In a rare show of solidarity, Canada’s largest incumbent telephone carriers asked the federal government to overturn voice over IP regulations they said would allow cable companies and new entrants to enjoy an unfair advantage, stifle competition and lead to unfair pricing for consumers.
At a press
conference in Ottawa, which was also broadcast via teleconference, Bell Canada, Aliant, SaskTel and Telus said they would be taking their appeal directly to Cabinet. The Canadian Radio-television and Telecommunications Commission recently ended months of speculation by deciding to regulate voice over IP (VoIP) similar to traditional telephone service. Incumbents would have to get pricing approval for their services, for example, and not run them at a loss.
Cable companies such as Rogers and Shaw Communications, which have both launched their own VoIP offerings in the past year, are not bound by the regulations, nor are VoIP-only companies such as Vonage.
Lawson Hunter, executive VP and chief corporate officer at Bell Canada, said Canada is now the only major industrialized country in the world to regulate retail prices for VoIP, which he described as an attempt to apply old telecom rules to what is essentially a new Internet application.
“It’s a bad decision . . . the CRTC has failed to recognize the realities of the technology and the market,” he said. “This is a regulatory regime that hobbles the companies that are in the best position to innovate.”
VoIP should not require price regulation to protect consumers, said Fred Crooks, senior vice-president, general counsel and corporate secretary of Aliant. In a thinly veiled reference to Shaw, Crooks said leaving cable companies unfettered means at least one major provider on the East Coast has already been able to provide a full range of communication products, including local telephone service. Without regulation, Aliant could offer a bundle of products and service to give customers more choice, he said. “Today, consumers don’t have that option.”
Telus executive vice-president of corporate affairs Janet Yale said Shaw has more than one million high-speed customers and is the dominant player in Alberta.
“Telus can hardly use (its) market power to dislodge them (Shaw), even if the playing field was level. We have to cut through the cable rhetoric to look at reality,” she said. “With VoIP, everyone is an entrant. No one has market power, including the established telephone companies.”
Far from harming consumers, Shaw Communications president Peter Bissonnette said he has already seen pricing for local telephone service fall since it launched VoIP services in markets such as Manitoba.
“That didn’t happen by divine intervention,” he said, adding that the ILECs are including in their appeal a request to overturn regulations that prevent them from certain bundling offers and win-back campaigns to lure former customers.
Appeals to Cabinet are time-consuming and take a lot of energy and resources away from other things, said Joe Parent, vice-president of marketing and business development at Vonage Canada. The CRTC made its decision in part, he said, because companies such as Bell and Telus already own 97 per cent of the existing telephone market.
“If anyone was allowed to come into the market – and this applies to any entrant, not just a telco or an ILEC – and exercise an undue amount of power, everyone would lose,” he said. “If you look at the situation that’s in place today, there’s nothing keeping them from competing. All they need to do is file tariffs.”
The incumbents, however, say that process is onerous and puts them at an unfair advantage compared to firms that can get services to market more quickly.