EXPO COMM: Regulation only one piece of access puzzle, says CRTC

TORONTO – If Canada is not yet the halcyon of wireline and wireless connectivity it aims to be, don’t blame the federal government for the situation, say its representatives.

Of the myriad elements confounding broadband data access beyond the nation’s urban centres and local phone service competition, government oversight is not among them, according to federal spokespeople. Instead, blame poor access to capital markets, half-baked business cases among service providers and Canada’s unique geography for the situation, they said.

“Regulation is only one piece of the puzzle,” said Charles Dalfen, chairperson of the Canadian Radio-television Telecommunications Commission (CRTC) during his keynote speech Tuesday at EXPO COMM, a wireless industry tradeshow in Toronto.

Dalfen alluded to carriers that burst onto the telecom scene circa 2000 with big plans to take the industry by storm, only to run out of money when capital markets went dry. He also suggested Canada’s physical size coupled with its small population makes servicing rural areas less attractive for telcos.

Dalfen said the government is doing its best to bring improved access to outlying areas, and market forces to bear on the market, but the CRTC has been criticized for its handling of local phone service competition, which seems dead in the water these days.

Some say the Commission favours incumbent local exchange carriers (ILECs) such as Bell Canada and Telus Corp. over newcomers. Others, notably ILECs, argue that the CRTC is in danger of coddling the new competitive local exchange carriers (CLECs), essentially rewarding them for poor business plans.

Dalfen said the local service situation “requires us to be balancing issues” between ILECs and CLECs. He added that the Commission did its best to toe this fine line during a “price cap review” earlier this year. That decision, enacted June 1, discounted the prices competitors have to pay to access incumbent networks and, in turn, to offer local service.

Dalfen also presented the CRTC’s preliminary report on the state of the telecommunications industry in 2001, a document that suggests government measures have had a positive effect on the sector, he said.

According to the Commission’s report (the full version will be published before the end of the year), local phone service revenues among carriers improved six per cent between 2000 and 2001. Internet service revenues improved 50 per cent year-over-year.

But in terms of penetration, local lines are off their peak 2000 numbers in the residential arena. Dalfen attributed the phenomenon to greater high-speed Internet access penetration, which does not require the second phone line some users purchased to support dial-up at home.

And when it comes to broadband penetration the country over, the picture isn’t pretty, said Michael Binder, spokesperson for Industry Canada. He pointed out that more than 70 per cent of Canadians cannot access high-speed Internet service.

“It’s time to accept the notion that we need high-speed,” he said during an EXPO COMM presentation. “The bottleneck is not in the backbone. It’s in the last mile.”

The government proposes to seed outlying areas with high-speed access by 2005, but Binder seemed surprised that one of the most likely technologies to do so quickly has not taken off in this country.

“Wireless rollout has been…disappointing,” he said, explaining that fixed-wireless installations remain low. Fixed wireless technology uses antennae and towers to transmit data. It’s less expensive to erect a tower than dig tunnels for fibre-optic cable installations.

“For whatever reason the equipment…and the business case didn’t materialize,” Binder said of fast, untethered connectivity, adding that he hopes the business and geographical landscape leaves “some room for wireless.”