Non-partisan witnesses lend support to government’s approach to telecom

Opposition members of the House of Commons Standing Committee on Industry, Science and Technology looking for reinforcement of their position that deregulation in telecommunications was happening too fast were likely disappointed following hearings on February 5 and 12.They were also probably none too happy to hear non-partisan witnesses say the government was moving in the right direction in terms of telecommunications deregulation, and that it was taking important steps in implementing the recommendations from the blue-ribbon Telecommunications Policy Review Panel (TPRP). Perhaps the more poignant and interesting comments during the recent hearings came not from the industry players but from the CRTC, the Competition Bureau of Canada and the TPRP. Hank Intven, a noted telecom lawyer, former member of the TPRP and one of the more anticipated witnesses, praised Industry Minister Maxime Bernier’s recent moves. "The government has taken some significant first steps to implement the panel’s recommendations," he said. The former TPRP member suggested in his opening remarks that the government’s orders on VoIP and forbearance "are consistent" with recommendations from the TPRP to rely more on market forces to discipline the telecommunications sector. He also noted that leaving the situation the way it is could be problematic. "It would be very risky for Canada to require or permit our regulators to devise regulatory approaches aimed at supporting one particular technology or business model and to handicap others in order to achieve a pre-determined industry structure," Intven said. The lawyer also downplayed the potential for re-monopolization of the sector if the doors to market forces discipline are thrown open. " than having the regulator direct market outcomes, you simply remove the barriers to competitive entry and that should get rid of the concerns about re-monopolization," Intven said in response to a question from Conservative MP Bev Shipley. Several opposition members were critical of the government’s number-of-competitors test in the proposed local forbearance regime. But Intven stood his ground under questioning, noting that he didn’t think there would be a huge risk in using the government’s competitiveness test and that it’s worth a try. Representatives from the CRTC, the Competition Bureau and the TPRP tried to reassure opposition members that today’s telecommunications markets are competitive and will remain so. They described the cable companies as formidable competitors well-equipped to compete in the marketplace, which have taken significant market share away from the incumbent telephone companies. Richard French, vice-chair of telecommunications at the commission, highlighted during testimony on February 5 that the incumbent operators have lost subscribers to the cable companies at a rapid pace in areas where they compete head-to-head. "The major cable companies that have offered VoIP products are, as one can see by reading their marketing and financial reporting, very pleased with the performance of their voice-over-Internet products," said French. "If we look at the data, we can see that they are making rapid incursions into the marketplace historically dominated by the incumbent operators." The CRTC telecom vice-chair also pointed out the importance of having a bundle of products to offer customers, an area where the cable companies are leading for the most part. "It is, I think, intuitively obvious that at the moment the major cable companies have a television product and the major telephone companies do not have a television product. So I suggest to you, respectfully, that though the market share may appear very impressive, the major entrants, the major cable companies, are well-equipped to compete in this marketplace," he said in response to a question from Liberal MP Dan McTeague. Sheridan Scott, head of the Competition Bureau, testifying immediately after French, referred to comments by the CRTC vice-chair that cable is increasingly offering competing services to the telephone companies. Intven stated bluntly in his opening remarks that despite 10 years of policies protecting competitive local exchange carriers (CLECs), competition from those companies didn’t really develop. "But in the meantime, the Canadian cable industry without significant regulatory support has become a strong and successful provider of competitive telecom services to Canadians. The market players and not the regulator have succeeded in bringing the benefits of competition to Canada," he said during his testimony on February 12. "The new entrants to local telecom markets, including the Canadian cable industry, have demonstrated themselves to be first-class providers of advanced broadband and now VoIP services, who can easily hold their own against the incumbent telecom carriers such as Bell Canada and Telus," Intven concluded.Opposition members did get something to cheer about though when Intven chastised Bernier and the government for moving too slowly on the second phase of the panel’s report: introduce legislative change to telecommunications regulatory framework. "While we would commend the government on starting the job of reforming Canadian telecom policy, my colleagues and I on the panel feel strongly that the government and Parliament should now move to complete the job," he said. "We believe it’s high time for Canada to modernize its telecom legislation to meet the requirements of 21st century telecommunications."Intven also criticized the government’s interventionist approach to the CRTC. "Whatever one thinks of the recent government orders to vary CRTC decisions, I don’t think anyone in a modern industrialized democracy believes that the political arms of government should regularly interfere with the decision-making process of an independent professional telecom regulator," he stated. (For more on Intven’s comments, please refer to Newsmakers on page 8.)In the past two weeks the Parliamentary committee has already heard from the major cable companies, the incumbent telephone companies, small cable competitors, other competitors and industry associations. Committee members voted on January 29 to further study deregulation of the telecommunications sector after Industry Minister Maxime Bernier adopted the policy direction to the CRTC and proposed a new local forbearance regime just before the holidays.

Non-partisan witnesses lend support to government’s approach to telecom

News | 02/16/2007 5:00 am EST

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