AT&T takes price cap issue to Cabinet

Frustration over the national regulator’s price cap for use of incumbent telephone networks has led one competitive local exchange carrier to appeal to a higher authority.

AT&T Canada Tuesday said it had filed a petition

with the federal Cabinet to endorse the idea that competitive local exchange carriers (CLECs) must have “”competitively neutral”” access to the networks of theincumbent local exchange carriers. Right now, use of those facilities represent 55 per cent of AT&T’s direct costs, the company said, or about $400 million annually, to the former monopoly firms.

AT&T Canada was among several carriers hoping for a drastic reduction in fees when the Canadian Radio-television and Telecommunications Commission (CRTC) conducted a review of the price cap earlier this year. Thought the CRTC did grant some reductions in the range of 15 to 20 per cent, this was much less than what some carriers had asked.

“”We have never asked the regulator to fix our business problems,”” said AT&T Canada spokesman Ian Dale, pointing to the cost-cutting moves AT&T has made this year like entering talks to restructure its debt. “”We’re taking major action here to improve our opportunity to be a long term, viable competitor. What we’re also looking for is that the regulatory environment be more supportive.””

While some carriers are making appeals to the CRTC to reexamine selected aspects of its decision, Dale said AT&T Canada opted for a more broad-based approach that attacked what he called the fundamental inequity between the incumbents and the CLECs.

“”We think these are important issues the federal government should pay attention to,”” he said. “”We know that Canadians have benefited hugely from competition in the last 10 years. We just feel that the regulatory environment remains tilted and that the new entrants — the three that are left — are working hard to survive.””

Elroy Jopling, a telecommunications analyst with Gartner Inc.’s Canadian office, said the CRTC may have alienated the CLECs in its May 30 decision.

“”They didn’t really listen to the woes of Call-Net/Sprint and AT&T,”” he said. “”I would say the commission put itself in the position as saying it wasn’t their job to look after those companies.””

Though the approach of Call-Net to look for incremental changes to the decision may pay off, Jopling said, AT&T could have its work cut out of it as it tries to argue its proposal before Cabinet.

“”AT&T has really taken a blanket approach to, in essence, really change the whole framework. Is that realistic? Probably not. This is not just a minor change,”” he said. “”There’s going to be a duopoly. There’s going to be Telus and Bell Canada.””

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