Why do we still have a regulatory differentiation between business and residential users on a wholesale level?
I understand the retail purposes for market segmentation and to help with cross subsidization. But it seems to me that mandated access to wholesale services should be more cost based. The CRTC agreed. In the case of business services, the CRTC said:
The Commission has decided that the flat rate tariff structure for wholesale business high-speed access services remains appropriate. The Commission has also decided that rates for these services should be based on the incumbent local exchange carriersā (ILECs) incremental costs of providing the services plus an appropriate markup.
And for residential services, the Commission said:
The Commission has also decided that rates for either model should be based on each of the individual large cable and telephone companiesā costs to provide the service plus a reasonable markup, and further, that these markups be comparable for all cable and telephone companies.
So if these rates are cost based, and if the commission got those rates right, why is it a problem if wholesale ISPs route residential traffic over a business tariff? If the tariffs are costed properly, then it shouldn’t be a problem – costs are being recovered.
Filings associated with wholesale internet services leave me believing that the artificial segmentation for wholesale purposes should be abandoned.
In the case of wholesale internet access, Bell is concerned that the tariffs may have incentives for competitors to “circumvent Capacity Based Billing charges by diverting residential traffic onto a business interface.” In other words, the CRTC regime for wholesale has somehow made it less expensive to carry business traffic than residential. Does that strike anyone else as bizarre?
If the tariffs were actually cost based with the correct driving variables, then it shouldn’t matter what the source of the traffic is on a retail level.
There are small businesses that operate from homes; there are large businesses with very low use compared to some power residential users. The need to segregate business and residential users and guard against ISPs “gaming” the system by putting residences into the business traffic mix should be telling the regulators that their decision needs to be revisited.
Something is wrong with the wholesale regime.
I suspect you’re right Mark.
The historical distinctions between business and resi were there because of assumptions/evidence of different usage patterns for voice (time of day, volume of calls, call duration etc), weren’t they? Legacy data services were never really considered “residential” – only a few folks put DS1 or DS3 circuits into their homes, and most telework used one or more ISDN lines (which as-i-recall were the same price for resi/bus since they also were considered business ccts).
From a technology perspective, current DSL and Cable access to a location (resi or bus) all uses the same gear. Sure, there’s service density, footprint and coverage differences, but as you say, those should be covered in the models.
In the end, the Internet access going into your local coffee shop or retail establishment is exactly the same as the one going to a house or MDU. So what’s left is the cost of backhauling that traffic off the access provider’s network onto the ISPs from the carrier’s egress point. Does that jive with your thinking?