically, as I took it, they indicated that WSPs could get access to shared facilities and bill-and-keep regime but, as a result, they would have to become a wireless CLEC that, in turn, would not have to take on the obligation of equal access.

6007   But not stopping there, they said that the now WSP or the then WCLEC, if you will, or wireless CLEC would have to still take on certain CLEC obligations that do not exist for WSP today, which include interconnecting at the LIR, which we do not do today and, as I mentioned, there would be certain costs associated with moving those commercial arrangements and those physical connections which would not have to be borne by anyone other than independent WSPs.

6008   And TELUS also indicated -- and frankly, we didn't quite understand this, but they said that the obligation would be borne where we'd have to interconnect with IXCs, but even though we wouldn't have to support equal ease of access. And we just didn't understand that, what the benefit of that would be or what the purpose of that would be, particularly as small new entrants with no market power.

6009   THE CHAIRPERSON: So what would be the main advantage if you no longer have to use WAS, that you would be -- since you are, in effect, a wireless CLEC, you can interconnect?

6010   MR. BORON: I'm sorry, Mr. Chairman?

6011   THE CHAIRPERSON: I thought the main advantage would be if the removal of equal access is there that you would now -- and you are now a wireless CLEC, you would have the ability to interconnect like CLECs do and you didn't have to rely on the WAS, which you say is 20 times higher than everything else.

6012   MR. BORON: Yeah, your comment, as you said, is correct. However, what we're -- the only thing we're quibbling with is that we believe that we should not have to be required to move interconnections to the LIR because there's no real benefit to anyone for that other than causing us to incur costs.

6013   And we believe that the ILECs can support that.

6014   And the other issue, really, is that we didn't understand TELUS' proposal that we would have to interconnect with IXCs but not support equal access.

6015   THE CHAIRPERSON: Okay. Maybe TELUS can enlighten us.

6016   MR. WOODHEAD: In terms of the IXC issue, it has nothing to do with equal access, actually. It has to do with IXCs need to terminate calls to Public Mobile's network. That was all it was.

6017   With respect to the other aspect of Public's comments with respect to what we were saying in paragraph 21, our understanding of Public's position here is that "don't ask us to do anything, but give us a shared-cost interconnection". That's it.

6018   Those are the parameters under which they're participating in this proceeding.

6019   And what we're suggesting is that there are certain things -- the Chairman just mentioned things like directory listings, which don't make sense. We were accepting the shared-cost interconnection point.

6020   And what we were trying to clarify was that, in our view, they should be required to interconnect with other LECs, WSPs and IXCs, as I said, for the purpose of terminating calls.

6021   They should be required to file the normal model tariff, which protects those other parties from, you know, high termination rates. And they should be required to separate the traffic by terminating carrier and terminating switch.

6022   And we've heard in this proceeding, certainly, that the SILECs raised the issue of this, but the same point applies to other LECs.

6023   And that was the sum and substance of our proposal. I take it that Public doesn't like those obligations and all it wants is to reduce their interconnection costs, but we disagree.

6024   MR. BORON: Mr. Chairman, I guess from our perspective all we want to do is get on the same footing as the vertically-integrated WSPs who, I think, are in the advantageous position of being able to do exactly what Mr. Woodhead just described, take the advantages of the -- of bill-and-keep and shared-cost interconnection without providing the obligations -- all the -- I mean, recognizing that all WSPs provide the lion's share of CLEC obligations today having to do with customer privacy and customer safety and things like number portability, et cetera, et cetera.

6025   But I think we just want to be on the same footing as the integrated -- vertically-integrated WSPs with respect to interconnection costs.

6026   THE CHAIRPERSON: I don't understand your logic here.

6027   The vertically-integrated WSP has a CLEC cousin who has all those obligations, so why should -- now you want to be in a position that you're, in effect, superior.

6028   MR. BORON: I guess in -- you know, with -- in all respect, we haven't -- we have not seen, up to this point, any regulatory underpinning that says that a WSP should get those advantages because they have a cousin who's a CLEC.

6029   THE CHAIRPERSON: No, but that's reality right now, right.

6030   And you're saying, "Put me in an equal position to the vertically-integrated WSPs". And all I'm saying is they discharge those obligations. Maybe not under their own name, but through their cousin. But they are being discharged. So TELUS' logic is fine. If you want that, then you should have the same aggregate burden.

6031   MR. BORON: I guess, again, not to dwell on it, but we don't see the value of having to take on those obligations.

6032   We certainly see value in meeting the obligations that we are mandated to provide today, but I think we've -- coming out of this proceeding, parties seem to have general alignment with respect to the value of equal ease of access.

6033   Frankly, that was the big one. I think if the Commission gets past that issue, I think having to adhere to these other obligations with respect to filing of tariffs and agreements and, you know, connecting at the LIR as opposed to LCA just seems to be causing independent WSPs to incur costs without any attendant benefits.

6034   THE CHAIRPERSON: And I'll come to you in a moment.

6035   TELUS, you had a flag up again. Did you want to say something more?

6036   MR. WOODHEAD: Just two brief points, and perhaps I'm missing something.

6037   But certainly the LIR regime is the current default regime, not for WSPs who interconnect through the WAS tariff at the LCA level. But I would assume there are attendant benefits, given that the LCAs make up -- many LCAs make up an LIR.

6038   So there would be ongoing efficiencies there for the wireless carrier.

6039   My only other comment, Mr. Chairman and Commissioners, is that part of the purpose of this regime -- or, sorry, this proceeding, and it was stated quite early in the notice, was that this is about consolidation of regimes.

6040   What Public Mobile is calling for here is a proliferation of regimes. So it's yet another exemption and special case, which boils down to, and I believe you just heard it: Don't do anything, but reduce my costs. Other than that, we're good.

6041   I'm not sure that that's where we intended to proceed or you intended to proceed when you called this proceeding and I would suggest that if we're going to consolidate, it should be on some relatively equivalent basis.

6042   THE CHAIRPERSON: Thank you.

6043   WIND?

6044   MR. ANTECOL: Ed Antecol for WIND and Yak.

6045   First of all, WIND is taking the position that it is happy to interconnect at the LIR and to observe the CLEC obligations of connecting with other carriers, filing a tariff and all of those things, the exception being directories and equal access.

6046   But what concerns me about the proposal that we just turn the wireless access service trunks into bill-and-keep facilities is that will create very perverse incentives the other way, because all of a sudden CLECs will have an incentive to use wireless carriers to terminate traffic to all other CLECs because local transit is just going to be bundled in this new facility.

6047   So I think that as a wireless carrier we recognize we need to separate our traffic into traffic for other carriers, traffic for bill-and-keep within the LIR and traffic in the EAS, and we accept that.

6048   And we also accept that as a -- you know, CLECs have an obligation to connect with every other LEC in the LIR that they operate in.

6049   And so if a wireless carrier was to have the CLEC privileges, when they wanted to operate in a small ILEC territory, I don't know why there would be some exemption that says you don't have to connect to the small ILEC.

6050   Because, you know, as a CLEC, if you're going to operate somewhere, you have to connect to everyone else who operates in that area or make alternate arrangements through transit.

6051   But my biggest concern is the wireless regime creates some anomalies with porting. We're finding 905 numbers that get ported into the 416 area code, and we're now starting to receive 905 traffic that carriers are telling us need to get routed to 416 POIs.

6052   And so if you just open this regime up the way Public is suggesting, I think it's just going to create more routing problems and more exceptions that we have to chase day in and day out to mend.

6053   So therefore, we're very much in favour of WSPs having the same interconnection regime as CLECs.

6054   THE CHAIRPERSON: Okay, thank you.

6055   Tim?

6056   COMMISSIONER DENTON: Your proposals are very clear, which is the CRTC euphemism for the fact that we have no questions to ask of you.

6057   But in your extempore rant, when you were speaking orally without reference to text, there was something about connecting on an LIR versus a local-calling-area basis.

6058   Is it because it's more efficient to connect on the LIR basis because it's a larger area; was that your point?

6059   MR. O'SHAUGHNESSY: No. We were actually saying that we are today connected on the LCA basis and we don't want to have to reconfigure our network to make that happen.

6060   COMMISSIONER DENTON: And you don't want to because you've already sunk those costs?

6061   MR. O'SHAUGHNESSY: We're already there and it's exactly the way the incumbent WSPs are already -- or the integrated WSPs are already connected as well. So why should we have to do something different to avail ourselves of the same benefit as they have?

6062   COMMISSIONER DENTON: And it may be idly curious, but if you had to do it all over again, would it not be more efficient to interconnect on a larger geographical area?

6063   MR. O'SHAUGHNESSY: At the time when we were going to market, the most important piece was time to market and getting into service and start generating revenue, and the fastest way of doing so was with the WSP regime, and there were more obligations and complexity in making it happen the other way around.

6064   As we move forward, costs become even more important because we have more and more customers and more and more interconnect traffic. So now it becomes something important.

6065   If we could go back to the beginning and redo things and start with a clean slate and have as much time as possible to do it without shareholder pressures to get to service, perhaps we would, but that wasn't the case.

6066   COMMISSIONER DENTON: And won't be in the future, I think.

6067   MR. O'SHAUGHNESSY: Not likely.

6068   COMMISSIONER DENTON: Okay, thank you very much. Those are my questions.

6069   THE CHAIRPERSON: Candice?

6070   COMMISSIONER MOLNAR: Thank you.

6071   Speaking of going off script, you also spoke about your position related to what's been termed today the Rogers model. Did you say that you are comfortable with that position?

6072   MR. BORON: Yes. I mean in a nutshell we're basically comfortable with the position, with two caveats.

6073   One, similar to the submission of our friends at Mobilicity, we believe that it should be through a mandated tariff as a starting point or as a base model.

6074   And the only other thing that we added to it was with respect to costs that might be causal or incurred by the LEC as a result of moving to IP interconnection. We believe that issue should not necessarily be decided upon in detail in this proceeding but should rather be done in the context of the tariff approval process.

6075   COMMISSIONER MOLNAR: Okay.

6076   So what I am trying to understand, the model was talking about interconnection of pure IP-to-IP -- I can't remember, Bell gave it a term -- but where you're connecting, you know, an IP customer on one end to an IP customer on the other, and it wasn't talking about the traffic that is currently -- or the customer base currently managed on TDM networks.

6077   So as you talk about a transition -- if we were to allow WSPs a co-carrier status, as you talk about a transition from LCAs to LIRs or not, how does that also align with the transition to IP interconnections?

6078   Like how many times would you need to have to manage your different arrangements or how would you need to manage these arrangements if these two different interconnection changes are made?

6079   MR. BORON: Obviously, and as we said in our submission last week, our desire would have been to go IP from the beginning. All of our long distance traffic, whether domestic, North America or international, is on IP today and we would prefer to be in an IP regime right from the get-go.

6080   So obviously, the sooner we end up with a complete IP interconnect regime, the happier we would be. We would get to an endgame quicker and not have to go through multiple iterations. That is our desire at the end of the game and why we propose a pretty quick timeline.

6081   COMMISSIONER MOLNAR: Okay, but I'm talking about what has been proposed here, which is not -- I understand you would prefer a full IP, but that's not what has been proposed here today.

6082   What has been proposed here today is that IP traffic from your network is carried to, you know, IP customers on an ILEC's or other carrier's network when it's pure IP from one IP switch to another. But then all of your calls that would terminate to TDM-based customers on the ILEC's network would still flow through the regular arrangements, as I understand it.

6083   So I'm just trying to understand how many steps or network configurations we are speaking of here.

6084   MR. O'SHAUGHNESSY: The Rogers proposal is good as far as it goes. Our preference would be to move right to an IP interconnect regime more quickly than that, and not just for end-to-end IP customer to IP customer traffic, because that is the efficient way networks are moving.

6085   So if that was the only way of getting through to it, that is what we would have to accept. But our preference would be to get straight to an IP interconnect regime from the point of view of getting to a better cost structure overall for the industry more quickly, and everyone has talked about that.

6086   We've heard today references to the fact that people carry -- even if they don't have IP to their customers, they carry their traffic on IP within the network because it's more efficient.

6087   COMMISSIONER MOLNAR: Excuse me. I'm sorry, I am just going to stop you --

6088   MR. O'SHAUGHNESSY: Yes.

6089   COMMISSIONER MOLNAR: -- because I understand it's your preference. It's not the model that I'm asking you about, though.

6090   And so I am trying to understand under a Rogers proposal what happens if we change the co-carrier status or change WSP to enable a co-carrier status.

6091   Are you going to be required to move some of your interconnections to LIRs as you transition others to an IP interconnection arrangement or, you know, what happens? Is this -- how many times would you need to change your arrangements is what I'm trying to understand.

6092   MR. O'SHAUGHNESSY: Yes, and that would be the effect of what would happen. We would have to look at it economically based on what the tariffs are in place and decide what to do.

6093   We would have to first move to whatever is available as a co-carrier on the TDM trunks, and then as IP trunks become available we can start using them for whatever portion of the traffic is IP.

6094   And we would have to look at the business arrangements and decide which one should happen first and at what timing.

6095   But there would be multiple evolutions of it, to answer your question.

6096   COMMISSIONER MOLNAR: Thanks. That was my question.

6097   THE CHAIRPERSON: Okay, I think those are all our questions.

6098   I still don't understand why both you and Mobilicity insist on a tariff. I can see that you want a tariff as a fallback, but you automatically assume that you will not be able to strike deals and I guess I'm always very conscious of the direction I have from government not to regulate unless there's market failure.

6099   MR. BORON: Can I maybe just add one more thing to that?

6100   I guess I have sort of made a career out of being on the other side of the table from the ILECs. I have been doing that for sort of 20 years now and similar to what Stewart at Mobilicity had said have had a fair amount of experience with mandated rights/negotiated regimes.

6101   And when you're sitting across the table and you have very limited negotiating power, things take an awful long time, and what almost inevitably happens is that you end up, as the small guy, sucking it up and agreeing to a bunch of things that a year later or six months later you wish you had never agreed to.

6102   And if you had gotten sort of the benchmark right from the get-go, it would be better for the industry and better for consumers.

6103   THE CHAIRPERSON: That is like what happened to you in going LCA or LIR at the beginning?

6104   MR. BORON: That would be an example, but I mean we did that because we went to market understanding what the requirements were for the WSP regime and those were the rules.

6105   THE CHAIRPERSON: Okay, thank you very much.

6106   I think that's it for today. I understand nobody else is willing to get on board today, so we will close it for today.

6107   Now, we are under considerable time pressure. I hope we will be able to deal with the remaining interveners tomorrow and so I just would ask you to keep that in mind tomorrow because I have to catch a flight in the afternoon with two of my colleagues. So hopefully we can be finished by around 2:00.

6108   Thank you very much. See you at 9:00 tomorrow morning.

--- L'audience est ajournée à 1636, pour reprendre le mardi 1er novembre 2011 à 0900

STÉNOGRAPHES

Johanne Morin

Karen Paré

Jennifer Cheslock

Monique Mahoney

Date de modification :

2011-10-31