CRTC still relevant in transition to competition, says CRTC vice-chair French

The CRTC still has a critical role to play in the transition to a fully competitive telecommunications market, commission vice-chair of telecommunications Richard French declared at a recent conference. Speaking at the TeleManagement Live 2005 conference in Toronto on October 18, French stated that the evolution to a competitive market may in fact require more rules rather than less. "The commission’s basic assumption is that truly competitive markets serve consumer interests better than regulation. But the commission’s experience is that going from a monopoly to truly competitive markets requires a whole slew of new rules and enforcement thereof," he said. "This is not unique to Canada: it applies to every liberalizing telecom regime in every industrialized country." For years, incumbent telephone companies have warned that emerging competition in several communications markets required the commission to get out of the way and let market forces protect consumer interests. But the emergence of competition and the creation of sustainable competitors are in part out of the control of the regulator. Upstart telecommunications providers need financing, and experience has demonstrated that this isn’t necessarily the easiest thing to accomplish. One only needs to look at the recent past in Canada’s telecom history to get a sense of what happened to the competitive landscape following the burst of the telecom bubble. As French highlights, entrants failed because of a lack of financing; capital markets were not excited by the prospect of financing competition against a monopoly. "Providers of the capital want to see that competitors’ initial efforts in the marketplace will not be overwhelmed, for instance, by pricing which on the part of the incumbents reflects incremental costs of network already in place...There are lots of investors still licking their wounds from these kinds of experiences in Canada," he said. Likening telecom markets to a professional sports league, the CRTC is the league commissioner and the franchises are the operators, explained French. "Everybody finds frustrating. Either the commissioner is not doing enough to foster parity or they’re doing too much redistribution of income from the rich teams to the poor teams or they are interfering too much in the operations of the individual franchises," he said. "The more the regulator hears self- interested pleading, the more the regulator becomes skeptical about what he or she is hearing and the more one feels one has to dig further and the longer and more complex the process becomes." Knowing where to draw the line Deciding between anticipating when and where competition will develop, or waiting for unequivocal evidence before deregulating is one of the most difficult issues the commission is facing, French said. He admitted that the successes of the wireless and the Internet industries might have caught a lot of people by surprise, but he added it’s tiring to now hear that the industry. "It’s going to do so tomorrow, right now, immediately, it’s already happened," he said of prognostications from the industry. "A lot of this hyperbole is damaging the effectiveness of those sorts of discussions we’re having. We’ve got to remember that for every wireless boom, there’s a CLEC bust." French suggests the commission will be "wrestling precisely with this problem of do we anticipate or do we not anticipate" for a long time. Do we wait for hard evidence or do we not wait for hard evidence?" The next six-to-eight months are going to be a critical time in terms of telecom regulation, French said, as over this period the Telecommunications Policy Review Panel will report back to the government with its recommendations on modernizing the country’s telecom policy and regulatory framework. "The challenge for the two wise men and one wise woman is that there are really two schools of thought about the adequacy of the . One is satisfied that the Act remains pertinent and sufficiently flexible to meet the demands of the pursuit of . The second group concludes the Act has served its purpose, that it dictates too much traditional command and control regulation...and that it unduly isolates telecom and broadcasting, one from the other, because these two acts cannot remain separate in the ," he said. Other issues coming up include a CRTC decision on the forbearance of local telephony services, which is expected late in the first quarter of 2006. Additionally, all eyes will be watching the performance and adoption rate of Voice over IP (VoIP) services. "We should know by the middle of next year whether the widespread optimism , that this is a mass-market product as has been suggested...whether VoIP is going to be the killer app for entrants," stated French.

CRTC still relevant in transition to competition, says CRTC vice-chair French

News | 10/26/2005 4:00 am EDT

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