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August 15, 2005


Mr. Allan MacGillivray
Executive Director
Telecommunications Policy Review Panel Secretariat
telecomreview@ic.gc.ca


Dear Sir:

Re:      Consultation on Telecommunications Policy and Regulatory Framework
         for Canada

Rogers Communications Inc. (Rogers) is pleased to provide its comments to the
Telecommunications Policy Review Panel in response to the issues raised in the
Panel‘s Consultation Paper.

Please contact me if you have any questions.

Yours very truly,




Kenneth G. Engelhart
Vice President, Regulatory

KGE/mf
                    2




___________________________________


  ROGERS COMMUNICATIONS INC.’S
       SUBMISSION TO THE
   TELECOMMUNICATIONS POLICY
         REVIEW PANEL




          Filed: August 15, 2005
                                     3




                              Table of Contents



1.   Executive Summary                            page 4

2.   Overview                                     page 7

3.   Rogers‘ Answers to the Questions in the
           Consultation Paper                     page 22

                  Section A                       page 22
                  Section B                       page 33
                  Section C                       page 47
                  Section D                       page 64
                  Section E                       page 72
                  Section F                       page 80
                  Section G                       page 81
                                       4



1.   EXECUTIVE SUMMARY

1.   The Telecommunications Policy Review Panel has been tasked with
     reviewing Canada‘s telecommunications policy and legislative framework
     with a view to assessing its suitability for addressing evolving issues in the
     telecommunications industry over the next decade. As the only
     communications company in Canada that competes, or is positioned to
     compete, with the telephone companies in all major segments of the
     market (wireless, high-speed Internet, video, long distance, local
     telephony and data), Rogers Communications Inc. (Rogers) has a keen
     interest in this review process.

2.   Unlike the incumbent telephone companies that seem intent on
     dismantling our telecommunications regulatory framework and moving
     more towards laws of general application, Rogers sees an important on-
     going role for the CRTC both in its protection of consumers from abuse of
     market power and in supervising the development of the Canadian
     telecommunications system. This includes the increasingly complex
     technical and inter-operability requirements of modern interconnection
     arrangements and the continuation of such important social policies as
     universal service and access to emergency services.

3.   While the incumbent telephone companies are generally pushing for
     forbearance from regulation in the local exchange market, removal of
     marketing safeguards, and more reliance on the Competition Act to
     discipline any abuse of market power, Rogers‘ position favours regulatory
     forbearance where competitive market forces are sufficient to replace
     regulation as the best means to safeguard consumer interests and to
     protect competitors from abuse of dominance; removal of price regulation
     and marketing safeguards when the telephone companies lose their
     dominance; and maintenance of the CRTC as the regulatory body that is
     best equipped to deal with the technical and economic issues raised by
     our competitive ―network of networks‖ model.

4.   Rogers‘ message on the regulatory front is one of patience. After many
     years of hard work, the CRTC has put the policies and safeguards in place
     that are required to foster a competitive local market. The CRTC‘s
     approach has been reviewed and proclaimed by the OECD as the correct
     approach, and Rogers agrees. However, we have not given the
     regulatory system enough time to take effect. With the incumbent
     telephone companies firmly in control of 95% of the local exchange market
     (100% in some areas) it is foolhardy to accept their request for a lightening
     of regulation in this sector. To do so would clearly undo all the good work
     of the Commission over the past decade.
                                       5


5.    In Rogers‘ view it is vitally important that the Panel not succumb to the
      temptation to dismiss concerns about the ILECs‘ dominance in the local
      retail and access markets, as concerns of the present, and simply
      ―leapfrog‖ ahead to what they would like the picture to look like in the
      future.

6.    The reality is that although the future is bright, and in Rogers‘ view is
      achievable, we will not get there if we prematurely dismiss the harsh
      realities of the transitional mode that we are still in, where we have one
      player in each region of the country that is overwhelmingly dominant in the
      largest segment of the telecommunications market.

7.    In Rogers‘ view, the Telecommunications Act currently contains the
      appropriate balance between the policy-making role of the federal
      government and the implementation and administration functions carried
      out by the CRTC. The purpose of such policies is to ensure that the
      CRTC has sufficient guidance and direction in carrying out its mandates,
      but not so detailed direction, as to undermine the expertise that the CRTC
      brings to bear on the subject.

8.    While Rogers would not propose any fundamental changes to the
      Telecommunications Act, it has recommended that the CRTC‘s powers be
      shored up in such areas as access to support structures and buildings,
      and it has also recommended that the CRTC be empowered to issue fines
      for breaching the Act. Certain changes to the policy objectives in section
      7 of the Act have also been proposed to update the 1993 statement of
      policy to better reflect Canada‘s current telecommunications policies.

9.    As regards technology development, Rogers believes that Canada will
      remain in the forefront of telecommunications developments and that it will
      continue to be a world-leader in the deployment of broadband and other
      new technologies.

10.   In order to maintain our leadership and enhance the level of Canadian
      infrastructure in all regions of the country, it is essential that the
      Government and regulators adopt a technology-neutral, and a
      competitively-neutral, approach to telecommunications regulation and
      policy. This must extend to government subsidy programs at both the
      federal and provincial levels, which currently tend to favour incumbent
      telephone companies and traditional transmission technologies.

11.   If Canada is to succeed in its goal of achieving broadband penetration in
      all regions of the country, and making Canada the most connected nation
      on earth, more care must be taken to ensure that we don‘t inadvertently
      shore up monopolies, or inhibit competitive entry, by subsidizing one
      carrier over another, or one technology over another. Where direct
                                        6


      subsidy of facilities is deemed necsssary, more competitive bidding is
      required for access to those subsidies and a more open attitude must be
      cultivated to using the most cost-effective technology for the job at hand.

12.   The regulatory framework should let the market decide on what
      technology is useful and let carriers respond to their perceptions of market
      demand.

13.   Canada has an enviable record of providing affordable, technologically
      advanced and ubiquitous basic access networks for each of telephony,
      video and Internet services. Competitive market forces work far better
      than regulations to ensure that carriers expand, upgrade and maintain
      their networks. All that is needed now is sustainable competition in the
      local residential telephone market to ensure that the ILECS are not able to
      abuse their quasi-monopoly power to quash the capability of competitors
      to invest in their networks in the local telephone and adjacent services
      markets

14.   Rogers welcomes this public debate and looks forward to the opportunity
      to discuss these and other issues with the Panel during its consultative
      process.
                                         7



2.    OVERVIEW

Introduction

15.   The Telecommunications Policy Review Panel has been tasked with
      reviewing Canada‘s telecommunications policy and legislative framework
      with a view to assessing its suitability for addressing evolving issues in the
      telecommunications industry over the next decade. As the only
      communications company in Canada that competes, or is positioned to
      compete, with the telephone companies in all major segments of the
      market (wireless, high-speed Internet, video, long distance, local
      telephony and data), Rogers Communications Inc. (Rogers) has a keen
      interest in this review process.

16.   Rogers is a diversified Canadian communications and media company
      that is engaged, through its operating subsidiaries, in four primary lines of
      business. Rogers Wireless Inc. is Canada's largest wireless voice and
      data communications services provider. Rogers Telecom Holdings Inc. is
      a leading national provider of voice and data communications services.
      Rogers Cable Inc. is Canada's largest cable television provider offering
      cable television, high-speed Internet access, voice-over-cable telephony
      services and video retailing. Rogers Media Inc. operates Canada‘s
      premier group of media assets with businesses in radio and television
      broadcasting, televised shopping, publishing and sports entertainment.
      Rogers is well known for its entrepreneurship and innovation, and has
      played an important leadership role in the development of new
      communications technologies and services in Canada. We hope that our
      experience and perspective on the issues raised in the Position Paper will
      be of assistance to the Review Panel.

17.   In this overview, Rogers has addressed some of the salient policy issues
      raised by the Telecom Policy Review Panel. Detailed answers to the
      questions posed in the Panel‘s Consultation Paper are addressed in the
      third part of this submission, in the same order as in the paper.


Rogers’ View on the State of Competition and the Need for On-going
Regulation

18.   This policy review has been requested by the incumbent telephone
      companies, which have lobbied hard to effect a fundamental change in the
      way telecommunications is regulated in Canada. The telephone
      companies are generally pushing for forbearance from regulation in the
      local exchange market, removal of marketing safeguards, and more
      reliance on the Competition Act to discipline any abuse of market power.
                                       8


      They are using the CRTC‘s recent decision to regulate VoIP telephone
      services in the same way as local exchange telephone services as
      justification for a new regime.

19.   In contrast, Rogers‘ position favours: (1) regulatory forbearance where
      competitive market forces are sufficient to replace regulation as the best
      means to safeguard consumer interests and to protect competitors from
      abuse of dominance; (2) removal of price regulation and marketing
      safeguards when the telephone companies lose their dominance; and (3)
      maintenance of the CRTC as the regulatory body that is best equipped to
      deal with the technical and economic issues raised by our competitive
      ―network of networks‖ model. That model relies extensively on
      economically efficient and technically advanced interconnection
      arrangements between carriers, as well as fair and non-discriminatory
      access to those networks by service providers, in order to achieve
      increased choice and lower prices for consumers.

20.   The Competition Act is not equipped to handle these types of
      interconnection and access issues effectively. This approach was tried in
      New Zealand and was abandoned after it spawned years of litigation and
      proved to be both a cumbersome and ineffective solution. On the other
      hand, the Competition Act does have a role to play in markets that have
      been forborne from regulation in ensuring that retail pricing is not
      predatory and that no player abuses its market power.

21.   The 1993 Telecommunications Act recognized that we were headed into a
      mixed market consisting of some sectors that were more or less
      competitive and some sectors that were still subject to a monopoly
      structure. It therefore equipped the CRTC with the tools necessary to
      open market segments to competition and to lighten up or forbear from
      regulation as those segments became sufficiently competitive to do so.
      This has resulted in approximately two-thirds of the total
      telecommunications market (by revenue) being forborne from rate
      regulation in the past twelve years and all segments being opened up to
      competition.

22.   The problem is that in the remaining third of the telecommunications
      market, which is essentially comprised of the local telephone market
      including competitive access services, the ILECs remain dominant with
      95% of the national market and an even higher percentage in some
      regions. The latest CRTC report to the Governor in Council on the status
      of competition in Canadian telecommunications markets still paints a
      picture of overwhelming dominance with the ILECs‘ share of telephone
      lines varying from a low of 89.5% in Nova Scotia to a high of 100% in
                                             9


       Saskatchewan1. While Rogers has every intention of trying to change
       these statistics over the next few years, the incumbent telephone
       companies remain overwhelmingly dominant in most, if not all, local
       markets in Canada and there is no basis in economics or public policy to
       stop regulating what is still a de facto monopoly. It is simply premature to
       consider forbearance. It will hopefully happen – but not yet.

23.    Under present circumstances, forbearance would undoubtedly result in the
       ability of the incumbent telephone companies to thwart competition by
       dropping prices where they face a competitor and making up their losses
       in other areas where they still enjoy a monopoly. This could eliminate
       competitors before they get firmly established and ultimately hurt
       consumers.

24.    The telephone companies point to VoIP and cable‘s entry into the local
       telephony market as the disruptive technology that will change all this, and
       Rogers hopes that this will prove to be the case. However, sitting where
       we do today, with very little market share, it is a huge gamble to forbear
       from regulation based on technology and market share predictions, rather
       than on solid numbers.

25.    Some patience is required. It has taken the CRTC twelve years to
       dismantle the technical and economic barriers to local entry including the
       dismantling of the subsidies built into rate of return regulation, but this job
       is now largely complete. What remains is to wait and see whether all of
       this very complex and tedious work will pay off in the form of increased
       competition. To dismantle price cap regulation and marketing safeguards
       prematurely would seriously jeopardize all that has been accomplished on
       the regulatory front since 1993.


Resisting the Temptation to “Leapfrog” to the Future

26.    The Telecom Policy Review Panel is tasked with looking five or ten years
       out to see where technology and markets are headed and to determine
       how best to meet Canada‘s telecommunications requirements in the
       future. This is a difficult task and it tends to assume that circumstances
       will be dramatically different as we head into the next decade. This
       provides the incumbent telephone companies with an excellent
       philosophical basis from which to launch their plans for deregulation and a
       diminished regulatory role for the CRTC.

27.    There is a natural tendency for all of us to assume away the very real
       problems that still characterize the industry‘s transition from a regulated

1
 Report to the Governor in Council, Status of Competition in Canadian Telecommunications
Markets, November 2004, at p. 37.
                                         10


      monopoly structure to a deregulated competitive market, and to leap to a
      future environment in which we can look anew at telecommunications
      policies and place greater reliance on laws of general application to
      govern the conduct of the industry.

28.   Unfortunately, this type of leap of faith ignores reality. If anyone had
      suggested in 1997 that eight years after the local market was opened to
      competition, SaskTel would still enjoy a 100% market share in
      Saskatchewan, or that Aliant would enjoy a 99.7% market share in New
      Brunswick, or MTS a 97.6% share in Manitoba, there would probably not
      have been many believers. Yet, eight years later, this is the position we
      find ourselves in.

29.   It has been a huge regulatory struggle to gain a very modest competitive
      foothold over an eight year period and it would be a very serious mistake
      to assume that the struggle is over, or almost over, and that regulatory
      intervention is either no longer needed, or that this will shortly be the case.
      And yet, that is what the incumbent telephone companies are postulating.
      They are assuming away the fact that we are still very much in a
      transitional stage with an uncertain outcome, and they are asking us to
      take a leap of faith into an environment that may or may not transpire.

30.   What is however very clear, is that if this leap of faith is made, and if the
      CRTC‘s transitional regime is dismantled prematurely, the competitive
      market will simply not develop in the manner envisaged by the CRTC or
      the Government of Canada, to the detriment of consumers and our
      telecommunications industry.

31.   The Government of Canada has commented on the state of competition in
      the Canadian telecommunications market on a couple of occasions over
      the past five years, in the context of petitions to review and vary CRTC
      decisions. In P.C. 2000-1053 of June 26, 2000, the Governor in Council
      directed the CRTC to submit annually, for the next five years, a report on
      the status of competition in Canadian telecommunications. This direction
      was issued pursuant to section 14 of the Act following expressions of
      concern to the Governor in Council respecting the status of competition in
      Canadian telecommunications markets.

32.   According to the then Minister of Industry, John Manley, ―…to ensure that
      competition continues, and that all Canadians have access – the
      regulatory environment has to be right. …As a government, our role is to
      establish policy. We must leave the CRTC to regulate. When it comes to
      intervening in CRTC decisions, we must set the bar high. If we don‘t, we
                                            11


       undermine the independent regulatory authority. These decisions involve
       matters best left to the regulator.‖2

33.    Three years later, Industry Minister, Allan Rock, echoed a similar
       sentiment in a statement accompanying the Governor in Council‘s
       dismissal of AT&T Canada‘s petition respecting the CRTC‘s decision on
       the second price cap regime:

        ―The Government of Canada is committed to real and genuine
       competition in the telecommunications sector,‖ said Minister Rock. ―For
       more than 10 years, we have steadily moved away from the monopoly
       model and toward greater competition because we believe that
       liberalization is the best means of protecting the public interest in the long
       term. Competition means better service, more choice and lower prices for
       Canadians.‖

       ―There are encouraging signs that show the Canadian Radio-television
       and Telecommunications Commission realizes the state of competition in
       the telecom sector needs to be strengthened, and that the Commission is
       working to achieve change without compromising the industry‘s stability,
       which is more important now than ever,‖ added Minister Rock. ―We do not
       want to interrupt the Commission‘s work. Policy and regulatory actions
       are most effective when they are cohesive and coordinated.‖

       In upholding the price cap ruling, Minister Rock called for continued
       vigilance by the Canadian Radio-television and Telecommunications
       Commission to work toward increased competition in the sector.3

34.    Four reports have been issued since 2000, when the Governor in Council
       first issued its directive. Table 4.3.4 from the CRTC‘s latest report dated
       November 25, 2004, demonstrates the very slow and uneven
       development of competition in the local market, including both residential
       and business lines. Competitor performance in the residential market is
       even weaker than these combined statistics indicate.




2
  Speaking Notes for the Honourable John Manley, Minister of Industry, CANARIE/NET 2000, 28
June 2000.
3
  Allan Rock Announces Response to Appeal of the CRTC‘s Price Cap Decision, Ottawa, March
26, 2003.
                                             12


                                 Table 4.3.4
               Incumbent Local Market Share by Province (lines) 4

Province                          2000             2001             2002             2003
British Columbia                 97.3%            97.2%            96.0%            92.7%
Alberta                          97.4%            96.5%            94.2%            94.0%
Saskatchewan                    100.0%            100.0%           100.0%          100.0%
Manitoba                         98.7%            98.2%            98.1%            97.6%
Ontario                          94.2%            94.4%            93.3%            92.2%
Quebec                           97.6%            96.9%            96.7%            95.6%
New Brunswick                    99.8%            99.8%            99.8%            99.7%
Nova Scotia                      99.2%            94.9%            92.0%            89.5%
Prince Edward Island            100.0%            99.5%            95.7%            93.9%
Newfoundland and                 98.9%            98.1%            97.2%            93.8%
Labrador



35.    If we look at what the CRTC has done since 2000 to enhance the
       competitiveness of Canadian local telephone markets, there have been a
       number of positive developments. These include:

              tighter rules respecting the bundling of local telephone services with
               other more competitive services5;

              strengthening of the win-back rules that prevent the ILECs from
               immediately targeting win-back promotions at the few customers
               that they lose to competitors6;

              the provision of digital network access services to competitors at
               cost-based rates7; and

              the imposition of floor prices to prevent the ILECs from marketing
               bundles of telecommunications services at below cost8.

4
  Report to the Governor in Council, Status of Competition in Canadian Telecommunications
Markets, November 2004 at p. 37.
5
  See for example, Regulatory framework for second price cap period, Telecom Decision
CRTC 2002-34, May 30, 2002 and Review of price floor safeguards for retail tariffed services
and related issues, Telecom Decision CRTC 2005-27, April 29, 2005.
6
   Review of winback promotions, Telecom Public Notice CRTC 2003-1, January 15, 2003; and
Review of promotions, Telecom Public Notice CRTC 2003-1-1, March 13, 2003; and Promotions
of local wireline services, Telecom Decision CRTC 2005-25, April 27, 2005.
7
  Regulatory Framework for the Second Price Cap Period, Telecom Decision CRTC 2002-34,
May 30, 2002; and Competitor Digital Network Services, Telecom Decision CRTC 2005-6,
February 3, 2005.
8
  Amendments to Telecom Public Notice CRTC 2003-8, Review of price floor safeguards for retail
tariffed services and related issues, Telecom Public Notice CRTC 2003-10, December 8, 2003,
                                                13



36.     These were all positive decisions by the CRTC that were designed to
        prevent the ILECs from abusing their dominance in the local telephone
        market, or leveraging it to extend their dominance into other more
        competitive market segments.

37.     Notwithstanding the fact that the CRTC‘s monitoring reports show very
        slow progress in developing a competitive local market, the ILECs have
        been pressing hard to undo the regulatory safeguards that have been put
        in place and to limit the CRTC‘s ability to regulate them on a going forward
        basis. The ILECs have used their very considerable resources to mount
        their campaign on a number of levels. These include:

               lobbying for a telecom policy review;

               lobbying for increased reliance on the Competition Act and less of a
                role for the CRTC;

               attacking regulatory safeguards in the courts9;

               applying to the CRTC for a streamlined tariff approval process10;

               strongly resisting more effective floor price safeguards11;

               attacking the CRTC‘s VoIP decision as being anti-competitive12;
                and

               waging a public opinion war against the CRTC and continuing
                regulation.

38.     The transparency of these tactics becomes obvious when one considers
        that SaskTel, with a 100% market share, is seeking repeal of parts of the
        CRTC‘s VoIP decision on the basis that it will impede its ability to compete
        in the local market.

39.     SaskTel‘s objective of retaining 100% of the local market is clearly at odds
        with the objectives of Canadian telecommunications policy set forth in

Review of price floor safeguards for retail tariffed services and related issues, Telecom Decision
CRTC 2005-27, April 29, 2005.
9
  Bell, SaskTel and TELUS challenge constitutionality of CRTC-imposed marketing restrictions,
Bell Canada News Release, June 13, 2005.
10
   Introduction of a streamlined process for retail tariff filings, Telecom Circular CRTC 2005-6,
April 25, 2005.
11
   Review of price floor safeguards for retail tariffed services and related issues, Telecom
Decision CRTC 2005-27, April 29, 2005.
12
   Aliant, Bell Canada, SaskTel and TELUS jointly call on federal cabinet to overturn CRTC VoIP
decision, Bell Canada News Release, July 28 2005
                                        14


      section 7 of the Act. Yet this is in fact the kind of ―double speak‖ that the
      incumbent telephone companies are engaging in.

40.   Sadly, these arguments are not being ignored and both governments and
      regulators are succumbing to the pressures exerted on them:

            the Government of Canada has initiated this policy review;

            the CRTC did not go ahead with certain important elements of its
             proposed strengthening of floor price safeguards;

            the CRTC agreed to further streamlining of the ILECs‘ tariff
             approval process; and

            there are now public calls in newspapers for a decreased role for
             the CRTC;

41.   When one looks for justification for any dramatic swing in the way we
      regulate telecommunications in Canada, one is hard-pressed to find any
      obvious answers – other than the fact that the ILECs would prefer not to
      be regulated, despite their overwhelming share of the local market.

42.   Rogers believes that the Governor in Council was on the right track in
      2000 and again in 2003 when it exhorted the CRTC to stay the course and
      to monitor competitive inroads. If anything, the CRTC has wavered
      somewhat from its stoic course and succumbed to increasing pressure to
      regulate the ILECs with a lighter hand. This is working to the advantage of
      the ILECs and is contrary to the Government‘s policy objective of
      encouraging facilities-based competition.

The Need to Hold the Course

43.   In this environment, talk of new regimes can be counter-productive and
      could result in re-monopolization by the ILECs. This would be a huge
      setback for the Canadian telecommunications industry, as well as the
      Government of Canada‘s policies. What is needed at this critical stage in
      the evolution of the Canadian telecommunications system is a
      reaffirmation that our current course is a good one and is helping to
      position Canada as a world leader in the new economy; that we must hold
      the course until the objective of a competitive local market is achieved;
      and that any further weakening of the regulatory regime could seriously
      jeopardize achievement of our policy objectives.

44.   The OECD has recognized the importance of Canada‘s regulatory regime,
      its painstaking attention to reducing barriers to entry, and the importance
      of this regime to Canada‘s performance in the world arena:
                                               15


          …Canada is one of the leading OECD countries in terms of its
          performance in the telecommunication sector. Its best practice
          performance is largely due to its regulatory processes and frameworks
          and policy structures. The development of competition in the
          telecommunication service sector has shown good progress but, as is the
          case for other OECD countries, is still insufficient for local telephone
          service and local access and in the short distance leased line market. But
          many of the contentious regulatory problems that have marred
          performance in other OECD countries have been largely resolved in the
          Canadian telecommunication context.13

          This is a very strong independent endorsement of our current course.


45.       The Telecommunications Act still contains the basic elements required to
          carry the industry forward to fulfill our policy objectives. These elements
          include:

                 powers to carry out Canada‘s universal service policies;

                 powers to prevent abuse of dominance by carriers that possess
                  significant market power;

                 powers to create and enforce a network of networks, consisting of
                  facilities-based carriers;

                 powers to enforce access to these networks by telecommunications
                  service providers and resellers that do not own transmission
                  facilities;

                 powers to establish and enforce public service requirements such
                  as access by persons with disabilities, emergency services and
                  access by law enforcement agencies.

46.       Now is not the time to start dismantling this regulatory framework. The
          Telecommunications Act has proven to be a very versatile piece of
          legislation for managing the transition from a monopoly to a competitive
          structure and its utility is far from exhausted. While there are a number of
          ways in which the CRTC‘s regulatory powers could be enhanced, such as
          by clarifying its powers to order access to support structures and multi-
          tenant buildings, these measures do not require a fundamental overhaul of
          the Act.



13
     Regulatory Reform in Canada, OECD, 2002, at p. 5.
                                               16


The Appropriate Role for Competition Law

47.       The power of forbearance was an important addition to the
          Telecommunications Act. Section 34 contains a requirement for the
          CRTC to forbear from economic regulation when competitive forces are
          strong enough to protect the interests of users. Coupled with this power is
          the policy objective expressed in section 7(f) ―to foster increased reliance
          on market forces for the provision of telecommunications services and to
          ensure that regulation, when required, is efficient and effective.‖

48.       Some parties, such as Bell Canada, have been calling publicly for a
          fundamental change in this system. They would like to see forbearance
          issues removed from the CRTC and made by another body applying
          competition law principles. They would also like to see more reliance on
          laws of general application, including competition laws, following a ruling
          on forbearance.

49.       In Rogers‘ view, there is no need to remove the forbearance decision from
          the CRTC‘s jurisdiction. As matters currently stand, the CRTC uses
          competition law principles to define relevant markets and assess market
          power when it does its analysis pursuant to section 34 of the Act. The
          Telecommunications Act does not prevent this and in fact the Commission
          has stated on a number of occasions that this is its approach. Other
          telecommunications regulators, such as the FCC in the United States and
          Ofcom in the United Kingdom, similarly make their own determinations on
          whether to forbear from regulation, again applying competition law
          principles.

50.       At the present time, the Commissioner of Competition can intervene in
          CRTC proceedings that address competition issues and this is done on a
          regular basis14. If greater participation by the Competition Bureau is
          desired in CRTC forbearance decisions, it would be more efficient to
          create an avenue for this greater input, and to combine the resources and
          expertise of the CRTC and the Bureau, rather than removing this issue
          from the CRTC.

51.       As regards greater application of competition laws to the
          telecommunications sector, in lieu of the Telecommunications Act
          provisions, Rogers does not view this as a viable option, except in limited
          circumstances.

52.       While it is appropriate to apply the Competition Act to pricing issues
          following a decision to forbear from rate regulation, the wholesale
          application of the Competition Act to other aspects of telecommunications
          regulation is not appropriate.
14
     Competition Act, RSC 1985, c. C-34, as amended, section 125.
                                       17



53.   As indicated above, Canadian telecommunications policy is not geared
      solely to creating a competitive market. There are other policy objectives,
      such as universal service, protection of privacy and the provision of public
      interest services, such as E9-1-1, that a competitive market is unlikely to
      deliver absent regulation.

54.   The telecommunications market also differs from other markets in respect
      of the degree of interdependence that exists between networks and
      between networks and service providers. The interconnection regimes
      that exist for local exchange carriers, wireless carriers, long distance
      carriers, pay telephone providers, operator service providers, and DSL
      resellers are both complex and dynamic, evolving over time with
      technology improvements. They not only involve physical interconnection
      of facilities and co-location requirements, but also access to databases,
      signalling systems and order processing systems, and requirements for
      consumer protection. The arrangements in place for local number
      portability and equal access are indicative of the type of systems in place.

55.   None of these arrangements would have occurred in the absence of
      regulation and the fact that in almost all cases, one competitor is relying
      on its principal competitor for access, makes it very unlikely that they
      would continue without on-going supervision. The smooth operation of the
      ―network of networks‖ that now characterizes the Canadian
      telecommunications system is critical to our future evolution and should
      not be left to the courts or the Competition Act to administer. The CRTC‘s
      knowledge, expertise and understanding of these arrangements makes it
      by far the most appropriate body to continue to exercise this supervisory
      function.

Wholesale Pricing is not a Substitute for Facilities-based Competition

56.   Another notion that has been raised in the Telecom Review Panel‘s
      Consultation Paper, and that has been the subject of public debate, is the
      proposition that we can rely on the regulation of wholesale pricing and
      forbear from the regulation of retail rates, without having any facilities-
      based competition.
57.   Rogers does not agree with this approach and believes that it would
      seriously affect on-going investment in telecommunications infrastructure
      and weaken competition and consumer choice in Canada.

58.   Rogers believes that the focus of the Telecommunications Act on facilities-
      based carriers and facilities-based competition is the correct approach.
      While it is also important to ensure that non-facilities-based service
      providers can access those networks, the real benefits of price
                                         18


      competition and service competition can only be gained from facilities-
      based competition.

59.   The wholesale-only model, as a regulatory strategy, suffers from a number
      of defects. It will only result in resale competition if there is a large enough
      margin between the wholesale and retail rates to encourage entry. Since
      the wholesale rate will be based on the carrier‘s costs, and the retail rate
      will be left up to the carrier in a forborne environment, the only room for
      price competition is on the additional costs of providing service over a
      common network. This gives very limited room for resellers to operate
      and is a recipe for on-going disputes over the wholesale rate and potential
      price squeezes by the carrier. This would not get the CRTC out of rate
      regulation – it would guarantee it in perpetuity.

60.   Forbearance based on the presence of wholesale rates will be of little use
      to consumers in rural and remote areas where low population densities
      make competitive entry by local resellers very unlikely. Consumers in
      these areas would be at the mercy of the ILEC‘s unregulated pricing.
      Even in areas where resale activity could occur, it will not necessarily
      occur even if the ILEC prices its services significantly above cost. This is
      because the reseller will know that the ILEC can respond to entry by
      simply dropping its price, on a selective basis, to trim the reseller‘s margin
      and thwart competitive entry.

61.   The current focus of the Telecommunications Act and the CRTC on
      facilities-based competition, as the primary means to achieve a
      competitive market and increased consumer choice, is therefore the
      correct one. This can be augmented by an access policy that ensures the
      provision of telecommunications services by third parties.


Ex Ante Regulation Still Has an Important Role to Play

62.   Another issue raised in the Consultation Paper, and advanced by the
      ILECs, is the issue of whether regulation should be performed ex ante, by
      prescribing the conduct and pricing of the dominant supplier, or ex post on
      a complaint basis.

63.   At the outset, it should be recognized that although the
      Telecommunications Act prescribes ex ante regulation of prices and
      conditions of service, it also contains a forbearance power that has been
      used by the CRTC to eliminate ex ante price regulation from
      approximately two-thirds of the telecommunications market. As discussed
      above, the remaining third is largely comprised of the local exchange
      market and the competitor access market, in which the ILECs remain
      dominant. Rogers does not support the replacement of ex ante with ex
                                              19

        post regulation. Rather, we support the complete replacement of all price
        regulation with forbearance, once the market is competitive.

64.     However, even with ex ante regulation, it would be wrong to think that the
        ILECs are unduly hampered by the regulatory approval process. Since
        the advent of price caps, the ILECs have been able to file retail price
        changes that are compliant with the regime on an ex parte basis and
        receive automatic approvals. Recent regulatory reforms have further
        streamlined this process.

65.     In examining whether an ex ante approach is more appropriate than an ex
        post approach, it should be recalled that in many instances, the regulatory
        safeguards (floor prices, bundling rules, win-back and promotions rules)
        were all originally promulgated in response to complaints about the abuse
        of dominance by the ILECs. If one were to examine the attempts by the
        ILECs to evade these rules through loopholes or narrow construction of
        the rules, one would find that in many cases, the CRTC had to revisit the
        issue and fill the loophole discovered by the ILEC15. The ILECs‘ conduct
        in exploiting their dominance over the years provides full justification of an
        ex ante approach when significant market power is found to exist. The
        opportunities for the ILECs to exploit their dominance arise on such a
        frequent basis, and have such a potentially damaging impact on their
        competitors, that we cannot afford to rely on an ex post approach. To do
        so after the damage is done is simply too late.

The Evolution of Technology

66.     Another important issue raised by the Telecom Policy Review Panel
        concerns the evolution of technology. From Rogers‘ perspective, the
        Panel appears to be overly concerned with forecasting technology trends
        and tailoring the regulatory regime to what it sees as the likely
        technological and industry structure. Rogers has concerns with this
        approach on a number of levels.

67.     First, it is risky to guess where technology is headed and it would be
        extremely risky to design regulatory reforms around specific technologies.
        The only certainty is that technology will continue to change. While VoIP
        is the currently the technology of choice, others will inevitably be


15
   Amendments to Telecom Public Notice CRTC 2003-8, Review of price floor safeguards
for retail tariffed services and related issues, Telecom Public Notice CRTC 2003-10, December 8,
2003, Review of price floor safeguards for retail tariffed services and related issues, Telecom
Decision CRTC 2005-27 April 29, 2005; Review of winback promotions, Telecom Public Notice
CRTC 2003-1, January 15, 2003, and Review of promotions, Telecom Public Notice CRTC 2003-
1-1, March 13, 2003, Promotions of local wireline services, Telecom Decision CRTC 2005-25,
April 27, 2005.
                                        20


      developed.

68.   Secondly, the thrust of telecom policy over the last twelve years has been
      to encourage facilities-based competition – since this form of competition
      will produce the most benefits for consumers in terms of price and choice.
      Facilities competition also holds the promise of ultimate regulatory
      forbearance, whereas the ―single pipe‖ model is a recipe for continued
      regulation and continued disputes over access rates.

69.   Thirdly, we are seeing very clearly that one pipe is not the way we are
      headed. Different technologies have different attributes that are best
      suited to different applications and needs. Wireline, fibre, mobile and fixed
      wireless, and satellite all have a role to play. Other platforms, such as
      broadband over power lines, are also a possibility.

70.   The CRTC‘s technology neutral, facilities-based, competitive policies have
      helped place Canada in the position of a world leader in the provision of
      broadband services to both the residential and business markets. Since
      broadband networks form the backbone of the new IP-based
      telecommunications infrastructure, Canada is extremely well-positioned to
      take advantage of both the social and economic benefits associated with
      the global information society.

71.   By fostering a technology-neutral environment for the deployment of
      diverse networks, and by layering efficient interconnection and
      interoperability requirements on these network providers, Canada is
      achieving widespread deployment of broadband facilities at competitive
      prices.

72.   In regions where the competitive provision of these facilities is not possible
      due to the high costs of deployment, government policies and programs at
      both the federal and provincial levels have helped to subsidize the
      extension of broadband networks to rural and remote areas.

73.   It is extremely important that all stakeholders in the telecommunications
      industry work together to achieve common policy objectives. Just as it is
      important for policy makers and regulators not to determine competitive
      outcomes by favouring one technology over another, it is equally important
      for governments not fall into the same trap by subsidizing network builds
      in a preferential manner. Subsidizing one network provider over another
      in regions where competition is otherwise likely to develop will only result
      in preventing the competitive provision of facilities and entrenching a
      monopoly. This in turn will make forbearance unlikely and defeat two of
      the principle goals of Canadian telecommunications policy.
                                      21


74.   Rogers thanks the Telecom Policy Review Panel for this opportunity to
      present its views on the issues raised in this important public process. We
      look forward to discussing with you these points; as well as all of our
      answers to the issues raised in the Consultation Paper, in later stages of
      the policy review.
                                       22



3.    ROGERS’ ANSWERS TO THE QUESTIONS IN THE CONSULTATION
      PAPER

      A.1   Comment on the technological developments described above
            and provide your views on how telecommunications and ICT
            will change over the next 10 years.

75.   Rogers is in general agreement with the discussion of changing markets
      and technologies set out in the consultation paper. However, implicit in
      the discussion is the view that technology will determine the final market
      structure, regardless of the regulatory and policy framework. Rogers
      disagrees with that assumption. Regulatory and policy decisions are of
      vital importance in determining market structure.

76.   The discussion starts with the observation that 25 years ago the world‘s
      telecommunications markets shared several features that have almost
      entirely disappeared, including the provision of telecommunications
      services on a monopoly basis by government agencies or private sector
      companies. In fact, despite the dramatic changes in technology, most
      telecommunications services are still provided by those same incumbent
      phone companies. In Saskatchewan for example, the phone company
      remains government-owned and still has a dominant position in virtually
      every telecommunications market. The advent of IP-based technologies,
      fibre optic technologies and wireless technologies has not made a
      significant dent in Sasktel‘s market position.

77.   To a lesser degree, the same can be said for the other incumbent
      telephone companies across Canada. While the phone companies in
      Alberta and Manitoba are now privately-held rather than government-
      owned, the incumbent telephone companies in Canada remain the
      dominant suppliers in almost every field of telecommunications. The local
      market is about 95% controlled by the incumbent phone companies.
      About 85% of residential lines still select the incumbent phone companies
      as the preferred interexchange carrier (PIC). (That is, equal access
      software in the local switch routes calls placed from 85% of residential
      lines over the incumbent‘s long distance networks.) The incumbents even
      have about 50% of the business long distance market, a dominant stake in
      what was widely thought to be the most competitive single market for non-
      incumbent entrants. Private line and data service is provided to enterprise
      customers in Canada primarily by the incumbent phone companies who
      have a market share of approximately 90%. The only areas where the
      incumbent phone companies are not the largest supplier are the wireless,
      high-speed Internet and broadcast distribution markets. Even here
      however, while Rogers is proud to be the largest supplier of mobile
      wireless services in Canada, only in Ontario is Rogers the largest single
                                       23


      mobile provider. In every province including Ontario, the combined market
      share of Bell and Telus exceeds that of Rogers. In their incumbent
      territories, the Telus, SaskTel, MTS and Aliant wireless companies have a
      commanding market share.

78.   In the residential high speed market, cable companies have about 55%
      share to the DSL providers‗45%. But high speed Internet service to
      business locations is heavily dominated by the telephone companies with
      over 90% market share. Even in the broadcast distribution market, which
      has historically been provided by cable television companies, Bell
      ExpressVu is the third largest broadcast distribution undertaking in
      Canada, after only 8 years in operation.

79.   So while the shift to IP-based technologies, fibre optics and wireless have
      been hugely important, the services and applications using these newer
      technologies are still overwhelmingly provided by the same incumbent
      telephone companies, as they were 25 years ago. This confirms widely-
      agreed-upon conclusions as to the significance of incumbency in network
      markets. This dominance will therefore continue unless the regulatory and
      policy environment is carefully designed. In that regard, the paper states:

            ―While consumers might benefit from more competition, especially
            in the local exchange market, there can be no doubt that the
            Canadian telecommunications sector – both the industry and the
            government – can justly be proud of the achievements of the past
            decades. And, there is reason to be optimistic about increased
            competition in local exchange market. There is every indication
            that voice over IP (VOIP) and entry by the cable
            telecommunications carriers will significantly increase competition
            in the local market.‖

80.   Rogers believes it is an understatement to say that consumers might
      benefit from more competition in the local exchange market. Consumers
      will certainly benefit if competition comes to the local exchange market.
      However, the paper‘s optimism that cable companies and non-facilities-
      based VOIP players will provide that competition may become a self-
      defeating prophecy. Just as the pervasive deployment of fibre optic
      technology did very little to unseat the dominance of the incumbent
      providers, the same might be true of VOIP. A more cautious optimism
      combined with a carefully crafted regulatory and policy environment, may
      enable these technological developments to translate into real change in
      the marketplace.

81.   Similarly, Rogers is of the view that the discussion paper overstates the
      importance of application providers as opposed to facilities providers.
      While Rogers acknowledges and supports the importance of VOIP and
                                        24


      other applications providers, we would note that the great bulk of
      telecommunications service revenues are earned by facilities-based
      providers and that facilities-based competition is the key driver for
      consumer benefits. For example, in Canada there is vigorous facilities-
      based competition between cable modem and DSL providers in the
      residential high speed Internet market. Countries that do not have this
      competition have a much lower penetration of residential high-speed
      Internet services, higher rates, lower bandwidth and inferior functions and
      services. Rogers questions why the discussion paper does not
      acknowledge the importance of facilities-based competition in creating a
      dynamic and competitive market place.

82.   To take another example, Aliant has a monopoly on fibre facilities
      connecting the province of Newfoundland and Labrador with the rest of
      Canada. Although Allstream does have a low-bandwidth microwave
      facility connecting the province to Nova Scotia, this facility has reliability
      problems and is currently operating at capacity. Similarly, there are
      satellite services but these are expensive and not useful for voice
      applications. As a result, Aliant charges prohibitive rates for access to its
      facilities which make it very difficult for competing service providers to
      offer services in the Province of Newfoundland and Labrador. By focusing
      on applications rather than facilities the paper overlooks serious barriers to
      the development of full competition in Canada.


      A.2    Comment on the potential for different networks (i.e., wireline
             telephone and cable networks, terrestrial wireless, satellite
             and hybrid networks) to carry existing and new ICT
             applications. Provide any relevant information on the
             infrastructure costs, bandwidth, security, reliability, and other
             features of such networks.

83.   The paper states as follows:

             ―This increased flexibility and efficiency of IP networks will lead to
             decreased costs, increased competition and enhanced
             opportunities for both new entrants and established players. In the
             longer term, no single network will be able to claim primacy or be
             able to control a particular market. Copper, coaxial cable, optical
             fibre and wireless networks will all carry the full range of services
             and, hence, will all compete with each other, primarily on the basis
             of price and inherent network characteristics (e.g. mobility,
             transmission capacity, reliability).‖

84.   Rogers agrees with this assessment with regard to the longer term.
      Incumbent access facilities have, however, long been bottleneck
                                        25


      ―essential‖ facilities. Innovations such as wireless and fibre-to-the-home
      have been touted as technologies that will help erode incumbent
      dominance in the access segment. In the medium term, however, no
      provider has yet created a serious economic model for access fibre, and
      mobile wireless does not offer the bandwidth or reliability that fixed assets
      do for advanced network applications. It would therefore be premature to
      adopt regulatory approaches based on the assumption of these
      technologies‘ unproblematic market entry.


      A.3    Are "one pipe, multiple applications" networks likely to
             become the primary means for ICT applications to be provided
             to Canadians? If not, why not?

85.   The concept of a single integrated network has been predicted for some
      time, yet such a ―one pipe, multiple applications‖ network has not
      materialized and is, in our view, unlikely to develop.

86.   It is important for the Panel to recognize that competing networks will
      continue to develop and some of those networks will be better suited to
      provide certain applications than others (e.g. wireless for mobile
      applications; satellite for remote regions; fibre and fixed wireless for large
      business applications; co-axial cable and DSL to homes and smaller
      businesses).

87.   Service providers and network operators will continue to use these
      different technologies to meet their customers‘ needs as network
      efficiencies and characteristics dictate. Rogers believes that competition
      will continue to drive new network developments and innovation.

88.   It is Rogers‘ submission that the Panel should focus on measures that
      encourage a technology-neutral approach to telecommunications
      investment and permit competitive market forces to drive investment and
      technology choices. The development of wireless technology is a prime
      example of this. Cellular/PCS carriers are on their third generation of
      technology in just 20 years. It is unlikely that this would have happened in
      a ―one pipe‖ environment.


      A.4    Are there likely to be multiple IP network providers offering
             service to the home, business and public sector? If so, how
             many and which types of network providers are likely to be
             providing service to each market? If not, which types of
             network providers are likely to serve each market and with
             which technologies?
                                        26


89.   Multiple IP networks are already a reality. All existing networks now
      employ IP in varying degrees in the delivery of services to consumers,
      businesses and the public sector – including traditional telephone
      systems, coaxial cable, DSL, satellite, 3-G Wireless, fibre and fixed
      wireless. Any number of new facilities-based operators can inject IP into
      their infrastructure as capital and network efficiency permits (e.g. hydro
      utilities may use IP to deliver broadband over power line). However,
      despite the fact that competing networks are increasingly capable of
      carrying voice data and video, it does not mean that all networks will be
      able to serve all market segments. Capacity requirements, security
      requirements and other factors, such as requirements for mobility, will
      continue to point to different types of networks and technologies to meet
      customer needs in an efficient manner. It is also important, for the Panel
      not to rule out the possibility of entirely new technologies will develop in
      the next 5 to 10 years.


      A.5    Is the Canadian competitive environment in
             telecommunications likely to evolve into a form of duopoly
             (i.e., incumbent local exchange carriers (ILECs) versus cable
             companies)? If so, what would be the implications for the
             telecommunications and ICT markets? What would be the
             implications for the regulatory framework?

90.   No, the Canadian telecommunications environment is not likely to evolve
      into a form of duopoly.

91.   Looking at the business market first, there are multiple facilities-based
      providers serving this market throughout the majority of the country and in
      all significant business centers. Bell Canada, Telus, MTS Allstream, and
      Rogers (through its Call-Net arm) compete throughout the country. There
      is more regional, facilities-based business competition in the form of Shaw
      Communications, Videotron Telecom and Eastlink, as well as ―utility
      telcos‖ like Hydro One Telecom, Telecom Ottawa, and the FibreWired
      alliance, each of whom has entered the market with rights of way and
      basic infrastructure already in place. In addition to this predominantly
      wireline-based competition, companies such as TeraGo and Look
      Communications provide wireless-based facilities competition in the
      business market.

92.   In the wireless business market, there are three aggressive facilities-
      based national players.

93.   In the residential market, there are generally two wireline facilities
      providers, the ILEC and the cable company, into every home at the
      current time. In addition, there are two Canadian direct-to-home satellite
                                       27


      companies providing video services throughout the country. Bell
      ExpressVu and Telesat also provide satellite-based, high-speed internet
      service throughout the country.

94.   At the current time, BCE, the parent of Bell Canada (an ILEC) and Shaw
      Communications, a cable company, own these satellite companies. These
      companies have been very successful in capturing a significant market
      share in the multi-channel video market. At the end of June 2005, these
      companies had 2,340,000 subscribers versus cable subscribers of
      7,310,000, out of the total TV homes of approximately 12,400,000. MTS
      and SaskTel provide terrestrial-based (VDSL) video services in Manitoba
      and Saskatchewan and together provide video service to approximately
      90,000 subscribers. Look TV and Craig Wireless provide competitive
      video service through fixed wireless technology (MMDS) and have
      approximately 70,000 subscribers in total. US satellite TV providers and
      over-the-air broadcasters provide signals to the approximate 2,800,000
      homes not subscribing to the suppliers described above. There are more
      than two video suppliers to virtually all Canadians.

95.   Turning to the local residential telephone market, the cable companies
      and ILECs are competing in the market as well as Call-Net in five major
      urban markets on a facilities-basis. Competition is in the early days and
      the ILECs maintain a 97% market share. ILEC out-of-territory activities
      are much more restrained than in the business market with the CRTC
      Monitoring Report showing only 1,000 lines in 2003.

96.   In the long distance market, there are a number of facilities-based
      providers and resellers.

97.   The question asks what the implications would be if the market evolved as
      a duopoly. Rogers submits that the evidence shows that two firms can
      provide the benefits of a competitive market. For example, the Canadian
      experience with high-speed Internet is instructive. In 1995, Rogers
      introduced the first high-speed Internet service. The Canadian cable
      companies leapt into the market seizing an early advantage. In response,
      the Canadian telcos and, in particular Bell Canada, aggressively invested
      in and launched their competitive DSL-based service well in advance of
      US telco developments in this area. In the early days the companies
      reduced prices and more lately have introduced a variety of different
      speed/price options to more effectively satisfy consumer preferences.
      This battle between the two players has led to Canada enjoying one of the
      highest penetration levels of high-speed Internet in the world with some of
      the lowest prices in the world. Left to their own without the prodding of the
      cable companies it is unlikely that the ubiquitous monopoly telephone
      companies would have introduced DSL-based Internet service at the
      same rapid pace. Rogers submits that the same competitive dynamic
                                        28


       occurred in the consumer wireless market to the benefit of Canadians,
       when that market was a duopoly.

98.    The principal objective for Canadians is to ensure that the market does not
       evolve into a monopoly in the broader residential communications market
       by virtue of the ILECs leveraging their monopoly local telephone power
       into other adjacent service markets. A duopoly is to be much desired in
       comparison to a monopoly.

99.    The regulatory framework‘s principal objective in the residential market
       should be to guard against the development of monopoly power and to
       promote competition between two or more competitive facilities-based
       suppliers supplemented by other more niche targeted players.


       A.6   Is vigorous inter-regional competition by ILECs and cable
             companies likely? Please explain the basis for your views.

100.   ILECs such as Bell and Telus already compete in both the wireline and
       wireless markets. Shaw‘s Star Choice DTH service competes with Rogers
       Cable, Cogeco and other cable providers. Rogers Telecom (formerly Call-
       Net) competes in the local telephone, private line and data markets with
       other cable operators. Accordingly, vigorous inter-regional competition by
       ILECs and cable companies is already present.


       A.7   Assuming a "one pipe, multiple applications" environment
             does evolve, describe the effect of this environment on the
             market position of existing service providers (e.g., ILECs,
             cable companies, wireless service providers, Internet Service
             Providers, etcetera) and any new entrants. Provide market
             share projections, if possible.

101.   As noted above in our response to A.3, Rogers does not believe that ―one
       pipe, multiple applications‖ networks are likely to become the primary
       means for ICT applications to be provided to Canadians. There are
       already multiple pipes to each home and business and in the future there
       will likely be more. Accordingly, facilities-based competition will be the
       rule. Of course, these multiple pipes may, and likely will, have multiple
       applications.

102.   If we evolve to an environment of one pipe rather than facilities-based
       competition, this environment would have a very serious effect on the
       market position of existing service providers. If the ILECs were the
       provider of the single pipe, cable companies, ISPs and other new entrants
       would likely disappear from the landscape, and a monopoly regulation
                                        29


       regime governing ILEC networks would need to be reintroduced. There
       likely would be no direct impact on wireless service providers because by
       definition they would be using wireless transmission facilities rather than
       the single wireline pipe. However, Rogers expects that in the future we
       will have integrated wireless/wireline services that allow a cell phone to
       operate on a wireline network in the home and on the public wireless
       network outside of the home. These and other types of technological
       innovations will likely be stifled if there is a one pipe environment. A one
       pipe environment means a facilities monopoly and experience both in
       Canada and other countries indicates that monopolies are not good at
       adopting new technologies and applications.


       A.8    Comment on the need for ongoing financing of advanced and
              legacy network infrastructure in Canada and on how such
              funding should be obtained by network providers in a "one
              pipe, multiple applications" environment. Since VoIP and other
              advanced ICT services may be provided separately from
              access networks, how should network infrastructure be
              financed in the future?

103.   Given that in Rogers view, a one pipe environment is neither likely nor
       desirable, answering questions about the financing of these networks is
       difficult. Generally, however, the end-user pays for a transmission facility
       to the premises. The end-user can then contract with applications
       providers for any applications or services that the end-user wishes to
       have. The fact that the applications are provided separately from the
       access networks poses no problem for the network infrastructure provider.
       The network infrastructure provider simply charges the end-user for
       transmission capacity and these payments finance the cost of the network.
       For example, currently many customers use cable modem networks to
       obtain VOIP services from suppliers such as Vonage. Customers pay for
       their network access in the form of a monthly payment for high-speed
       service. They also separately pay Vonage for VOIP service. Accordingly,
       the fact that Vonage provides a VOIP service does not make it difficult for
       the cable operator to finance their cable modem high-speed Internet
       service.

104.   In the event that there is a one pipe environment, the supplier of that pipe
       will have a monopoly. In this circumstance, obtaining adequate financing
       will not be a problem. Indeed the monopoly will likely charge prices which
       deliver supra-normal profits, making it easy for the monopolist to fund
       existing and future networks.

105.   Financing these networks in an environment of facilities-based competition
       is more challenging. For example, there are three facilities-based mobile
                                        30


       wireless providers in Canada. Two of these providers, Bell and Telus,
       have agreed to a CDNA roaming agreement. As a result, each carrier
       builds rural networks in their home territory and the other carrier roams on
       these networks. Since rural networks are very expensive for wireless
       service providers to construct, this agreement gives Bell and Telus a huge
       cost advantage over Rogers. They have more extensive rural networks at
       a lower cost than Rogers. This gives them a competitive advantage in the
       marketplace.

106.   Generally speaking the incumbent telephone companies have relatively
       low debt levels and huge annual returns of free cash and EBITDA. This
       makes it very easy for the incumbents to finance new networks. New
       entrants on the other hand, generally have very high debt levels making
       the financing of new networks much more challenging. Bell Canada, for
       example, has to date invested $2 billion on its Bell ExpressVu DTH
       satellite service in facilities and operating losses and in the most recent
       quarter generated a mere $6 million in EBITDA.. Network expenditures of
       this magnitude would be impossible for any network provider without the
       incumbent phone companies‘ huge cash flow.


       A.9   Provide any other comments on the implications of IP and
             other new technologies for the Canadian telecommunications
             and ICT sector that the Panel should take into account in
             developing its recommendations.

107.   The discussion paper notes that:

             ―… Regulation may be required to maintain open access for
             applications providers.‖


108.   Rogers believes that market forces will ensure that applications providers
       continue to have access to networks. Competition between cable
       operators, telephone companies, other telecommunications carriers, fixed
       wireless providers, satellite providers and others will ensure that open
       access is maintained for applications providers.

109.   Rogers has stated publicly that it has no intention of blocking access to
       VOIP or other applications providers. The CRTC has stated it will use its
       powers to ensure that applications providers will have access to cable
       high-speed Internet services without their services being degraded.
       Rogers has no objection to the regulator exercising these powers.

110.   Rogers notes, however, that its customers are paying for a data service
       and the applications providers are providing their services to these
                                        31


       customers. Consequently, the cable operator‘s obligation should be
       restricted to allowing the customer unobstructed access to the applications
       provider of his or her choice, acknowledging the Internet Protocol‘s
       limitations with respect to certain quality-of-service issues that may affect
       the user experience. Requests that the cable operator provide network
       facilities, quality of service or other features that prioritize some
       applications over others as a corrective to the Internet Protocol‘s
       limitations should be determined by the market, and not by regulatory
       requirements.


       A.10 Comment on the development of wireless services in Canada
            over the next 10 years and the implications for Canadian
            productivity, competitiveness and social benefits.

111.   Rogers is a pioneer in the Canadian wireless sector and is Canada‘s
       largest mobile wireless provider. Canada‘s wireless industry provides high
       quality service over a huge geographic area at rates that are among the
       lowest in the world. There is a high degree of technical innovation and
       customer service. Despite these notable achievements, the penetration of
       wireless services in Canada is lower than it is in most other industrialized
       countries. In Rogers‘ view, this lower penetration is not because of any
       fault in the Canadian wireless industry. Rather, Canada‘s wireline industry
       provides high quality service at fixed monthly rates without local measured
       service. In addition, Canada‘s North American lifestyle and long winters
       mean that most Canadians spend the vast majority of their time indoors
       and therefore near a high quality fixed service. Many European countries,
       unlike Canada, have Calling Party Pays (CPP) so that wireless customers
       do not pay for incoming minutes. As a result of this combination of pricing,
       quality, and environmental factors, wireless services have been less
       attractive than they have been in some other countries.

112.   The data to date does not indicate that wireless substitution for local
       wireline service is an important phenomenon in Canada. Statistics
       Canada monitors the number of households that have wireless service but
       no wireline service. In March of 2003, 1.9% of Canadian households fell
       within this category. By March of 2004 the proportion had risen to 2.4%.
       In November of 2004 the proportion was 2.7%. As this data shows, use of
       wireless in the absence of local wireline service is modest to date. Rogers
       expects this slow rate of growth for wireless substitution to continue.

113.   The discussion paper comments on the growth of fixed wireless services
       such as WiMax. Rogers hopes to be an important pioneer in this sector.
       We have acquired Microcell which owned the license to provide 2.5 GHz
       services through its Inukshuk division. Furthermore, Rogers acquired a
       considerable amount of spectrum in the 2.3/3.5 GHz auctions that took
                                        32


       place in 2004 and 2005. Rogers believes that fixed wireless services will
       be important for Canada and is committed to being a pioneer in the
       development of these services. However, Rogers would caution the
       review panel that the future for fixed wireless services is still unknown.
       While Rogers shares the excitement of many industry experts and
       observers, the actual success or failure of WiMax and fixed wireless in
       general remains uncertain and these businesses remain speculative
       today. Rogers has a history of pioneering new technologies such as FM
       radio in the early 60‘s, cable television in the late 60‘s, mobile wireless
       services in the early 80‘s and high-speed Internet service in the mid
       1990‘s. At the same time there have been other technological innovations
       such as CT2 Plus and Mobitex which have not earned a positive rate of
       return for Rogers. We are committed to being pioneers in cutting edge
       technologies and are very optimistic about the future of WiMax. However,
       the actual extent and direction of WiMax deployment and the applications
       which will ride on fixed wireless facilities remains unclear.


       A.11 Please add any comments on the evolution of
            telecommunications networks or the telecommunications
            industry structure over the next 10 years that the Panel should
            take into account in developing its recommendations.

114.   In Rogers‘ view, it is extremely difficult to accurately predict where
       technology is headed over the next decade. For that reason, it is not
       desirable to make policy recommendations based on prognostications
       about the future. History has shown that 10 years is more than a life time
       in the technological cycle. Moreover, during that cycle, many new
       technologies will be examined, fewer will be developed and even fewer
       will succeed. In the same time frame, it is quite likely that the utility of
       some older technologies will also be revived. Remember the premature
       announcements of the death of the local copper loop. As hard as it is to
       predict technology changes, it is even more difficult to predict timing and
       consumer acceptance. Indeed, the telecommunications technology path
       is littered with failed technology predictions.

115.   ―Fibre to the home‖ has been predicted for at least 15 years, but has failed
       to materialize. The next prediction was the ILECs‘ ―Beacon‖ initiative –
       based on a hybrid fibre-coax network. That was followed by the
       development of DSL technology using copper pairs that had previously
       been viewed as obsolete.

116.   On the other hand, many technological predictions have failed because of
       the inability to gauge the utility of the new technology to consumers and
       business users. The explosive growth of wireless networks is a case in
       point. No one foresaw the day when cell phones would become as
                                        33


       widely accepted as they are today, when carriers would be giving away
       phones to new subscribers. In addition, the demise of the twisted copper
       pair has been predicted many times, but the twisted copper pair has
       survived as one of the most enduring and productive network technologies
       of all time; it not only made DSL possible, but it also remains the last mile
       access for many IP applications and services today. The Internet had also
       been around for many years, before it became a ―new‖ driver of our
       telecommunications industry.

117.   It should also be noted that Canada does not have the luxury of dictating
       technology directions to the rest of the world. We operate in North
       American and world markets which have increasingly integrated networks.
       Our country‘s adoption of CT2 technology in the late 1980s is a case in
       point. In this instance, we had to abandon our endorsement of this
       standard for mobile phones because the U.S. market went in a different
       direction.

118.   For these reasons, it is important for public policy to engender a
       technology-neutral regulatory environment that does not build in any
       biases towards a particular technology result. The regulatory framework
       should let the market decide on what technology is useful and let carriers
       respond to their perceptions of market demand.


       B.1    Should the existing policy objectives set out in section 7 of the
              Telecommunications Act be changed? If so, what should they
              be?

119.   In general, Rogers believes that the policy objectives set out in section 7
       of the Act have been effective in providing direction to the CRTC. These
       objectives have provided the CRTC with useful guidance, without micro-
       managing the manner in which the CRTC fulfills its mandate under the
       Act.

120.   Nonetheless, Rogers believes that the Panel should consider whether
       certain of the objectives should be altered or updated to ensure that they
       remain valid. For example, section 7(e) reflects Canada‘s position prior to
       the implementation of the WTO agreement. All routing restrictions have
       been removed now and this objective could be deleted. Section 7(g) begs
       the question of whether the CRTC really has a role in stimulating research
       and development in Canada, as opposed to encouraging innovation –
       which it does do through its pro-competitive policies. Finally, section 7(i)
       respecting privacy was put in place prior to the passage of the
       comprehensive federal and provincial privacy legislation, which now
       applies to Canadian carriers. Rogers is of the view that this objective is no
       longer needed in light of those laws of general application and in light of
                                        34


       the presence of section 41 of the Act respecting nuisance communications
       (ADADs, SPAM, Do not call lists etc.).

121.   In addition to modifying or deleting the policy objectives identified above,
       the Panel should consider adding new policy objectives that reflect the
       changes that have occurred in our telecommunications industry over the
       past 12 years. Specifically, consideration should be given to the following
       objectives: (i) to promote the concept of a network of networks; (ii) to
       develop technologically neutral regulation; (iii) to respond to the
       emergency and security requirements of users of telecommunications
       services; and (iv) to promote fair access to underlying rights of way and
       infrastructure.


       B.2    How detailed should the telecommunications policies set out
              in the Telecommunications Act be and, conversely, how much
              discretion should be left to regulators such as the CRTC and
              Industry Canada.

122.   The Telecommunications Act currently contains the appropriate balance
       between the policy-making role of the federal government and the
       implementation and administration functions carried out by the CRTC.
       The purpose of such policies is to ensure that the CRTC has sufficient
       guidance and direction in carrying out its mandates, but policies should
       not be so detailed as to undermine the expertise that the CRTC brings to
       bear on the subject. The current policy objectives are broad enough to
       allow the CRTC to adapt the regulatory framework to the rapidly changing
       telecommunications sector. This enables the CRTC to use its expertise
       to interpret and apply the policy objectives to a wide range of fact
       situations and evolving developments in the industry.

123.   At the same time, the policy objectives in the Act are specific enough to
       provide guidance to the CRTC. In this respect, they have the effect of
       limiting the scope of discretion that the CRTC has for developing a
       regulatory framework that is inconsistent with the interests of Canadians,
       as defined by Parliament. Moreover, the Act provides the Governor in
       Council with the authority to issue policy directions to the CRTC if it is
       determined that more detailed guidance on broad policy issues is
       warranted. The act also provides the Governor in Council with the ability
       to review and vary decisions or orders of the CRTC, if it considers that the
       CRTC has strayed from the policy objectives set forth in the Act.

124.   As noted in response to C.10, the Minister of Industry does not currently
       have to act in accordance with the policy objectives in administering the
       Radiocommunication Act. As discussed below, Rogers believes that, like
       the CRTC, the Minister should be required to act in accordance with the
                                        35

       objectives in section 7 of the Telecommunications Act, as well as any
       directions issued by the Governor in Council pursuant to section 8 of the
       Act.


       B.3   What should be the overall objectives of economic regulation?

125.   Rogers agrees with the Consultation Paper that the overall objective of
       economic regulation is to provide a substitute for competitive market
       forces where there is a monopoly or near-monopoly. The Consultation
       Paper states that the CRTC‘s economic regulation applies to the ILECs
       ―which have held market power in the provision of local exchange
       services‖. The ILECs continue to hold market power in the provision of
       local exchange services with 97% of the residential market and 95%
       overall. As noted in the Consultation Paper, economic regulation protects
       consumers by preventing these monopolies from excessively raising rates.
       Similarly, economic regulation can prevent anticompetitive practices
       designed to prevent competitive entry.


       B.4   Are the two main principles of economic regulation set out in
             the Telecommunications Act, namely “just and reasonable
             rates” and “no unjust discrimination”, still appropriate? If yes,
             should they be further clarified in legislation or in other
             statements of regulatory policy? If not, how should they be
             modified or replaced?

126.   Yes the two main principles of ―just and reasonable rates‖ and ―no unjust
       discrimination‖ are still appropriate. Canada‘s local telephone market is a
       monopoly or near monopoly. Competition in local telephony began eight
       years ago with Telecom Decision CRTC 97-8; Local Competition. Despite
       this, the incumbent phone companies retained a 97% market share in the
       residential market and a 92% market share in the business market for a
       95% market share overall. The local wireline market is the only segment
       of Canada‘s telecommunications sector that still demonstrates monopoly
       or near monopoly characteristics and accordingly is the only section that
       requires economic regulation. Economic theory and real world experience
       shows that monopolies will raise prices, engage in price discrimination and
       engage in anti-competitive conduct to preserve their monopoly.
       Accordingly, economic regulation to protect consumers, prevent price
       discrimination and to prevent anti-competitive conduct against new
       entrants is appropriate.


       B.5   Is the regulatory framework developed by the CRTC
             appropriate in areas of economic regulation such as
                                       36


             protection of retail customers, prevention of anticompetitive
             practices, prevention of undue price discrimination, and
             availability and quality of service? If not, what changes should
             be made? Should other areas be subject to economic
             regulation?

127.   Yes. For the reasons described above in section B.4, the regulatory
       framework developed by the CRTC is appropriate. There is no need for
       economic regulation to be imposed on other areas of the communications
       market. These areas are all subject to market forces as a result of
       facilities-based competition.


       B.6   Should economic regulation ever be re-imposed on carriers or
             services that have been deregulated? If so, what principles
             and tests should be used to come to such a determination?

128.   In general, economic regulation should not be re-imposed on carriers or
       services that have been deregulated. Once a decision has been made to
       let market forces operate, those market forces should operate, subject to
       the provisions of the Competition Act.

129.   It is possible to imagine a situation where a formerly competitive market
       reverts to a monopoly requiring the re-imposition of economic regulation.
       For example, if all of the major competitors became bankrupt and the
       former incumbent returned to its monopoly or near monopoly status,
       economic regulation would presumably be re-imposed. However, absent
       such a drastic outcome, the possibility of re-regulation should not be
       allowed to interfere with the normal flow of market forces.


       B.7   If economic regulation of telecommunications markets
             remains necessary, what form should it take? Is the present
             mix of price cap regulation, service-specific cost-plus markup
             regulation, and other CRTC approaches appropriate? Would
             other regulatory mechanisms be preferable?

130.   Current mechanisms are appropriate. The current mechanisms have
       been tested and fine-tuned and with the exception of the local telephone
       market have proven to be successful in introducing sustainable
       competition in the Canadian telecom market. Rogers notes that a number
       of other industrialized countries have different regulatory mechanisms.
       Some of these countries regulate only wholesale services and some use
       ex post rather than ex ante regulation. For the most part, these countries
       have highly monopolistic communications environments dominated by the
       former PTT. Telecommunications competition has been a failure in most
                                         37


       of these countries. Competition has been a success in Canada because
       the CRTC‘s economic regulation works. It regulates the incumbent to
       protect consumers and prevent anti-competitive conduct until such time as
       competition is possible. Once competition is possible, economic
       regulation is largely discarded and market forces are allowed to operate.
       Other countries have a form of economic regulation which does not
       sufficiently control the incumbent and does not allow competition to
       become established. Canada should not emulate these models.


       B.8    If a service is sufficiently competitive at the retail level (i.e. in
              the market for end users) to warrant deregulation, is there a
              continuing need to regulate the wholesale services and
              facilities underlying the service? If so, under what
              circumstances would such regulation be required, and what
              form should it take?

131.   Where retail competition is partially a result of the presence of regulated
       bottleneck essential facilities, then there will be a continuing need to
       regulate the wholesale services and facilities underlying the retail service.
       The regulation would set rates, ensure that there is no unjust
       discrimination and ensure that there is quality of service and appropriate
       terms and conditions. For example, the CRTC‘s CDNA tariff may
       encourage competition in the local private line voice and data market.
       However, if that competition leads to retail deregulation, the tariff would
       need to be maintained. Failure to maintain the tariff would likely result in
       the elimination of the very retail competition that permitted deregulation.
       Given that market participants have based their business plans on these
       tariffs, they will be required until market forces lead to the availability of
       wholesale services at comparable rates.

132.   If, on the other hand there is sufficient facilities-based competition to
       warrant retail price deregulation then it is inappropriate to regulate the
       price of wholesale services and facilities. This is the situation that
       currently exists in the market for high-speed Internet services. The CRTC
       has found that competition between cable modem services and DSL
       services is sufficiently competitive to warrant retail price deregulation.
       However the Commission at the same time mandated wholesale price
       regulation so that ISPs can have access to cable modem and DSL
       facilities. In Rogers‘ view, this does not make economic sense. If a
       market is sufficiently competitive to permit retail deregulation based on
       facilities-based competition then there is no public policy or economic
       rationale to impose a new regime of wholesale price regulation.
                                        38


       B.9    If a service is not sufficiently competitive at the retail level to
              warrant deregulation, to what extent can regulation of the
              underlying wholesale services and facilities be relied upon as
              a substitute for direct regulation of the retail service?

133.   Rogers notes that regulation of underlying wholesale services has been
       unsuccessful as a means of providing true competition. In the local
       telephone market there have been a number of proceedings to develop
       rates and terms and conditions for the provision of unbundled loops at the
       wholesale level. Despite a great deal of time and effort to develop
       regulatory rules for the provision of unbundled loops, there is very little
       competition in the local telephone market. As noted above, 95% of the
       market overall and 97% in the residential segment is still provided by the
       incumbent.

134.   This state of affairs is not unique to Canada. In the United States there
       has been a huge amount of regulatory effort associated with the UNE-P
       tariff and previously with the Open Network Architecture tariff. Other
       countries have elaborate wholesale regulatory regimes, none of which
       have led to sustainable local telephone competition.

135.   Retail price competition, in contrast to wholesale service regulation has
       proven to be remarkably successful. Retail price competition provides
       certainty to consumers and prevents excessive rate increases by the
       monopolists. When coupled with price cap regulation, however, the
       monopoly has an incentive to conduct its operations efficiently. Retail
       price regulation also prevents anti-competitive conduct by the monopolist.
       Wholesale service regulation will be completely ineffective at preventing
       anticompetitive conduct against a facilities-based provider which does not
       use the wholesale services.

136.   The regulation of wholesale services and facilities can be a useful way of
       providing increased competition in the marketplace. For example, a
       facilities-based provider such as Rogers is restricted to providing wireline
       services to the 29% of Canadians that receive its cable television service.
       By using regulated wholesale services and facilities, it can with its Rogers
       Telecom division (formerly CallNet) provide services to the other 71% of
       Canadians. The regulation of the wholesale services and facilities is
       therefore important, but cannot be relied upon as a substitute for direct
       regulation of the retail service.


       B.10 When should telecommunications markets be subject to ex
            ante and when to ex post regulatory intervention? What
            criteria should be used to determine the choice of method of
            regulation?
                                        39



137.   Rate regulation should be ex ante to prevent abuses and to provide
       customer certainty. With ex ante regulation the incumbent monopolist
       provides a costing study showing that the rates are priced above cost and
       fulfill the other various regulatory requirements. Accompanying the cost
       study is a tariff specifying the relevant rate.

138.   With ex post regulation the incumbent monopolist charges whatever rate it
       wants. If there is a subsequent complaint, a costing study is required and
       there is a determination on whether the rate was appropriate or not. If the
       subsequent rate is found to be too high, consumers have been
       disadvantaged. If the subsequent rate is found to be anticompetitive,
       competitors have been damaged. The incumbent may then be called
       upon to make retroactive payments or fines. In either event, ex post
       regulation leads to more regulatory proceedings and less certainty for
       consumers and competitors.

139.   The Canadian system works much better. Ex ante regulation gives way
       not to ex post regulation, but rather to deregulation once sustainable
       competition has emerged.


       B.11 Are changes required to the present regulatory regime to
            provide economic incentives for ILECs, cable companies,
            wireless service providers and others to expand, upgrade and
            maintain the capabilities of Canada’s basic access networks?
            If so, what specific changes should be introduced?

140.   Canada has an enviable record of providing affordable, technologically
       advanced and ubiquitous basic access networks for each of telephony,
       video and Internet services. Competitive market forces work far better
       than regulations to ensure that carriers expand, upgrade and maintain
       their networks. All that is needed now is sustainable competition in the
       local residential telephone market to ensure that the ILECS are not able to
       abuse their quasi-monopoly power to quash the capability of competitors
       to invest in their networks in the local telephone and adjacent services
       markets


       B.12 Should the ILECs continue to be required to provide their
            regulated services to any potential customer on demand? If
            so, is a new regulatory framework required to finance this
            obligation to serve?

141. Rogers submits that so long as ILECs‘ local residential services are
     regulated then they should be required to provide service to any potential
                                        40


       customer on demand subject to the current rules in place for high-cost
       areas. These rules require that customers beyond a certain distance from
       current facilities must make a contribution to the cost.

142.   When service is deregulated in an area there would be no obligation to
       serve for the ILEC. Rogers notes that customer rates plus contribution
       payments ensure that service to any customer is provided on a
       compensatory basis. Further in this regard, there was speculation in the
       financial press that Bell was contemplating the sale of 850,000 rural
       subscribers to Bell Nordiq, a separate, publicly-traded income trust for a
       sum of approximately $3 billion, or a value of about $3,500 per subscriber.
       Customers are very valuable and providing service to a customer is not a
       penalty for the service provider.

143.   If the current contribution system is abandoned, as recommended in the
       response to B.13, a new framework, as described in that response could
       be implemented.


       B.13   Are changes required to the contribution regime or other
              aspects of the regulatory framework that subsidize delivery of
              telecommunications services in high cost areas?

144.   Rogers submits that contribution payments should be eliminated as we
       move to a truly deregulated telecommunications environment. It makes
       no sense in a competitive market for a wireless carrier to subsidize a
       wireline carrier that may be competing for the same customer. It may be
       possible to allow the ILECs to retain their deferral account funds in order
       to subsidize service in rural areas. This could eliminate the requirement
       for contribution and could eliminate the regulatory issues surrounding the
       deferral account. (See the response to B. 17) However, in the event that
       the review panel determines that the use of the deferral account funds is
       not appropriate or sufficient, Rogers would propose a further mechanism.
       Where carriers are not willing to provide service in an area they could be
       permitted to withdraw service from this area. Upon withdrawing service
       from the area, the incumbents would surrender all of the network
       equipment and facilities used in the area without compensation. Since the
       facilities were financed by monopoly shareholders during a period where
       the phone companies received a fair rate of return, surrendering the
       facilities for no compensation is fair and does not represent an
       expropriation from the incumbents. The federal government could then
       conduct a reverse auction process to secure a new telecommunications
       provider for the area. Potential providers would bid on the lowest amount
       of subsidy that they need in order to provide service for (e.g.) a ten year
       period. At the conclusion of the period there would be a new reverse
       auction or possibly an automatic renewal where both the government and
                                         41


       the carrier agreed to the existing arrangement. Using an auction
       mechanism such as this would ensure that the amount of subsidy required
       is as little as possible. In addition, this mechanism would relieve the
       incumbents of the requirement to serve areas which they no longer wish to
       serve. Finally, this arrangement would relieve other telecommunications
       carriers from the obligation to pay contribution payments to the incumbent.


       B.14 Should section 43 of the Telecommunications Act be amended
            to provide the CRTC with greater jurisdiction over access to
            rights-of-way and support structures by Canadian carriers?

145.   Section 43 of the Telecommunications Act gives the CRTC adequate
       jurisdiction over access rights of way. The CRTC and its predecessors
       have had these powers for 100 years and they ensure that
       telecommunications carriers and broadcast distribution undertakings gain
       access to municipal rights of way without paying rents or excessive fees.
       Without these powers, Canada would not have a ubiquitously deployed
       high tech telecommunications infrastructure. The review panel should
       reject requests by municipalities for amendments to the
       Telecommunications Act to allow them to charge rent for access to their
       rights of way. The current CRTC regime gives the municipality the full
       power to recover their costs, which is an equitable and efficient outcome.

146.   With respect to access to support structures current provisions in the
       CRTC‘s decisions give competitors excellent access to telephone
       company poles.

147.   However, following the decision of the Supreme Court of Canada in the
       Barrie Utilities case the CRTC no longer has jurisdiction over access to
       electric utility poles. This is a legislative gap that should be filled. As the
       discussion paper notes, in some cases, provincial utility boards can
       provide access. In the case of Rogers, we were pleased that the Ontario
       Energy Board granted us a decision giving us access to the poles of
       electrical utilities in Ontario. However, the rate that the OEB granted was
       50% higher than the rate that the CRTC set for the same access. Indeed
       the OEB rate is higher than the rate set by any regulatory board in Canada
       or the United States for access to electrical power poles.

148.   More problematically, some provinces do not have legislation that
       provides access to electric utility poles. Rogers operates in New
       Brunswick, which is one such province. Unless the electrical utility needs
       to come before the P.U.B. for a general rate increase, provincial legislation
       does not permit rates to be set for power pole usage. As a consequence,
       NB Power is seeking excessive pole rate increases from Rogers Cable.
       This legislative gap should be fixed by amending the Telecommunications
                                        42

       Act to give the CRTC jurisdiction over access to all support structures
       regardless of their ownership.

149.   Specifically, Rogers proposes that the Telecommunications Act should be
       amended by adding the following after subsection 43(1):

          43(1).1        In this section, “support structure” means any
          structure of a Canadian carrier, distribution undertaking or
          electric utility that is used or capable of being used to support
          the transmission line of a Canadian carrier or distribution
          undertaking.

          “electric utility” means a person who owns or operates
          equipment or facilities used by that person or another person for
          the delivery or provision of electricity to the public for
          compensation.


150.   Furthermore, subsection 43(5) should be repealed and replaced
       with the following:

          43(5)        Access to support structures – Where a Canadian
          carrier or distribution undertaking cannot, on terms acceptable
          to it, gain access to a support structure, the carrier or
          distribution undertaking may apply to the Commission for a right
          to access the support structure for the purpose of constructing,
          installing, altering, moving, operating, using, repairing, or
          maintaining a transmission line, and the Commission may grant
          the permission subject to any conditions that the Commission
          determines.



       B.15 Should the CRTC be granted powers to order access to multi-
            unit buildings for the purpose of installing or providing access
            to in-building wire? If so, please describe the nature and
            extent of such a power, including proposed legislative
            wording. If not, please explain whether the current situation is
            acceptable or whether an alternative approach would be
            preferable.

151.   Building access is an important issue. In an environment where
       communications services were provided on a monopoly basis, a building
       owner had very little leverage over telecommunications carriers.
       Residents wanted communications services in the building and so the
       building owner provided access to the telecommunications carrier with
                                        43


       relatively few conditions. However, in a competitive environment, the
       building owner has the ability to deny access to one provider while
       providing it to a second provider. The building owner could do this in
       order to obtain financial compensation from the carrier which is granted
       access. While competition is expected to deliver efficiency and lower
       prices, building owners are in a position to appropriate those benefits for
       themselves and deny them to their tenants. Of course in the long run, in a
       fully competitive real estate market, tenants would move to buildings
       where building owners do not engage in such practices. However, there
       are considerable exit costs and entry barriers involved in changing
       locations and so charging excessive access payments to
       telecommunications carriers can be a profitable and anti-competitive
       strategy for building owners. For these reasons, the CRTC is needed to
       set rules regarding access to multi-dwelling unit buildings in order to
       ensure that basic telecom policy objectives are achieved. Unfortunately,
       the legislative framework permitting the CRTC to do so is far from clear.
       Many of Canada‘s building owner groups have indicated that they will fight
       the CRTC‘s rules in court. Rogers recommends that the
       Telecommunications Act be amended in order to give the CRTC a clear
       right to order access to multi-unit buildings. Just as section 43 of the
       Telecommunications Act grants the CRTC these powers for both
       telecommunications carriers and broadcast distribution undertakings,
       Rogers submits that the building access jurisdiction should equally apply
       to both types of providers. Given that BDUs now provide telecom services
       and that telephone companies also provide BDU services, it only makes
       sense that the access jurisdiction should apply to both networks.


       B.16 Should any other changes be made to the regulatory
            framework governing access to rights-of-way and support
            structures?

152.   Quite often, disputes over access to rights-of-way and support structures
       are customer impacting. A delay in getting access can result in the loss of
       a customer. As a result, the CRTC should be required to provide
       decisions on questions or applications for access to rights-of-way and
       support structures on an expedited basis. The incumbent telephone
       companies are now receiving decisions on tariff filings in 10 days – a
       similar timeframe for decisions on questions of access would be very
       helpful. We believe this to be especially appropriate for access to rights-
       of-way given the clarity provided by the decisions of the Federal Court of
       Appeal and the Supreme Court of Canada in the Ledcor Industries v City
       of Vancouver case.
                                        44


       B.17 Should any changes be made to the regulatory framework for
            interconnection?

153.   Rogers submits that the regulatory framework for interconnection is unduly
       complicated. Part of this complexity comes from physical interconnection
       arrangements and part from financial arrangements.


       Financial Arrangements

154.   There is an array of financial payments required for interconnection.
       Carriers pay a 1.1% contribution tax in order to fund the deployment of
       wireline local telephone networks in rural and remote areas. Canada is
       the only country where wireless carriers pay this contribution tax. This
       means that at the same time as wireless carriers are trying to deploy their
       own networks in Canada‘s rural and remote areas, they are forced to
       subsidize wireline carriers for deploying networks in those same areas. If
       wireless is ever to be a substitute for wireline in a meaningful way, this
       arrangement is clearly untenable. Neither network should subsidize the
       other.

155.   Furthermore, Rogers would propose that the entire contribution regime be
       eliminated. Currently, there is a large amount of money in each incumbent
       telephone company‘s ―deferral account‖ which was created by the current
       price cap regime. Rogers submits that the incumbent phone companies
       should be allowed to keep this deferral account money and should not be
       required to add further amounts to the deferral account if they no longer
       receive contribution payments. That is, they should fund their contribution
       payments from the deferral account.

156.   Another area of financial payments is the payments of approximately .1¢
       per minute which long distance carriers pay to local carriers. Long
       distance carriers pay this in order to ―use‖ the local network. However, it
       would be equally legitimate to have the local networks pay the long
       distance networks in return for making long distance service available to
       local customers. Payments by long distance carriers should be seen as a
       result of their inequality of bargaining power with local networks, rather
       than as an efficient interconnection payment. Currently, since the
       incumbent telephone companies are the overwhelmingly dominant
       providers of local telephone services, they will be receiving most of these
       long distance interconnection payments. However if, as they themselves
       predict, the local telephone market becomes competitive, then the
       incumbent phone companies‘ long distance operations will often be paying
       the payments to other local telephone providers. Rogers recommends that
       the long distance to local payments be eliminated in the regulatory
       framework for interconnection.
                                        45



157.   Similarly, local telephone providers make payments to other local
       telephone providers when their exchange of traffic is out of balance. If
       one carrier sends more than 20% of its domestic traffic to another carrier it
       must pay for that traffic termination. Carriers that have an excess of
       outbound minutes are merely carriers whose customers make more calls
       than they receive. The carrier that receives the payment has customers
       that receive more calls than they make. Neither carrier has lower costs or
       is imposing any cost. Accordingly, neither carrier has any reason to pay
       the other carrier. Rogers recommends that the local interconnection ―out
       of balance‖ payments should similarly be eliminated.

158.   In general, Rogers recommends that where one carrier interconnects with
       another carrier there would be no payments for interconnection.
       Obviously, where one carrier uses unbundled or transport facilities from
       another carrier, payments would continue to be required. However where
       one network interconnects with another network at a common facility,
       generally speaking no financial payments should be required for the
       exchange of traffic at that facility.


       Technical Arrangements

159.   Many of the interconnection arrangements are unnecessarily technically
       difficult. For example, number portability rules require that numbers can
       only be ported within a telephone exchange. This is an anachronistic rule
       which makes very little sense in the current environment. Exchanges are
       a vestige of an earlier era and most telephone companies organize their
       local calling based on local calling areas, which are much larger than local
       exchanges. New entrants such as cable companies, have local telephone
       operating territories based on cable licensed areas and not based on
       telephone exchanges at all. This rule was set up when there was a great
       regulatory fear of ―long distance toll bypass‖. Now that long distance rates
       are low and contribution payments are in any case no longer derived from
       long distance revenues, this entire concern has disappeared. Therefore, it
       makes little sense to have a number portability regime which is designed
       to solve a problem which no longer exists.

160.   In general, each carrier should be allowed to interconnect with other
       carriers without making payments in a fashion which provides the greatest
       possible flexibility. Rogers urges the Review Panel to recommend that
       such an interconnection regime be designed.
                                        46


       B.18 Is CISC an efficient mechanism for developing interconnection
            standards? Should any changes be made to CISC's mandate
            and process?

161.   Rogers submits that CISC started as an efficient mechanism for
       developing interconnection standards. The CISC still works reasonably
       well. There has been an increasing tendency by the Commission to leave
       the CISC process entirely to private sector participants. Rogers submits
       that without proper regulatory supervision by CRTC staff, the CISC
       process is unduly long and cumbersome and often fails to achieve results.
       The CISC mandate and process is fine but the CRTC needs to actively
       supervise each individual CISC process to ensure that the process is
       moving efficiently. Its status as a co-regulatory, not self-regulatory,
       process should be emphasized.


       B.19 What steps, if any, should be taken to enhance the
            effectiveness of Canada's participation in international
            spectrum and standards organizations?

162.   In Rogers' view, the existing participation in international spectrum and
       standards organizations by both federal agencies and individual carriers or
       manufacturers is very effective in representing the views of Canadian
       constituents, and we see no need for additional steps or enhancements to
       current processes.


       B.20 Given the inevitable implications for Canada, should the
            Federal Government and industry groups participate more in
            the United States' spectrum and standards policy and
            regulatory processes?

163.   Rogers' believe that the existing level of participation by the Federal
       Government and industry groups in the US spectrum and standards policy
       and regulatory processes is sufficient to ensure that the interest of these
       Canadian groups is fully met.


       B.21 Should regulation of spectrum, technical standards,
            interconnection, numbering and other technical matters be
            unified under a single regulatory authority? If so, which
            authority, and under what conditions?

164.   The existing regulation of spectrum, technical standards, interconnection,
       numbering and other technical matters is regulated by either Industry
       Canada or the CRTC, depending on the subject matter. Each of these
                                        47


       groups is very knowledgeable in their respective areas of expertise.
       Rogers believes that the current system has historically worked well, and
       will continue to do so for all interested parties, and therefore, we do not
       see any immediate need to change or amend the existing processes.


       C.1    Is the allocation of governance and operational functions
              outlined above (i.e. policy development and law making,
              regulation, and network operation and service provision)
              appropriate for Canada? If so, is it being properly applied
              under the current regulatory framework? If not, please
              describe the preferred allocation of functions.

165.   In Rogers‘ view, the allocation of governance and operational functions
       (i.e. policy development and law making, regulation, and network
       operation and service provision) outlined in the Consultation Paper is the
       appropriate model for Canada.

166.   Under the Telecommunications Act, Parliament and the Governor in
       Council develop telecommunications policies and promulgate laws, the
       CRTC operates as an independent tribunal to interpret and implement
       those policies in the most effective and efficient manner, and carriers and
       service providers operate under this regime. Additional checks and
       balances are built into the model in the form of powers to issue policy
       directives and to review and vary CRTC decisions which enable the
       Governor in Council to correct any perceived deviations by the CRTC from
       the Government‘s policy objectives. The power to review and vary CRTC
       decisions has been exercised on several occasions since the
       Telecommunications Act was enacted in 1993, whereas the power to
       issue policy directions has not yet been used. The presence of this latter
       authority provides the Governor in Council with the ability to establish or
       clarify the Federal Government‘s policy on a particular matter if it
       determines that the CRTC‘s regulatory framework has failed to achieve
       the Government‘s stated objectives. Further checks on the CRTC‘s
       compliance with the terms of the governing legislation are also found in
       the appeal provisions which grant jurisdiction to the Federal Court of
       Appeal to review errors of law or jurisdiction by the CRTC.

167.   The optimal allocation of governance and operational functions that is
       evident under the Telecommunications Act can be contrasted with the
       situation that exists under the Radiocommunication Act. Under the latter
       Act, there is no independent body that is charged with administering the
       Act. Instead, a government department is charged with this function. The
       Minister is not required to comply with the policy objectives in section 7 of
       the Telecommunications Act, or with any policy directions issued pursuant
       to section 8 by the Governor in Council, and there are no express avenues
                                         48


       for redress from the Minister‘s decisions to the courts or the Governor in
       Council.


       C.2    Should general competition law principles have a role in the
              regulation of the telecommunications sector? If so, to what
              extent should the provisions of the Competition Act apply and
              to what extent should sector specific regulation continue to be
              applied?

168.   As matters currently stand, the CRTC uses competition law principles to
       define relevant markets and assess market power when it does its
       forbearance analysis pursuant to section 34 of the Act. The
       Telecommunications Act does not prevent this and, in fact, the
       Commission has stated on a number of occasions that this is its approach.
       Other telecommunications regulators, such as the FCC in the United
       States and Ofcom in the United Kingdom, similarly make their own
       determinations on whether to forbear from regulation, again applying
       competition law principles. These principles are comparable to those that
       the CRTC applies.

169.   At the present time, the Commissioner of Competition can intervene in
       CRTC proceedings that address competition issues and this is done on a
       regular basis. If greater participation by the Competition Bureau is desired
       in CRTC forbearance decisions, it would be more efficient to create an
       avenue for this greater input, and to combine the resources and expertise
       of the CRTC and the Bureau, rather than removing this issue from the
       CRTC.

170.   As regards greater application of competition laws to the
       telecommunications sector, in lieu of the Telecommunications Act
       provisions, Rogers does not view this as a viable option, except in limited
       circumstances.

171.   While it is appropriate to apply the Competition Act to pricing issues
       following a decision to forbear from rate regulation, the wholesale
       application of the Competition Act to other aspects of telecommunications
       regulation is not appropriate.

172.   Canadian telecommunications policy is not geared solely to creating a
       competitive market. There are other policy objectives, such as universal
       service, protection of privacy and the provision of public interest services,
       such as E9-1-1, that a competitive market is unlikely to deliver absent
       regulation.
                                        49


173.   The telecommunications market also differs from other markets in respect
       of the degree of interdependence that exists between networks and
       between networks and service providers. The interconnection regimes
       that exist for local exchange carriers, wireless carriers, long distance
       carriers, pay telephone providers, operator service providers, and DSL
       resellers are both complex and dynamic, evolving over time with
       technology improvements. They not only involve physical interconnection
       of facilities and co-location requirements, but also access to databases,
       signalling systems and order processing systems, and requirements for
       consumer protection. The arrangements in place for local number
       portability and equal access are indicative of the type of systems in place.

174.   None of these arrangements would have occurred in the absence of
       regulation and the fact that in almost all cases, one competitor is relying
       on its principal competitor for access, makes it very unlikely that they
       would continue without on-going supervision. The smooth operation of the
       ―network of networks‖ that now characterizes the Canadian
       telecommunications system is critical to our future evolution and should
       not be left to the courts or the Competition Act to administer. The CRTC‘s
       knowledge, expertise and understanding of these arrangements makes it
       by far the most appropriate body to continue to exercise this supervisory
       function.

175.   New Zealand is the only country that Rogers is aware of that has
       attempted to establish a competition law regime for telecommunications –
       but that experiment failed. Based in part on the recommendations of a
       Ministerial Inquiry into Telecommunications in 2000, the
       Telecommunications Act 2001 was enacted and it re-established a
       telecommunications-specific regulator known as the Telecommunications
       Commissioner. The role of the Telecommunications Commissioner is
       distinct from that of the antitrust authority, the Commerce Commission.
       The Telecommunications Act specifically excludes operation of the
       Commerce Act and Fair Trading Act in respect of determinations made by
       the Telecommunications Commissioner. The principle underlying the new
       regime has been described as ―as much market as possible and as much
       government as necessary‖ to achieve fair and sustainable competition.

176.   Other jurisdictions have stayed the course and continue to apply sector-
       specific legislation to the telecommunications industry. In the United
       States, for example, despite the existence of a more competitive
       telecommunications sector than exists in Canada, sector-specific
       economic regulation of the telecommunications industry remains in place,
       and there has not been any serious suggestion that the FCC or the
       dozens of state regulators that apply sector-specific regulation should be
       replaced by the Department of Justice‘s anti-trust section.
                                         50


177.   Other countries, such as the U.K. and Australia, similarly apply telecom-
       specific legislation to the telecommunications sector.

178.   While the telecommunications regulator in each of these jurisdictions also
       has concurrent jurisdiction under anti-trust legislation, each jurisdiction has
       sector-specific legislation dealing with telecommunications.

179.   Even in Australia where the administrative body that oversees general
       competition law and the economic side of telecommunications regulation
       is the same entity, the regulator applies telecommunication-specific
       provisions that are included in the anti-trust legislation, and not just
       generic competition law, to matters relating to competition and market
       behaviour in the telecommunications sector.

180.   While the Competition Bureau and the CRTC share the mandate of
       promoting competition, their mandates differ in one key respect. The
       CRTC is mandated to guide the development of competition in an industry
       that is making the transition from monopoly to effective and sustainable
       competition, whereas the competition law authorities are mandated to
       ensure that a competitive environment is maintained. Once this is
       understood, there is no conflict, inherent or otherwise, between the
       CRTC's sector-specific role and regulatory framework, and the general
       competition law and institutions.

181.   The Competition Act does not create a regulator that can guide the
       telecommunications industry into a competitive market and achieve the
       other objectives of telecommunications policy outlined in the
       Telecommunications Act – it just creates competition laws and a
       mechanism to investigate complaints and bring cases before the
       Competition Bureau or the courts. As discussed above, the Competition
       Act assumes a competitive market and penalizes parties whose conduct
       substantially lessens competition. This is not the immediate problem in
       the telecommunications sector, where a century-old monopoly and other
       barriers to entry must be overcome in order to establish a sustainable
       competitive environment. The Competition Act is not designed to achieve
       this purpose and it would, in Rogers‘ submission, be inappropriate and
       impractical to try to apply a pure competition law model to the
       telecommunications industry.


       C.3    Taking into account the experience of other jurisdictions, what
              is the best regulatory framework for the application of
              competition law principles to the telecommunications sector?

182.   In Rogers‘ view the ultimate goal should be to use the CRTC‘s expertise
       and industry-specific knowledge, in situations where it is required, such as
                                         51


       where there are insufficient market forces or where there are other public
       policy imperatives (such as interconnection, public safety or social
       requirements), and to let the laws of general application – including the
       Competition Act –apply where competitive forces exist and are sustainable
       and no party possesses significant market power. In other words, when
       the CRTC forbears from rate regulation, it should be made clear that the
       Competition Act then applies to pricing issues or to whatever other issues
       the CRTC has forborne from regulating.

183.   As indicated in response to C.2, Rogers is unaware of any jurisdiction that
       has abandoned sector-specific regulation. However, several are making
       more efficient use of competition law authorities to assist them in making
       decisions on competition-related issues, such as market definition and the
       presence or abuse of significant market powers. Rogers believes that this
       combining of expertise is more productive than trying to redefine the
       CRTC‘s jurisdiction on issues such as forbearance.

184.   Consideration should therefore be given to expanding the role of the
       Commissioner of Competition in competition-related issues before the
       CRTC, either by lending Competition Bureau staff to the CRTC in
       connection with such proceedings, or allowing the CRTC to consult with
       the Commissioner of Competition during the deliberation process, and
       sharing the record of the proceeding with the Commissioner and her staff.
       In this way, more efficient use could be made of the Bureau‘s and the
       CRTC‘s expertise in these type of hybrid cases.

185.   While this proposal is not identical to any others that exist in other
       countries, it adopts some of the attributes of the German, U.S., U.K. and
       Australian models, all of which involve various degrees of consultations
       between their anti-trust and telecommunications authorities, to the
       Canadian environment.


       C.4    How should policy-making powers be distributed among
              federal government institutions?

186.   As discussed in C-1 above, the CRTC‘s policy making role is largely
       confined to interpreting and applying the policy objectives outlined in the
       Telecommunications Act. Rogers is not proposing to change that role and
       we believe that it is the correct role for the CRTC. Where the guidance
       provided by the policy objectives is insufficient, the CRTC has the ability to
       extrapolate using the existing policy framework. At the same time, the
       Governor in Council has checks and balances over the CRTC, with its
       authority to issue policy directions and to review and vary decisions.
       However, as noted previously, the Governor in Council has not issued a
       policy direction to the CRTC since the Telecommunications Act was
                                       52


       enacted in 1993. In our view, twelve years is a considerable amount of
       time for the CRTC to operate in a rapidly changing telecommunications
       environment without policy direction from the federal Government. As
       discussed in C.7 below, we believe that exercising the power of direction
       to guide the CRTC on policy issues is preferable to reviewing CRTC
       decisions based on changes in policy that have not been articulated in
       advance by the Government.

187.   Within the radiocommunications sector, Industry Canada has become
       much more transparent in its policy development. It now publishes
       position papers, has public consultations and produces well-defined
       policies for the industry. Due to the statutory framework, and Industry
       Canada‘s administrative nature, it can develop policies on an on-going
       basis and does not have to wait for a change in legislation.


       C.5   Should steps be taken to make Canadian telecommunications
             policy more explicit, transparent and accessible? If so, how?
             Alternatively, is it better to retain the flexible and ad hoc
             policy-making mechanisms currently in place?

188.   In general, Rogers does not see a need to change the current flexible and
       ad-hoc policy-making process. The broad principles do not need to be
       more explicit. Broad policy statements enable the CRTC to interpret
       policy as circumstances change and to reprioritize policy objectives that
       may become less relevant over time.

189.   As the Panel is aware, the telecommunications industry is one of the
       fastest developing sectors of the Canadian economy. It is also one of the
       most strategically important sectors. As discussed below in C.7, perhaps
       consideration should therefore be given to more frequent policy reviews by
       the Governor in Council – not to micro-manage the telecommunications
       industry – but rather to make sure that policies that are being applied by
       the CRTC keep up with Government policy objectives for the sector.


       C.6   Should the federal Cabinet retain both the power to issue
             policy directions to the CRTC and the power to review CRTC
             decisions? Should changes be made to either power?

190.   The Governor in Council should continue to have the power to issue policy
       directions to the CRTC and the power to review CRTC decisions. The
       Cabinet review process serves as an important check on the CRTC‘s
       discretion to apply the broad policy objectives in the legislation. As
       discussed earlier, the Governor in Council‘s power to issue directions
                                        53


       provides a means to update government policy without introducing new
       legislation.


       C.7   Should the government take measures to encourage
             independent telecommunications policy research and analysis
             in Canada? If so, what measures would be appropriate?

191.   The government should consider convening a national policy forum every
       five years where papers could be commissioned from policy institutions,
       individuals and technologists. Such a forum could provide a valuable
       source of debate on telecom policy involving government, NGOs, industry
       and academics. The forum could be structured with a government
       position paper or other policy framework document that would guide the
       discussion. It could become a Canadian showcase for public policy
       development and provide the Government of Canada with outstanding
       input into its policy development process.


       C.8   Should there be mandatory periodic reviews of Canadian
             telecommunications policy and regulation? If so, by whom,
             how often and how should such reviews be conducted?

192.   Rogers believes that periodic telecom policy reviews would serve the
       country well. They would provide the government with the type of input
       needed to decide on whether legislative changes were required or
       whether new policy directions should be issued. Such proposals could
       then be vetted through the relevant Parliamentary committee. A five year
       time frame would be appropriate for the telecommunications industry.


       C.9   Should there be any other changes to the telecommunications
             policy-making process in Canada?

193.   As noted, Rogers is of the view that the federal government needs to
       become more involved in the development of the policy framework for
       Canada‘s telecommunications industry. To this end, the government
       should convene policy forums and should consider issuing policy
       directions to the CRTC, as required from time to time, to ensure that the
       policy framework in which the Commission operates is consistent with
       government policy and fulfills the strategic role that telecommunications
       plays in the Canadian economy.


       C.10 How should rule-making powers for the telecommunications
            sector be distributed among federal government institutions?
                                        54



194.   It does not necessarily matter that separate government bodies or
       institutions are involved in rulemaking, as long as the various entities are
       operating pursuant to a common policy framework. Parliament is
       ultimately responsible for creating the rules and policies that govern the
       telecommunications sector. It does so by outlining the overriding policy
       objectives in the Telecommunications Act and by establishing the legal
       framework under which the CRTC and telecommunications carriers
       operate. The CRTC is able to create rules that are consistent with its
       enabling statute and the policy framework contained therein. The courts
       provide checks and balances on the CRTC‘s jurisdiction and on legal
       issues, and the Governor in Council provides checks and balances on
       policy issues through the petition process. In addition, the Governor in
       Council can provide the CRTC with broad policy direction – but even these
       directions must be placed before Parliament for a period of forty days,
       thereby providing Parliament with a check on the Governor in Council‘s
       authority.

195.   There appear to be some instances under the current legislation where
       the objectives in the legislation do not have to be followed:

       (1)   review and vary by Governor in Council under section 12 does not
             appear to be tied to the policy objectives in section 7 in the same
             way that section 47(1) binds the CRTC to render its decisions in
             accordance with those objectives;

       (2)   issuance of radio licences by the Minister (s. 1.1 of Radiocom Act
             gives the Minister a discretion to follow the policy objectives in s. 7
             of Telecom Act).

196.   By authorizing certain decisions to be made in a manner that could be
       inconsistent with the policy objectives of the Telecommunications Act,
       there is a possibility that the various government institutions that are
       empowered to regulate the telecommunications industry in Canada could
       implement rules that are conflicting. In our view, this possibility is not
       good public policy and should be amended to ensure that each institution
       must operate in accordance with the same policy framework.


       C.11 Should there be any other changes to telecommunications rule
            making in Canada?

197.   Another change that could be implemented would be to require the CRTC
       to outline its proposed rules up-front and seek public comment on whether
       those preliminary views should be implemented. This Notice of Proposed
       Rule Making process would be similar to the approach that has been
                                        55


       adopted in the United States by the FCC and has to some extent been
       employed by Industry Canada with some degree of success. The CRTC
       has occasionally adopted this kind of notice of proposed rule making
       technique for some of its recent rule making proceedings, such as the
       VoIP and price floor proceedings. Rogers believes strongly that Notices of
       Proposed Rulemaking allow parties to provide better evidence and
       argument and result in better decisions. The CRTC, telecommunications
       service providers and the public would benefit this rule making procedure
       were mandatory.


       C.12 Are there problems with the current authorization regime? If
            so, please provide suggestions on whether and how it would
            be possible to reduce the number and type of authorizations
            required to enter telecommunications businesses and expand
            telecommunications infrastructure.

198.   In general, it is Rogers‘ submission that the current authorization and
       licensing processes have not been a major barrier to entry into the
       telecommunications business, nor have they significantly inhibited the
       development of competition.

199.   There are, however, some areas where further improvements are
       warranted. Most importantly, is the authorization regime in relation to
       obtaining CLEC status. Entering into arrangements for interconnection
       with ILECs has proven to be a slow and arduous process. The ILECs will
       often misinterpret or refuse to implement CRTC rulings, which will then
       require the CLEC to obtain CRTC assistance in gaining interconnection –
       a process that takes several months. Also, the ILECs often establish a
       number of internal processes that are designed to delay CLEC
       authorization. An example of this is where the ILEC assigns only a limited
       (and insufficient) number of personnel to interconnect with each proposed
       CLEC, thereby delaying the time frame for interconnection. We have also
       encountered the situation where an ILEC has refused to start construction
       or even order equipment for their build until all municipal approvals have
       been received for our build. The time it takes to order the equipment
       alone can add as much as eight weeks of time for each point of
       interconnection. This has proven to be a cumbersome and time-
       consuming process that could be shortened by the establishment of
       specific timeframes for implementing interconnection requests.

200.   Another example of an authorization process that requires improvement
       involves spectrum licensing. While the fact that spectrum licensing is
       carried out by Industry Canada is not a problem per se, there needs to be
       more coordination with the CRTC regarding ownership policy and
       compliance. We should not have to go all through the ownership
                                         56


       compliance rules every time another licence is acquired. Compliance with
       one regulatory approval process should constitute compliance with the
       other, since the same ownership rules apply under both the
       Telecommunications Act and Radiocommunication Act. This is an
       unnecessary bureaucratic bottleneck.

201.   BITS licences seem to be unnecessary. A person obtains the licence as
       of right, without a fee and the licensing process appears to be a waste of
       time.

202.   As for the other CRTC authorizations, these are largely automatic,
       provided that the service provider complies with the CRTC‘s criteria. In
       the current regulatory environment, most of the CRTC‘s regimes are
       registration regimes. The one major exception to this is the CLEC regime
       which requires CRTC approval of compliance with pre-established
       objective criteria. The difficulties we have encountered with this regime
       are highlighted above.

203.   The only other operational requirements that have proven to be barriers to
       competition are access to MDUs, support structures and rights of way.
       While strictly speaking these are not part of the ―authorization regime‖,
       they do represent a key area of concern since they are often the last
       bottleneck for competition. The ILECs continue to have a ―leg up‖ on new
       competitors because they have installed facilities in most buildings when
       they were first constructed. The CRTC‘s current regime for MDU access
       is not very enforceable. Moreover, there are serious jurisdictional and
       enforcement issues that need to be worked out between the Canadian
       and Provincial governments in order to ensure that CLECs and other
       telecommunication service providers are authorized to install their facilities
       in MDUs. This is an area that needs serious consideration.


       C.13 Taking into account the status of Bill C-37 (which would give
            the CRTC power to levy fines or "administrative monetary
            penalties"), please comment on the need to change the
            enforcement powers of Canada's telecommunications
            regulators, the CRTC and Industry Canada.

204.   The proposal in Bill C-37 is long overdue. Virtually every other country
       with comparable regimes to Canada‘s grants the sector-specific regulator
       powers to impose monetary fines and other penalties for violation of the
       governing legislation or regulatory regime. Rogers strongly recommends
       that the Panel consider the practices of the FCC and OfCom in this regard
       and consider extending the fining powers in Bill C-37 to apply more
       generally to enforcement of all aspects of the regulatory regime.
                                          57

205.   Generally speaking, the criminal sanctions in the Telecommunications Act
       have not proven to be very practical for enforcement – although they may
       have some deterrent effect. A fining power would, on the other hand,
       give the CRTC more clout in enforcing its regime. At the moment, there is
       a large gap between threatening to register an order at the Federal Court
       and initiating criminal prosecutions. There is no middle ground for
       enforcement. Rogers notes that all decisions of the CRTC, including fines
       and penalties would be subject to review by the Federal Court of Appeal
       for errors of law and jurisdiction. As such, there is little or no risk that the
       enforcement power will be used arbitrarily or abusively.

206.   In addition to fines and penalties, we encourage the Panel to include a
       recommendation that the CRTC be empowered to make rate adjustments
       retroactively. Currently, the whole issue of ―enforcement‖ is discussed
       generally in the context of fines and administrative monetary penalties.
       However, competition has often suffered not only because violations of
       competitive safeguards go unpunished, but because competitors who are
       harmed by such behaviour have no real recourse. We are not advocating
       that the CRTC be empowered to award ―damages‖ (as discussed below).
       However, there have been several occasions in which the Commission
       has found that dominant carriers were charging excessive tariffs for
       services provided to competitors but was powerless to order that previous
       excesses be disgorged or reimbursed to competitors. As a result, there
       has been a significant transfer of wealth from competitors‘ investors to the
       ILECs‘ investors over the years as a result of excessive charges that not
       only took too long to correct but were never corrected monetarily.


       C.14 Should the enforcement function be separated from the rule-
            making function (e.g. assigned to different institutions - or to
            independent offices within the same institutions)?

207.   In Rogers‘ view, it is important that we do not create too many
       bureaucratic silos around enforcement. The CRTC is the appropriate
       body to implement and enforce telecommunications policy and there is no
       need to parcel enforcement out to another institution. The CRTC already
       makes decisions that have significant financial implications – e.g. cutting
       off service, denial of carrier status, changing the contribution regime, etc.
       Granting a fining power to the Commission would not, therefore, be a
       departure from the important economic implications of its current powers.
       Moreover, as noted above, any decisions or order relating to fines would
       be subject to appeal to the Federal Court of Appeal on questions of law or
       jurisdiction.
                                        58


       C.15 Should there be any other changes to the enforcement regime
            for telecommunications rules? If so, what should they be?

208.   The foregoing recommendations provide a very good starting point to
       reforming the CRTC‘s enforcement powers. Over time, experience will
       indicate whether other improvements are desirable.


       C.16 Should a separate institution or an independent office within
            an institution be established for dispute resolution and, if so,
            what should be the extent of its powers?

209.   In general, Rogers is of the view that creating more administrative layers
       within the CRTC will not necessarily result in better regulation or better
       enforcement. There is nothing that a separate institution or an
       independent office within the CRTC can do for dispute resolution that can
       not be achieved using the resources of the CRTC, as presently
       constituted. One of the advantages of having a sector-specific regulator is
       its expertise in the area. This could be lost if a third party deals with
       disputes.


       C.17 If the CRTC retains its dispute resolution powers, should it be
            granted the power to award damages? Alternatively, should
            the court's powers to award damages in telecommunications
            disputes be increased (e.g. punitive damages) to ensure
            litigation can be an effective alternative to detailed regulation?

210.   The Courts, not the CRTC, are the appropriate venue to seek a remedy of
       damages. However, it would appear that the Position Paper issued by the
       Panel misstates the law in respect of section 72 of the
       Telecommunications Act. One does not need a CRTC ruling to proceed
       under section 72 of the Telecommunications Act. The few Court
       judgements that have opined on section 72 appear to be confused about
       the application of that section and have failed to adopt a plain and literal
       interpretation of the provision. At the present time, the Courts sometime
       defer to CRTC jurisdiction on cases involving damage claims as the forum
       conveniens notwithstanding that the CRTC lacks the authority under the
       Telecommunications Act to grant damage awards. Section 72 needs to be
       amended to clarify that the Courts have primary jurisdiction in claims for
       damages.

211.   As for the question of whether the Courts‘ powers to award damages
       should be increased ―to ensure litigation can be an effective alternative to
       detailed regulation‖, Rogers believes that this would not an effective
       means to ensure compliance with CRTC regulation. Civil litigation is not a
                                          59


       substitute for sector-specific regulation and is only one recourse available
       to aggrieved parties (including customers and competitors). Except in
       those cases where telecommunication policy and regulations are not in
       issue, Courts lack the expertise that is needed to properly resolve disputes
       involving telecommunications service providers. Judges are not equipped
       to fully understand the policy and regulatory implications of their decisions
       and the impact that they will have on the growth and development of
       telecommunications in Canada. In short, the Courts are not a suitable
       replacement for the detailed sector-specific regulation that the CRTC is
       mandated to provide. A far better instrument to discipline offenders would
       be the addition of a fining power to the CRTC‘s enforcement powers, as
       discussed above.


       C.18 What measures should be taken to clarify the jurisdiction of
            the various institutions with dispute resolution powers in the
            area of telecommunications?

212.   As noted above, Rogers believes that there is a need to clarify the
       overlapping jurisdiction between the CRTC and the Competition Bureau,
       particularly in those instances where a service has been forborne from
       regulation. The CRTC needs to consistently state in its orders the precise
       matters over which it will retain jurisdiction and those over which it will not.
       For example, if it retains jurisdiction under section 27(2) in respect of inter-
       carrier disputes, it should make clear that it will not exercise jurisdiction
       over retail rate discrimination under that section.

213.   In addition, as suggested above, section 72 of the Act should be amended
       to clarify that the Courts are the primary forum in civil litigation claims for
       damages.


       C.19 What measures should be taken to simplify and expedite the
            process for dispute resolution at the CRTC or at Industry
            Canada?

214.   In 2004, the CRTC announced new expedited dispute resolution
       procedures which Rogers believes significantly improve the ability of the
       CRTC to respond in a timely manner to inter-parties disputes. Rogers
       believes that the Commission will continue to improve its processes over
       time.


       C.20 Should the current dispute resolution regime for
            telecommunications matters be modified in any other way? If
            so, how?
                                        60



215.   Rogers believes that the current dispute resolution regime established by
       the CRTC is effective and efficient. We are not proposing that any
       additional changes be made to that regime.


       C.21 Should any changes be made to the appeal and review
            mechanisms for CRTC decisions or for Industry Canada
            regulatory decisions?

216.   Rogers does not currently feel a pressing need to change the appeal and
       review mechanisms for CRTC decisions. Consideration should be given
       to instituting similar appeal and review and vary sections in the
       Radiocommunication Act to govern Industry Canada.


       C.22 Please provide comments on the nature and extent of
            convergence as a technological and industry trend and
            propose any changes to Canadian telecommunications
            regulatory framework that should be made to ensure this
            framework can cope adequately with technological changes.

217.   Convergence is a long-term industry trend and it has been happening for
       many years. We are witnessing the essence of convergence today: each
       network appears capable of carrying any type of service – voice, data or
       video – and each service provider can potentially deliver any services to a
       customer. Indeed, the ―bundle‖ phenomenon is the epitome of
       convergence.

218.   All these developments have taken place under the current regulatory
       framework and Rogers is of the view that convergence will continue to
       manifest itself going forward. The reforms recommended in this review
       will only serve to further facilitate convergence.


       C.23 Please comment on any specific legislative or regulatory
            measures that would enhance the ability of the federal
            government policy makers and regulators to address the
            issues arising from convergence.

219.   Rogers would propose one change that we believe would enhance the
       ability of the CRTC to address issues arising from convergence. That
       measure is for the CRTC telecommunications and broadcasting staffs to
       interact on a more regular basis. It is our experience that these two sets
       of CRTC staff are largely unaware of each other's activities. In our view,
       there needs to be more coordination between the two groups and an effort
                                         61


       should be made to ensure that they are operating from a common set of
       principles. Perhaps the Convergence Hub could be reinstated to bring
       these groups together.

220.   This lack of interaction is, we believe, reflected in some of the decisions
       that are being issued by the CRTC. For example, while the CRTC is very
       concerned about a level playing field between ILECs and competitors that
       have just started to compete, they continue to have a very unlevel playing
       field between cable and DTH distributors even though DTH distributors
       have 25% of the BDU market in Canada. Those DTH distributors are
       authorized to carry distant (timeshifted) signals at no incremental cost to
       the undertaking. Cable has to pay 50 cents per sub per month. Rogers
       Digital Cable needs to offer these services to all subscribers in order to be
       competitive. As a result of the policy adopted by the CRTC under the
       Broadcasting Act, cable BDUs are forced to spend millions of dollars for
       something that our competitors get for free. This example highlights the
       fact that the two branches of the CRTC, telecom and broadcasting,
       operate under different perceptions of convergence.


       C.24 What steps, if any, should be taken to improve the efficiency
            and timeliness of CRTC and Industry Canada regulatory
            processes? Please identify specific measures which should
            apply to each type of regulatory process, such as tariff
            applications, carrier disputes, spectrum-related regulation,
            customer complaints, etc.

221.   The CRTC recently announced new expedited dispute resolution
       procedures which Rogers believes represent a significant step forward.
       Rogers believes that the Commission will continue to improve its
       processes over time.

222.   As for Industry Canada, the one aspect of its regulatory process that
       should be improved is in its review of ownership matters. The time that it
       takes to review the ownership of well-known Canadian carriers, including
       those who have multiple telecommunications and broadcasting interests,
       is far too long, and appears to be undertaken anew every time a new
       licence is issued.


       C.25 Should the issue of regulatory efficiency and timeliness be left
            to the internal management of the regulators, or should
            specific rules be set out in telecom policy or laws? If the latter,
            what should those rules be?
                                         62


223.   While the CRTC‘s decisions had been fraught with delays in the past,
       Rogers notes that the Commission appears to have now committed to
       completing and rendering its determinations in a timely manner. This
       indicates that regulatory efficiency and timeliness can be left to the internal
       management of the regulators. This issue should, however, be reviewed
       from time to time.


       C.26 Should structural or operation changes be made in the CRTC
            to improve the effectiveness and efficiency of its regulatory
            process? For example, would a reduction in the number of
            Commissioners at the CRTC help to streamline regulatory
            decision making? Should there be changes in the appointment
            process for CRTC Commissioners? Should the CRTC's policy-
            and rule-making functions be separated from its enforcement
            and dispute resolution functions?

224.   We are aware that other telecommunications regulators in other
       jurisdictions are able to carry out their mandates with far fewer
       Commissioners than the CRTC. The FCC, for example is able to get by
       with 5 Commissioners. We believe that reducing the number of
       Commissioners might help to streamline the regulatory process and make
       it more efficient. While the proposal to separate the internal rule-making
       and dispute resolution functions of the CRTC, such as is done in the U.S.
       with respect to the FCC, has some appeal, our one concern is that the two
       groups could become disjoined in the same way that the
       telecommunications and broadcasting branches of the CRTC have over
       the past several years. This could lead to the situation where different
       groups within the CRTC would have different approaches to resolving
       policy issues, creating an inconsistent regulatory framework.


       C.27 Would the outsourcing of specific tasks by the CRTC (e.g.
            alternative dispute resolution) or Industry Canada (e.g.
            spectrum monitoring and management) improve efficiency? If
            so, which tasks should be outsourced? How would the
            outsourced tasks be funded?

225.   Rogers does not see any merit in outsourcing the tasks that have been
       assigned to the CRTC and Industry Canada to third parties. While
       outsourcing may work for pure administrative functions such as
       administration of the contribution fund or a ―do not call‖ database, it is
       likely to be problematic in cases involving the balancing of public policy
       objectives and conflicting private and public interests as required under
       section 7 of the Telecommunications Act.
                                          63


226.   Moreover, as stated in C19 above, one of the advantages of having a
       sector-specific regulator is its expertise in the area. This could be lost if
       aspects of the job are delegated to a third party. In any event, Rogers
       does not think that the CRTC currently suffers a level of inefficiency that
       requires outsourcing to remedy.


       C.28 Do the current circumstances of telecommunications
            regulation warrant different approaches to employing human
            resources to more effectively regulate the industry? Should
            the CRTC budget be increased? Should it be treated like a
            special operating agency, and thus separate from Public
            Service Commission of Canada policies?

227.   As noted above, the Panel may want to examine the number of
       Commissioners that are appointed to the CRTC. The Panel may also
       want to examine whether the CRTC is adequately staffed, both in terms of
       head count and in terms of the skills and qualifications available for CRTC
       staff to adequately discharge their duties. The current method of staffing
       the CRTC may not necessarily be the appropriate one for an agency that
       is saddled with keeping pace with and often out-thinking a fast-paced
       sector like telecommunications. For example, attracting quality staff may
       require better compensation and private sector type of incentives, and
       therefore the Panel should examine whether CRTC staffing should be
       extracted from the Public Service Commission rules and policies.

228.   The CRTC is financed by the telecommunications industry – but is
       restricted on spending by the Financial Services Act and the public service
       salary guidelines. The CRTC has lost a lot of good people to the private
       sector because of uncompetitive salaries. Rogers is of the view that the
       CRTC needs more flexibility (like Ofcom) to set competitive salaries and
       retain good people. It also needs more flexibility to manage its human
       resources and renew the skills sets available at the Commission through
       retrenchment unencumbered by bureaucratic considerations.


       C.29 Do the CRTC and Industry Canada require further legal powers
            to regulate more effectively? If so, what specific powers
            should be granted?

229.   If all the foregoing recommendations are implemented the regulatory
       framework will be significantly advanced. The need for further
       improvements may need to be re-evaluated in the future, in the context of
       regularly scheduled policy and legislative reviews.
                                                  64


       D.1       What is the current status of access to broadband and
                 advanced ICT in Canada? Is this situation likely to improve or
                 deteriorate with the introduction of new technologies?
                 Specifically what emerging technologies will increase or
                 decrease the gap experienced by unserved and underserved
                 communities, and in what timeframe?

230.   Canada is currently a world leader in access to broadband and advanced
       ICT. The most recent OECD report on broadband penetration released on
       May 24, 2005 shows Canada with the fifth highest penetration of
       broadband in the world.

       OECD Key ICT indicators
       4a. Broadband subscribers per 100 inhabitants in OECD countries, December 2004


                                       DSL        Cable Modem      Other Platforms      Total
       Korea                              14.1               8.5                 2.2            24.9
       Netherlands                         11.6              7.4                 0.0            19.0
       Denmark                             11.8              5.5                 1.6            18.8
       Iceland                             17.4              0.2                 0.7            18.3
       Canada                               8.6              9.1                 0.1            17.8
       Switzerland                         10.8              6.5                 0.0            17.3
       Belgium                              9.6              6.0                 0.0            15.6
       Japan                               10.4              2.3                 2.3            15.0
       Finland                             11.2              2.2                 1.6            15.0
       Norway                              12.3              2.0                 0.5            14.9
       Sweden                               9.5              2.6                 2.5            14.5
       United States                        4.7              7.2                 0.9            12.8
       France                               9.9              0.7                 0.0            10.6
       United Kingdom                       7.1              3.4                 0.0            10.5
       Austria                              5.5              4.7                 0.1            10.2
       OECD                                 6.2              3.4                 0.6            10.2


       Note: Nations with penetration levels below the OECD average are not presented here.

231.   Given Canada‘s vast geography this placing is a significant
       accomplishment.

232.   The CRTC 2003 and 2004 Competition Reports provide an excellent
       summary of the status of access to broadband. Rogers will not repeat the
       extensive summaries found in section 5 of these documents but a few
       highlights are useful to address the question. The 2004 Report provides
       statistics as of the end of 2003. Page 87 of the Report reveals:

                Broadband service is available to approximately 86% of Canadian
                 households.
                Broadband service is available to 95% of the households in urban
                 centres and approximately 63% of the households in rural centres.
                                        65


233.   Advances in the past year and a half will have increased these availability
       numbers. While Canada is already in an enviable position, this situation
       will improve further with the recent development of enhanced satellite-
       based broadband capability through Telesat and its Anik F2 satellite that is
       the world‘s first to commercialize the Ka-band. The emergence of
       effective two-way satellite provision of broadband has decreased the gap
       previously experienced in remote locations unserved by fibre backbone
       facilities and larger communities in Canada. Given the vast geographic
       size of Canada, it is apparent that satellite provision of high-speed
       functionality will be the most economic means of serving many
       communities in remote locations. It is uneconomic to deploy fibre
       connection across the hundreds and, in many cases, thousands of miles
       required to connect many remote communities to Internet backbones.
       However, this situation is now being redressed by the advances in satellite
       technology recently been put into the market.

234.   Imminent expanded deployment of the Inukshuk fixed wireless network in
       the 2500MHz range will lead to further improvement in access to
       broadband. Inukshuk has been an early leader in deploying broadband
       access to remote locations. For example, Inukshuk first launched
       commercial broadband wireless services at the beginning of 2004.
       Working with its partner SSI Micro, the first Canadian launch of new
       multipoint communication system (―MCS‖) technology was in February
       2004 in Yellowknife, NWT. Shortly thereafter, Microcell Solutions Inc.
       launched iFido high speed Internet service in Richmond, B.C. and
       Cumberland Ontario, a rural location outside Ottawa. Since these
       launches, the high-speed wireless network build-out has continued at an
       aggressive pace in both northern and southern Canada. There are
       currently more than 40 communities in Northern Quebec and the Nunavut
       Territory operational via the Inukshuk MCS spectrum and utilizing the
       same technology as southern Canada, and many more are planned in
       2005. Rogers is very excited about the prospects of broadband fixed
       wireless service throughout Canada and looks forward to aggressively
       rolling out this functionality across the country where it has access to
       spectrum.


       D.2    Is government or regulatory intervention required to expand
             Canada's telecommunications network connectivity - or
             should this be left to the market? Given the level of
             competition in the broadband access market, as well as the
             fact that new access and IP technologies are reducing costs
             for consumers and improving the business case for service
             providers, is government or regulatory intervention still
             required?
                                         66


235.   In Rogers‘ view, given the extreme level of competition in the broadband
       access market and the deployment of new technologies, government or
       regulatory intervention is not warranted, except in limited cases. The
       competitive market has been very effective in delivering broadband
       capability to Canadians. Nevertheless, there are markets in Canada
       which due to their remote location and small size will never be economic
       from the perspective of a private enterprise through wireline provision. In
       these cases, government or regulatory intervention will be required in
       order to achieve the federal and provincial governments‘ objective of
       making broadband networks and services available in every Canadian
       community. The challenge of this objective is that the 14% of Canadian
       households without broadband availability at the end of 2003 resided in
       approximately 3,000 communities out of the total 5,500 total communities
       in Canada. In other words, the remaining unserved population is very
       dispersed in a very large number of very small communities.

236.   As noted above, there are currently more than 40 communities in Northern
       Quebec, and the Nunavut Territory operational via the Inukshuk MCS
       spectrum. These communities were built in many cases with the co-
       operation of the Broadband for Rural and Northern Development (BRAND)
       Pilot Program, National Satellite Initiative (NSI) and local partners such as
       KRG (Kativik Regional Government) and SSI Micro and would not have
       been economically feasible without such support.

237.   New Ka-band satellite technology makes two-way, higher-speed access
       available today throughout Canada but the cost to consumers is high and
       the speed somewhat slower than terrestrial-based service. For example,
       Xplorenet is a distributor of Telesat‘s Ka-band technology. Xplorenet‘s
       website shows the company offering two packages of high-speed Internet
       service as follows:

                                          Package 1            Package 2

       Monthly Fee                        $59.99               $99.99
       Download Speed (up to)             512 Kbps             1Mbps
       Upload speed (up to)               128 Kbps             256Kbps
       Hardware Fee (suggested retail)    $699                 $999


       D.3     If government or regulatory intervention is warranted, why,
              and in what types of markets is it required? (e.g. what specific
              types of remote, rural, lower income, Aboriginal communities
              or communities within some proximity to urban centres that
              are currently still unserved). What types of social and
              economic benefits justify such methods?
                                         67


238.   As discussed in D1 & D2 above, new satellite technology provides
       ubiquitous broadband availability throughout Canada, albeit at speeds that
       are in the lower end of the high-speed range and at a higher cost than in
       large urban centers. Government or regulatory intervention will be
       necessary if governments wish to maintain their objective of broadband
       availability in every Canadian community at a cost to consumers that is
       closer to the rates offered in urban and with a similar range of speeds.
       Commercial enterprises will not provide the service at rates similar to
       urban centers because service would be uneconomic to many remote
       communities with small populations. Intervention will be required where a
       private enterprise business plan cannot justify the provision of service.
       The most uneconomic locations will require the most assistance.


       D.4     How effective have federal government initiatives been to date
              in improving access to broadband for communities,
              businesses, citizens, and public institutions?

239.   Federal government initiatives to date have been effective in improving
       access to broadband for communities, businesses, citizens and public
       institutions. The 2004 CRTC Competition Report indicates in section 5.6
       that investments made through the Broadband for Rural and Northern
       Development (BRAND) Pilot Program, initiated in September 2002, ―are
       expected to extend broadband access to approximately 880 rural,
       northern and First Nation communities by year-end 2005‖. Further
       complementary investments through the National Satellite Initiative (NSI)
       ―as well as provincial and territorial broadband initiatives, including private
       sector participation, should extend broadband access to an additional 700
       previously unserved communities by year-end 2005‖

240.   In summary, the Report estimates that over the 2002-2005 time period,
       government initiatives will result in some 1,580 communities having
       broadband availability that would not have existed in the absence of the
       programs. In this four year period, approximately 50% of the communities
       that the National Broadband Selection Committee estimated would not
       have broadband without government initiatives will have been connected.
       In many cases, the combination of private/public enterprise has been
       effective in leveraging private funds to service locations that otherwise
       would not be served.


       D.5     What specific policies and/or fiscal and/or regulatory
              measures are needed to provide affordable broadband access
              to all communities? Given the political challenges of obtaining
              government budget allocations for expansion of
              telecommunications network connectivity, what other
                                         68


              government or regulatory funding initiatives should be
              considered? For example, should there be a tax subsidy
              mechanism? An auctions-based mechanism? Should services
              be subsidized through the CRTC's contribution regime? If so,
              what would be the extent to which the mechanisms are applied
              and/or the appropriate level and conditions of subsidy?

241.   As discussed above, significant progress has been realized over the past
       four years in extending broadband availability through current funding
       initiatives. Rogers submits that government funding should come from
       general tax revenues and all service providers should have an equal
       opportunity to win the bids to provide facilities. As will be further discussed
       below, it is imperative that all service providers have open access to the
       government-subsidized facilities at rates that are reduced to reflect the
       contribution paid by governments. In other words, the private enterprise‘s
       rates for access for other service providers must recover only those costs
       incurred by the private enterprise – it is not entitled to set rates to recover
       the government‘s contribution nor make a return on this contribution.

242.   With regard to an auction-based mechanism, Rogers assumes this refers
       to implementing competitive bidding procedures to ensure that the lowest
       cost provider (and therefore the recipient of the smallest grant-in-aid
       contribution from government sources) would be responsible for
       constructing the necessary physical facilities. Rogers is supportive of this
       approach. As discussed above, Rogers submits that open third-party
       access for other potential broadband service providers to these facilities
       must be required at rates that reflect the financial contributions of the
       participating governments. We believe it is necessary to emphasize the
       importance of this issue given the very unfortunate experience that Rogers
       is suffering in New Brunswick.

243.   Aliant, Rogers‘ major competitor in New Brunswick, has received a
       massive $30 million subsidy from the federal and provincial governments
       in order to build broadband facilities in rural and remote areas. Rogers
       cannot construct a profitable business case to serve these locations.
       Although there was an RFP process prior to Aliant winning this large
       amount of money, Rogers does not believe that it had a fair opportunity to
       participate. The RFP called for proposals to build a broadband fibre optic
       network that would reach 100% of New Brunswick residents would provide
       for open access by other third party service providers and businesses in
       the province, would be subsidized through Industry Canada‘s Broadband
       for Rural and Northern Development (BRAND) program, and would not be
       eligible for any subsidy flowing from the province. The subsidy that was
       given to Aliant results in a broadband network that will serve 90% of the
       residents of New Brunswick, is wholly owned by Aliant, a for-profit
                                            69


          company, and was subsidized through Industry Canada‘s Strategic
          Infrastructure Fund and the province.

244.      In addition, the subsidies that were given to Aliant were not used to build a
          fibre optic network, but were instead used to upgrade Aliant‘s existing
          local access network. Where fibre optic transport facilities exist, Aliant
          insists on charging Rogers full tariff prices for access to its network even
          though it has received a 66% subsidy toward the cost of building the
          facilities. This is unacceptable and is leading to a situation where residents
          have no choice of suppliers in part as a result of government funding.
          Rogers understands that government policy is not to promote monopoly
          service to the benefit of one company but that is what has happened in
          New Brunswick.

245.      With regard to the CRTC‘s contribution regime, the level of contribution
          dollars has been calculated to recover the difference between revenues
          and costs in providing local telephone service in specifically–defined high-
          cost serving areas. Rogers does not support an expansion of the CRTC
          contribution regime in order to support broadband expansion. See also
          B.13.

246.      Rogers submits that currently there is one source of funding in addition to
          general tax revenues that can reasonably be used to support the
          extension of broadband services. ILEC deferral accounts were
          established in Telecom Decision CRTC 2002-34, Regulatory framework
          for the second price cap period (―Decision 2002-34‖) and Telecom
          Decision CRTC 2002-43, Implementation of price regulation for Télébec
          and TELUS Québec (―Decision 2002-43‖). The ILECs were directed to
          assign to their respective deferral accounts, in each year of the price cap
          period, an amount equal to any revenue reduction that would otherwise be
          required under the I-X constraint for the basket of residential local services
          in non-HCSAs. There has been an accumulation of substantial funds in
          the deferral accounts.

247.      The ongoing CRTC proceeding initiated by Public Notice PN 2004-1 is
          considering how best to dispose of the surplus amounts expected to
          accumulate in the ILEC deferral accounts. The following policy objectives,
          initially set out in Decisions 2002-34 and 2002-43, were provided as a
          guide16:

          a) to render reliable and affordable services of high quality, accessible to
             both urban and rural area customers;




16
     PN 2004-1, paragraph 21.
                                         70


       b) to balance the interests of the three main stakeholders in
          telecommunications markets, (i.e., customers, competitors and
          incumbent telephone companies);

       c) to foster facilities-based competition in Canadian telecommunications
          markets;

       d) to provide incumbents with incentives to increase efficiencies and to be
          more innovative; and

       e) to adopt regulatory approaches that impose the minimum regulatory
          burden compatible with the achievement of the previous four
          objectives.

248.   In this proceeding, Rogers has proposed that the monies in the deferral
       accounts be used to extend the availability of broadband to locations that
       would not be served by commercial service providers in the absence of
       financial assistance.

249.   At paragraph 3 of its June 10, 2005 submission, Rogers (under the name
       of its Fido division) stated:

       ―Consistent with our May 13 [, 2004] submission, Fido continues to advocate and
       recommend that the accumulated surpluses in the Incumbent Local Exchange
       Carrier (―ILEC‖) deferral accounts be dedicated to a competitively-neutral
       national subsidy program to promote the deployment of broadband Internet
       access services in unserved and under-served regions of Canada. Such a
       program could be modelled upon, and perhaps even operate in conjunction with,
       Industry Canada‘s well-respected Broadband for Rural and Northern
       Development (―BRAND‖) program and the National Satellite Initiative (―NSI‖).‖


       D.6    Should consideration be given to expanding the definition of
              universal service for regulatory purposes, to include specific
              broadband connectivity? If so, should other services be added
              to the definition of regulated universal services? What is "an
              appropriate level of access to modern telecommunications
              services" for all Canadians?

250.   Rogers submits that the definition of universal service for regulatory
       purposes should not be expended to include specific broadband
       connectivity. In this regard, it is important to review to what extent there
       exists a definition of universal service for regulatory purposes.

251.   ILECs presently have the following limited obligation to serve requirement
       as per Article 3.1 of their Terms of Service as approved by the CRTC:
                                           71



             3.1    The Company is not required to provide service to an applicant
                    where:
                   (a)   the Company would have to incur unusual expenses
                         which the applicant will not pay; for example, for securing
                         rights of way or for special construction;
                   (b)    the applicant owes amounts to the Company that are
                         past due other than as a guarantor; or
                   (c)   the applicant does not provide a reasonable deposit or
                         alternative required pursuant to these Terms.

252.   The Bell Canada Act separately imposes a limited duty to serve on Bell
       that is reflected in detail in Item 150 of Bell‘s General Tariff. In effect, Bell
       furnishes the first 165 metres of construction without the application of a
       construction charge. A construction charge applies for costs incurred
       thereafter.
253.   A Service Improvement Plan (SIP) was initiated for Bell and other ILECs in
       conjunction with the Second Price Cap regime. This plan subsidized the
       extension of local telephone service to high-cost locations up to $25,000
       per line with the customer contributing $1,000.
254.   In summary, currently there is no regulatory definition of ―mandatory‖
       universal service. New service will only be provided if the applicant is
       willing to pay the cost of constructing any necessary facilities beyond 165
       meters.
255.   The National Broadband Task Force report released in June 2001
       estimated that it would cost up to $4.6B to connect all homes and
       businesses in the defined communities with broadband capability. Given
       the large sum of money needed, Rogers does not believe that it would be
       a prudent use of resources to extend even the current limited ―universal
       service‖ local telephone obligations imposed on Bell by the Bell Canada
       Act to broadband service.
256.   Moreover, it should not be forgotten that through satellite functionality, all
       Canadians do have access to broadband service.


       D.7    If policy, fiscal or regulatory changes are required to achieve
              the goal of expanding the level of advanced access (e.g.
              broadband to every community), what is the net cost to
              achieve this goal (i.e. what is the difference between the
              expected costs and the revenues which would be expected to
              be generated from the services)?

257.   Rogers is not able to quantify this net cost. We note that the National
       Broadband Task Force (NBTF) in its 2001 Report identified a total cost of
       up to $4.6B to connect to every home and business. Since that time, over
       half of the communities identified as needing assistance have been
       connected to the Internet backbone at a minimum.
                                      72




       D.8   What should be the roles of the various stakeholders - the
             private sector, CRTC, federal and provincial governments,
             non-profit organizations, and communities themselves – in
             bridging Canada's broadband divide?

258.   Appendix G of the 2001 NBTG Report provides a good overview of the
       mechanics of expanding broadband access to underserved locations
       through the joint efforts of various stakeholders.


       D.9   If policy, fiscal or regulatory changes are required, in what
             time frame and in what manner should the government
             achieve this goal?

259.   As explained above, Rogers does not see a need to implement changes in
       policy, fiscal or regulatory regimes to achieve the objectives currently
       pursued by the various governments. Good progress is being made within
       the current framework and Rogers advocates staying the course with this
       framework.


       D.10 To what extent will the provision of an advanced
            telecommunications infrastructure drive the adoption of
            advanced information and communications services by
            Canadian consumers and businesses? Is there a role for
            government to play in the adoption of these services and
            technologies?

260.   The provision of an advanced telecommunications infrastructure is
       necessary to drive the adoption of advanced information and
       communications services however these services must be developed and
       made available over the infrastructure. Governments should be model
       users of advanced information and communications services and should
       also make their services available through the advanced information and
       communications infrastructure to the widest extent possible.


       E.1   What is the relationship between investment in ICT and
             productivity? In particular, in what industries does investment
             in ICT increase productivity? Under what circumstances does
             this occur? Can there be negative consequences for
             productivity as a result of increased investment in and reliance
             on ICT?
                                               73


261.    Investment in ICT does not always increase labour productivity, but it can
        as part of an innovative managerial scheme. To take an analogy, electric-
        powered factories, were less efficient than the water-powered factories
        which preceded them, and whose design they mimicked. Once factories
        were redesigned around the special characteristics of electric motors, on
        the other hand—small motors placed strategically throughout the factory—
        they showed appreciable efficiency gains, driving productivity to create an
        Industrial Revolution.17

262.    Similarly, the early introduction of computers in modern institutions yielded
        only Solow‘s ―productivity paradox‖—―you can see the computer age
        everywhere but in the productivity statistics‖. Though there were a
        number of arguments as to why this paradox subsisted, at least one factor
        was the failure to reorganize work in a way that to accommodates ICTs‘
        potential: ―firms can actually be worse off if they invest in computers
        without the new work systems ―, whereas ―organizations that utilized
        decentralized decision-making and have employees with greater levels of
        skill and education appear to invest more in information technology‖,
        yielding ―slightly higher returns on their IT investments.‖18 As a recent
        McKinsey study put it, ―IT does matter, but its ability to impact productivity
        depends on how it is deployed.‖19

263.    It is not the role of government regulation to dictate how firms deploy
        telecom services or develop innovative work processes around them: that
        can arise only through organizational excellence and experimentation in
        the marketplace. Experimentation in the marketplace depends, however,
        on a competitive telecom services sector which assembles ICTs into
        diverse and innovative end-user packages. Where incumbent market
        power is deployed in ways that frustrate market entry, the productivity of
        ICT investment is therefore stifled.


        E.2     Does the relationship between ICT and productivity justify a
                Government policy supporting increased ICT investment? If
                so, what government measures would be appropriate?

264.    The relationship between ICT and productivity does justify government
        policies supporting increased ICT investment. For example, the
        communications sector is seen by many levels of government as an
        attractive target for special taxes, levies and fees. These taxes and
17
   Paul David, ―The Dynamo and the Computer: A Historical Perspective on the Modern
Productivity Paradox‖ (1990) 1 American Economic Review Papers and Proceedings 355.
18
   Erik Brynjolfsson and Lrin M. Hitt, ―Beyond the Productivity Paradox: Computers are the
Catalyst for Bigger Changes‖ (1998) Communications of the ACM, online:
<http://grace.wharton.upenn.edu/~lhitt/bpp.pdf>.
19
   ―Does IT Improve Performance?‖ Online:
<http://www.mckinseyquarterly.com/newsletters/chartfocus/2005_06.htm>.
                                       74


       charges can only decrease the efficiency and effectiveness of the
       telecommunications sector and its ability to deliver new and innovative
       ICT. Governments at all levels should avoid policies and measures which
       single out the telecommunications sector for taxes, charges and fees.


       E.3   Are Canadian businesses and governments under-investing in
             ICT? On what basis can the Canadian level of ICT investment
             be assessed to determine if it is appropriate? Is ICT
             investment by the United States the appropriate comparison
             point? If not, which jurisdictions should Canada use as a
             benchmark (e.g., European Union, G7, OECD)?

 265. Rogers submits that investment by the United States is the appropriate
      comparison point. As our closest neighbor and largest trading partner, the
      United States has a similar workforce, geography and economy to
      Canada. Accordingly, it provides a natural benchmark to use as a
      comparison point.


       E.4   Is Canada 'under-investing' in telecommunications or are other
             countries just 'over-investing'?

266.   In order to determine whether an appropriate level of investment has been
       made, it is useful to look at the services that are being delivered using
       those investments and quality and pricing associated with those services.
       Canada‘s residential broadband networks are superior to those of the
       United States, both in terms of penetration and price. The same can be
       said for our cable television and wireless networks. Local, long distance,
       private line, data and wireless services are all highly advanced in Canada,
       all available at reasonable rates and widely deployed. Accordingly, there
       is no indication that under-investment in telecommunications is causing
       any problems in the delivery of advanced and efficient telecommunications
       services to Canadians.


       E.5   How much impact have the foreign investment restrictions had
             on overall Canadian telecommunications investment?

267.   As the discussion above indicates, foreign investment restrictions have
       likely not had a large overall impact on the Canadian telecommunications
       sector to date. However, the situation may be different going forward and
       the federal government should consider whether the existing ban on
       foreign ownership of the communications sector remains appropriate.
                                        75


       E.6    Should the foreign investment restrictions be removed? What
              would be the implications of this for future
              telecommunications investment as well as ICT investment as a
              whole? What other effects would the removal of such
              restrictions have?

268.   Rogers believes that the foreign investment restrictions are an
       anachronism and that their removal will be beneficial for Canada.
       However, the federal government may want to ensure that there is no
       undue impact on jobs, head office locations and research and
       development in Canada.


       E.7    Would partial removal of the foreign investment restrictions
              (e.g., for new entrants only) address possible concerns about
              foreign control of most or all of Canadian
              telecommunications? Are there any additional measures that
              the Government could take to mitigate any undesirable
              effects?

269.   Rogers submits that it makes no sense to remove the restrictions for new
       entrants while not removing it for existing players. As noted above, the
       government may wish to impose licensing or other mechanisms to ensure
       that foreign owned telecommunications carriers do not remove jobs, head
       offices and research and development from Canada.


       E.8    Is Canadian business under investing in ICT? If so, what might
              be the reason for this and what measures could the Federal
              Government take to encourage greater levels of ICT
              investment?

270.   We can discuss our own experiences in investing in ICT. Over the last 10
       years, Rogers has made massive investments in our cable television,
       wireless, Internet and other networks. Investments in cable television
       alone have been $4.8 billion while investments in wireless networks have
       been $5.0 billion. In the case of cable television, this amounts to over
       $2,100 per subscriber, a sufficient investment to build an entire cable
       television network from scratch. In effect, our investments over the last 10
       years have completely rebuilt our cable television infrastructure. This level
       of investment has allowed Rogers to pioneer a number of new services,
       such as high speed Internet, digital cable, wireless data services such as
       Blackberry and 3G cellular service. The investments have also allowed us
       to expand our networks to serve more customers and to provide more
       services to existing customers. However, in some parts of Canada there
       are significant barriers to greater levels of ICT investment. One such area
                                        76


       is the province of New Brunswick. The cost of investing in New Brunswick
       is significantly higher than investments in other parts of Canada. The cost
       of investing in New Brunswick is so much higher because of the small
       population of this province relative to its large geography. There are large
       distances between small villages which makes the business case for
       interconnecting these villages with fibre optics and rebuilding the systems
       for two-way communication uneconomical. Layered on top of this is a
       utility tax of 2.25% of the net book value of Rogers‘ infrastructure that the
       province levies against all of Rogers‘ plant, and an annual Department of
       Transport right of way fee of a maximum of $2,500 per kilometre of linear
       plant that Rogers places on Level I and II highways. Although Rogers is
       proud of the huge rebuild efforts it is engaged in New Brunswick, more
       work remains to be done. Unless the burden of taxes and government
       fees is reduced in New Brunswick however, the business case for doing
       so is problematic.

271.   To further compound this problem, Aliant, Rogers‘ major competitor in
       New Brunswick received a massive $30 million subsidy from the federal
       and provincial governments in order to build the broadband facilities to
       rural and remote areas, which Rogers cannot construct a business case
       for. The history of this issue is described above at D.5


       E.11 What role, if any, should the Federal Government play as a
            model user of ICT? Assuming Federal Government has such a
            role, what measures should it take to improve the manner in
            which it uses ICT?

272.   The federal government should be a model user of ICT. It should ensure
       that all services that Canadians receive from the federal government
       should be available online.


       E.12 How could government procurement policies be better co-
            coordinated or otherwise changed to improve the
            competitiveness of our ICT research and development and
            manufacturing capacity?

       Government of Canada Procurement Reform

273.   The Government of Canada‘s procurement policies have been under
       review for over a year, and recently resulted in a procurement reform effort
       aimed at ensuring ―the Government of Canada gets the best value for the
       goods and services it purchases and to reduce costs.‖
                                       77


274.   Among other things, the Government proposes that this will be done by
       making the use of Standing Offers or some other appropriate procurement
       vehicle mandatory for certain commodities (including wireless voice and
       data services). In this way, the Government expects to ―obtain better
       prices through consolidation of requirements and increased competition
       amongst suppliers.‖

275.   Rogers supports the Government‘s objectives for procurement reform and
       the mandatory use of appropriate contracting vehicles for wireless voice
       and data services. However, Rogers has significant concerns with the
       Government‘s approach to date, which has involved moving toward long-
       term single-supplier contracts for multiple departments. In our view, this
       approach is threatening to seriously undermine the competitiveness of the
       wireless telecommunications sector in Canada.

       Concerns with Single-Supplier Approach

276.   In March 2004, the Government of Canada awarded a single-supplier
       contract for the provision of wireless voice and data services for nine
       Government Departments. Since that time, Public Works and
       Government Services Canada has expressed its intention to move forward
       with another single-supplier contract for upwards of thirty additional
       departments and agencies.

277.   Rogers does not believe that this approach is in the best interests of
       competition in the sector, the three wireless voice and data companies in
       Canada, or the Government of Canada.

       Inconsistent with Principle of Increased Competition

278.   As described above, the Government expects to receive better prices
       through increased competition amongst suppliers. Moving to single-
       supplier relationships that are competed once every six years is
       completely counterintuitive to this principle. A single-supplier approach
       removes competition for the duration of the contract, only requiring
       companies to compete for business during the RFP stage. Furthermore,
       as this approach is extended to all departments and agencies, the effect
       will be to create a monopoly for wireless voice and data services to the
       Government of Canada. Given the long-standing objective of the
       Government of Canada (through Industry Canada and the CRTC) to
       increase competition in a sector that is comprised of only three major
       players, it seems unreasonable to proceed with a procurement
       mechanism that has the exact opposite effect for five out of every six
       years.

       Significant Effect on Competitiveness of Sector
                                          78



279.   A single-supplier approach, when extended across the Government of
       Canada, will significantly curtail competitiveness in the wireless
       telecommunications sector in Canada and have a chilling effect on
       innovation. Given the volume of government wireless use, shutting two-
       thirds of the sector out of this market will have significant revenue (and
       consequent R&D) implications for two of the three companies. All of the
       companies in this sector have made significant investments in their
       networks, technology and service delivery processes over the years, in
       part, in response to requirements set from large institutional clients like
       Government. It is unlikely that companies will make these investments
       and similar efforts to improve the value proposition for the Government of
       Canada if they find themselves shut out of significant portions of the
       market for several years at a time.

       Benefits of a Multiple-Vendor Approach

280.   Rogers is confident that the Government of Canada can structure an RFP
       that is fair and open and meets the objectives of a solution that cuts costs,
       meets specific operating requirements, and provides flexible, responsive,
       up-to-date products and service packages. In Rogers‘ view, all these
       objectives can be met, simultaneously. With the right contracting vehicle,
       there will be no need to trade-off one set of objectives against another, to
       sacrifice optimal technical solutions, for example, to save money.

281.   Rogers believes that the best procurement mechanism is one that gives
       departments and users access to the best technology and services
       available, at the best prices over the life of the contract, not just at the time
       of the tender.

282.   A multiple-vendor approach, such as a Vendor of Record (VOR)
       agreement, allows the Government to select qualified bidders to provide
       the required technologies and services at ―guaranteed lowest price‖ rates.
       This procurement approach provides users and departments with the best
       and most diverse technology solutions available in the marketplace,
       allowing them to select products and services that meet their specific
       needs. The option of choice will drive significant cost savings and price
       certainty by requiring bidders to compete for business, within pre-defined
       parameters.

283.   This approach is entirely consistent with the Government‘s objective of
       increased competition for the sector, by qualifying multiple companies who
       continue to compete over the life of the contract, rather than once every
       six years. It helps maintain competitiveness and innovation in the sector
       as well, forcing companies to continually improve prices, invest in new
       technologies and service options and strive to meet the needs of large and
                                        79


       complex departments. This approach also can achieve equivalent or
       better price savings than the single-supplier model. All of the
       administrative savings can be realized by requiring successful bidders to
       meet ordering and billing specifications. The expected savings from
       volume guarantees can also be achieved by providing minimum volume
       guarantees to each bidder to secure preferential pricing.

284.   In summary, this more competitive approach will result in new and
       innovative service offerings and pricing decreases, thereby delivering real
       and ongoing cost savings to Government.

       Conclusion

285.   The Government of Canada‘s procurement policies have a dramatic
       impact on competitiveness and innovation in the wireless
       telecommunications sector in Canada. Moreover, the current direction
       being taken by the Government runs significant risks for the sector and
       should be reconsidered.


       E.13 What policies or regulatory changes should be adopted to
            improve the efficiency and competitiveness of Canadian ICT
            for the delivery of government, health, education and other
            public services?

286.   Rogers notes that around the world, a number of governments are
       investing in telecommunications facilities in order to provide publicly
       owned telecommunications services to their citizens. Rogers submits that,
       other than in remote unserved areas, this is an unnecessary and unhelpful
       practice. If a municipal government, for example, builds a wireless
       broadband network, it disrupts the normal competitive and market
       processes. How can a private sector broadband wireless provider
       compete with the unlimited coffers of a municipal government with taxation
       powers? History has not provided any examples that show that
       government-owned telecommunications service providers are more
       efficient than private sector providers. Quite the contrary; in most parts of
       the world, public sector telecommunications providers have been
       privatized precisely because they were less efficient and less progressive
       than their private sector counterparts. Government policy should not
       encourage the public ownership of telecommunications facilities.


       E.15 How can consumer concerns about privacy, network
            dependability, security and fraud be addressed to facilitate the
            adoption of ICT?
                                        80


287.   Rogers submits that Canadian privacy legislation works well and does not
       need improvement. Canada has adopted flexible yet effective privacy
       legislation which protects Canadian consumers while allowing businesses
       to serve their customers. We recommend that the Office of the Privacy
       Commissioner (OPC) be given exclusive jurisdiction over privacy issues
       and that this jurisdiction be removed from the CRTC. Currently, each
       regulator has a set of rules dealing with the collection, use and disclosure
       of personal information. It would be better to leave these matters in the
       hands of the OPC, which has more experience and understanding of the
       issues.

288.   Network dependability will result from a competitive market structure.
       Government action is not needed. Similarly, security and fraud are best
       dealt with through software and hardware rather than through any
       legislative or regulatory mechanisms. Therefore, in Rogers‘ view, the
       Panel need not recommend changes regarding network dependability,
       security and fraud in order to facilitate the adoption of ICT.


       E.16 What measures, if any, should the Federal Government take to
            increase the usage of the Internet and adoption of ICT by
            consumers?

289.   The proliferation of spam is one area where consumers are justifiably
       concerned. In that regard, we applaud the government for the recent
       Report of the Spam Task Force. We encourage the federal government to
       take the necessary steps to rid the Internet, to the largest extent possible,
       of unwanted email messages.


       F.1    What other issues should the Panel take into account in
              making its recommendations? Please provide specific facts,
              analysis and suggestions that you think are relevant to the
              Panel’s recommendation?

290.   Under this Section, the Panel has invited comments on what policy and
       regulatory measures, if any, it should recommend to enhance the
       competitiveness of Canadian companies in global markets. The Panel
       noted that ―Canadians may be less active than they once were in
       developing, promoting and providing telecommunications services and
       equipment internationally‖, and cited the recent exit from the global market
       of ―major Canadian foreign investors, such as Bell Canada International,
       Teleglobe and Telesystem International‖. In our view, the Panel‘s
       recommendation must favor the development of true and sustainable
       competition domestically and not the anointment of select ―national
       champions‖. Only a vibrant, competitive domestic market can spawn
                                        81


       competitors that are innovative and efficient enough to operate at the
       global and international level. The Panel must support strong competition
       domestically so that market forces, rather than incumbency strength, can
       determine and enhance the competitiveness of Canadian companies in
       global markets.

291.   We observe that, unlike the more vociferous, self-serving criticisms that
       have been coming from certain vested interests lately, the Panel has been
       very candid in its recognition that the telecommunications sector and the
       current regulatory framework have served Canadian consumers and
       businesses very well.


       G.2    Should Canadian telecommunications laws be consolidated
              into a single law? Could this improve clarity and consistency
              of enforcement? If so, how?

292.   We do not perceive any undue overlap, duplication or confusion among
       existing laws that touch on telecommunications in Canada. The key
       sources of Canadian telecommunications laws are clear with respect to
       the objects of their direction and the spheres of operation, namely the
       Telecommunications Act and the Radiocommunication Act. .

293.   In any event, we are of the view that the problem with enforcement is not
       due to the absence of a single or unified body of laws but rather the failure
       of the existing laws to adequately empower the regulator with enforcement
       tools and perhaps the lack of will on the regulator‘s part to use the
       enforcement tools it currently has.


       G.3    What additional changes, if any, should be made to Canadian
              telecommunications laws to achieve the overall objectives of
              the Telecommunications Policy Review?

294.   Despite higher court decisions regarding the CRTC‘s powers over
       municipal rights of way, support structures and access to multi-dwelling
       units, there remains some uncertainty as to the extent and scope of the
       Commission‘s jurisdiction and power over these issues. The
       Telecommunications Act should be made more explicit with respect to the
       CRTC‘s power in these areas. Section 43 of the Act which has been the
       source of litigation with respect to the Commission‘s jurisdiction needs to
       be re-written more clearly;


       G.4    Would it be appropriate to develop a policy direction, pursuant
              to section 8 of the Telecommunications act, to implement the
                                         82


              telecommunications policy and regulatory changes discussed
              in this document? If so, what specifically should such a
              direction say?

295.   Section 8 provides for the power of the Minister to issue a policy direction
       to the CRTC. To the extent that many of the changes proposed in this
       document require legislative amendments, a policy direction will not effect
       these changes. With respect to those changes which can be carried out
       by the CRTC without legislative changes, a policy direction may be the
       most effective approach to implement the policies. The direction,
       however, must not be a simple reproduction of the Panel‘s final report; the
       direction should identify the aspects of the Panel‘s
       report/recommendations that are to be implemented, prioritize them and
       instruct the CRTC to implement them.


       G.6    Given the wide range of possible changes that could be made
              in Canadian telecommunications policy and regulation, what
              should be the priorities for the Panel’s area of study and
              recommendation?

296.   In prioritizing its area of study and recommendation, we urge the Panel to
       keep in site the following key principles:

       -   New technologies promise greater competition tomorrow but the
           market is not yet sufficiently competitive today;
       -   In the transition to competition, it is crucial to have competitive
           safeguards that are designed to curb the dominant firm‘s natural
           incentive to retain market share as well as to take these incumbency
           advantages under consideration in its decision making process;
       -   If we do not put in place adequate competitive safeguards in order to
           ensure that the seeds of competition actually germinate and flourish
           and that new entrants who have invested in new technologies actually
           have a chance to make a viable business, only the dominant firms will
           be able to take advantage of the much-heralded technologies which
           they will quickly transform into new barriers to competition;
       -   No service providers should be accorded ―national flag bearer‖ status
           in the telecommunications sector;
       -   The singular goal is to establish enduring competition, not a semblance
           of competition in which many players fight on the fringes of markets
           dominated in the center by the incumbents

297.   With the foregoing in mind, we strongly recommend the Panel list its
       priorities in the following particular order;

       1) Give the CRTC the ability to finish the transition to competition:
                                83



      (a)    give CRTC power to enforce its regulatory framework
             through penalties and fines;
      (b)    give the CRTC power to retroactively adjust rates so that
             where competitors have been overcharged for input costs
             the CRTC can provide the appropriate redress
      (c)    ensure that dominant firms‘ local services are not
             prematurely deregulated on the basis of promising
             technologies and mere threats of entry and nascent entry;
      (d)    ensure that competitive safeguards that were established to
             even the playing field in the local market against the
             dominant ILECs with their formidable incumbency
             advantages are only removed with the arrival of real and
             significant competition – for example, winback rules,
             promotions, and price floors

2) Prepare for tomorrow‘s competitive framework:

   (a) Identify measurable criteria with which to evaluate the progress and
       milestones in the achievement of the 10-year policy and regulatory
       framework being recommended by the Panel. Establish periodic
       review of the industry against the criteria identified above, with a
       view to making adjustments as may be necessary

				
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