Good afternoon. My name is John MacDonald, and I'm president of the enterprise solutions division at MTS Allstream.
By the way, my speaking remarks, as well as our whole submission and some interesting observations regarding the competitive situation in the U.S. that might be helpful to the process, are included within this particular document. To ensure that I keep to the timelines you've set for comments, let me get straight to the point.
First, MTS Allstream straddles the divide between the former monopoly incumbent provider, which we are in the province of Manitoba, and the so-called new entrant competitor, which we are in the rest of the country for business, or, as we refer to it, the enterprise customer. In fact, we were the first long-distance competitor, as Unitel, and among the first local competitors, as AT&T Canada. Today, we are the largest national competitor to the incumbents Bell and TELUS, in each of their territories, and we deliver communications solutions to the small, medium, and large enterprise customers.
Typically, the views of incumbents and competitors on matters of policy and regulation are opposing. Some say our personality on both actually makes us a bit schizophrenic. We say it actually makes us an honest broker. We understand that when we pursue policy and regulation that is pro-competitive, there may be short-term implications for our incumbent business in Manitoba that now faces competition from the likes of Shaw. We certainly are aware that when policy or regulation is adopted that allows former monopoly incumbents like Bell or TELUS to leverage their dominant position in terms of control over their respective local network infrastructure, then competitors and the cause of competition are threatened.
With respect to the proposed policy direction, we agree wholeheartedly with the government's goals to ensure our telecommunications regulatory system is more modern, flexible, and efficient, and that our industry is internationally competitive and successful so that Canadian consumers will benefit from a stronger competitive environment that will bring greater choice and even lower prices and better services.
For the most part, we support the language of the proposed direction. However, MTS Allstream believes subparagraph 1(c)(ii) of the proposed direction that deals with access for competitors to the local networks controlled by the historic monopoly companies, as currently drafted, will actively undermine achievement of these laudable goals. It could jeopardize competition, particularly in the critical market for business services.
To be clear, we would ask the committee to carefully scrutinize language, the impact of which could be the elimination of choice for thousands of small and medium-sized business owners across the country, and that could result in costs to Canadian consumers.
The premise of that section, a copy of which is attached to my comments, is that allowing the former monopolies to set high prices for competitors to access the local network they control, often with markups of at least 50% to 300%, will encourage those competitors to build local networks of their own. That premise is frankly wrong. As has been repeatedly demonstrated in the marketplace in Canada, in the United States, and in Europe, experience has proven that the market will not fund, the economics do not support, and competition will not result from policy that seeks to force a replication of the pervasive local network control by the incumbent.
Local networks, whether telco or cable, have been built and maintained in Canada with an effectively guaranteed rate of return. In the business market especially, there is no widespread local network other than the one controlled by the former monopolies. Fair wholesale access to that local network for competitors is therefore critical to competition.
MTS Allstream has invested more than any other company--$8 billion--in competitive networks nationally. Yet we still require fair access to the local network to offer choice to customers. We propose alternative wording to that section in question, which is also before you. The language we propose is entirely consistent with the goals expressed by the government, but unlike the current language, it recognizes that where a former monopoly exercises significant market power over the network, for competitive market forces to take hold, competitors must have fair access to that network.
Thank you for considering this extremely important issue.
I look forward to your questions.