The Evolution of Access and the TekSavvy Story

November 6, 2012

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The Evolution of Access and the TekSavvy Story

When I was asked to give a talk about the evolution of access at the ISP Summit in Toronto, it got me thinking about how it’s impossible to separate that evolution from the ups and downs we’ve experienced at TekSavvy. The reality is that without proper access to incumbent networks, ISPs like ours can’t survive. And our survival is critical if we want to ensure a competitive market that benefits consumers.

Let me start by telling you a bit about TekSavvy, our history and how we’ve been affected by access-related issues.

We provide Internet access and phone services to 180 thousand subscribers in different parts of the country. Some are businesses, but most are residential customers. At first, they were primarily technology-savvy power-users, but now they include a very broad demographic. A big part of our success to date has been our focus on delivery, value and excellent customer service. We listen to our customers and we try to respond to their needs. When they’re concerned about something, so are we. That’s who we are. That’s how we operate.

My brother and I started the access side of the business ten years ago. Things were very different back then. At the time, we used a combination of dial-up and Bell DSL services. We had access to all their speed tiers and we could accommodate whatever usage we saw fit. It was a pretty good deal.

A few years later, in 2006, the incumbent phone companies started using fiber to the node. They were delivering retail speeds two to three times higher than what we were. At first it wasn’t such a big problem, but as our customers started to demand those higher speeds, we just couldn’t compete. It became increasingly apparent that speed was the new game changer. That period was tough...especially when they started using traffic management practices to throttle our customers. That really stung.

By 2009, the CRTC was being asked to let wholesale customers like us, be charged for usage, and on top of that, they wanted to impose caps. This was the final straw! Considering where we had started, with speeds that matched and usage we could allocate the way we saw fit, this was now a completely different proposition. We were as incensed as our customers. Something needed to be done. It was time to take action.

We embarked on a large scale regulatory effort focused on a number of initiatives. We opposed throttling and usage-based billing and, we continued to press for speed-matching.

At the same time though, we knew we couldn’t do it alone. We needed help. We were running a business. And, all this other stuff was just getting in the way of the day to day. That’s when we joined forces with other ISPs to form CNOC.

During that same period, we realized that we needed to figure out what else we could do to make our company grow. We looked around to see what was available to us and cable internet was the obvious choice. Our customers wanted speed and cable would give us that. Adding a cable platform to our list of services wasn’t an easy move, but it’s played a significant role in our growth.

So the pot kept brewing, and then the worst of all fears happened. The CRTC delivered its highly controversial UBB decision. It was a scary time for us, scary in every conceivable way. Our very existence was on the line. We were investing heavily in our future, but, at the same time, we were facing the end. There was a lot at stake and now we had to deal with what we had feared the most and worked so hard to prevent.

But then, a huge backlash sent a very clear signal. In response to an on-line petition with more than 500 thousand signatures, the government “suggested” that the CRTC should re-consider its ruling. Clearly UBB was a lightning rod issue. In a way, it was a perfect storm. And, we were at the centre of it. We had mixed emotions. We were relieved that someone was listening and that independents finally had a voice. We started to think that change was a real possibility. However, we had just dodged a bullet. We went from facing extinction to being thrown into the deep end.

Luckily, we had our cable platform which allowed us to avoid UBB and provide speed matching at the same time as these issues were getting a tremendous amount of attention. The cable side of our business started growing by leaps and bounds. We even suffered some serious growing pains.

Despite the growth, all of the regulatory uncertainty left us in limbo. We needed to keep investing in the business even though the stakes kept getting higher because we had little assurance of what the future might bring.

Late last year, the Commission finally ruled on a number of issues. They set wholesale rates and they decided that usage would be charged by capacity and not volume. In some ways, this was good news. But, many of the rates are still excessive and we don’t think they make sense in light of today’s marketplace. What we have now is only a partial solution. For growth to really exist, we believe rates need to drop. We won’t know what those rates will end up being until the current review and vary applications have been resolved.

In the meantime, we’ve decided to get back to the basics and, for us, that’s the quality of access... what we’re actually delivering to each and every one of our customers. Quality issues can affect the entire cycle of a typical high-speed access connection, everything from ordering, provisioning and installation to repairs and the disconnection of services. When there are disruptions in quality of service, whether caused by us or the incumbents who provide the access, it’s our customers who feel it. And, we don’t think that’s right or fair. When people access the Internet, they just want everything to work. And, we’re in the business of making sure that it does. It’s all about the experience and we want it to be positive.

In a relatively short time, the Internet has evolved from a novelty, to a tool for doing business and a major source of entertainment. Now, it’s an essential service. We rely on it for work and for play. We use it to create, to communicate, to educate... Whether you use VoIP, FaceTime or Skype to connect with others, NetFlix or IPTV to be entertained, or VPNs and cloud-based computing for work – you need a reliable, cost-effective, unencumbered Internet access service. This is vital as we move further into the digital age.

Consumers win when they can choose their services and their service providers. Reasonably priced high quality access is the key to that choice. But the current system restricts smaller players like us who still account for a very small share of the market.

It’s clear to us that more needs to be done. To create positive change, I believe we all need to work together, that includes all the industry stakeholders, the government and most importantly, consumers.

To the incumbents, I would simply say... we need your acceptance. We all know that you are the key players in this industry with a wide variety of business interests. Even though we may compete for the same customers, we have different objectives. We exist because there’s a need for alternatives. We’re competitors, but in a way, we’re also partners, whether we like it or not. The truth is that while we’re busy fighting, wasting time and resources, the digital age is outpacing us all. If we want to keep up, we have to adapt. We need a strategy. And, we need to work together.

To the CRTC... we applaud the new Chair for putting emphasis on regulatory actions that will benefit consumers. We share that view. Our customers have always been our primary focus. We’re particularly pleased with the recent transparency decision and are waiting to see how it gets implemented. Moving forward however, the questions I have are.... How long is it going to take to get access rates and conditions right? And how and when are we going to deal with access to FTTP? We need to know that or once again we’re going to be marginalized. For years, there’s been so much focus on regulatory issues that it’s become a distraction. We just want to see things resolved so that we can get back to business.

We recognize that regulation is a last resort and not a substitute for market forces. Where we can work things out ourselves, we should do that. But we need the CRTC to be there when negotiations don’t work out. Otherwise there won’t be competition and consumers will suffer.

Lastly, to consumers, keep making your voices heard! I believe we need to engage in more dialogue. Mr. Blais has already started on this path by asking consumers what they want from the wireless industry. Take advantage of those opportunities. I believe we need to see more of the same type of thing across the entire industry. We need to open up the conversation to include everyone. ISPs, the incumbents, the public, stakeholders like ARIN, ISOC, CIRA, ICANN and other regulatory bodies from around the world. We need to start talking to each other. We’re all asking legitimate questions and in many cases, similar questions. If we engage in a conversation, we just might find the answers.

Marc - CEO/TekSavvy

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