Time to review 2006 policy directive to the CRTC, consumer advocates say

The past two years or so have been turbulent for the CRTC. Many regulatory developments emerged—such as court decisions on Globalive Communications Corp. and value-for-signal, a politically charged review of wholesale usage-based billing, and large-scale broadcasting acquisitions—that directly affect the way Canada’s broadcast and telecom behemoths conduct their operations. While the public may not be keeping an eye on the latest regulatory debates, decisions have the potential to affect not only how much they pay for what have arguably become essential services, but also how they receive them. No one would argue that the CRTC has it easy. It must examine complex industry trends, understand the significance of rapid changes in technology, and figure out ways to balance industry interests with those of consumers. With such a challenging mandate, it’s not surprising that some argue the CRTC tips the balance of power in favour of industry. When the CRTC's value-for-signal decision came out in March 2010, one newspaper wrote that it’s “time the CRTC start thinking about consumers.” Fast-forward to July 2011 and many questions remain the same. Last month, the commission’s fact-finding consultation on over-the-top services drew criticism over the CRTC's interests in consumer protection. The CRTC is foremost a creature of statute—its operations must be based on the powers and directions it derives from the Telecommunications Act and Broadcasting Act. The Broadcasting Act, enacted in 1991 when the Internet was not a significant source of broadcast entertainment for Canadians, says little in terms of consumer protection, focusing more on the delivery of Canadian content. It does, however, say that the Canadian broadcasting system should be regulated in a flexible manner that facilitates the provision of Canadian programs to Canadians, and that it should not inhibit the development of information technologies to deliver broadcasting services. The Telecommunications Act of 1993 goes a step further, stating that telecom policy must render reliable and affordable services of high quality accessible to Canadians living in urban and rural areas across the country. Denis Carmel, a spokesman at the CRTC, said in an interview that, under the acts, the commission must regulate in the public interest. “We are not a consumer-protection agency. We are here to ensure that the broadcasting and telecommunications systems in Canada are in the interests of Canadians,” he said. “We have very open proceedings that allow anyone to participate. Obviously we have to balance the interests of various parties … It’s more about the system and making sure it’s healthy for Canadians.” But some groups would argue the acts should provide a clearer focal point for the CRTC to protect consumers. “The main difficulty with the Telecommunications Act is that it’s meant as a blueprint for deregulating the monopoly industry and is not meant as a blueprint for promulgating universal rules across a full range of providers,” Michael Janigan, executive director of the Public Interest Advocacy Centre (PIAC), said in an interview. “That’s principally the difficulty we see in a variety of circumstances where, what is really needed, is rather than looking at whether a monopoly provider should be regulated, there should be a set of rules that mandate fairness for consumers.” Janigan said the CRTC’s power to protect the interests of consumers is often impacted by whether it has deregulated a service. Wireless, for example, is deregulated, which means that it’s difficult to make changes if consumers complain of high prices. “If they have forborne from regulation and have for example forborne on the power to set just and reasonable rates, they’ll certainly be more limited in their ability to deal effectively with the service,” he said. Janigan noted that, because courts have been “largely permissive” when it comes to the CRTC’s powers, the commission has often had the flexibility to address consumer issues as they arise. The commission’s main challenge, he said, is taking action under a 2006 Conservative government policy directive issued by then-industry minister Maxime Bernier. “It has mandated a set of regulatory hoops that the CRTC has to go through before it can do something that is consumer-responsive. That has been a big issue in our view,” he said. The 2006 policy directive instructs the CRTC to rely on market forces to the maximum extent feasible for telecom issues. Janigan said the government should rescind the policy objective and look at combining the broadcasting and telecom acts into single statute. “What’s needed now are tools that effectively protect consumers and promote competition,” he said. “Eventually, they have to figure out a way to deal with an act that is really out-of-date at this point in time and a Broadcasting Act that does not fit with the new reality of the industry. There’s going to be pressure from all sides to redo the acts.” CRTC chairman Konrad von Finckenstein has spoken in favour of a merged act and its benefits in a rapidly converging telecom and broadcasting environment. Sheridan Scott, former head of the Competition Bureau and a partner with Bennett Jones LLP in Ottawa, said in an interview that combining the acts would make little sense if the objective is protecting consumers. “I’m more of the view that the Broadcasting Act needs some amendments to bring it into the digital era, but I don’t think that gets fixed by putting two acts into a single act. I’d look at reforming the Broadcasting Act on its own,” she said. Scott said the main concern about consumer interests isn’t amendments to legislation, it’s ensuring consumer groups have a say in proceedings and hearings. She said the upcoming Canadian Broadcasting Participation Fund will help promote the participation of consumer-interest groups at broadcasting hearings. “What’s important is having the mechanism to bring forward that point of view. The CRTC probably has the flexibility under the Broadcasting Act to take these concerns into consideration,” she said. Scott added that questioning the CRTC’s relevance and role in protecting consumers is nothing new. “There are always people who disagree with CRTC decisions. That’s why you have a regulatory body like the CRTC that has to decide on how to balance competing interests,” she said. “Because people are unhappy doesn’t mean it’s broken.” David Ellis, a technology consultant and instructor at York University’s department of communication studies, said in an interview that the CRTC has in some cases favoured industry interests. “In several different ways, the commission has gone completely away from any attempt to provide meaningful measures for consumer protection,” he said. “So far, I think it’s one-nothing, industry versus consumers.” Ellis attributes this to the CRTC’s ability to conduct meaningful research on consumer needs. “There is a problem about understanding how things actually work … that creates a skewed perspective,” he said. Ellis added that the CRTC’s failure to become a champion of consumer interests also lies in the way it carries out its mandate. “If you look at things like the complaints process and the confusion that’s been created between the CCTS and the commission as the place to go to for complaints; if you look at the website; if you look at the way they handle questions about how things work and the way they handle inquiries from people … it looks like they’re making little or no effort to address the needs of consumers,” he said. “I just don’t think that the commission is equipped empirically, nor does it have the right mindset, about consumers.” Carmel said that the CRTC website has been a “long-term struggle” for the commission because of the large amount of archived information generated over the years, which now represents about 130,000 pages of content. He said that the commission is working to improve the website’s search function. Carmel added that the commission is also trying to make its complaints process easier to navigate for consumers, as well as more transparent, particularly by making previous complaints accessible online. For things to change at the CRTC, the 2006 policy directive would have to be “seriously rethought,” Ellis said, but cautioned that he believes there is little political will to do so. “There has to be something that comes from the top and language that directs the commission to provide much better services on their website, to provide much better education and outreach services and to find a balance between market forces and consumer needs,” he said. But according to the Harper government, consumer interests are already a policy priority. Michael Cimpaye, a spokesman for Industry Canada, said in an email that part of the CRTC’s objective is to ensure the delivery of high quality telecommunications services at affordable rates. “The policy of the Harper Government has, and always will be, to encourage competition, increase consumer choice, minimize regulation and allow market forces to prevail. These are our policies and this is our focus,” he wrote. news@thewirereport.ca

Time to review 2006 policy directive to the CRTC, consumer advocates say

Broadcast | July 22, 2011

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