Business coalition wants to minimize regulationFormed only in late 2003, the Coalition for Competitive Telecommunications (CCT) has called forcefully on Ottawa’s regulators to step off in the evolution of what it deems a plenty competitive marketplace (see Telemanagement #219 for our initial conversation with the group). An umbrella organization of industry groups, it has been itching for an opportunity to rewrite the rules to move the CRTC back from its interventionist role. A broad review of Canada’s telecommunications rules announced in the February 23 federal budget will provide that chance, and I spoke last month with Ian Russell, chair of the Coalition and senior VP of the Investment Dealers Association, to discuss the review. What was the Coalition’s reaction to the budget speech? We look at it in a very positive light. Its highlight is the government’s commitment to a review of telecom policy, which is something we’ve been seeking for some time, among a number of other specific policy initiatives. I was pleasantly surprised that it came as quickly as it did. The fact they are going to proceed with a review is a good thing, but there’s a lot of detail missing relating to the process itself and the participants. It’s refreshing that the driver for this review has been Industry Canada. I haven’t seen that in the last couple of budgets. It’s good that initiatives are coming not just from the regulator but from the department itself. In a press release responding to the call for the telecom review, the Coalition said the regulatory framework needs to intrude as little as possible on business telecommunications. Can you elaborate? The Telecommunications Act has been around more than 10 years, which, in the context of telecommunications, is a lifetime because of the rapid pace of innovation and change in the market. The regulator has a lot of power bestowed upon it by the Act; it carries a lot of influence on the marketplace. We don’t object to that, but they appear to be quite willing to exercise it. We want principles put in place to say that regulation may be appropriate in some circumstances, but the regulator has an obligation to justify the need for it. Because if you over-regulate something you’re adding costs, and you can stifle innovation, growth and competition. The second principle is transparency, and the two go hand in hand. We’d like to see a little clearer picture of what the CRTC is doing, what its plans are. Who would you like to see on the review panel to ensure it recognizes all the intricacies at play? To deliver a comprehensive and effective review, the panel needs to look at all aspects of telecom regulation. We need to get everyone’s perspective on the table in the upcoming review. That will be critical to arriving at a comprehensive and well-reasoned set of recommendations. That requires a panel representative of all elements of the marketplace. So you would have participating in it the regulators, obviously; the business users; some groups speaking for the retailers; and the telecom providers. Obviously you want the perspective of the legacy providers and of smaller, more specialized providers coming from the Voice over IP (VoIP) or from the Internet end of things. Then you would want the cable companies represented. It would be great if a panel member had knowledge of the business consumer perspective, because we believe that Canadian telecommunications policy has to further the interests of users. We think that’s critical. The year-end deadline appears aggressive. Is it achievable? I agree it’s a very aggressive time frame. If they are going to hold to that, they have left themselves a very, very tight deadline. How deep does the review have to go to address the needs of the business community? First of all, it needs to be thorough. There has been a tendency to ignore the user dimension in the policy-making process and be obsessed with the providers, and, in particular, the competitive implications for larger providers. The review has to look very carefully at the business marketplace. Then they have to look at how we should best restructure the regulatory framework in order to accommodate the needs of business. What business wants is an open, competitive, dynamic marketplace with lots of choice and flexibility in the market. The regulatory regime should be designed to accommodate that. That suggests retooling a regulatory regime that was designed for a different purpose. The system that’s in place is still a legacy framework, and we are now into a fairly advanced stage of competition in most sectors. The framework has still not caught up, and I don’t think this is a time for tinkering. It’s too heavy handed, too intrusive, and focused on the wrong things. The business market is highly competitive; you want to encourage that. You certainly don’t want to damage that. Does it make a difference to the business community what type of organization is offering these services? We are looking for a form of regulation that would provide as much access for providers of different types of services as possible so that there’s a maximum of choice and competition in the marketplace. That objective doesn’t contradict what the big legacy carriers are looking for. I think everybody is really in favour of an open and competitive market. Nothing beats choice. Wireless number portability is a significant issue for the business community. What’s the Coalition’s position? The Coalition would support a wireless number portability initiative. We sense that number portability is an issue of importance to the business community, but at this stage we are not fully equipped to speak to it. How do you assess the proposal to give the CRTC direct fining authority as a way to give teeth to a do-not-call list? The rules that came out over a year ago were in the form of a rather intrusive regulatory model. Then, right before the budget, Bill C-37 suggested to us that this was being fast-tracked as a politicized issue. Direct fining authority is an important component of the do-not-call list; those who contravene it will face a complaint mechanism and a fining mechanism. The legislation sets out a general framework, and the devil is in the details, namely how will it all come together in terms of definitional questions. The principle sounds good, and if they follow the U.S. model, I suppose that would give us some reassurance. On the other hand, I gather it will be the CRTC that will write the regulations. We could throw the baby out with the bath water if they get carried away with the way they regulate it. There was talk of how business-to-business calls were going to be a part of this do-not-call list. Is that going to be the case? If you have clients and customers who go on the list, does that preclude you from contacting them by telephone and fax? That would be a real problem for us. So we want to get in fairly quickly with a submission to the government. The list is there primarily to ensure that you and I and all of us don’t get called to death at the dinner hour at our homes. The biggest issue for the business community and the Coalition is ensuring this do-not-call list does not affect the way Canadian business does business.  We want to see exemptions and carve-outs in this legislation for business-to-business, existing-client and even personal-relationship calls, where there may be a friend or family relationship. How does the Coalition believe the CRTC should regulate Voice over IP? It goes back to our basic principles of regulation: it may be necessary and may be justified, but you should approach a particular area very carefully to avoid adverse consequences for business in the market. VoIP is simply a reflection of the dynamic innovation and growth in telecommunications and in particular the Internet. The Internet is integral to business and is a very important business tool. Nobody should be doing anything that might adversely affect business through stifling innovation. The government and the CRTC recognized those principles when they took a first look at the Internet. Then out of the blue the CRTC has come forward with proposals to regulate VoIP. We look at that as an extension of traditional legacy regulation, and we’re opposed to it. If the CRTC is going to come forward with any new policy, it should justify what proposals it has in terms of what the benefit is—namely, where’s the huge problem that justifies this legacy regulatory framework? First of all, there doesn’t appear to be a competitive problem that needs this heavily weighted regulation. As well, the commission’s preliminary views could have a damaging impact on an innovative and competitive marketplace. We made those arguments last September before the CRTC, and I hope that we had some impact. The last thing we need is another heavy layer of regulation that is completely unjustified and would be very detrimental to the business user of telecom services. However, there is a need for an access condition such that any end user or potential business customer for VoIP service could choose freely among all VoIP providers. No one should have a VoIP service bundled together with their high-speed broadband service in a way that would effectively deter or prohibit a potential VoIP entrant provider from providing its own service. We try to be carrier agnostic. Business needs to ensure that VoIP will remain competitive in what we hope will be a largely deregulated market. ‘Canadian Telecom Policy Objectives Are Internally Contradictory’—CCTThe Coalition for Competitive Communications summarizes its approach to telecom policy and regulation in the following six points: 1. The Canadian telecommunications policy objectives are internally contradictory and fail to provide the CRTC with government priorities. 2. The Telecommunications Act is intended to promote competition and allow market forces, and not regulation, to protect the interests of users. However, the statute is still predominately a collection of CRTC regulatory powers that are a legacy of the pre-competitive era of monopoly regulation, raising the risk that CRTC intervention will stifle competition and innovation. 3. The CRTC has proven itself incapable of expeditious decision making under the legislation, and must be made subject to statutory decision making intervals, failure to meet which would result in deemed approvals. 4. The existing legislative procedure for issuing government policy directives is so cumbersome as to render it effectively impossible for the government to direct the CRTC on telecommunications policies and priorities. 5. The CRTC’s powers to intervene in business contracts between telecommunications suppliers, customers and users are extensive and disregard the sanctity of contracts that the courts have consistently upheld. CRTC regulatory intervention should be justified in terms of cost-benefit analysis. 6. The CRTC requires a greater range of flexible remedial powers to deal with anti-competitive behaviour once it has been proven to exist, and it needs far less power to micromanage industry structures and market shares through tariff and pricing and prior approvals on rates, terms and conditions of service.