Analysts lambaste CRTC report

A government report on Canada’s telecom industry is so “backward-looking” that it may hurt the sector it aims to serve, according to one IT advisory firm.

Montreal-based SeaBoard Group says the Canadian Radio-television and Telecommunications Commission’s (CRTC) 2004 report, Status of Competition in Canadian Telecommunications Markets, is out of step with reality. As far as SeaBoard is concerned, the Commission’s mistaken study could stifle competition in this increasingly competitive sector.

“SeaBoard contends this latest report is a disappointing, backward-looking document which hasn’t measured or addressed the profound shifts taking place in the communications industry,” reads the group’s own report, Old Bottles, New Wine, released this month.

It goes on to say: “There is a clear danger that the Commission may invoke a heavy hand on the market…based on its blemished picture and flawed interpretation.”

In November the CRTC released its competition report, noting that in 2003, wireless and Web were hot markets. On the voice side of the fence, however, “competitors in the local wireline market made little progress as incumbent telephone companies provided over 93.7 per cent of local lines.”

“More needs to be done to ensure that we achieve our goal of sustainable facilities-based competition,” said Charles Dalfen, CRTC chairman, in a statement.

But SeaBoard says the Commission’s view might be askew. The analysts take issue with the CRTC dividing the industry into silos such as local phone service, long-distance, mobile, and Internet. SeaBoard says it’s no good for the Commission to consider each area alone, especially as the sectors influence each other.

For instance, SeaBoard predicts the wireless arena will include 15 per cent of the “local” market by 2007 as some customers replace their wireline phones with cellular handsets. But the CRTC continues to see local and wireless as separate entities.

The SeaBoard report says the ill-focused picture that the CRTC’s document presents could hurt the telecom industry. “A tainted assessment of trends and market forces will lead to poor public policy — such a movement could have significant implications for the industry and the country.”

Iain Grant, a SeaBoard analyst, described one scenario: the CRTC might decide local phone service competition is lagging, should the Commission ignore the wireless sector’s impact. In response the CRTC could impose stricter price floors and caps on incumbent local exchange carriers (ILECs) like Bell Canada, in the ill advised belief that ILECs command more of the market than they actually do.

Such a move would stifle the ILECs’ ability to compete — this, when the Commission is all about seeding the telecom space for healthy competition, doesn’t make sense. And if the CRTC’s report strays too far from reality, it could stifle a company like Bell right out of business, while giving the incumbent’s competitors an unwarranted leg up, Grant said.

He said part of the problem is the length of time it takes for the CRTC write its annual telecom report. The most recent iteration came out just a few weeks ago, but it talks about the industry’s situation all the way back in 2003.

Grant suggested the Commission should focus on the big picture instead of minor details. “You have to back off and look at the overall trends,” he said. “That way you come up with a report in 10 days instead of 18 months.”

He also said it’s time for Industry Canada to convene a special panel to look at inter-sector competition and inform the CRTC’s future mandate. “It could be up to Industry Canada to say, ‘Perhaps we don’t need a Commission. Perhaps we need something else.’”

Judging from the CRTC’s report, the Commission is willing to change. “Specific elements of the monitoring exercise may need to change over time to take into account significant market developments,” it reads.

But that sentence doesn’t mitigate Grant’s concern. “They talk about their willingness to change, but then they put the old template on it and ignore the facts in front of them.”

For more information about SeaBoard’s report, visit

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Jim Love, Chief Content Officer, IT World Canada

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