Industry Canada expected to act on telco regulation

Canada’s controversial telecom policy and regulation procedures maybe headed for a shake-up early this summer.

The Telecommunications Policy Review Panel last month called onMinister of Industry Maxime Bernier to cut back the role of theCanadian Radio-Television and Telecommunications Commission (CRTC)in setting rates. But Bernier now finds himself at a crossroadsafter the CRTC laid out stringent conditions for local forbearance,or circumstances where it might consider loosening its grip onregulation.

Instead of leaning towards deregulation, the CRTC has listedcomplex criteria under which an incumbent telephone company (telco)can ask the CRTC to “forbear from regulating.”

The decision shows that the CRTC will not change anything it iscurrently doing or is likely to do in the foreseeable future, saidTony Stikeman, a spokesperson for the Coalition for CompetitiveTelecommunications.

“It’s a complete re-emphasis and re-dedication to the status quo,”he said. “The CRTC has thrown the gauntlet down and is not willingto countenance any liberalization or deviation from their previousposition.”

The Coalition, which represents industry associations comprised ofover 12,000 Canadian companies, has asked Bernier to force the CRTCto back off on regulating the teleco industry, according toStikeman.

Bernier is scheduled to address the Canadian Telecom Summit inToronto from June 12 to 14.

“We hear there’s a big policy statement being readied for that,”said Stikeman. “The Coalition has asked the Minister to issue apolicy directive to the CTRC ‘to change course.'”

Stikeman said the policy directive has been a feature of theTelecommunications Act from the beginning, but has yet to beimplemented. “And we think this is the rainy day they’ve beenwaiting for,” he said.

The CRTC reports to Industry Canada on telecommunications and toHeritage Canada on radio and television, said Stikeman. IndustryCanada is also responsible for the Telecommunications Policy ReviewPanel, which last month turned in a report outlining 127 stepstowards greater deregulation.

“The Minister of Industry is now sitting with two diametricallyopposed reports and decisions in front of him,” said Stikeman, “TheMinister is going to have to make a policy statement some time inthe near future, indicating what he likes or doesn’t like.”

Telecommunications analysts and other industry insiders will bewatching next month for early indications of where Bernier isheaded with the CRTC. Federal Cabinet is due by mid-May to reject,approve, or amend the CTRC’s decision from last year to regulatethe IP telephony (voice over Internet Protocol) industry.

The main points from last week’s forbearance decision are thatresidential and business services will be treated as separatemarkets; the incumbent local exchange carriers (such as Bell andTelus) must have lost at least 25 per cent market share to beconsidered for forbearance; and incumbents must meet certain levelsof quality in the services they provide to competitorcompanies.

The CRTC decision stands at 180 degrees to where the Review Panelis pointing, and the Competition Act ought to play a much moreprominent role in the telecommunications industry, according toStikeman.

“We feel stunned,” he said.

I don’t think anybody was expecting that, not just that the statusquo would hold, but in fact that the status quo would bere-emphasized and reinforced, Stikeman said.

The CRTC has introduced a layer of complexity into what should havebeen a deregulatory decision, said Jeff Leiper, director, Canadianmarket strategies for Yankee Group Research (Canada) Inc.

“In an effort to deregulate, they’ve actually added complexity intothe regulatory regime,” he said. “It’s an example of unnecessaryregulation.”

The decision is really at odds with the thrust of theTelecommunications Policy Review Panel’s recommendations lastmonth, according to Leiper.

“We’re seeing two different forces at work in Canada,” he said. “Ata higher level it’s very deregulatory, and the Commission continuesto try to hold on to that mandate to regulate.”

Leiper points at the irony of the decision: “The actual effect ofthe forbearance decision will certainly be to delayforbearance.”

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