The CRTC’s decision in August to ask incumbent carriers to issue tariff rates for dark fibre should be a boon to organizations in less-populous regions where there is little or no competition to the incumbent telcos, according to several industry observers.
In some rural areas of Quebec, the cost of a T-1 line from an incumbent can run up to $8,000 per month, noted Robert Proulx, CEO of Xit Telecom, a Quebec-based outfit that builds community networks in Canada and the U.S. Without tariffs for dark fibre, these rural communities will have very limited access to broadband networks and face an uphill battle in forging any economic development, Proulx explained.
“The loss to the community is terrible,” he said. “They can’t promote development at $8,000 per month.”
The CRTC’s decision to ask incumbent carriers across Canada to produce tariff rates for inter-exchange dark fibre resulted from a complaint filed by Xit.
Xit had been competing on requests for proposal (RFPs) issued by a number of school boards in Quebec for the building of dark fibre networks that would be used by the individual school boards.
Xit responded to the RFPs, but in their proposals would offer to build community-based networks that could be used to offer high-speed services to a number of large organizations in the school boards’ communities. Under the Xit proposals, the cost of the dark fibre networks would be split among several community organizations, which would benefit from having ultimately cheaper access to broadband telecom services.
The problem, Proulx said, was that incumbent telcos like Bell Canada and Telus Quebec, would respond to the same RFPs, but with prices that were under the cost of construction. The incumbents would also specify that only the school boards could use the resulting networks, meaning other organizations in the community would be stuck with the same high telecommunications costs they had paid in the past.
“The incumbents didn’t want to have a separate network in there, because they have monopolies in a lot of rural communities,” Proulx said. “They can charge their high tariffs, because there are no alternatives.”
The incumbent carriers were able to undercut their RFP competitors, because they didn’t have to list public prices for dark fibre.
A Bell spokesperson said the company would not comment on the dark fibre tariff issue at this time. The company, however, did reply in its CRTC submission that construction costs on fibre routes can vary significantly and that imposing a tariff would allow competitors to enter the market without having to pay the true costs of construction. The carrier also noted that a tariff would discourage investments in fibre builds and hamper facilities-based competition. Telus Quebec also argued that a general tariff on dark fibre would be unfair to facilities-based providers.
In its ruling, the commission said that the current practice of allowing facilities-based providers to sell dark fibre access under Special Facilities Tariffs, which vary from case to case, allows these providers to withhold access to potential competitors, or charge unfair rates. The CRTC also noted that because the SFT process takes time to iron out, competitors may have trouble bidding on contracts with customers.
Now that the CRTC is pushing ahead with tariffs, the incumbents will have to offer the same dark fibre prices to anyone who wants the fibre, whether it be a customer like a school board or a potential competitor like Xit.
“Either they can issue a low tariff and we can help the region grow by buying fibre from Bell,” Proulx explained. “Or they can issue a high tariff and we’ll bring in a constructor and build the fibre network ourselves.”
Bill St. Arnaud, senior director of advanced networks for CANARIE, a group dedicated to the research and implementation of advanced broadband telecommunications in Canada, said there’s a competition issue if incumbent carriers are selling dark fibre to specific customers for less than they are willing to sell to other customers.
“The incumbent already has the fibre sunk in the ground, so it’s easy for them to unload this onto the marketplace,” he said. “Other companies have to build, incur capital costs and so forth, so it’s an impossible situation to compete against.”
Dark fibre networks can offer some groups faster and more competitively priced telecom services than what they currently receive, St. Arnaud said.
“We’ve always been encouraging institutions to look at dark fibre as opposed to buying a managed service,” he noted. “It’s not the answer for everyone, but for some people it makes a compelling case.”
Jeff Roberts, the CEO of the Columbia Mountain Open Network, a group trying to bring high-speed telecom services to the Columbia Basin region of B.C., noted that some carriers, including Telus, already have tariffs for intra-exchange dark fibre.
“It’s so expensive that basically every eight months you pay for the fibre,” he said. “So if that’s what we end up with for an inter-exchange tariff, we have no interest whatsoever. If the tariff bears some relation to the actual cost of construction, that would be great.”
The only significant dark-fibre deal Roberts has seen Telus reach was a $30-million agreement with Axia NetMedia to build SuperNet, an advanced research network in Alberta. Axia designs and manages high-speed networks.
In submitting its SuperNet pricing to the CRTC, Telus said the price would only apply to the SuperNet deal, because the deal was a big, special, one-time assembly.
“But I see nothing different from that deal and me wanting to get some dark fibre to hook up a community that doesn’t have high-speed services,” Roberts said. “The scale is different, but the need and motivation is identical.”
Ultimately, Roberts said, the only way to get fair dark-fibre pricing from an incumbent is to threaten to build an alternative network, like Axia did.
“It’s all something of a game of chicken,” he explained. “The ILEC says the fibre isn’t available, until you issue your tender for construction, at which point they’re willing to sit down to the table.”
