CRTC chairman

The decision by the Canadian Radio Television and Telecommunications Commission (CRTC) limiting regulation of voice over IP (VoIP) to local phone service would turn off telecom players from further investing on next-generation networks, an industry analyst said yesterday.

CRTC’s objective to enhance competition through this ruling may have the opposite effect, said Roberta Fox, senior partner at Fox Group Consulting, an IT advisory firm in Markham, Ont.What’s the incentive for Bell, from a residential perspective, to even put in local service to a new subdivision?Roberta Fox>Text “For example, Rogers on their cable network will be able to turn on their VoIP and have it delivered over a cable network. What’s the incentive for Bell, from a residential perspective, to even put in local service to a new subdivision?” said Fox.

In its May 12 decision, the CRTC indicated it would regulate VoIP only when the technology is used as a local telephone service. VoIP enables subscribers to make voice calls over broadband connections.

“We believe that VoIP represents a key moment in the evolution of local exchange telephone services,” CRTC chairman Charles Dalfen said in a statement. “This is precisely the moment when Canada needs a regulatory framework that will provide the quickest road to competition.”

Echoing Fox’s sentiments, Telus Corp. said the CRTC decision “restricts the ability of incumbent telephone companies to provide Canadians with competitively priced IP services.”

Thanks to this ruling, phone companies are required to seek approval from the CRTC for rate changes, according to Janet Yale, Telus executive vice-president of corporate affairs. However, cable and foreign service providers offering VoIP are not governed by the same requirement.

“It fails to unleash the power of the Internet to the benefit of Canadian consumers,” Yale said of the CRTC’s decision.

She said phone companies “have shown leadership” in deploying next-generation IP networks, only to be used by “competitors to take our customers away without any form of regulatory oversight…because we won’t have a competitive offer in the marketplace.”

Yale said Telus would appeal the decision before the federal cabinet.

For its part, MCI Canada welcomed the decision, saying it spells the inevitable march towards VoIP for Canadian communication service providers and their customers.

“These decisions are pivotal in laying out the competitive forces in Canada and in other countries,” said Robert Quance, general manager, MCI Canada, a 20-year veteran of the Canadian telecommunications and IT market.

Quance said the decision was consistent with the CRTC’s preliminary ruling and should not have come as a surprise “to anyone who is in the market and knowledgeable about the issue.”

Quance participated in CRTC’s preliminary proceedings in Ottawa in September of last year.This is precisely the moment when Canada needs a regulatory framework that will provide the quickest road to competition.Charles Dalfen>Text Telecom analyst Lawrence Surtees at IDC Canada shared MCI’s opinion, saying it was a “fair and equitable decision.”

Surtees said the communications market, over the past century and a half, has gone from competition to monopoly. And this is because “market forces were left totally unconstrained, and well-heeled players were left unfettered to bash the little guys.”

“So there may be a chance in the long run to better nurture and sustain a competitive playing field in IP telephony,” said Surtees. However, he added that the complex nature of VoIP technology may “somehow escape or defy efforts to apply traditional regulations to it.”

— With files from Brian Eaton

Related links:

CRTC holds public VoIP hearings

CRTC looks at VoIP regulation

Telcos ask for more time with CRTC VoIP regulation

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