The CRTC plans to look for outsiders to act as phone cops to help it force compliance with its regulations and it expects to have enough cash on hand to pay for the phone fuzz by dipping into research budgets. In Telecom Public Notice 2003-4, released April 10, the commission indicated that it would be sending out inspectors to guarantee that ILECs do not violate telecom rules and that a combination of inspections and commission prosecutions may be used to ensure all the rules are obeyed (NL Update, Apr. 10/03). The CRTC listed six previous rulings where incumbents had played fast-and-loose with regulations. Most complaints about non-compliance have been filed by CLECs, which may not have the ability to monitor the incumbents to a great extent. The vice-chair of the commission says it is still working out all the details about the execution of the inspections. "Our existing staff is fully occupied dealing with issues right now. So I expect we may well want to go outside and hire some people under contract to do this for us," David Colville explains to Network Letter. "Having said that, it requires somebody with a fair knowledge of the regulatory rules and probably some sort of an accounting background as well. It’s a fairly specialized skill you’re looking for." Funding could come from existing budgets. There are no immediate plans to ask the federal government for more money. "We’d probably use, in the short term at least, some of the consulting money that would be in the budget to hire consultants for doing some telecom analysis or overviews or whatever. It’s not clear how much of this we’d need to do," he adds. One Ottawa-based telecom lawyer questions the need for accountants to conduct the investigations. Anthony Keenleyside of McCarthy Tétrault LLP wonders how one can differentiate between fiscal malfeasance and simple oversights. "That suggests if they go in and look at the books they’ll be able to find all sorts of things," he states. "And if you look at things like the winback rules, those weren’t accounting things, those were decisions taken by human beings that they were going to offer services in a certain way. So the books might show how it was recorded but it won’t show how it came about." The country’s largest ILEC thinks there could be a silver lining in the inspection dark cloud. Bell Canada believes the scrutiny could provide the CRTC with straightforward information without the corporate spin that so often accompanies it. "Quite frankly, we’re keen to see them get the correct facts before them," Sheridan Scott, chief regulatory officer for the telco, tells NL. "We find our competitors often have incorrect facts or submit opinions masquerading as facts rather than putting correct information before the commission." Scott promises Bell’s full cooperation with the new regime. She believes tweaking the regulatory process is the most effective way of offering full competition in the telephony marketplace. "We certainly think that’s how the commission should be coming at this issue of competition rather than introducing artificial measures like further discounts to help competitors," she opines. "Certainly this approach would be very much in keeping with the recent decision by the Governor in to reject the AT&T petition, where they asked for a number of discounts to the prices that they pay to us. The Governor in Council was quite clear that they were supporting stability and investment and were not interested in revisiting the commission’s decision and sending it in the direction that AT&T was interested in sending it." (NL Update, Mar. 31/03) Most observers point to Telecom Decision 2002-76 as the catalyst for the recent public notice about the use of inspectors (NL, Dec. 16/02). In that case, the CRTC found that Bell had violated bundling rules by transferring work with outside clients to affiliate Bell Nexxia without filing the appropriate tariffs. It ordered the contracts to be transferred back to Bell and expanded the rules to other contracts with companies not subject to the original complaint. It also ordered the other ILECs to show they obey the regulations. One surprising element is the regulator’s donning of the mantle of prosecutor. In the public notice, the CRTC writes, "The commission notes that, in addition to being able to consent to prosecution by a third party, it can itself take the necessary steps to commence prosecution proceedings where it considers that there has been a contravention of the Act." Keenleyside questions that interpretation. "I’ve always read the Act as saying they need to give the consent to others to prosecute, which is what they did in the Maritimes with Unitel some years ago, to let Unitel prosecute I guess it was MT&T," he states. "I stand to be corrected, but I think this is the first time where they said, ‘in that section, we interpret it broadly enough to let us be the prosecutors.’" But he concedes that having the dual threat of inspections and prosecutions may convince the telcos that the CRTC is sincere. He notes that while the six decisions cited by the commission resulted in proper adherence to the existing regulations, no prosecutions were carried out. The escalating tenor of the CRTC pronouncements may serve as a proper deterrent for the incumbents. That is certainly Colville’s hope. "It’s not clear how much of this we’d need to do. It may well be that if we do a few of these kind of randomly that that alone will demonstrate that we’re serious about this," he states.