OECD praises Canadian regulatory regime but recommends some fine-tuning

Canada’s move into less regulation in the telephony sector is a success, but some streamlining of jurisdiction is still needed, an international body believes. The Organisation for Economic Co-operation and Development (OECD) continued its look at the regulatory process in member nations with a study of this country, released at the end of last month. While Canada: Maintaining Leadership Through Innovation examines several regulated areas of the economy, it devotes several of its 132 pages to a look at the telecom field. Indeed, it saves its highest praise for the work done in this area. "The telecommunications sector is probably the biggest sectoral success story," the report states. "It plays an important role in the economy (2.7 per cent of GDP and 4.6 per cent of capital expenditure, with the 7th largest market in the OECD). Reform was greatly facilitated by the Supreme Court’s confirmations of the federal government’s jurisdiction over telecommunications early in the process." It commends the Telecommunications Act of 1993, which placed all carriers under CRTC regulatory oversight and which established the concept of forbearance. "Rapid and successful deregulation and liberalization followed. The market has taken off as a result," the study continues. "The last few years have seen considerable competitive entry (and exit) in the long distance and local services markets, a fall in prices in the long distance, mobile and Internet markets, and the introduction of new services. However, as in most other OECD countries, competition in local residential markets has not yet taken hold and incumbents retain a near-monopoly in this market segment." A background study released at the same time, Regulatory Reform in the Tele-communications Industry, advocates giving the CRTC greater power in one area. The background report notes the cumbersome process involved in appeals and enforcement. The commission is able to sit in judgement of itself through the Part VII process and yet falls shy in the execution. "The CRTC does not have the ability to fine. It should have this power and the level of fines should be sufficiently high to act as a deterrent to non-compliance," the OECD urges. "Good regulatory practice in OECD countries has shown that regulators need to be able to rapidly enforce decisions and the ability to fine ensures they can do so." It echoes the sentiments of many critics in Canada by stating that the commission is too big (NL, Feb. 11/02, Feb. 26/02). It says the number of commissioners is "exceptionally large for a regulatory body," notwithstanding the need for regional representation and the fact that the CRTC handles both telecom and broadcasting. It also notes the long time it takes the commission to make decisions. It cites the first price cap decision to prove its point. The review of regulatory framework ruling, Decision 94-19, was released on Sept. 16, 1994. The Public Notice, 96-8, was issued March 12 1996, with hearings running in October and November that year. Decision 97-9 was released on May 1, 1997 with actual implementation of the price cap regime not beginning until Jan. 1, 1998. The main study urges the elimination of foreign ownership restrictions (see related story on page one) and advocates access to wholesale prices for leased circuits. New entrants should be able to utilize the circuits, especially within large cities, at cost-based prices. "These circuits are an essential facility for new entrants to develop their customer base and build their facilities," the report offers. "This would ensure effective access to local markets and facilitate the development of local competition." The OECD recommends that the power to license spectrum and international submarine cables be stripped from Industry Canada and handed over to the CRTC. Industry should, however, keep responsibility for spectrum planning, since this is a policy role, not an administrative one.

OECD praises Canadian regulatory regime but recommends some fine-tuning

News | 11/04/2002 5:00 am EST

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