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Telecom Order CRTC 2006-55 |
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Ottawa, 20 March 2006 |
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Shaw Cablesystems G.P. |
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Reference: 8740-S9-200600636 |
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Third Party Internet Access service |
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Application |
1. |
The Commission received an application
by Shaw Cablesystems G.P. (Shaw), under Tariff Notice 8 (TN 8), dated
20 January 2006. In its application the company proposed to modify
item 103, Third Party Internet Access (TPIA) service, to revise rates
for its TPIA services, which consist of TPIA Transport - Lite, TPIA
Transport - Regular, and TPIA Transport - Xtreme (TPIA - Lite, TPIA
- Regular, and TPIA - Xtreme). |
2. |
Shaw's TPIA service is offered to Internet
service providers (ISPs) in order to permit the interconnection of
the ISP's end-users via Shaw's cable plant to provide retail-level
Internet services. |
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Process |
3. |
The Commission received comments from Cybersurf
Corp. (Cybersurf), dated 27 January 2006 and 20 February 2006; the
Quebec Coalition of Internet Service Providers (QCISP), dated 2 February
2006 and 20 February 2006 and Vianet Internet Solutions (Vianet),
dated 2 March 2006. Reply comments were received from Shaw,
dated 3 March 2006. |
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Parties' comments |
4. |
Cybersurf, supported by the QCISP, submitted
that the TPIA transport monthly rate of $21.25 per end-user access,
approved in Terms and rates approved for large cable carriers'
higher speed access service, Order CRTC 2000-789,
21 August 2000 (Order 2000-789),1
should apply to all TPIA - Lite, TPIA - Regular, and TPIA - Xtreme
services until the Commission had verified the cost study evidence
filed by Shaw, and competitors had been given the opportunity to comment. |
5. |
Cybersurf noted that Shaw's
currently approved TPIA tariff described the approved TPIA end-user
access rate as a TPIA transport rate that was not linked to a particular
service level or speed. Cybersurf submitted that as a consequence
Shaw had an obligation to provide its TPIA services to Cybersurf at
the current end-user rate of $21.25. |
6. |
The QCISP requested that the Commission
not approve Shaw's rates as proposed in TN 8, submitting that doing
so would cause significant and irreparable harm to a QCISP member
in Shaw's territory. The QCISP submitted that the productivity improvements
realized by Shaw, combined with lower hardware costs, should have
led to significantly lower rates than the $21.25 that had been approved
by Order 2000-789.
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7. |
Cybersurf, supported by the QCISP, submitted,
among other things, that certain cost study methodologies and assumptions
used by Shaw in its TPIA cost studies were not based on the Commission's
incremental Phase II costing approach, and that the cost studies filed
by Shaw required an in-depth analysis. The QCISP requested the opportunity
to address interrogatories to all cable carriers with respect to their
TPIA services. |
8. |
The QCISP noted that Shaw had submitted
its costing information to the Commission in confidence. The QCISP
requested the disclosure of certain costing information and further
requested that it be permitted to address interrogatories after the
information had been placed on the public record. |
9. |
Vianet submitted, among other things, that
Shaw was operating in a geographical area adjacent to another cable
provider, Persona, in Northern Ontario. Vianet submitted that it was
of the view that the TPIA costs incurred by Shaw should be similar
to those incurred by Persona. Accordingly, Vianet requested that the
Commission order Shaw to reduce its proposed TPIA transport rates
by 40 to 50 percent to coincide with the rates currently charged by
Persona. |
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Shaw's reply comments |
10. |
Shaw submitted, among other things, that
the Commission should disregard the comments filed by interveners
and approve the rates proposed under TN 8. Shaw submitted that Cybersurf's
request that the TPIA transport rate of $21.25 apply to TPIA - Lite,
TPIA - Regular, and TPIA - Xtreme services until the Commission
had verified the cost study evidence filed by Shaw should be denied.
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11. |
Shaw submitted that the existing approved
rate of $21.25 applied to the TPIA service approved in Order 2000-789,
which was commonly referred to as TPIA Regular service and was labelled
as TPIA Transport - High Speed under the Rates and Charges for TPIA
Service Elements in Shaw's TPIA tariff. |
12. |
Shaw submitted that it would be arbitrary
and inappropriate to use the approved TPIA transport tariff rate for
TPIA - Lite and TPIA - Xtreme. Shaw further submitted that the economic
evaluations that it had filed in August 2004 and January 2006 demonstrated
that the costs and rates of differing TPIA transport service levels/speeds
were not the same. |
13. |
Shaw submitted that providing all service
levels/speeds to Cybersurf or other TPIA customers at one rate would
result in competitors receiving artificially low, subsidized service
offerings for those service levels/speeds for which costs were above
the existing rate. Shaw further submitted that there was no policy
rationale for artificially sustaining competitors through the provision
of inappropriately low TPIA transport rates. |
14. |
Shaw submitted that the Commission should
convene a proceeding to determine whether the test for forbearance
under section 34 of the Telecommunications Act (the Act) was
now satisfied in the high-speed Internet access market. |
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Commission's analysis
and determinations |
15. |
The Commission notes that it has not yet
verified the cost study evidence filed by Shaw and that competitors
have not yet had an opportunity to comment on that evidence. However,
due to demand for Shaw's TPIA services, the Commission considers it
appropriate to determine interim rates for Shaw's three TPIA services,
until a final determination is made. |
16. |
The Commission notes that the QCISP requested
disclosure of certain costing information and the opportunity to address
interrogatories to Shaw after the information had been placed on the
public record. The Commission notes that Commission staff will address
these requests shortly. |
17. |
With respect to Vianet's submission that
Persona provided Vianet with TPIA service at rates less than those
proposed by Shaw in TN 8, the Commission notes that a procedure to
be established will provide all parties with the opportunity to review
and comment on Shaw's proposed rates, on the cost studies it filed
in support of its application, and on other submissions made by the
applicant and interveners. With respect to Shaw's proposal that the
Commission should convene a proceeding to determine whether the test
for forbearance under section 34 of the Act was now satisfied in the
high-speed Internet access market, the Commission notes that Shaw's
proposal is beyond the scope of this application. |
18. |
The Commission notes that in Order 2000-789,
a monthly rate of $21.25 per end-user was approved for Shaw's TPIA
service. The Commission also notes that Shaw submitted that this service
was commonly referred to as TPIA Regular service and was labelled
as TPIA Transport - High Speed under the Rates and Charges for TPIA
Service Elements in Shaw's TPIA tariff. The Commission considers that
until the cost studies filed in support of the TPIA - Regular service
have been verified, modification of the approved TPIA rate would be
premature. The Commission further notes that the TPIA transport rate
of $21.25 per end-user exceeds Shaw's proposed TPIA - Regular costs.
Accordingly, the Commission considers that it would be appropriate
to retain the currently approved TPIA transport monthly rate of $21.25
per end-user and apply it to Shaw's proposed TPIA - Regular service. |
19. |
With regards to Cybersurf's submission
that Shaw had an obligation to provide TPIA - Lite, TPIA - Regular,
and TPIA - Xtreme to Cybersurf at the existing $21.25 TPIA per end-user access
rate, the Commission notes that Shaw has proposed significantly different
costs for these three services. In particular, Shaw's costing evidence,
filed in confidence with the Commission, shows that TPIA transport
costs increase significantly as TPIA transport service speeds increase.
The Commission notes that, while Shaw's cost evidence has not as yet
been tested, Shaw's TPIA service is provided over a shared network
and the Commission considers it reasonable to assume, on a prima facie
basis, that costs will vary with the service speed. Accordingly, the
Commission considers that the current TPIA transport rate of $21.25
per end-user access should not apply to Shaw's proposed TPIA - Lite
and TPIA - Xtreme services. |
20. |
In light of the above, the Commission
denies Cybersurf's request that the TPIA rate of $21.25 per end-user
access, approved in Order 2000-789,
apply to all TPIA speeds (TPIA - Lite, TPIA - Regular, and TPIA -
Xtreme). |
21. |
The Commission notes that Shaw's proposed
rates for its TPIA services will be verified in detail. The Commission
considers that the interim TPIA rates should reflect that Shaw has
demonstrated that TPIA costs vary with the service speed. The Commission
notes that it has taken into consideration intervener comments in
the determination of the interim rates for TPIA - Lite and
TPIA - Xtreme. |
22. |
Accordingly, the Commission approves
on an interim basis Shaw TN 8, modified as follows: the monthly
rate per end-user access for TPIA - Lite will be $19.00 and the monthly
rate for TPIA - Xtreme will be $30.00; and the current TPIA rate of
$21.25 (approved in Order 2000-789)
will apply to TPIA - Regular. |
23. |
The Commission may wish to approve rates
on a retroactive basis when it disposes of Shaw's application on a
final basis. Therefore, the Commission directs Shaw to track competitor
demand for each of TPIA - Lite, TPIA - Regular, and TPIA - Xtreme
from the date of this Order. |
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Secretary General |
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This document is available in alternative
format upon request, and may also be examined in PDF
format or in HTML at the following Internet site: http://www.crtc.gc.ca
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