Thank you very much, Mr. Chair.
We have given our customers access to services such as IPv6, static addressing, voice over IP, hosted PBX services, and managed private networks, just to name a few. Our smaller size also attracts many customers who prefer dealing with a nimble organization that can offer them a custom solution to meet their unique needs. We provided many of these services long before incumbents did, and in some cases they still do not offer these services.
A common and fundamental misconception is that companies such as mine simply resell a Bell retail service at a lower cost. This could not be further from the truth. The service we lease from Bell is just one of the elements required to give an end-user full service. We provide all the equipment at the customer's premise and deal with internal wiring issues. We have to lease or build facilities to connect to Bell's network. We invest heavily in infrastructure such as data centres, routers, switching equipment, along with a large set of servers to handle a variety of functions, including authentication, DNS, customer management portals and billing systems, not to mention all the associated staff. We also need to build out a network so that we can take the end-user's connection, of which Bell provides the last mile, and transmit their data all across the world. This is expensive and complex to do.
We make decisions on how to build this technology so we can find ways to differentiate our service from the incumbents'. Such differentiation gives the consumer more choice and available offerings and brings price discipline to the market. However, recent decisions by the CRTC, such as the recent UBB decision, the traffic management decision, and several others, have diminished our ability to compete effectively.
The first arm of Bell's strategy is to dictate the business model that competitors will be forced to use so as to ensure that consumers will not have motivation to leave them for a competitor. The restrictions Bell has placed on its own users has degraded their end-user service. It's natural for these users to seek providers like us, who manage our network differently and do not necessarily impose such restrictions.
The second arm of the strategy is to make it difficult or impossible for providers to build their own facilities. Remember, the claim is that we are not building facilities, but the strategy is to make it unprofitable or impossible for us to do. In this regard, the commission disallowed independent providers from being able to offer a service named ADSL-CO. This would have incented competitors to build facilities and connect at the closest feasible point to the end-user. Allowing this service would have encouraged facilities-based competition, eliminated the competitors' traffic from Bell's network, eliminated a lot of the congestion, and allowed the competitor to provide a more robust set of competitive options to the end-user. Most importantly, as a mandated essential service, ADSL-CO would have required Bell to provide this service to us at a price that recovers all their costs plus a healthy profit. Such a service would drastically lower the costs to us and such savings would be passed on to the consumer.
The basic story endlessly repeated by the large carriers is that we are merely resellers, and in some fashion parasites that inhibit needed investments. On this false premise, much damage has ensued. Usage-based billing is a case in point. UBB has been applied to wholesale services. Retail-style UBB fees should not be applied to the wholesale access Bell is required to offer.
My main concerns are as follows.
First, I would like to continue dispelling the myth that competitors are getting some kind of free ride for their heavy users. Competitors already pay fees proportionate for the amount of capacity that our customers use on Bell's facilities. The CRTC UBB proceedings have also made it clear that Bell's proposed UBB rates have no cost-based underpinning. Usage charges, as proposed, are almost, if not exclusively, pure profit.
Secondly, we are completely opposed to the concept of per end-user usage billing. A usage component, if appropriate, should be applied only on an aggregated basis--that is, on the whole competitor leasing and not each end customer of that competitor. Allowing Bell to charge each of my customers in the same manner as Bell's own retail services eliminates my ability to differentiate my product. The proposed rates allow Bell to simultaneously gouge us, their competitor, and completely limit our ability to offer differentiated services that could attract customers away.
It is important to understand the underlying game plan. Everything will soon be distributed over the Internet. Canadians will send and receive ever larger amounts of data. The caps and charges put in place by Bell discourage usage growth. Why, when the world is going toward greater usage, are we moving towards limiting it? How can this be good for innovation, productivity, and our international competiveness?
We are grateful that the government recognizes the problem by dealing with the recent UBB decisions of the CRTC. We are also hopeful that the CRTC will use this as an opportunity to embrace an approach to wholesale regulation that is more effective at disciplining the market power of the incumbents and promoting competition.
Thank you for your time, Mr. Chair.
