Voice over IP developments will result in changes to regulatory regime

The changes being brought about by the deployment of Voice over Internet Protocol (VoIP) will force the CRTC to rethink how it regulates the telephone and cable markets, a conference was told. Some suggested that basic definitions will have to be rethought. Delegates at the 2nd annual Canadian Telecommunications Forum, held in Ottawa on October 27 and 28, were treated to two lively discussions about the role of regulation in the new IP marketplace. Dispensing with the usual PowerPoint presentations that have become commonplace at such events, the four members of the Regulatory Agenda: The Pace is Accelerating panel responded to questions posed them by moderator Lorne Salzman, a partner in the McCarthy Tétrault LLP law firm. They began by discussing the recently-concluded CRTC hearings into VoIP. The tone of the hearings were different than most CRTC proceedings, noted Don Bowles, VP of regulatory affairs at Call-Net Enterprises Inc. He attributed this to the fact that the regulator initiated the hearings rather than an outside party. "The commission had a position and the ILECs freaked out," Bowles remarked. Michael Hennessy, president of the Canadian Cable Telecommunications Association, suggested that the hearings showed how concerned the established telcos are about the rise of the new service and the resulting impact on the competitive environment. "I’ve never seen Bell pull out all the stops," he stated. "It’s a public relations exercise that has spun out of control." Bell’s representative on the panel, VP regulatory law Denis Henry, maintained that there were differences in the VoIP hearings from previous CRTC discussions. For example, manufacturers and business customers intervened to a greater extent than usual. Henry wondered how the regulator would find common ground when it came to setting new rules. "I can’t think of another situation where the commission regulated a technology where some companies are in, others are starting and the ILECs aren’t there," he stated. Even the definitions came under review. Teresa Griffin-Muir, VP regulatory affairs for MTS Allstream, disputed a quote from U.S. Federal Communications Commission chair Michael Powell. VoIP is a voice service, not a data service as the American regulator asserted, she said. "In the past, the ILECs said you can’t regulate technology, you can only regulate service," she added. Bowles said that deploying IP could be easier than copper for collocation by CLECs on ILEC networks. For that reason, the broadband channel should be unbundled. The telecom representatives took turns sniping at the cable industry. Bowles noted that when cablecos and telcos offer broadband, they do so in such a manner that no one else can duplicate it. Competitors need access to high-speed networks, he stated. "You’re fighting an old fight," Hennessy responded. "It’ll be a duopoly and no one else will have access," Bowles replied. Henry reminded delegates that Calgary ISP Cybersurf had complained during the CRTC hearings that it has been unable to get third party access to the broadband networks owned by the cablecos. (The commission has since ruled on third party Internet access tariffs.) Hennessy dismissed the attacks from the telecom sector. He said there is no symmetry in the telephony market because the established telcos have such a large share of the market. Cable services are not forborne until after the firms have passed an imputation test. Speaking on a panel a day earlier, the CCTA president called for an overhaul of the regulatory system. "How can the whole world change and not regulation?" he asked.The conference’s second day began with a session entitled The Technology is Changing: Does Public Policy Measure Up?. It featured some of the most divergent opinions of the two-day forum. Michael Janigan, executive director and general counsel at the Public Interest Advocacy Centre, urged the CRTC to continue its oversight of the telecom marketplace. "What likely course of action vis-à-vis allocation of telco resources directed to the PSTN or unregulated VoIP markets would be encouraged by ILEC forbearance?" he asked. "Is there really some expectation that the Telecommunications Act objectives of public affordability and connectivity would vanish or be easily met as broadband supplants wireline for voice service delivery? What happens if the VoIP market ends up looking like the current local services market for residential telephone subscribers?" Janigan was followed by Valentin Petkantchin, research director of the Montreal Economic Institute. Drawing on material he assembled for the Institute’s working paper Do We Still Need to Regulate Telephone Services? (NL, May 26/04), he called on the regulator to get out of the way. "From an economic point of view, the CRTC role should be to do nothing," he averred. In the IP marketplace, competition will be provided by wireline and wireless companies, by ISPs and by utels. That broad array of choice makes the regulatory regime unnecessary, he argued. Panelists representing Canada’s two largest telcos want the CRTC to remain in place but they are in favour of changes to the current system. Mirko Bibic, chief of regulatory affairs at Bell Canada, repeated the company’s call for a revision of the Telecommunications Act. The act, last updated in 1993, assumes the current situation is telecom as usual. "It can’t be telecom as usual when you have all these new entrants coming in," he offered. He cited the policy reviews under way or under consideration around the world. The United Kingdom is currently reviewing its telecom rules. Australia is updating its telecom policy, which was set in 1997. A report is due next January. In the United States, FCC chair Michael Powell recently declared his nation’s 1996 Telecom Act to be out of date and urged a revision. The director of regulatory affairs for TELUS Corp. noted two major challenges in the policy sector. Opportunities to innovate and invest have been lost due to delay and indecision, Ted Woodhead said. He also complained about a lack of consistent application of competition policies that have been implemented by the commission. He called for the continued monitoring of all facets of communications markets beyond the existing government mandate. The regulator should be support by adequate resources, he added. There will also be a need for swift handling of local forbearance applications, Woodhead asserted. He sees some improvement in CRTC operations but wants further gains. "The commission has been timely in its decisions but more can be done," he stated.

Voice over IP developments will result in changes to regulatory regime

News | November 11, 2004

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