Canadian Telecom Summit: Regulation takes centre stage

A complex interplay of technology, services and end-user requirements inform the rules that govern phone companies, according to Charles Dalfen, chair of the Canadian Radio-television and Telecommunications Commission (CRTC), indicating that the regulation process is more complicated than it’s sometimes made out to be.

That was one of the insights gleaned from the Canadian Telecom Summit, a communications-minded conference in Toronto on June 16 and 17 that provided an indication of how the telecom industry might look in the future. Speaking before Summit attendees, Dalfen said he’s “troubled” by the “false dichotomy” that some people apply to telecom regulation. They pit the notion of a regulation-free, market-driven industry that caters to established carriers like Bell Canada and Telus Corp. against the idea of a heavily regulated sector that panders to newer entrants like Call-Net Enterprises Inc. But regulation “is not as black and white as these arguments suggest,” Dalfen said.

He said that creating rules to foster a competitive telecom landscape is a difficult procedure. It takes myriad factors into account. The CRTC must keep its eye on emerging technologies like voice over IP (VoIP), and new service providers such as Rogers Communications Inc., a cable company looking to offer VoIP service next year. The Commission must also mind trends among service providers, such as the carrier consolidation occurring now (Bell is acquiring Vancouver’s 360networks Corp.; Telus has made a play for mobile phone service provider Microcell Telecommunications Inc.; MTS Inc. in Winnipeg has acquired Allstream), as well as the increasing popularity of wireless voice and data services.

“We will be watching these developments with great interest,” Dalfen said, adding later that the CRTC would forbear products from regulation “as and when…competition permits.” Dalfen also said the Commission might create a set of criteria to test services for deregulation.

The Commission is supposed to regulate things like local phone service to ensure that established carriers can’t set prices so low that the Call-Nets of the world wouldn’t be able to compete, among other economic impetuses. The CRTC is steeped in a discussion about VoIP regulation these days. Dalfen said his group would decide whether or not VoIP should be regulated early next year.

But judging by the words of Sheridan Scott, one might wonder if the government itself is ready for a deregulated telecom industry. Scott, commissioner of competition at the Canadian Competition Bureau, said the feds face a pile of work to integrate disparate departments before the government is properly prepped for a market-driven phone sector.

Scott pointed out that the Competition Bureau would enforce competition rules should telecom become regulation-free. But for now the Bureau is not allowed to view confidential CRTC information — data that would facilitate competitive dispute resolutions.

As a result of the wall that stands between the Competition Bureau and the CRTC today, when issues arise that are of a regulatory and a competitive nature, they can be difficult to resolve. For instance, Scott noted that when one carrier complained that another carrier’s wholesale prices were too high and, at the same time, that the offending provider’s retail prices were too low, the Competition Bureau had to work in tandem with the CRTC: the Bureau considered the retail matter while the Commission handled the wholesale side. Two government departments were tied up with a single problem that, had the CRTC and the Bureau worked more closely, might have been dealt with quicker, Scott said.

“Closer cooperation is possible,” Scott said. She described the competition-regulation system in New Zealand, where the regulatory body resides within the competition office. That close relationship urges the decision-making process.

The government wasn’t the only group speaking at the Summit. Carriers came too, and notably Bill Linton, president of Call-Net, outlined this company’s future in a keynote speech. He said his is the only competitive local exchange carrier (CLEC) not being purchased or acquired by another carrier. Recall that Bell is buying 360’s assets while MTS has scooped Allstream.

Will Call-Net wither away, the sole unhitched carrier as other service providers team up? Linton, of course, said no, and even went so far as to suggest that Call-Net, although alone, would profit from the industry’s commingling. He pointed out that the firm has agreed to purchase certain 360 assets that Bell doesn’t want, particularly networks in the Eastern provinces. Linton said those metro loops would go a long way to helping Call-Net become a facilities-based competitor — a service provider that owns its own infrastructure, and the sort of carrier that the CRTC wants to foster.

Both Scott and Linton said the telecom sector seems to be rising from the doldrums to which it sunk in 2001. Scott said she can tell by the increasing number of applications for dispute resolution coming to the Competition Bureau from carriers. Linton said he can tell by the flurry of e-mail messages he’s been getting lately, all of which seem to be about new VoIP services from gung-ho competitors.

“The telecom industry must be looking up,” he said. “It’s good that we’re dragging the public relations industry along.”

Linton said Call-Net is testing VoIP, but it won’t provide the service soon. He didn’t seem all that convinced that the technology, which essentially puts phone calls onto data networks like the Internet, is ready for prime time. “I don’t believe this service, from a quality standpoint, is as robust as the service we provide.”

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