The Canadian Radio-Television and Telecommunications Commission (CRTC) Friday admitted competition in the local phone service market was heating up faster than forecast but said it was sticking with an earlier decision that gave Voice over Internet Protocol (VoIP) providers an advantage over incumbent phone companies.
In May 2005, the CRTC issued a ruling saying that large telephone companies could not undercut smaller and fledgling phone companies by offering lower prices.
The telecommunications watchdog also said it would regulate VoIP service the same way it regulates companies such as Bell Canada and Telus. This meant that incumbents cannot offer Internet-based phone services below cost while new companies can set prices as low as they want.
Bell Canada, Telus, Aliant, SaskTel, appealed the ruling. The CRTC relaxed some of the rules this April but said local telephone companies should be regulated until they lose 25 per cent of the market share.
That policy, according to the commission, will be reviewed because of new data that shows competitors in the local phone market are keeping most of the customers they attract.
"Local competition data, eighteen months more current than data available for the forbearance decision, showed that competitors are making significant investments, are rapidly extending their customer service offerings, are keeping most of the customers they attract and are achieving or exceeding their business plans," a CRTC press statement said.
“Our objective is to reduce the scope of regulation where market forces are sufficiently strong to protect consumer interests," said Charles Dalfen, CRTC chairman.
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