Regulatory policy only one element in evolution of telephone competition

CRTC chair Charles Dalfen was guest speaker at the opening session of International Institute of Communications Canadian chapter meeting in Ottawa. An edited version of his remarks appears here. The full text may be found here. For us, a key challenge and opportunity is competition. We’re proud of the commission’s role in introducing competition into all areas of communications – a process that began in the late seventies. In telecommunications, Canada is a world leader in providing widespread services of high quality at comparatively low prices. In fact, our telecom rates and our Internet access rates are among the lowest in the world. 2.1 million Canadians are broadband subscribers. This is the second-highest penetration in the world, and it grows directly out of the competitive frameworks that we as Canadians have put in place, which favour a rapid cycle of innovation. In the wireless market we have vigorous competition and the lowest prices in the world. But in wireline, the competitive situation is very different. Competition in local telephone service, and particularly residential, continues to be minimal. Our preliminary figures show competitors’ share of lines as just under 4%, although we were taken to task by one incumbent who insisted it was just over 4%. But whether it’s 4% or 5% or 10%, it is still far below the level necessary for the public to reap the benefits of competition; and too low to alleviate a growing concern about the re-emergence of the dreaded monster of monopolization. We had hoped that alternative technologies and providers might make their way into the local residential market – using coaxial cable, either circuit-switched or Internet Protocol; wireless or other technologies, to challenge wireline for the customer’s primary phone. There has, in fact, been some headway made by competitive providers such as Call-Net and EastLink in certain parts of the country. There is also an incipient trend, especially among young people, to use wireless as their only phone. But however encouraging these inroads may be, they remain very limited, even though alternative technologies have been around for a while. In fact, 25 years ago, in a 1977 decision defining the terms under which the cable companies could attach their lines to telephone utility poles, we stated the following: "Although the two transmission technologies – coaxial cable and copper pair – provide distinct services into the home at present, new services may develop which could be provided by either technology. In such cases, neither technology should be burdened with artificial barriers preventing their development in a fair and reasonable manner." So what has happened since? The one service that is now being provided via both technologies in a fully competitive manner is high-speed Internet access. With that exception, however, coaxial cable is still used predominantly to distribute broadcasting services, and the copper pair to carry telephone messages. In the local business market, competitors’ shares are somewhat higher. But there too, the present situation clearly does not amount to vigorous sustainable facilities-based competition that has been, and continues to be, a goal of our policies. Just as clearly, however, regulatory policy is only one element in the evolution of a truly competitive industry. Telecommunications carriers operate within an economic environment, and the current environment is a difficult one. Many participants in the sector have failed, while others have restructured. In order to succeed, competitors will require sound business judgment and effective strategies. Investors and financial institutions are still very cautious about this sector, to say the least, and they will have to regain their confidence before they are again willing to take the necessary risks. This is so in Canada as in practically every other country. And yet we cannot wait for all the stars to align in a favourable pattern. We at the commission will continue to do what we can to foster competition and excellence of service in the environment as it is. We are moving ahead with a number of follow-up proceedings which flow out of the price cap decision. In several of these cases, we have accepted the incumbent’s evidence of lower costs and we have reacted quickly to reduce prices on an interim basis. We are continuing with our Competitor Digital Network Access service proceeding which will address policy, tariff and technical issues concerning services and facilities of incumbents that may be made available to competitors. In addition to dealing with these access issues, the commission will also continue to be vigilant in dealing with anti-competitive behavior, whether in telecom, in cable, or in any other area of our jurisdiction.

Regulatory policy only one element in evolution of telephone competition

News | 12/02/2002 5:00 am EST

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