Regulatory reform next step in ensuring sustainable competition, Call-Net says

Call-Net Enterprises Inc. president/CEO William Linton recently addressed the National Press Club on the topic of competition in the telecommunications market. An edited transcript of his remarks appears here. It’s easy to forget, 10 years later, just how revolutionary the emergence of Sprint Canada’s long distance service was when we first came on the scene in 1992. So where are we now, a decade later? Despite the efforts of companies like Call-Net and others to bring competition to Canadian consumers, today’s market is dominated by the established telcos with a 100-year head start. In the early years of competition, from 1993 through 1997, new entrants in the long distance market made significant market share gains. But as the regulatory system struggled to adapt, the barriers mounted to competition. New entrants were weighed down with such disincentives as per-minute contribution charges that had to be paid to the former monopoly telephone companies. This was recently changed, but it was too late. The new companies’ market share gains had already tailed off ... and lately, they’ve essentially been at a standstill. At least the long distance market had a promising start in the early days. The new entrants’ share in the local market has grown much more slowly since competition opened in 1998. For instance, in the business local market, where much of the attention has been focused, the incumbents enjoy a market share of roughly 96%. On the residential side of local services, the picture is even worse, with the incumbents maintaining a market share greater than 99%! The results have been predictable. Over the past year, the major trend we have seen in the industry isn’t more innovation, or better service, or greater choice. It’s failure. This recent track record strongly suggests there is a more systemic problem than individual errors or natural consolidation; and that problem is regulation. It’s the system that has failed us. I would say that sustaining competition requires two things: healthy competitors; and a level playing field. Smoothing out the playing field requires significant attention to the kind of regulatory changes that will promote competition.There have been some important moves in this direction recently. But much remains to be done. There’s no two ways about it. The current regulatory system threatens our ability to sustain a competitive market for telecom – one that offers Canadians a choice. It just so happens that the CRTC is currently reviewing the issue of how the incumbents’ services are priced and regulated. Call-Net has been an active participant in this important proceeding. We’re confident that we’ve provided the regulators with a viable, workable solution that will solve the problem and sustain competition and choice for Canadians. To do so means the price we pay for access must be set at a level that enables us to compete. Our proposal will significantly improve the environment for competition, with no material harm done to the incumbents. By contrast, having no regulatory relief could well spell the end of competition and choice in Canadian telecommunications. Given the experience in other industries, I’m sure that this is something all Canadians would be very happy to avoid. The long-term issue of telecom requires an alternative facilities based competitor. But until we get a positive decision on the issue of price caps, all these points are moot. Let us know what you think of Bill Linton’s comments or formalize your views in a Newsmakers column of about 650 words. Email ppark@decima.ca

Regulatory reform next step in ensuring sustainable competition, Call-Net says

News | 03/25/2002 5:00 am EST

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