IP will enable pull distribution, making some rules obsolete

Canada needs a new telecommunications policy. The industry needs more freedom from regulation, and especially from rules based on cultural concerns. While this might seem like an old issue, what makes it different now is the critical mass of technological change that is about to leave regulators


The most obvious change is the result of convergence, driven by Internet Protocol (IP), which will enable facilities-based competition from cable providers. However, the dominance of the telcos in local service is causing concern and is a major factor in the current voice-over-IP regulatory proceedings.

If regulatory uncertainty delays facilities-based solutions, then simple Internet telephony will overtake them. Many people already use their PCs to make long-distance calls over the Internet. While there are some technical problems related to local services, solving them should be left to the industry. The CRTC has a simple role here, which is to kick-start healthy competition and prevent abuse of market power. There is no excuse to use the spectre of competition as a fishing trip to find other things to regulate. Achieving real competition in local services will remove the last hurdle to deregulation of the telecommunications industry, which should be the impetus to downsize the CRTC. A need for some rules might remain, but they should be viewed more like health and safety rules in other industries. However, such major change will unlikely happen from within, since it requires a serious shift in thinking.

Traditionally, telecommunications and cultural interests have been linked through policy and regulation. For example, the federal government struggles against more foreign ownership in telecommunications because it does not want a foreign company dictating what we see on television. The linkages are based on an outmoded model, which assumes that the broadcaster, or broadcast distributor, is able to restrict the choice of content in favour of cultural policy. But this model is about to become obsolete due to improvements in compression technology, which means high-quality video will require less bandwidth, and convergence, which will help IP video providers compete.

IP telephony will pave the way, closely followed by a new pull model for video delivery: one in which users will decide not only what and when to watch, but from which sources, anywhere in the world.

But the new model is not compatible with current policy and is not attractive to current broadcasters or distributors, since it will remove their traditional control. Therefore, support for a shift in thinking is unlikely to come from within the industry and, along with current policies, could put the brakes on progress. It would be naive to think that this issue will be resolved in less than a few years, but must act to address it. The first step is to recognize that the links between telecommunications and cultural interests must be broken. They are not sustainable in the new technological environment, unless we envisage even more restrictions on individual freedom. The federal government must look for ways to achieve its cultural policy objectives without affecting the development of the telecommunications industry (including the Internet and broadcast distribution). Canada has a choice. It could wait and react with defensive regulations, or it could lead with new policies that promote Canada’s leadership in this industry — without the need for government subsidy.

Share on LinkedIn Share with Google+