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VMEDIA INC. ... CONCERNING TELECOM REGULATORY POLICY CRTC 2015-326, 22 JULY 2015 CANADA GAZETTE PART I, NOVEMBER 21, 2015 COMMENTS BY VMEDIA INC. DECEMBER 18, 2015 Table of Contents

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Text of VMEDIA INC. ... CONCERNING TELECOM REGULATORY POLICY CRTC 2015-326, 22 JULY 2015 CANADA GAZETTE PART...

  • NOTICE NO. DGTP-002-2015

    PETITON TO THE GOVERNOR IN COUNCIL

    CONCERNING TELECOM REGULATORY POLICY

    CRTC 2015-326, 22 JULY 2015

    CANADA GAZETTE PART I, NOVEMBER 21, 2015

    COMMENTS BY

    VMEDIA INC.

    DECEMBER 18, 2015

  • Table of Contents A. INTRODUCTION .......................................................................................................................................... 1

    B. SUMMARY ..................................................................................................................................................... 2

    C. CANADIAN GOVERNMENT POLICY FAVOURS COMPETITIVE MARKETS, WITH

    INDEPENDENT COMPETITORS FRONT AND CENTRE ............................................................................. 6

    D. BELL’S ARGUMENT THAT ONLY FACILITIES BASED OPERATORS CAN BE

    TOLERATED DEFIES 30 YEARS OF EXPERIENCE AND REGULATORY INITIATIVES ................... 7

    E. INDEPENDENT COMPETITORS NEED ACCESS TO FTTH IN ORDER TO COMPETE ....... 9

    F. BELL TRIES TO INTIMIDATE CANADIANS: KILL OFF THE INDEPENDENT

    COMPETITORS OR WE MIGHT NOT INVEST IN FTTH ........................................................................... 11

    G. THE CRTC LOOKED CAREFULLY AT FTTH INVESTMENT INCENTIVES, AND

    TOTALLY REJECTED BELL’S SCAREMONGERING ................................................................................... 12

    H. DESPITE THE CRTC’S DECISION, BELL AND OTHER TELCOS CONTINUE TO

    TRUMPET THEIR ROLLOUT OF FTTH .......................................................................................................... 13

    I. BELL WARNS CANADIANS NOT TO UNDERMINE ITS FTTH INVESTMENT THESIS –

    WHATEVER THAT MAY BE ............................................................................................................................... 14

    J. BELL’S ATTEMPT TO BAN CABLECO WHOLESALE USING DOCSIS 3.1 HAS NOTHING

    TO DO WITH FTTH INVESTMENT INCENTIVES, AND SHOWS THAT BELL’S ONLY GOAL IS

    TO ELIMINATE INDEPENDENT COMPETITORS AND PRESERVE A DUOPOLY ........................... 17

    K. IF BELL IS SUCCESSFUL, CANADIANS WILL BE THE BIG LOSERS ..................................... 18

    L. CONCLUSION ............................................................................................................................................. 20

  • Notice No. DGTP-002-2015 VMedia Comments

    1

    A. INTRODUCTION

    1. VMedia is pleased to submit its comments on the Petition by Bell Canada (the

    Petition) asking the Governor in Council to review and vary Telecom Regulatory Policy

    CRTC 2015-326, Review of Wholesale Wireline Services and Associated Policies (TRP2015-

    326).

    2. VMedia is a competitive provider of internet, TV and phone services in Canada. 1 As an

    independent internet service provider, VMedia competes with the incumbent telephone

    companies (telcos) and cable television companies (cablecos) in providing Canadian

    consumers with the high-speed internet-based services they increasingly demand. Today,

    VMedia is the only independent service provider that holds CRTC licences to offer TV

    services throughout Canada.

    3. VMedia was one of the first companies to be licensed by the CRTC as a non-incumbent

    broadcasting distribution undertaking (BDU) to deliver TV signals to Canadian consumers.

    Since then, VMedia has pioneered a number of important innovations, including:

     the first “skinny basic” TV offering,

     its proprietary VBox which combines the functionality of a set-top box capable

    of receiving conventional TV services and a media payer which can access apps

    and over the top video and other content over the internet, and

     its VCloud personal video recording function which allows consumers to scroll

    back up to 7 days to view TV programs they missed or may want to revisit.

    4. VMedia launched its TV service, together with its high-speed internet service, in

    March 2013. Since then, VMedia has grown substantially as it offers Canadians attractive

    packages of internet, TV and phone services in competition with the incumbents, and

    continues to grow at a rate of 2% per month. This growth, which has been driven primarily 1 For more information on VMedia, see www.vmedia.ca

    http://www.vmedia.ca/

  • Notice No. DGTP-002-2015 VMedia Comments

    2

    by word of mouth, is a response both to the demand by Canadians for a compelling

    alternative to the incumbent operators which dominate the market, and to the quality and

    price-competitiveness of VMedia's services. VMedia currently serves over 18,000

    predominantly middle class homes, which enjoy savings of up to 30% on their service

    packages as compared to the prices charged by the incumbents.

    5. VMedia was an active participant in the extensive CRTC proceeding leading to

    TRP2015-326. That proceeding reviewed the wholesale framework under which VMedia

    acquires bandwidth from the telcos and cablecos. VMedia argued for a wholesale

    framework that includes fair pricing and proper access to telco and cableco facilities,

    including fibre-to-the-home (FTTH) facilities.2 This is essential to developing and

    sustaining a robust competitive market that will benefit Canadian consumers with more

    choice, innovative services, and better prices. Such a framework is growing in urgency as

    Canadians transition their TV and video consumption to the internet, dramatically driving

    up bandwidth usage and the likelihood of abusive pricing if the market is permitted to be

    dominated by local duopolies.

    6. With the issuance of TRP2015-326, the CRTC took a number of important steps to

    improve the wholesale framework, most notably, its decision to require incumbent

    operators to offer wholesale broadband services over FTTH facilities in addition to other

    access facilities. It is that FTTH ruling that Bell Canada seeks to overturn with its Petition to

    the Governor in Council.3

    7. For the reasons set forth below, VMedia strongly urges that Bell’s Petition be rejected.

    B. SUMMARY

    8. In its Petition, Bell wants to reverse the CRTC ruling requiring wholesale access to

    FTTH. Bell also asks, in the name of “competitive neutrality”, to reverse mandated

    2 FTTH is sometimes referred to as fibre-to-the-premises or FTTP. 3 Bell is also seeking to overturn other important pro-competitive rulings in TRP2015-326 through a review and variance application to the CRTC.

  • Notice No. DGTP-002-2015 VMedia Comments

    3

    wholesale access to certain high-speed cableco facilities (which largely do not use FTTH).

    Bell believes that the CRTC ruling both misreads Government policy and CRTC precedent,

    and will lead to reduced investment in FTTH.

    9. Contrary to Bell’s view, Canadian Government policy favours competition including

    by independent operators like VMedia. In the Prime Minister’s recent mandate letter to the

    Minister of Innovation, Science and Economic Development, Mr. Trudeau set out as a top

    priority:

    Increase high-speed broadband coverage and work to support competition, choice and availability of services, and foster a strong investment environment for telecommunications services to keep Canada at the leading edge of the digital economy. (underlining added)

    10. The pro-competition policy is consistent with a central element of the Prime

    Minister's message of standing up for the middle class. It is precisely the middle class, and

    others less fortunate, that will suffer most if high-speed internet access, so central to all of

    our lives, continues to be controlled by a telco/cableco duopoly.

    11. Bell describes mandated FTTH as some unprecedented regulatory event which

    undermines facilities-based competition. But the CRTC has for more than 30 years

    welcomed all manner of competitive entry including by facilities-based, non-facilities-

    based and hybrid operators. Indeed, Bell and other telcos readily employ sharing and

    resale of other telco facilities and services in formulating their own retail service offerings.

    The CRTC’s FTTH ruling is thus fully consistent with the CRTC’s longstanding regulatory

    approach, and is fully consistent with the federal Government’s 2006 Policy Direction to

    the CRTC.

    12. Independent competitors like VMedia will be devastated if Bell’s Petition is granted.

    Independent competitors use incumbent wholesale services in their retail offerings.

    Consumers are demanding higher speed services to access the growing number of high-

    resolution streaming services and more downloads, which is precisely the reason why Bell

    is rolling out FTTH. The independent competitors must be able to respond with their own

    competitive offerings, otherwise they will wither and die.

  • Notice No. DGTP-002-2015 VMedia Comments

    4

    13. It is no answer to say that the independent competitors should ubiquitously install

    their own FTTH. Some will install FTTH in select areas, but the telc