The federal government has announced it wants to speed up deregulation of local phone services by basing it on “presence of competitive infrastructure” in a specific geography rather than market share.
A competitive market – and consequently, one exempt from regulation – would now be one where two or more major phone, wireless or cable companies operate. The move – expected to cover around 60 per cent of the population – is widely expected to lead to lower phone service prices – at least in the short term.
The announcement by Maxime Bernier, Minister of Industry, on Monday afternoon, reverses an earlier Canadian Radio-Television Commission (CRTC) decision.
The CRTC decision had required big telephone companies to lose a sizeable chunk of their market share in a specific geography before the local telephone services they provided in that area would be exempt from CRTC regulation.
The CRTC had placed price ceilings on how much monopolies such as Bell Canada, Telus Communications Co. and other telecom giants could charge in areas where they control more than 75 per cent of the local phone market.
A statement released by Bernier’s office yesterday said the minister is proposing that the CRTC’s “market-share test” for forbearance – or exemption from regulation – be replaced by one that emphasizes the presence of competitive infrastructure in a given geographical area.
“The government’s proposal is intended to stimulate competition and innovation among local telephone service providers so that Canadian consumers and businesses will benefit from even more choice, improved products and services, and lower prices,” Bernier said in a statement.
“Canada’s new government has an ambitious policy agenda for the telecommunications sector, the essence of which is a new regulatory framework that is more modern flexible and efficient,” the minister said.
Consumer groups and small local phone companies have expressed their reservations about this flavour of deregulation.
They argue that such deregulation does not really bring down prices in the long run, as big telecos could always lower their prices to extinguish the competition — and once that goal is achieved – hike them again.
At least one Canadian telecommunication analyst, however, welcomed Bernier’s announcement.
“It’s going to be a free for all,” said Roberta Fox, principal of Fox Group Consulting in Mount Albert, Ont. Fox said the advances in technology has adequately leveled field to allow deregulation.
She said the argument against deregulation may have held some three or two years ago, “when traditional analog phone technology still held sway.”
She said it appears that Bernier wants to deregulate the retail area where consumer-type services are being offered.
The move, she said, will provide consumers with more choices and eventually drive down the price of services offered by all providers.
“Initially the likes of Rogers and other wireless providers had an unfair advantage since they could offer lower prices, now the big players can do that too.”
The new playing field will also push service providers even those offering Internet Protocol (IP)-based phone services to “be more creative with their offerings to attract customers,” said Fox.