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rocca
Start.ca
Premium Member
join:2008-11-16
London, ON

rocca to pnear

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to pnear

Re: CRTC and TPIA usage rates overview

The file is CRTC 2011-703, which split the wholesale cost for the components into 2 parts - the circuit, and the capacity.

They got the circuit cost right for the most part (a few exceptions IMHO) but it's one that is easier to calculate. When it came to the capacity rate, most of the incumbents came up with really confusing, complex and inflated cost studies for capacity rates using 'conversion factors' which inflated their numbers to look like they were 'revenue neutral' - ie the new cost for a wholesale service would be generally the same as the old cost in the previous tariff. This resulted in capacity costs like $22.13/Mbps from Bell and $26.95/Mbps from Cogeco. The exception was MTS Allstream which did their calculations properly in Mbps as directed and using the 'all carriers' approach, ie assuming that they share the network components evenly with wholesale/retail - this resulted in a cost of $2.81/Mbps which is quite the difference.

The cost of capacity is essentially the part of the service from the CO or CMTS back to the POI. This is very similar in structure to commercial transport offered by these same incumbents on a commercial (non-tariff) basis for well under $3/Mbps in most cases and around $1/Mbps in some cases. There are a few exceptions such as Bell which uses BAS's for aggregation/termination which should raise the rates above simply a transport replacement, but the factor of inflation is somewhere between 5x and 10x too much.

As general internet usage continues to grow and more people move to streaming services, the fact that the capacity rate is wrong becomes more amplified since that is the cost that is growing. Imagine if the majority of customers watched IPTV at 8Mbps every night, the average usage component on the Cogeco network would be 8 * $26.95 ($215 per customer) plus the circuit cost and that doesn't include the actual backhaul, or internet transit, support, etc.. - it's impossible to sustain over the top services while the capacity rates continue to be so highly inflated.

Anyway, the file closed end of July or August I believe, and just waiting on a decision at this point. The Commission really did seem to be asking some good questions in their interrogatories so I'm hopeful we see positive results soon.

Shikomu
join:2007-11-16
Ontario

Shikomu

Member

Found your response very informative Thanks.

pnear
join:2002-06-12
Milton, ON

pnear to rocca

Member

to rocca
Thanks for the recap!