Old arguments trotted out for fight on local forbearance proposal

Industry Minister Maxime Bernier may have his hands full in the coming weeks with an increasingly divided telecommunications industry if comments filed in response to his proposed order to change local services deregulation criteria in Telecom Decision 2006-15 are any indication.The scope of comments runs the full gamut of key issues in the Canadian communications sector, going far beyond the issue of local competition to touch on foreign ownership restrictions, the level of complexity inherent in broadcasting regulation in Canada and the independence of the CRTC. While all parties agree that market forces are more efficient at regulating end-user pricing in the telecom industry, opinions diverge on how that objective should be attained in the short and longer term.MCI Canada, for example, agrees with the minister’s statements on the need to reform the telecom regulatory landscape, but has doubts that such reforms can be fully realized without first reforming the foreign ownership restrictions in telecommunications. "The proposed order misses a critical opportunity to increase the overall level of competition in Canada’s local telephone services market because it ignores the restrictions that Canada maintains on foreign direct investment in Canadian telecommunications carriers," writes MCI. "The proposed order cannot achieve its stated objective because it attempts to streamline regulation in a market which is not truly open to competitive entry and not fully exposed to the operation of market forces."In a submission co-authored by Cogeco Cable Inc., Bragg Communications Inc. (Eastlink) and Rogers Communications Inc., the integrity of the political process and the independence of the commission itself are singled out as being jeoprdized by the minister’s action. "The proposed order is the most interventionist order ever contemplated in the Canadian telecommunications sector," the three companies say. "It steps over the dividing line between policy-making and regulatory implementation and it severely blurs the distinction between government and regulatory functions. It thereby threatens the CRTC’s status as an independent regulatory agency."As could be expected the three cablecos dedicate some ink to the winback issue, going as far as to say that restrictions on winbacks should remain in place for six months even after forbearance is granted. "The degree of competition that is present in local markets varies significantly across Canada. To remove this safeguard…is extremely prejudicial to new entrants and could severely retard the expansion of competition in many areas," their submission reads. The effectiveness of the Competition Bureau of Canada to adjudicate telecom-related disputes was called into question by Canadian Cable Systems Alliance, Primus Telecommunications Canada and Quebecor Media Inc. Quebecor stated the bureau did not have the requisite expertise and could not treat, with any efficiency, the complaints that are likely to come before it. They noted, for example, that if things remain as they are, at the moment of the coming into effect of forbearance in a local market, the consequence would be a price war. This would be followed by a significant increase in the number of complaints to the bureau which, subsequently, will not be able to deal with them in a timely manner. They suggest that the end effect of this lengthy process will be either the withdrawal of local competitors from certain markets or from the broader market entirely. Not content to restrict its comments to the minister’s proposed order however, Quebecor appears to see a minister sympathetic to perhaps eliminating burdensome regulation. The company’s comments went several steps beyond the scope of the proposed order, raising issues related to broadcast regulation and wireless communications. They state that the regulatory burden they are obliged to live with on the broadcasting side is reaching a critical state, citing the 250 or so regulatory conditions they have to respect, many of which are "ancient" and have not been revisited for more than thirty years. Further, they state the CRTC has continued to make matter worse by imposing more and more conditions, making the situation more rather than less complex as technology develops. Finally, Quebecor states that the minister should look at the wireless industry in Canada, where wireless subscribers pay 60% more on average than their American cousins. Quebecor is requesting the minister initiate a spectrum auction as soon as possible to increase the number of players in the market. Many smaller or rural providers of telecom services – such as Bruce Telecom, Access Communications Corp. and Distributel – have suggested that the proposed order, if implemented, could stall the rollout of competitive services to rural and smaller centres or lead to an outright withdrawal of competitive services in these areas altogether. Access has already suggested this (NL, Feb. 2/07). The incumbent telcos and industry associations such as boards of trade and chambers of commerce all lent their support to the changes, but some were looking for revisions to the order’s wording. Bell Aliant is requesting that the government go a step further with its order and explicitly grant forbearance for the exchanges in the Halifax local interconnection region, something they have been demanding from the CRTC since 2004. In addition, the company is also requesting the government change wording of the proposed competitive facilities test. It wants it to be satisfied if alternative providers offer services "anywhere" in an exchange or local interconnection region, rather than "throughout" an exchange. Bell Canada wants the definition of facilities-based providers to be broadened to include those providers which use self-supplied network facilities as well as those that combine their facilities with unbundled loops. "The government adopt a standard for local forbearance that is consistent with the basic cable deregulation test such that the competitor’s service must be available to 30% or more of the ILEC’s NAS in the market in question," it writes. Telus Corp. recommends that it isn’t necessary for the incumbent to meet the competitor quality-of-service standards for a six month period prior to applying for forbearance in a local market. The company writes an attestation of its ability to meet competitor quality of service criteria once should be considered sufficient.

Old arguments trotted out for fight on local forbearance proposal

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

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