Incumbent telephone companies were dealt with a blow from the Canadian Radio and Telecommunications Commission on Friday as the regulator decided to stick with the original ruling on voice-over-IP that it made over a year ago.
Lawson Hunter, executive vice-president and chief corporate officer at Bell Canada, said the next step is to wait and see what the government does.
“It’s astonishing that in light of the direction that Cabinet gave them that they came back and did nothing, particularly in light of the fact that every other industrialized country in the world doesn’t regulate VoIP and yet they can’t seem to figure out how to do that,” said Hunter.
Ken Engelhart, vice-president of regulatory affairs for Rogers Wireless, Cable and Media, said the company has mixed feelings about the CRTC’s decision.
“The good news is the CRTC has maintained their VoIP decision but the bad news is that they’re reviewing the forebearance decision just a few short months after it was issued,” he said. “That’s a bit disappointing and creates uncertainty for us.”
The CRTC’s decision re-affirmed its original position to treat VoIP as a telephone service but also recognized that competition in local telephone service is taking hold more firmly than anticipated.
To address this, the Commission said it will reassess a decision it made in April on forebearance in which incumbent local exchange carriers (ILECs) must lose 25 per cent market share in order to operate without interferance from the regulator. The CRTC will also review the winback rule that applies to major phone companies, which currently states that the companies must lose 20 per cent market share before they can try to get customers back.
“This is now twice in four-and-a-half months that the Commission has started a process due to problems with their own forebearance decision,” said Bell’s Hunter. “They didn’t get it right then, they’ve admitted they’ve got it wrong twice, what confidence could one have that they’ll get it right the next time.”
Roger’s Engelhart said the forebearance numbers were lower than what Rogers asked them to set them at originally.
“It’s very hard to say that a market where one competitor has 75 per cent of the market is a competitive market,” he said. “The CRTC felt that 25 per cent and 20 per cent were fully competitive and we were willing to live with that.”
Hunter said that the notion that market share is equated to competition is a mistake.
“It’s more a question of choice than it is of market share,” he said. “There’s lots of choice for consumers. Hopefully, the (CRTC) will get away from market share altogether but that doesn’t sound like what they want to do.”
Bell Canada, along with Telus, has a 95 per cent market share of the local residential and business phone markets and 44 per cent of Bell Canada’s revenue is from telephone service.
More competition also means that the CRTC will have to reconsider a decision it made in June to ignore the impact of mobile phone substitution, said telecom expert Mark Goldberg, who has his own consulting business, Mark H. Goldberg and Associates Inc. He said increased competition means that the incumbents will hit that 25 per cent mark faster.
“The CRTC is saying we got it right with VoIP saying that voice is voice regardless of the underlying technology,” said Goldberg. “But we may have made a mistake in the way we’re treating all voice.”
Bell, Rogers and other voice providers can make a written submission to the government in the next 90 days after which the CRTC has 120 days to make its decision.