NL Newsmakers

The CRTC initiated last week its much anticipated proceeding on the implementation of rules surrounding Voice over IP (VoIP) communications. The following is the Canadian Cable Television Association’s position on VoIP, presented by acting president Michael Hennessy. A recent Network Letter article on the upcoming CRTC proceeding on Voice over Internet Protocol (VoIP) may have left some confusion with respect to the CCTA’s preliminary position on VoIP (NL, March 31/04). We appreciate this opportunity presented by Network Letter to explain what we see as the key issues in that proceeding. First, while IP has the potential to enhance a variety of communications services, we believe that if IP networks are interconnected to the PSTN to provide telephone service, then IP providers should be treated in a similar fashion as other service providers. The treatment should recognize that different regimes exist today for ILECs, CLECs, resellers and wireless service providers, which reflect the market position of the different classes of service provider, the type of interconnection sought and any existing technological barriers to meeting certain obligations. The fact that the underlying technology is not circuit-switched should not be the determining factor for the regulatory treatment of the service provided. Focusing on the nature of the service and the service provider’s position in the market, rather than the underlying serving technology, is consistent with the CRTC’s technology neutral approach. Effectively, this means that when an ILEC provides local voice service using IP, it should do so under existing tariffs and when it is a competitor a much reduced regulatory framework applies. Second, as CCTA has noted in previous proceedings, the existing CLEC rules can accommodate a larger cable operator that wants to use IP to launch a telephony service today. These rules were designed to be technology neutral. Accordingly, should an IP-based cable company seek to enter the market as a CLEC, approval should not be contingent on the outcome of the VoIP proceeding. That being said, CCTA is concerned that the current rules limit competition, particularly in smaller centres. CCTA also believes that the CLEC rules can be enhanced to increase incentives and strengthen the conditions for sustainable entry regardless of underlying technology. Areas that need to be, or are being addressed, include the appropriate number of points of interconnection, separate trunk groups for different types of traffic and possible price adjustments that reflect the underlying efficiencies of IP. Third, because of cost/scale barriers in existing tariffs, we anticipate that many, particularly, smaller cable companies may consider services provided by other CLECs as a means to enter the voice telephony market. In some communities this model has the potential to bring choice and competition where stand-alone CLECs would not otherwise enter. This model is one way to reduce the initial costs of interconnection and regulatory requirements that a full service CLEC would face. Fourth, we do not consider that the potential for IP telephony provides sufficient grounds to consider lighter regulation for ILECs. Overall, ILECs still control 97% of the residential telephony market even after more than five years of local competition. IP telephony may hold promise for the future but today it is still untested. Moreover, only residential customers who have taken up high-speed Internet service can use the service - this is far from the ubiquitous reach of traditional wireline service. Finally, CCTA believes that the use of IP by Internet customers to talk to others on the ’Net on a non-interconnected basis should remain unregulated. Users of these voice services do not benefit from the ability to connect universally with traditional telephone users. The limitations of such services are similar to the PC voice model previously recognized by the CRTC. Our customers should be free to access such Internet applications without regulatory constraint. In summary, the current CLEC regulations can accommodate a cable company that wants to enter the voice services market today, regardless of the underlying technology. That said, we believe that some of the requirements for CLECs have created economic barriers to entry that should be addressed if competition is to take hold. We also believe that there is no evidence to support a new regulatory regime for ILECs’ VoIP-based telephony services. Encouraging competition in the local telephony market will be best served by identifying what barriers to entry may exist under the current rules and what options are available to overcome them. The upcoming CRTC consultations will provide an excellent opportunity to discuss how best to stimulate competition.

NL Newsmakers

News | April 14, 2004

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