CRTC VoIP ruling under fire from CEP for asymmetrical economic regulation

This summer the major incumbent telephone companies and a coalition representing the country’s largest users of telecommunications services appealed to Cabinet the CRTC’s landmark ruling on Voice over IP services. The Communications, Energy and Paperworkers Union of Canada also appealed the decision. The following is an excerpt of the CEP’s petition, recently published on Industry Canada’s Strategis web site. If Decision 2005-28 is not varied as CEP proposes, CEP’s members will be unfairly disadvantaged and their economic well-being significantly affected because economic regulation of VoIP services will be imposed on the telephone companies (ILECs) where its members work, but not on other VoIP providers, such as the cable companies or foreign-based providers. Fair competition among service providers through symmetrical regulation of all service providers will ensure that the opportunities brought about by the new VoIP technology are equally available to all communications companies and the people who work for them. On a broader level CEP strongly believes that Decision 2005-28’s asymmetrical regulatory regime will harm Canadian consumers through resulting higher prices and reduced choices. This asymmetrical regulatory treatment prevents the ILECs from competing effectively with other VoIP providers, reducing overall competition in the marketplace and harming customers. The following are examples of how this happens:• If an ILEC wants to offer VoIP as part of a bundle with another service – even with a non-telecommunications service such as cable TV – it must get prior CRTC approval. • When seeking tariff approval, ILECs’ prices have to meet complex CRTC imputation and costing rules, possibly resulting in customers paying higher prices. • ILECs are required to make end-customer access facilities (the loop) available to their competitors at low prices. This reduces incentives for competitors to invest in their own facilities.• ILECs are restricted in their ability to price their VoIP services to meet their competitors’ pricing. For example, Cogeco recently launched its VoIP service at prices which are $5 lower in Quebec than in Ontario. Bell Canada cannot do this. CEP strongly opposes this asymmetrical framework for economic regulation. This framework, if allowed to stand, will significantly harm the Canadian telecommunications industry. During the VoIP proceeding, CEP supported a symmetrical regime in which economic regulation would apply equally to all VoIP providers, including the cable companies and foreign-based providers. However, CEP’s overriding concern was, and remains, to ensure a symmetrical regulatory regime. Unequal regulatory treatment distorts markets and leads to network inefficiencies. When SaskTel would rather offer its Navigata VoIP services out-of-territory, where it escapes regulation rather than in Saskatchewan, where it is subjected to regulation, it is clear that the existing regulatory framework is having a harmful effect on services in Saskatchewan and is in effect penalizing subscribers in that province. It also penalizes our members. Increased broadband penetration is an important policy objective of all governments in Canada. Since VoIP services are expected to become a key driver for increased broadband penetration, economic regulations which limit the availability of VoIP service in any way will hamper increased broadband penetration.

CRTC VoIP ruling under fire from CEP for asymmetrical economic regulation

News | 09/16/2005 4:00 am EDT

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