Debate over policy direction presents nothing new

In a remarkable example of déja vu, the comments received by Industry Canada on the government’s proposed policy directive to the CRTC (NL, June 22/06) have re-ignited the intense difference of opinion between incumbent carriers and competitors on the state of telecommunications competition in Canada today. The vast majority of parties submitting comments agreed with the overall thrust of the directive, supporting the language calling for the commission to rely on market forces to the maximum extent possible to achieve telecommunications policy objectives. For example, Barrett Xplore feels so strongly about the primacy of market forces in governing Canadian telecommunications policy that they have included with their comments their recent petition to the cabinet to review and vary Telecom Decision 2006-9 and, further, have asked the government to issue a directive to the commission to specifically review this decision exclusively through the market forces lens (NL, June 8/06). Where the parties differed, however, was on the issue of wholesale services, a debate that has been raging between incumbent carriers and competitors for quite some time (NL Sept. 1/06 and Aug. 17/06). The incumbents have come out strongly in favour of the directive. Bell Canada and its subsidiary, Bell Aliant, support the directive as is and are not suggesting any changes be made. "Bell Canada urges the government to adopt the Policy Direction, as set out in the Canada Gazette, at the earliest possible opportunity," it says in its comments. Telus, on the other hand, not only supports the directive, but goes further in asking the government to strengthen its language by removing all instances of the word "should" and replace them with the word "shall", in order to render the directive mandatory rather than suggestive. In addition, Telus is asking the government to issue an additional directive on the issue of the pricing of new, non-essential facilities. "In addition to the direction under consideration in these comments, the TPR Panel proposed a direction to the CRTC stating that regulating the availability and pricing of new, non-essential facilities and ancillary services is inconsistent with policy objectives set out in section 7 of the Telecommunications Act. Telus urges the Governor-in-Council to issue this policy direction as quickly as possible," submitted Telus. The incumbent carriers are joined in their support for the directive by some of Canada’s main business groups, such as the Canadian Manufacturers and Exporters, the Chambre de Commerce du Québec and the Coalition for Competitive Telecommunications, all of which endorse the government’s approach as being beneficial to their members interests as it would help stimulate further price reductions for business telecommunications services. While in support of the overall scope of the directive, competitors as diverse as MTS Allstream, the Canadian association of VoIP Providers, Rogers Communications and the True Voice of Competition (a coalition of resellers, ISPs and smaller carriers) are all arguing that the provisions within the directive concerning wholesale services be re-written given their potentially deleterious effects on competition. "Rogers wishes to emphasize that great caution should be taken in interfering with the CRTC’s regime for mandated access to wholesale services. The vast majority of the competition which exists in the business market today relies on mandated access to wholesale services. If this mandated access were to be unavailable or available only at increased rates, Rogers Business Solutions and, we believe, Allstream would have no choice but to exit most segments of the market," Rogers states in its submission. MTS Allstream offers a much bleaker assessment. "y implying that mandated access to local access facilities on fair, reasonable and non-discriminatory terms should be more restrictive, the Wholesale Directive threatens to destroy the modest inroads made by competitors. If the directive is implemented as is, Canada would be placed on a path towards decreased competition, innovation and investment and increased market concentration," it states in its submission. In addition to the predictable divergence of opinions between incumbent carriers and competitors over the issue of wholesale access, the opportunity to comment on the directive has encouraged some unusual parties to submit comments for consideration. For example, a number of organizations representing the arts have filed comments warning Industry Canada that it should address the issue of foreign ownership restrictions with care. "ACTRA is also concerned that directing the CRTC to follow ‘a more market based approach to implementing the Act’ is an initial step toward an eventual relaxation of foreign ownership rules. ACTRA has consistently held that the present ceiling of foreign ownership of 47% is appropriate to ensure that the telecommunications industry remains Canadian," says ACTRA in their submission. To counter this point, however, AT&T Inc. has suggested that the foreign ownership restrictions as applied to telecommunications facilities be scrapped in their entirety, stating that Canada has one of the most restrictive and inflexible set of direct foreign investment rules amongst all OECD countries. "Without open competition, a firm with significant market power (SMP) can have an ongoing incentive and ability to maximize profits by keeping prices higher and producing lower quantities of services than that which would otherwise exist in an efficient market," the company states. Canada’s major cable companies have sallied forth with an esoteric set of comments and suggestions. The joint submission by Rogers Communications Inc., Shaw Communications Inc., Cogeco Cable and Vidéotron ltée focuses on the specific wording of the directive, in particular, on section (a) of the directive concerning the reliance on market forces and the use of efficient regulation. "Based on our review, we are concerned that, in its current form, the wording of two of the provisions in the draft order (sections (a)(i) and (ii)) could be interpreted as conflicting with the requirements of the Telecommunications Act. We also believe that section (c)(i) is subject to the same criticism and, in our view, is unnecessary in light of the other provisions in the order," they state in their submission. Noting the commission’s statutory limitations requiring tariff filings and advance approval of rates, the cablecos suggest that section (a) of the directive be re-written to include language that specifically references market conditions and provisions within the Telecom Act to which the commission is bound. Further, the cablecos recommend the elimination of section (c)(i) regarding tariff approval measures as they argue it is made redundant by the part of section (a) dealing with the use of efficient regulatory measures. In a truly unusual submission, Telecommunities Canada – an alliance of community networks and community access projects across the country – argue that the government should be addressing issues related to the Internet and the use of information and communication technologies (ICT), matters that it states the telecommunications policy review panel neglected in its deliberations. For example, they argue that the government should form a new department – the department of information and communications technologies – to deal with the converged policy-making role of ICT and the Internet, as well as recasting the Telecom Act policy objectives to include sub-sections affirming that telecommunications performs an essential role in the maintenance of Canada’s sovereignty as well as a recognition that ICT plays an important role in social and economic fabric of Canada.

Debate over policy direction presents nothing new

News | October 13, 2006

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