100621-CISP-Final-Submissions-v1.1(changes in para … · Huawei Equipment’Manufacturer’of’the’MA5600T’integrated’DSLAM/ Optical’Line’Terminal’capable’of’supporting’up’to’36’10Gigabit

Notice of Consultation 2009-‐261-‐8 Proceeding to consider the appropriateness of mandating certain wholesale

high-‐speed access servicesCRTC File #: 8663-‐C12-‐200907321 –

http://www.crtc.gc.ca/PartVII/eng/2009/8663/c12_200907321.htm

Final Comments of the Coalition of Internet Service Providers inc.

(paragraphs 20, 56, 57 & 64 revised on June 22, 2010)

June 21, 2010



TNC 2009-‐261-‐8 Final Submissions and CommentsThe Coalition of Internet Service Providers inc. June 21, 2010

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Glossary

10GigE Ethernet service at 10 thousand megabits per second, or 10 times the speed of Gigabit Ethernet

Cablelabs Cable Television Laboratories, which is the entity owned by the North-‐American Cable Carriers which standardizes the data over cable service interface speciXication

CISC CRTC Industry/Interconnection Steering CommitteeCISP Coalition of Internet Service Providers inc.CMTS Cable Modem Termination System, which is the cable carrier

equivalent of an ILEC DSLAM, and which is the equipment at the cable carrier head-‐end which sends trafXic to the cable modems located in the homes of end-‐users.

CO Central OfXiceCO-‐based DSL Digital Subsriber Line Service provided from an incumbent local

exchange carrier central ofXiceCO-‐based FTTH Fibre-‐to-‐the-‐home service provided from an incumbent local

exchange carrier central ofXiceDeep-‐Fibre DOCSIS 3.0

Cable carrier equivalent to Xibre-‐to-‐the-‐node where the optical nodes serve on average 125 homes rather than the conventional design for hybrid-‐Xibre coaxial networks of 500 homes per Xibre optic optical node, and which employs the DOCSIS 3.0 standard, for multiple parallel downstream connections over multiple television 6 megaghertz channels

DOCSIS DATA over Cable Service Interface SpeciXication designed by Cablelabs which is an adaptation of the Ethernet standard of the IEEE for carriage over shared hybrid Xibre-‐coaxial networks of the cable carriers. DOCSIS deXines how multiple cable modems can share the same single transmission lines at the same time, without steeping on each other’s toes. With version 3.0, the speciXication deXines how multiple television 6 MHz channels can be utilized at the same time to increase the speeds of transmission to levels of 100 megabits per second and higher. The speciXication also determines how voice packets can be made to be transmitted in priority to other packets.

DSL-‐CO Equivalent to CO-‐based DSLDSLAM Digital Subscriber Line Access Multiplexer, which is located inside

Central OfXices, or remotes or outside plant interfaces (nodes)DTH Direct-‐to-‐home satellite serviceE9-‐1-‐1 Enhanced 9-‐1-‐1 which requires determining end-‐user location on

an Internet Protocol networkFTTH Fibre-‐to-‐the-‐home which means the provision of services via an

all-‐optical-‐glass outside plant.


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FTTN Fibre-‐to-‐the-‐Node, which means the provision of higher-‐speed digital subsctiber line services from active equipment situated in proximity to end-‐users and co-‐located on outside plant street cabinets, pedestals or poles.

FTTN-‐based DSLSee FTTN. To contrast the provision of DSL from nodes from the provision of DSL from Central OfXices or Central OfXice Remotes.

Geolocation Capability of an IP network to associate an internet protocol address to a physical street address which is required by E-‐9-‐1-‐1.

GigE Gigabit Ethernet, Ethernet service at 1000 megabits per secondGPON Gigabit Passive Optical Network, which is a kind of FTTH network ,

whereby there are no equipment powered by electricity needed in the outside plant and which shares Xibre strands via optical couplers. Typically 32 or 64 end-‐users are aggregated onto a single strand of optical Xibre.

Head-‐End Cable Carrier Central OfXice HFC Hybrid Fibre Coaxial, cable carrier network architecture where

radio frequency signals are modulated onto an optical carrier and then transmitted over optical Xibre over long distances, then to be downconverted to a modulation carrier over coaxial cable deep into a neighbourhood, with the help of an optical node.

Huawei Equipment Manufacturer of the MA5600T integrated DSLAM/Optical Line Terminal capable of supporting up to 36 10-‐Gigabit Ethernet interfaces and capable of serving both GPON and VDSL2 from the same shelf. This equipment http://www.huawei.com/broadband_access/products/olt/ma5600t.do?card=1

ICC Incumbent Cable Carriers such as Shaw, Rogers, Videotron, Cogeco and Eastlink/Persona.

ILEC, ILECs Incumbent Local Exchange Carriers such as Telus, Sasktel, MTS, Bell, Bell Aliant & Telebec

IP Internet Protocol either at version 4 (IPv4) or version 6 (IPv6). There will be a depletion of IPv4 in the near future requiring a transition to IPv6.

IPTV Internet Protocol Television, which means a way to convert television programs into encrypted Internet Protocol packets containing digitized MPEG streams and which can thus be transported by packet switching equipment such as digital subscriber line equipment.

ISP Internet Service Provider


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http://www.huawei.com/broadband_access/products/olt/ma5600t.do?card=1




ITMP Internet Protocol TrafXic Management Practice, which is meant to dissuade or discourage or prevent abuse of the network, which can either be economic (such as measuring the quantity of information downloaded over a months time and applying overages after a given number of gigabytes transferred) or technical such as deliberately altering the Xlow of packets containing speciXic applications such as peer to peer Xile sharing.

Local Exchange Services

The provision of local telephone services which are competitive with the plain old telephone services provided by the ILECs

Margin Squeeze The practice by incumbent carriers of pricing their wholesale unbundled services so high that the Internet Service Provider which subscribe to these services is not able to generate appropriate levels of proXitability from the provision of services making use of such tariffs

M-‐CMTS / MHA Modular Cable Modem Termination Systems speciXication of the Cablelabs Modular Head-‐End Architecture framework.See: http://www.cablelabs.com/cablemodem/speciXications/mha.html This speciXication can make possible the engineering of QoS on the downstreams by ISPs by allowing ISPs to install and control their own Shared Port Adapters inside Cable Carrier CMTSs.

NGNs Next Generation Networks, meaning investments which CISP has deXined to be related exclusively to new transmission facilities such as FTTH which are exempt of a Xirst mover advantage and which are duplicable without reliance on a very large economy of scale

OECD Organization for Economic Co-‐Operation and DevelopmentOverbuild The process by which existing transmission lines are duplicated by

the same owner to create more Xibre optic capacity Prioritization Capacity of a packet switched network to deny access to the pipe

for certain trafXic for a short period of time in order to allow for higher-‐priority voice trafXic to get through Xirst.

QoS Quality of Service, which is synonymous to PrioritizationRemote-‐based DSL

The provision of digital subscriber line from ILEC remote locations, which are typically pedestal-‐mounted mini central ofXices located at a certain distance of a central ofXice to aggregate trafXic from a remote community.

Remote-‐based FTTH,

The provision of Xibre-‐to-‐the-‐home through optical line terminating equipment located at ILEC remote locations, which are typically pedestal-‐mounted mini central ofXices located at a certain distance of a central ofXice to aggregate trafXic from a remote community. Sometimes, the only equipment needed at the remote may be passive optical splitters and when converted to GPON, a remote may be converted to an entirely passive (without need for electricity) location.


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http://www.cablelabs.com/cablemodem/specifications/mha.html




Retail IS Retail Internet ServicesRFoG Radio-‐Frequency over Glass, which is the termed coined by the

cable industry to indicate the extension of hybrid Xibre-‐optic coaxial networks through passive optical network splitters (PON) such that the Xibre optic cable enters the home and that the conversion from Xibre to coaxial cable (if any) is done in the home rather than in the outside plant. Cable Carriers will be running DOCSIS over FTTH PON and will be calling this RFoG. See:http://en.wikipedia.org/wiki/RFoG

SILECs Small incumbent local exchange carriers, such as members of the Association des Compagnies de Telephone du Quebec and the Ontario Telephone Association


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http://en.wikipedia.org/wiki/RFoG

http://en.wikipedia.org/wiki/RFoG

Subloops The portion of the telephone outside plant exclusively composed of twisted pair copper and situated between the customer premises and a location in the network where the copper is aggregated onto a copper feeder cable or terminated on a DSLAM located at an outside plant cabinet or remote. Homes are typically fed with at least two pairs (two subloops).

TPIA Third Party Internet Access, which is the tariff employed by the Cable Carriers for sharing their DOCSIS networks with ISPs

TR-‐101 Broadband Forum speciXication entitled Migration to Ethernet-‐Based DSL Aggregation which can be freely downloaded at: http://www.broadband-‐forum.org/technical/download/TR-‐101.pdf

TR-‐156 Broadband Forum speciXication entitled: Using GPON Access in the context of TR-‐101, and which can be freely downloaded at: http://www.broadband-‐forum.org/technical/download/TR-‐156.pdf

TR-‐167 Broadband Forum speciXication entitled GPON-‐fed TR-‐101 Ethernet Access Node, and which can be freely downloaded at: http://www.broadband-‐forum.org/technical/download/TR-‐167.pdf

VDSL2 Very High Speed Digital Subscriber Line 2 deXined in the International Telecommunications Union G.993.2 speciXication. See: http://en.wikipedia.org/wiki/Very_high_speed_digital_subscriber_line_2

VLANs Virtual Local Area Networks are additional headers on Ethernet packets which enable switches to switch not only on the Ethernet address of the modems and computers, but additionally according to this header. It is like a second set of address labels on an envelope.

VoIP Voice over Internet Protocol. See: http://en.wikipedia.org/wiki/VoIP

WiMAX Worldwide Interoperability for Microwave Access. An alternative access technology, which CISP members are increasingly combining to their self-‐supplied aggregation facilities, in order to become in control of their own access network. Being wireless, this technology is much more highly aggregated, and does not offer the same performance than DSL or DOCSIS. See:http://en.wikipedia.org/wiki/WiMAX


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http://www.broadband-forum.org/technical/download/TR-101.pdf












http://en.wikipedia.org/wiki/Very_high_speed_digital_subscriber_line_2




http://en.wikipedia.org/wiki/VoIP

http://en.wikipedia.org/wiki/VoIP

http://en.wikipedia.org/wiki/WiMAX

http://en.wikipedia.org/wiki/WiMAX

Introduction

1.The Coalition of Internet Service Providers inc. (CISP) unites the voices of several Internet Service Providers across Canada whom have consistently been arguing over the last several years before the Commission, that facilities-‐based competition was deliberately sabotaged by the Incumbent telephone companies through margin squeeze tactics and best effort aggregation.2.Despite the claims of the ILECs, the objective of the Internet Service Providers to resolve ongoing margin squeeze issues is not at odds with the objective of the ILECs to safeguard the returns required to support investments in next-‐generation networks.3.In answer to the last question of the Chairman, as to how may NGNs be deXined, CISP submits that its evidence is supportive of the following deXinition:

Next-Generation Networks are investments towards the construction of new transmission facilities which the Commission will deem to be duplicable by competitors with whom incumbents will be willing to share their Lirst mover advantages and large economies of scale tied to their historical incumbency.

4.The Telecommunications Act deXines a Canadian carrier as an entity who is entitled to the privilege of making use of the public right of way, to own and operate transmission facilities in order to provide services to the public for a fee. The core component of the deXinition is the privilege of making use of scarce resource that is the public right of way. Irresponsible use of the public right of way, such as the operation of support structures with insufXicient spare capacity to support the sharing of such structures, is a violation of such privilege, which is equivalent to, in terms of competition law, as a potentially sanction-‐able Xirst mover advantage1. 5.The race to the build-‐out of new facilities, is one whereby ILECs possess a clear and undeniable Xirst mover advantage, given their ownership of the support structures and that they are the principal sources of congestion on such structures. To avoid regulation, an investment in an NGN should be demonstrated to be free from Xirst mover advantages. Other notable forms of Xirst mover advantages are found in the execution of long-‐term contracts with customers, in absence of efXicient unbundling tariffs and the conversion of facilities under contract to new facilities without the exercise of early termination charges under contract, such as conversion from DTH Satellite to IPTV over FTTN or FTTH.


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1 See: http://www.oecd.org/dataoecd/4/22/2496809.pdf DSTI/ICCP/TISP(2001)6/FINAL OECD Report entitled: INDICATORS FOR THE ASSESSMENT OF TELECOMMUNICATIONS COMPETITION.

http://www.oecd.org/dataoecd/4/22/2496809.pdf

http://www.oecd.org/dataoecd/4/22/2496809.pdf

6.Facilities such as the Xibre-‐optic transport facilities between ILEC COs and ILEC remotes, or between Cable Carrier Local Head-‐Ends and Optical Nodes, were deployed for several years prior to the inception of local competition in Canada in 1997. CISP submits that when ILECs overbuild their Xibre-‐optic facilities all the way from the central ofXice to the remote, such investment is made in anticipation of the deployment of FTTH. The overbuilding of Xibre optic facilities all the way from the CO to provide FTTN is not required, and in fact, is not done for that purpose despite the ILEC claims otherwise. The proof lies in the fact that Cable Carriers have not been overbuilding the Xibre optic facilities all the way from their Head-‐Ends to extend the reach of their networks deep Xibre optical nodes, thus outpacing ILECs with DOCSIS 3 services. 7.For most 2nd tier markets, ILECs have yet to announce any FTTN or FTTH plans and consequently, the incumbent cable carriers have thus replaced the ILECs are the champions of incumbency with the highest market power. The failure of the ILECs to deliver on FTTN in certain markets is not related to a shortage of Xibre optic facilities between their COs and their remotes, but rather the result of the costs of point to point equipment at the remotes and at the nodes to provide VDSL2 speeds. By contrast, cable carriers have signiXicantly lower costs on their point to multipoint networks, which are highly shared and extremely asymmetrical. Unfortunately, the general public is happy with highly shared and asymmetrical networks at this time, thus not enticing cable carriers to transition to DOCSIS 3 IPTV over RFoG FTTH anytime soon.8.The concerns of CISP were heard by the Commission during Public Notice 2006-‐14 wherein during this proceeding, an element departing from the status quo was determined by the Commission: Internet Service Providers should no longer be denied the opportunity to self-‐supply their own aggregation facilities.9.The notion of ISPs ceasing to be denied the opportunity to self-‐supply their own aggregation facilities is important on 3 fronts:a. ISPs can combine self-‐supplied aggregation facilities with alternative modes of

access technologies such as WiMAX and FTTH to provide services to their customers. Several CISP members have already fulXilled this vision on a small scale and are looking forward to utilizing efXicient DSL-‐CO tariffs to bootstrap their customer bases to convert a larger share of it over time to WiMAX and FTTH. The self-‐supplied transport facility in a remote market can terminate to both an ILEC CO as well as eventually to the location of WiMAX towers and to targeted neighbourhoods where FTTH is viable.

b. By self-‐supplying aggregation facilities, ISPs are no longer the source of congestion on incumbent carrier aggregation facilities and therefore can require that their trafXic not be subjected to Technical Internet Protocol TrafXic Management practices (Technical ITMPs) across unbundled access networks tariffs such as DSL-‐CO and Local Head-‐End.


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c. The Commission has already statued in Telecom Decision 2008-‐17 that the Xibre-‐optic transport facilities between ILEC remotes and ILEC CO's as well as implicitly between Cable Carrier Head-‐Ends and Cable-‐Carrier Optical Nodes, as being conditional mandated non-‐essential facilities. This conclusion has been reached. It is not open for debate in the present proceeding. What is up for debate is the level of mark-‐up that should be granted for use of such facilities in the design of DSL-‐CO and Local Head-‐End tariffs. CISP submits that if the mark-‐up granted by the Commission over Phase II costs for use of such facilities is not 15% for the ILECs and ICCs and 25% for the SILECs, then it will remain unknown will not make it possible to resolve current margin squeeze problems.

10.CISP submits that with modern hardware employed by the incumbent telephone and cable carriers, it is possible to provide interconnection and packet switching at speeds, which exceed the maximum throughput of all end-‐user connections. CISP has given a name for this concept: wirespeed aggregation to the CO or Head-‐End. For a 5 mbps service, it would take 1000 mbps / 5 mbps = 200 end-‐users logged-‐on and utilizing the service at its fullest speed at the same time, to create congestion on a Gigabit Ethernet interconnection. We are here today.11.The growth technology of the ILECs and of the Cable Carriers support low-‐cost 10 Gigabit Ethernet (the successor to Gigabit Ethernet) interconnection. An ISP delivering 50 mbps services to its end-‐users would only need to have 10,000 mbps / 50 mbps = 200 end-‐users logged-‐on and utilizing the service at its fullest speed at the same time to create congestion on such an interface. 14 years ago, ISPs requested GigE in the design of TPIA. Today, 10GigE is what should be investigated.12.Conspicuously, none of the ILECs, nor anyone of the Cable Carriers, have proposed a conXiguration for the DSL-‐CO and Local Head-‐End tariffs with 10 gigabit interconnections. In fact, Bell Canada argues that the fastest speed it can provide for DSL-‐CO is 45 mbps on a DS3 interface, retrograding the debate to one which would have been outdated 15 years ago. The Commission has not requested ILECs to identify their growth technology nor sought afXidavits from ILEC manufacturers as to the capabilities of the technology to support unbundling. Without such evidence, the Commission cannot and must not give any weight to the claims of Bell Canada that Alcatel and Huawei do not support GPON unbundling through the TR-‐101 standard. The simple proof lies in the fact that the TR-‐167 standard, dated February 2010, which identiXies how to use TR-‐101 on GPON, is authored by Micheal Shaffer of Huawei. Requirement 67 of the TR-‐167 standard, references speciXically how GPON equipment must support wholesale capabilities (i.e. media access control learning messages for 1:1 VLANs must be forwarded to the Internet Service Provider maintenance end-‐point).


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Dispelling the 10 Myths entertained by the incumbent carriers in this proceeding

13.CISP wish to dispel the 10 myths entertained by the incumbent telephone and cable carriers in this proceeding, as to the meaningfulness of the present proceeding:

I. There is no need continued regulation, as no increases in market power will arise from investments in NGNs

II. Proposals of CISP for NGN unbundling are not technically feasible.

III. Wholesale customers cannot possibly contribute their fair share towards NGN investments

IV. ISPs do not contribute to broadband adoption

V. It is not worth the costs to Xix TPIA

VI. ISPs will not invest into their own facilities if DSL-‐CO is available

VII.The CRTC is examining how the wholesale framework should apply on a forward looking basis to new types of Internet access infrastructures

VIII.Current support structure access framework provides a level playing Xield for new entrants

IX. Regulatory holidays are necessary

X. No solution exist that can be put in place rapidly to safeguard facilities-‐based competition

Myth I: There is no need continued regulation, as no increases in market power will arise from investments in NGNs

14.CISP submits that the Commission has already made the determination at paragraphs 20 to 47 of Telecom Decision 2008-‐17, that the Commission framework for assessing market power is not one of monopoly control, but rather one focused on the continued need for mandated access to facilities which are impractical or infeasible to duplicate, by competitors, when retail forbearance is based on access to those very facilities.15.The Telecom Monitoring report makes it very clear that the joint market share of the incumbent telephone and cable carriers is in excess of 90%. Consequently, it beholds any logic to consider that the joint dominant market power of the ILECs and ICCs will be lessened as a result of investments by ILECs and ICCs in FTTN, FTTH and Deep Fibre DOCSIS 3.


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16.The Increased market power of the incumbent telephone and cable carriers arising from their investments in FTTN, FTTH and Deep Fibre DOCSIS 3 without an obligation to unbundle such facilities, is an inferior outcome to one where Internet Service Providers are given access to such facilities and will lead to a signiXicant lessening or prevention of competition as ISPs will become evicted from the market.17.Hundreads of thousands of Canadians rely on services provided by Internet Service Providers. Were it not for the implication of independent Internet Service Providers, whom have helped to launch the Internet with dial-‐up access, the Internet in Canada would not be what it is today. Internet Service Providers will continue to innovate where incumbent carriers will not, and embrace new business models that see a greater share of the Xinite available bandwidth be made available as telecommunications bandwidth rather than as broadcasting signal distribution bandwidth. ISPs are the guardians of Internet Innovations and continued regulations to ensure that ISPs remain relevant industry players fully satisXies the public interest for continued innovation on the Internet.

Myth II: The proposals of CISP for NGN unbundling are not technically feasible.

18.Proposals for unbundling both growth-‐technology investments as well as new FTTH, FTTN and Deep Fibre DOCSIS 3 investments, have been demonstrated as functional by CISP in this proceeding. The architectures are capable of supporting Retail Internet, Local Exchange and IPTV applications. They have been deemed as are technically feasible as no evidence has been put forwards by any party as to possible deXiciencies in the proposed solutions. 19.In the present proceeding, CISP has proposed an unbundling architecture for FTTN and FTTH networks, based on three speciXications of the Broadband Forum, which are TR-‐1012 and which had been introduced on the present public record prior to the undertaking of CISP during the oral hearings (the unbundling diagrams presented by CISP are depictive of TR-‐101 standard). As a result of the undertaking during the oral hearing, CISP has introduced additional speciXications which are adaptations of the TR-‐101 standard and which enable Xibre-‐to-‐the-‐home GPON networks unbundling, namely TR1563 & TR 1674.


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2 http://www.broadband-‐forum.org/technical/download/TR-‐101.pdf 3 http://www.broadband-‐forum.org/technical/download/TR-‐156.pdf 4 http://www.broadband-‐forum.org/technical/download/TR-‐167.pdf







20.With regards to the facilities of incumbent cable carriers, CISP has proposed in this proceeding, an unbundling architecture for Deep Fibre DOCSIS 3 networks, reliant on the Cablelabs Modular Head-‐End Architecture5. The Cable Carriers have chosen to focus their energy on demolishing CMTS co-‐location and spectrum sharing and have deliberately ignored the CISP proposal. This is their decision and the Commission should be deterred from giving any attention to this strategy.21.In large markets, CISP does not favour HFC spectrum unbundling for the very reasons cable carriers oppose it, namely the complexity of spectrum management and of equipment provisioning with potentially multiple ISPs. While HFC networks are highly shared, as demonstrated by CISP, they can be unbundled. The CISP proposal alleviates all concerns of the cable carriers with regards to issues with shared management of their networks as they would remain in control over the CMTS and the scarce upstream. In the proposal of CISP, TPIA remains on the upstream. However, the CISP proposal is forward looking in the sense that it allows ISPs to engineer their own QoS on the downstream, by being afforded the possibility of controlling their own M-‐CMTS Shared Port Adapter to be co-‐located into a Cable Carrier-‐owned DOCSIS 3 M-‐CMTS. With the proposal of CISP, ISPs would be able to differentiate their own services from the ones of the Cable Carriers while being recognizant of the limitations of the cable networks with regards to upstream. CISP is of the view that the continued attention of the cable carriers onto the spectrum sharing proposed by Cybersurf is a red herring designed to deter the attention of the Commission away from the DOCIS 3 M-‐CMTS architecture proposed by CISP. 22.The unbundling architectures proposed by CISP have been deemed technically possible by all manufacturers, which CISP has contacted, which includes the ones, which provide equipment to the ILECs and the incumbent cable carriers. 23.CISP submits that the Commission should explicitly task CISC to report on the CISP proposals prior to endorsing any of the unsubstantiated claims of the incumbent carriers as to the infeasibility of the unbundling architectures proposed by CISP in the present proceeding.

Myth III: Wholesale customers cannot possibly contribute their fair share towards NGN investments


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5 http://www.cablelabs.com/cablemodem/speciXications/mha.html



24.Internet Service Providers are not prepared to compensate incumbent telephone and cable carriers over and above current wholesale rates for the beneXit of obtaining the additional functionality and speeds required to by ISPs to provide triple play (Retail Internet with Local Exchange and and IPTV) services. ILEC costs are lower when they are not the ones providing the following functions: Customer Service, Internet Bandwidth, Television Programming Rights, Television Head-‐End + Digital Rights Management + IPTV back-‐end services, InterofXice Aggregation Facilities, Billing and Collection Services, all of the facilities and services required to provide telephone services other than interconnection services already mandated.


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25.CISP submits that the following prospective incremental operational minimum expenditures (OPEX) are incurred by the ILECs in the provision of triple play services and that these costs are avoided when they provide wholesale services to their competitors (in $ per month per Xinal end-‐users):

a) Customer and installation services: $5

b) Internet Bandwidth: $3

c) Television Programming Rights: $15 (for the average basic package)

d) Head-‐End + Digital Rights Management + IPTV back-‐end services: $3

e) InterofXice Aggregation Facilities: $3

f) Billing and Collection Services: $2

g) All of the facilities and services required to provide telephone services other than interconnection services already mandated: $5

26.The total of these avoided expenditures is conservatively a minimum of 5+3+15+3+2+5 = $33 per month per customer. This means that when ILECs provide wholesale services, they should be able to unbundle not only the functionalities necessary for the provision of Retail IS by competitors, but also the functionalities necessary for the provision of local exchange services (IP geolocation and VoIP prioritization) as well as for the provision of IPTV (unlimited downstream bandwidth at speeds sufXicient to support the simultaneous streaming of several HDTV channels) without incurring additional costs. 27.Under the most plausible consideration, ILECs will be pricing their FTTN basic triple play (Telephone + Internet + TV) services, such as to be competitive with the cable carriers, which the Commission can validate to be in the $70 per month range. Under the assumption that ILECs would only engage into such activity with the expectation of generating a minimalistic 20% gross margin on a loss leader basic package (with the expectation of higher margins for packages inclusive of HDTV for instance), CISP submits that it is fair to assume that the ILECs can justify their investments in FTTN in the presence of transmission facilities costs on the order of $70 – (70$ * 20%) – $33 = $23 per month per customer. 28.With a cost of $23 per month for transmission facilities supportive of triple play services over FTTN, given the expectation that the Commission would Xind such facilities to be conditional essential, should ISPs compensate ILECs at levels of 15% of mark-‐up above these costs, i.e. $26.45 per month, the revenues that ILECs would be generating from their wholesale services, would contribute in a very healthy way, to the proXitability of their investments in FTTN.


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29.CISP submits that the Commission should only give consideration to the ILEC claims that wholesale rates could never be set at a level supportive of their investments in FTTN and FTTH in the presence of strong evidence as to the magnitude of the operational expenditures which the ILECs are not going to incur in the context of an unbundled service offering consisting only of the conditional essential facilities.30.A substantial majority of CISP members are customers, which are early adopters. CISP members Xirmly believe that these early adopters can be enticed to shift to services developed by ISPs through reliance on FTTN and FTTH unbundled offerings of the ILECs, generating revenues for the ILECs supportive of their investments in FTTN and FTTH and sparing signiXicant costs which the ILECs would not be required to incur, effectively dispelling the myth that ILECs would not be making investments in FTTN and FTTH if they were required to unbundle FTTN and FTTH.

Myth IV: ISPs do not contribute to broadband adoption

31.Several CISP members such as Xittel, Oricom, OnCall & Michaud Technologies, are prime contributors to the adoption of broadband in Canada by being Xirsts to deploy Wireless High-‐Speed Internet Access service in underserved or unserved markets.32.CISP members routinely provide services to customer’s walking-‐in with their broken computers and modems to get service. Such personalized service are typically not available from incumbent carriers, and consequently, customers of ISPs whom are not very technical, tend to be very loyal knowing that their ISPs are there to help, even in person, and will dare to touch their computers to Xix them.

Myth V: It is not worth the costs to Lix TPIA

33.TPIA is undoubtedly an important service, which is being used in high-‐volumes by several CISP members, despite current shortcomings as the beneXits arising from the consistency of the speeds of cable modem services outweigh the drawbacks of their shortcomings. For many CISP members, the choice is either to offer TPIA or loose the customer. 34.During the proceeding, both ILECs and ICCs have entertained the notion that the costs of regulation to protect competition outweigh the beneXits of competition. The Cable Carriers have deemed TPIA is good enough despite its many shortcomings, which include (just to name a few):

• lack of support for the IPv6 protocol, • no support for dedicated IP addresses, • the absence of IP address geolocation for E-‐9-‐1-‐1, • the lack of access by ISPs to the ICC provisioning platforms,


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• the impossibility for ISPs to make use of cable modems with telephone jacks and batteries just like the cable carriers,

• the lack of VLAN transport capabilities despite such services being provided by the Cable Carriers in their business services,

• the lack of more centralized aggregation• the lack of access to VoIP QoS prioritization to the same extent ICCs are

prioritizing their own local exchange services over DOCSIS.

35.Finally, the way cable carriers have been able to get away with economic ITMPs dispositions in their tariffs which are priced at the same levels at the wholesale level than at the retail level, but which evidently exclude costs such as Internet bandwidth and billing & collection, which Cable Carrier need not recover at the wholesale level. It makes sense anymore that such charges not be subject to Phase II cost studies. The Commission must provide CISP members with an opportunity to look into these costs in the determination of proper local head-‐end tariffs at Phase II costs + 15% as a result of the present proceeding.Myth VI: ISPs will not invest in alternative access facilities if they can rely on DSL-CO.

36.At the last minute in this proceeding, the age-‐old issue subloops was brought back forward by the ILECs as if such subject was a novelty. The Commission will recall that in a note to the industry dated October 28, 2002 the Commission had already then statued that a wider public proceeding would be required to deal with some of the issues raised through over two years of discussions from 2000 to 2002, concerning access to copper loops at remotes, in the CISC and on the public record of Bell Canada Tariff Notice #6622 and Telus Tariff Notice #72.

37.CISPs notes that the Bell Canada proposal at this late stage in the present proceeding runs at odds with the Commission determination that a public proceeding would be required to tame the numerous technical, policy and costing issues surrounding the topic of subloops. CISP will simply conclude that the Bell Canada proposal does not provide anywhere near the required amounts of details to forego of the prevailing Commission determination that a public proceeding will need to take place prior to the Commission giving it any further consideration.

38.In Telecom Decision 2008-‐17, the Commission had determined that DSL-‐CO services were to fall in the Conditional Essential category and would thus need to be offered at rates with a mark-‐up capped at 15% over Phase II costs. In Telecom Regulatory Policy 2009-‐34, the Commission rescinded the entirety of that determination on the basis that Public Notice 2006-‐14 had not declared explicitly that FTTN would be an issue within the scope of that proceeding.


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39.CISP submits that there is simply no basis, at this time, for the Commission to make a determination, little more than two years later, that new alternative sources have developed, such that the original determination of the Commission in Telecom Decision 2008-‐17 would also need to be rescinded with regards to the conditional essentiality of the loops which are aggregated at an ILEC CO.

40.The Commission had determined in March 2008, that for the loops aggregated at an ILEC CO, that the essentiality test prescribed by Telecom 2008-‐17, was met, irrespective of the availability of CO-‐LOCATION, which the Commission deemed impractical. In other words, the Commission determined that facilities consisting of loops as well as equipment inside ILEC central ofXices to provide digital subscriber line services, (such as DSLAMs, packet aggregation switches & necessary primary and uninterruptible sources of electricity), were required by competitors, not practical or feasible to duplicate and that, without such facilities being made available to competitors, there would arise a substantial lessening or prevention of competition.

41.CISP submits that the Commission must accept as fact that a substantial lessening and prevention of competition has taken place over the last two years for the sizeable portion of the access network served directly by Central OfXices. It beholds any exercise of logic to imagine how the Commission could not extend such conclusion to the portion of the access network served by ILEC remotes and FTTN nodes, especially at a time where the provision of ADSL2+,VDSL & VDSL 2 services by ILECs from their remotes and nodes, are critically required by the same ILECs to remain relevant market players in the presence of the much lower costs and widespread roll-‐out of DOCSIS 3 services, which take advantage of transmission facilities similarly deployed at a time where Class 1 BDU franchises were exclusively granted by the CRTC to the incumbent cable carriers.

42.CISP submits that the issues surrounding the lack of practicality of co-‐location in central ofXices has been dealt with in Telecom Decision 2008-‐17 and is thus not an issue of concern in the present proceeding. CISP submits that the ILECs claims that DSL-‐CO services should not provide access to loops served directly from the central ofXice given the availability of co-‐location runs completely at odds with the SINGLE justiXication provided by the Commission for rescinding its determinations with regards to DSL-‐CO in Telecom Decision 2008-‐17, which was that the issue of FTTN was not in scope of PN 2006-‐14 (paragraph 15, of Telecom Regulatory Policy 2009-‐34).


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43.CISP therefore considers that the only issue which is up for debate with regards to the kinds of additional facilities over those which ISPs currently require to provide their services, which the Commission has determined to be practical and economically feasible for ISPs to make prior to obtain DSL-‐CO services, are self-‐supplied transport facilities between ILEC central ofXices. The Commission has in Telecom Decision 2008-‐17 determined that co-‐location of DSLAMs was not practical. CISP submits that the record of the present proceeding has not established that the conditions for obtaining co-‐location have improved over those prevailing two years ago.

44.Consequently, the only determination which the Commission is required to make in the present proceeding, is the extent to which ISPs will invest into their own inter-‐ofXice aggregation facilities as a result of the availability of DSL-‐CO, in order to satisfy itself that this service should be mandated.

45.CISP members have demonstrated that they have begun, and will intensify the pace of such investments, such as to build or self-‐supply the necessary interofXice aggregation facilities to build an economy of scale sufXicient to transition their customers away from an DSL-‐CO conXiguration, towards self-‐supplied WiMAX and FTTH access conXigurations.

46.CISP submits that the Commission has already determined that it expects that ISPs will make use of DSL-‐CO to climb the investment ladder towards the self-‐supply WiMAX and FTTH access networks. CISP members have already demonstrated that they are carefully following this very path prescribed by the Commission and that their ability to intensify the pace of such transition can only be achieved if ISPs can gain access to conditional essential ILEC DSLAMs and loops at Phase II costs + 15%, without being required to co-‐locate ISP-‐owned DSLAMs inside ILEC central ofXices.

47.CISP requests that the Commission makes it a priority in this proceeding to put an end to the margin squeeze, which arises from the obligation of ISPs to purchase overpriced interofXice aggregation services as a precondition of obtaining access to ILEC DSLAMs and loops. CISP requests the Commission to explicitly prevent further attempts by ILECs to package their services with forborne transport, such as to avoid having to unbundle facilities deemed by the Commission as conditional essential. CISP considers however that aggregated access service should continue to remain mandated.


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Myth VII: The CRTC is examining how the wholesale framework should apply on a forward looking basis to new types of Internet access infrastructures

48.In its Digital Economy public Consultation, the Government of Canada states in paragraph 2 of Page 18, that the present proceeding was expanded to consider how the wholesale framework should apply on a forward looking basis to new types of Internet access infrastructure. However, it is a fact that the Commission has not sought to assemble any evidence as to the prospective market power of the ILECs and of the ICCs in geographic markets where FTTN and FTTH has been already or will soon be deployed. Now that Bell Aliant has conXirmed by that by 2012, more that the third of the maritimes which is urban and served by aerial outside plant, will beneXit from its FibreOP FTTH service, it is easy to witness that these investment decisions were made for geographic markets where low levels of competition are supportive of very high retail prices and where low costs of construction are achievable for the Xirst mover, giving rise to signiXicant economies of scale.

49.Competitors of Bell Canada on the other hand, cannot cancel Bell Express-‐Vu satellite TV contracts in order to convert customers to FibreOP. They cannot force Bell Canada to remove dead cables which negate the availability of spare capacity on support structures which otherwise would lead to prohibitively high make-‐ready costs. Simply said, the ILECs possess a Xirst mover advantage, which is undeniable.

50.Consequently, in order for the Commission to remain consistent with the view of the present proceeding that the Government of Canada is presenting to the population at large in its digital economy consultation, CISP submits that in the very least, the Commission should ensure that any Xinding that it makes in the present proceeding should apply on an interim basis, to not only DSL-‐CO, but FTTN as well as FTTH, until such time as the Commission sets a process in place whereby it would consider how the wholesale framework should apply on a forward looking basis to new types of Internet access infrastructures.

51.CISP in the present proceeding has proposed unbundling architectures for FTTN and FTTH networks, based on the speciXications of the Broadband Forums, which are common to both FTTN and FTTH equipment. As a matter of fact, the growth technology employed by the ILECs is based on common equipment for both FTTN and FTTH and where it is simply a matter of inserting either a GPON or a VDSL2 line card in the shelf, in order to either provide FTTN or FTTH. The same functionality required for unbundling is thus available to both FTTN or FTTH end-‐users, of either the ILEC or the wholesale customer of the ILEC.

52.Should the ILEC demonstrate that it may take some time for the right software to be developed for their FTTN and FTTH equipment in order to support TR-‐101 unbundling, CISP submits that the Commission should require mandatory resale as an interim measure, as it did at paragraph 20 of Telecom Decision 99-‐11.


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Myth VIII: Current support structure access framework provides a level playing Lield for new entrants

53.In Notice of Consultation 2009-‐432-‐1, the Commission has seen several contributions on the public record from several non-‐dominant carriers, which have objected to the revision of the rates for support structures prior in isolation of the re-‐evaluation of the terms and conditions at which support structures services are provided by the ILECs in Canada. Furthermore, in the present proceeding, the Commission has been provided with expert economic evidence by CISP from Dr. Stephen Barnes, which has demonstrated the linkage between Xirst mover advantages and the proper duration of temporary monopolies for signiXicantly sub-‐additive investments (investments only justiXiable in the presence of large economies of scale, hence not duplicable by new entrants).

54.CISP is of the view that the current support structure sharing framework does not provide a competitive level playing Xield set to deal properly with the Xirst mover advantages that the ILECs have in the deployment of FTTH. Consequently, CISP is of the view that the Commission cannot infer that the market cannot support new investments by new entrants without Xirst considering in a public proceeding, the re-‐evaluation of the support structure access framework to make it more conducive to new investments by all players, including new entrants.

55.Furthermore, CISP submits that the Commission should make every effort to ensure that any temporary monopoly or long terms monopoly, it would ever decide to grant to new investments (such as by not granting matching speeds, or by a declaratory ruling that greenXield FTTH investments are to be indemniXied against short-‐term unbundling obligations), seek a calculation of the value of the Xirst mover advantage in consideration of the present absence of a level playing Xield with regards to the prevailing support structure access framework in Canada, particularly in regards to ILEC conduits.

56.Finally, the Commission cannot dismiss the extreme incertitude which has arisen out of the current TNC 2009-‐432 with regards to the principles which the Commission will employ in the rating of support structure access services. Competitors whom are considering FTTH investments today, are also witnessing ILEC requests for support structure rate increases from 400% to 600% over and above current rates.

57.CISP submits that the Commission is also responsible for ensuring that stable market conditions are in place to support new investments by both incumbent carriers as well as new entrants, which to say the least, is far from being the case at the present time.


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Myth IX: Regulatory holidays are necessary

58.CISP wishes to be clear, it does not condone or endorse the concept of regulatory holidays. However, facts are that the economic theory of CISP’s expert winess Dr. Stephen Barnes, is the only evidence on the public record of the present proceeding, which provides a proper framework for determining the duration of temporary monopolies.

59.During the oral hearing phase of the present proceeding, proposals were made by ILECs (Sasktel) to associate NGN investments with a non-‐rolling regulatory holiday lasting 10 years. CISP on the other hand is of the view that the 10 years have been a very long regulatory holiday, whereby margin squeeze issues still remain to be formally dealt with by the Commission.

60.The consumer groups have depicted the current market as being a roller coaster business climate for competitors. CISP is of the view that the mere fact that regulatory holidays have been proposed during the oral hearing gives legitimacy to the economic evidence of Dr. Stephen Barnes provided by CISP on the record of Public Notice 2006-‐14 and re-‐submitted in the current proceeding.

61.Clearly, there is recognition from ILECs, from Sasktel, that ILECs have signiXicant market power and that investments in FTTH are substantially subadditive according to the evidence of Dr. Barnes, and thus should warrant that if any monopoly is granted by the Commission, that it be temporary in nature. The question is thus simply how long should last such temporary monopoly.

62.CISP unlike any other party in the present proceeding has provided economic theory framing how long such a temporary monopoly should last in order to strike the appropriate balance between the wishes of incumbents and competitors. However, CISP has signiXicant objections as to how Sasktel goes about framing the duration of the temporary monopoly it is seeking.

63.As discussed above, ILEC costs are signiXicantly reduced when they provide wholesale services exempt of the functionalities, which are tied to costs, which tend to grow linearly with the subscriber base (such as Television programming charges).

64.The economic theory advanced by Dr. Barnes provides a clear mechanism for the Commission to assess whether expenses are signiXicantly subadditive or not (i.e. would grow almost linearly with the subscriber base in this latter case or would be subadditive and beneXit from large economies of scale and Xirst mover advantages). CISP submits that expenses which are not subadditive and which are entirely at the charge of the service provider assembling a service out of unbundled network elements provided by an incumbent carrier, should contribute towards a proportional reduction of the duration of the temporary monopoly.


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65.CISP is of the view that the Commission should cease to condone incumbent carriers, which are engaging customers into long-‐term contracts in absence of an effective unbundling regime, thus creating a Xirst mover advantage towards a technological shift to FTTN or FTTH which is not dealt with by effective regulation.

66.The evidence provided by Dr. Barnes provides a framework for answering to the capacity incumbents to engage their customers into long-‐term contracts prior to the availability of wholesale offerings at conditional essential rates, through an adjustment of the duration of the temporary monopoly.

67.The resulting duration of the temporary monopoly is likely to be measured in weeks (for FTTN) and months (for FTTH). The temporary monopoly duration should thus be shorter than current market conditions in which investments are made with the expectation of the payback period to be of the same duration than the long-‐term contract with the customer. For instance, Bell Aliant FibreOp customers are charged a monthly premium of $10 per month, to obtain the services without a long term contract. In the context of Bell Aliant FibreOp, the CapEx is less than $2000 per home, and the monthly package for FibreOp IV6 (inclusive of HDTV) is $159.95 per month (add to this and extra $10 per month, for removing the long term contract obligation).

68.Consequently, for as long as an ISP would commit to equivalent long-‐term contract per end-‐user contract duration, there would be no justiXication for any temporary monopolies, especially given the reduced costs of wholesale offerings over retail offerings.


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6 http://productsandservice.bellaliant.net/PS/nb/english/productsandservices/productDetailPage.do?bodycont=productsandservices%2fproductDetailPage.do?product_id=3261787&product_id=3261787&curbody=2&section=2

http://productsandservice.bellaliant.net/PS/nb/english/productsandservices/productDetailPage.do?bodycont=productsandservices%2fproductDetailPage.do?product_id=3261787&product_id=3261787&curbody=2&section=2






Myth X: No solution exist that can be put in place rapidly to safeguard facilities-based competition

69.CISP in this proceeding has contributed to the public record the following solutions:

A. On the engineering side, CISP has proposed technically feasible unbundling architectures for all existing as well as all new forms of access technologies, based on Cablelabs and Broadband Forum standards, which are supported by the equipment manufacturers retained by the ICCs and the ILECs.

B. The solutions proposed by CISP do not rely on any complicated co-‐location or spectrum-‐sharing arrangements.

C. CISP has provided economic theory in support of calculating the value of Xirst mover advantages and its impact on the duration of temporary monopolies

D. CISP members have demonstrated signiXicant demand for DSL-‐CO and Local Head-‐End services, and that they will use such services to climb the investment ladder.

E. A deXinition for Next-‐Generation Networks: Next-Generation Networks are investments towards the construction of new transmission facilities which the Commission will deem to be duplicable by competitors with whom incumbents will be willing to share their Lirst mover advantages and large economies of scale tied to their historical incumbency.

F. CISP has answered all Commission questions, concisely and precisely, with sound technical engineering, and due compliance with the Telecommunications Act, the Policy Objectives as well as reliance on previous Commission determinations.

G. CISP has demonstrated that its members are making investments into self-‐supplied aggregation facilities as well as alternative access facilities, namely WiMAX and FTTH.

H. CISP has demonstrated that current margin squeeze issues will not be solved unless the Commission declares DSL-‐CO and Local Head-‐End services to be conditional essential thus ensuring that the mark-‐up for such services will be limited at 15% above incumbent telephone and cable carrier Phase II costs.

I. CISP commits to participate in further activities at CISC to develop the Xinal architecture for DSL-‐CO and Local Head-‐End tariffs.

Conclusion

70.CISP has provided the Commission with the toolbox necessary to see through the rapid implementation of efXicient DSL-‐CO and Local Head-‐END services, applicable to both current as well as new FTTN, FTTH and Deep Fibre DOCSIS 3 investments.*** END OF DOCUMENT ***


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Documents

100621-CISP-Final-Submissions-v1.1(changes in para … · Huawei Equipment’Manufacturer’of’the’MA5600T’integrated’DSLAM/ Optical’Line’Terminal’capable’of’supporting’up’to’36’10Gigabit