A Canadian Radio-television and Telecommunications Commission report on the state of competition in the Canadian telecom marketplace has identified the rollout of DSL and Internet cable services to more regions as the biggest challenge facing the industry today.
The paper, requested by the federal government and released late last month, is the first of five scheduled annual reports. It includes an overview of the current status of the rollout of broadband across the country, and the status of competition in Canada, across all telecom markets.
The issues surrounding broadband are being dealt with by the National Broadband Task Force, which is trying to meet the government’s goal of making broadband widely available by 2004. The Task Force found, according to the report, that DSL and/or high-speed Internet cable service is offered in 1,203 communities, which represents approximately 75 per cent of the population. It also found that a combined population of 6.4 million Canadians – mostly in geographically remote areas – receive neither DSL or Internet cable service.
These are the areas which represent the most challenge, according to the report, but the issues involved, such as access, are being addressed.
“The fortunate part, of course, is that the further forward we get, the more you can anticipate the launch of new services being provided by, for example, the satellite companies,” said Mark Quigley, research director at Kanata, Ont.-based The Yankee Group in Canada. “Eventually, Shaw (Communications Inc.) and (Bell Canada’s) ExpressVu and others will be able to provide a high-speed, two-way service pretty much anywhere in Canada.”
Quigley added that despite the recent demise of many CLECs, the services market for Canadian businesses remains a competitive one because there is still a choice of providers in the larger Canadian centres. He added that smaller centres are not yet seeing competition because it becomes more difficult to justify the business case in areas with smaller business populations.
The CRTC report indicates that international minutes were split almost 50/50 between the incumbents and competitors last year. Where the markets become less competitive, notes the report, is in the area of residential service.
“For example, in 2000, the incumbents had over 80 per cent of residential long-distance minutes (73 per cent of revenues),” states the report. “As well, in the local services market, the incumbents had 96 per cent of total local lines in 2000. This market was opened to competition in 1997 and, to date, competition has primarily been in the urban business market.”
And competition is something that is heavily on the mind of at least one player.
“I think what the CRTC needs to get its head around is what are the things it needs to do to stimulate and promote competition, because I don’t think we’ve achieved the objective of creating a competitive telecommunications marketplace,” said Steven Koles, senior vice-president of sales and marketing at Group Telecom Inc. in Toronto. “The only thing we have kind of pointed out is making sure the CRTC is active in managing any kind of anti-competitive behaviour from the ILECs.”
Specifically, he said, Group Telecom is concerned about issues such as long-term contracts between customers and ILECs, which make it difficult for competitors to obtain new customers.
“It is that type of behaviour that we are asking the CRTC to make sure they take a look at, as a part of ensuring that we have a competitive landscape so that…we’ve got an opportunity to compete on a level playing field.”
Another ongoing issue that has been facing the upstarts is that of access to incumbents’ lines in order to provide service to their customers. That matter is something that, according to the CRTC report, is being addressed.
At press time, some matters involving this issue were being reviewed in court. Elroy Jopling, principal analyst for Gartner/Dataquest in Mississauga, Ont., explained that AT&T and Call-Net/Sprint are asking that the charges they are paying for the services, lines and/or facilities of the incumbents be examined.
“It’s not going to be an easy decision for the Commission,” he said. “You look at it and really at the bottom of the argument is an issue of, can people like AT&T survive without some form of greater ownership of access lines, and if they don’t have that, can they survive by buying those services from the likes of Bell and Telus?
“At this point in time, AT&T obviously seems to be portraying that they can’t survive, and that effectively, they would go under if this was to continue.”
Jopling said it will be interesting to see what the Commission does as the proceedings take place.
“This is not an easy one this time,” he said.