Role and responsibilities of Canadian telecom regulator being questioned

Certain groups and companies question the CRTC’s roles and responsibilities, suggesting the telecom regulator should give up the mantra of economic regulation. The comments come as part of the Telecommunications Policy Review Panel. Launched earlier this year, the panel is studying the current telecommunications policy and regulatory framework with the goal of modernizing it. While packed full of themes within each of the three review sections – telecom regulation, broadband access and information and communications technologies adoption – the most popular part seems to be how the Commission uses economic regulation. Unsurprisingly, several parties have seized upon this issue. Proponents for changing the regulatory model believe a public utility approach is no longer appropriate. They say a new model must rely to a much greater degree on market forces. Key to migrating to this type of telecom regulation would be the elimination of the current ex ante regulatory model – where the CRTC imposes regulation on incumbents before the companies turn on services – and the start of an ex post approach, where regulation is imposed after a market is deemed to be non-competitive or a carrier demonstrates anti-competitive behaviour. BCE Inc. suggests in its comments the CRTC is misguided in its worries about ILEC dominance in the market. "Commission concerns about incumbent power (and its concomitant failure to recognize the competitive significance of new technologies and competitors, including similarly situated competitors such as cable companies) have led to an overly complicated set of price controls, economically irrational restrictions on ILECs’ pricing flexibility, and asymmetrical regulation that confuses competition with the promotion of the interests of competitors to the ILECs," the company states. The country’s largest incumbent telephone company suggests the CRTC be relieved of its economic regulation duties and be limited to social and technical aspects. "In regulating the telecommunications sector, specific responsibilities would fall to the authority with the greatest institutional competency in the area," writes BCE. "The CRTC, for example, would have jurisdiction over social and technical matters. Other issues, including matters related to competition in the market, would be handled by competition authorities – the Commission of Competition and the Competition Tribunal." Reluctance on the commission’s part to migrate to an ex post model, says TELUS Corp., could be relieved by giving the regulator greater responsibility in terms of enforcing rules rather than focusing on managing the market. "New legislation could also give the CRTC an additional enforcement tool, the power to levy administrative monetary penalties (AMPs). These administrative penalties could become a useful adjunct to an ex post tariff system and a regime where market participants are expected to comply with the rules of fair market conduct without prior consent," the western ILEC writes. The Competition Bureau itself believes to have a role to play in regulating telecommunications services. It notes, however, that rules will have to be in place to allow the telecom regulator and the bureau to effectively work together. "The challenge for regulators and policy makers in planning for, overseeing and supporting continuing transformation of the telecommunications industry from a fully regulated industry to one directed by market forces, is establishing a framework that will allow regulatory and competition authorities to work in union," the bureau writes in its comments. The commission recognizes that there is a sea of change with respect to the desire from many to eliminate regulation based on rates and prior tariff approval. But the CRTC notes in its comments that it’s important to understand what the goal of migrating to this type of regulation is. "Is it legislative policy that is no longer relevant? Is it the legislation itself which fails to give effect to a relevant legislative policy? Or have the CRTC, or the courts, misinterpreted the legislation in a manner that thwarts or fails to achieve the legislative intent?" If, as some carriers suggest, a move to competition law principles is required, then it is important to discuss the differences of the Telecommunications Act and the Competition Act, indicates the CRTC. The latter assumes a market is already competitive and only "seeks to enforce principles of fair competition" while the goal of the Telecom Act is to regulate markets as they evolve to a competitive state. In a non-competitive market it is more appropriate to have regulatory oversight than prosecutions as a means to regulate an industry. Writes the commission: "In this environment, it might be more productive to focus on how best to marry the bureau’s expertise in defining markets and assessing market power with the commission’s sector specific knowledge and status as a quasi-judicial administrative body. Consideration could, for example, be given to allowing the commissioner and her staff to participate more directly in CRTC proceedings involving competition issues where the bureau’s expertise could be utilized." Canada’s cable TV association believes there is no "pressing requirement" to radically modify the telecommunications regulatory and policy framework. The Canadian Cable Telecommunications Association (CCTA) suggests now is not the time to be looking into issues related to market power and competition, such as those currently before the commission. The Telecom Review Panel should be focusing on "longer-term policy issues, such as the implications for content regulation from the increasing integration of carriage and content in the broadband world" given the blurring distinction between telecommunications and broadcasting. The CCTA goes further and urges the panel to call for the creation of a single government department responsible for broadcasting, telecommunications and the Internet once all telecom markets are fully competitive. The overriding principles governing this department would fall under a new Communications Act. Second-round comments are due on September 15 and Network Letter will continue to follow this important process. For more details on the proposal from the Canadian Cable Telecommunications Association, please see an upcoming issue of Network Letter affiliate publication Canadian Communications Reports.

Role and responsibilities of Canadian telecom regulator being questioned

News | September 1, 2005

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