Government’s “beauty contest” rules under fire from communications law experts

A noted communications lawyer and academic has once again criticized the way Industry Canada awards spectrum licences through a comparative review process, more commonly known as "beauty contests". Hudson Janisch, a professor of law at the University of Toronto and one of the most respected communications lawyers in the country, told a recent communications law and policy conference that the department needs to revamp its current comparative review practices. During a session titled Fairness and Transparency in Telecom Regulation at the New Developments in Communications Law and Policy conference in Ottawa April 26, Janisch praised Industry Canada’s efforts to open up the spectrum licensing process by moving towards auctions, but he reserved considerable criticism for the department’s continued use of comparative reviews. "he whole auction process has been introduced and implemented in a procedurally impressive fashion," he said. "However, where beauty contests have been retained, a number of problems remain." In his presentation, based on a paper with the same title as the session, Janisch concentrated on the lack of reasons in rulings and the inadequacies in the decision-making processes employed in comparative reviews. This isn’t the first time the comparative review process has come under fire. Twelve years ago, Janisch launched a volley against the department’s comparative review rules. In a paper presented to this long running biennial conference in 1990, Janisch was highly critical of the lack of procedural fairness at the spectrum licensing authority of the time, the former Department of Communications. To illustrate the deficiencies with the current comparative review process, he highlighted the roadblocks that have hindered TeleZone in gaining access to reasons why it was denied one of the original PCS licences in September 1995 (CCR, Jan. 24/96). Microcell Telecommunications Inc. and Clearnet Communications Inc. were awarded the two new entrant licences, while Mobility Canada and Rogers Communications Inc. were granted the other two. In addition to pointing out the lack of reasons and inadequacies in the process, Janisch’s discussion focused on the criteria used and the weighting each of those factors is assigned within the whole process. TeleZone insists that the government changed the evaluation criteria during the process without consulting the applicants. However, documents obtained through Access to Information requests failed to produce any evidence to back up that claim. The company contends that there is a single document that contains this information. The government has refused to hand it over, despite an investigation by the Information Commissioner that recommended disclosure (RoW, March 29/99). However, Janisch pointed out that the same decision, which closed the door on the Access to Information request, left another option open to TeleZone. He suggested that instead of focusing on the Access request, TeleZone could have directly confronted the procedural fairness, which may have resulted in a different outcome because procedural fairness requires disclosure. "Although unsuccessful with respect to the Access to Information, the allocation did lift the curtain to some extent on Industry Canada’s (rules)," he said. The TeleZone case is now back in an Ontario provincial court, where discoveries are currently taking place. The company is seeking $250 million in damages for negligence and break of contract. "I tend to agree with the Information Commissioner that the weighting criteria represents the very secret role that the Access to Information Act was designed to expose to public view," Janisch said. "That quality of public decision making would be improved if applicants were given this type of information." Janisch also suggested there seems to be a lack of connection between comments made during the comments and reply comments period and the actual decision. He cites the U.S. Federal Communications Commission’s process, which provides a much better connection between comments and decisions. "What seems to be missing is some form of linkage between inputs and outputs, which can reassure those participating that comments are being taken seriously," he said. McCarthy Tétrault’s Anthony Keenleyside suggested, however, that Janisch’s paper didn’t go far enough. "Why is Industry Canada still dealing with spectrum management and related licensing at all?" he asked. He said that much of the problem, which Janisch highlighted in his paper, would have had a different ending if the whole process would have taken place in front of the CRTC. "Many of the issues that Janisch raised, the TeleZone case, either would not have arisen or at least (would have been) less likely to have arisen if the CRTC had handled it. (If it) used its traditional call for applications process in the broadcast model, and applied it to the telecom context," he told delegates. Keenleyside suggested that the CRTC call for applications process is much more open than that of Industry Canada’s. "There’s hearings with interventions, and a written decision with substantive reasons that analyzes the strengths and weaknesses of the various applications," he noted.

Government’s “beauty contest” rules under fire from communications law experts

News | 05/13/2002 4:00 am EDT

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