Telecommunications carriers agree with the federal government’s introduction of legislation on Monday that would allow the regulatory body for the telco sector to impose hefty fines on firms that are in breach of its decisions or the Telecommunications Act.
The legislation, brought forth by Industry Canada Minister David Emerson, will make amendments to the Telecommunications Act granting the Canadian Radio and Telecommunications Commission (CRTC) fining power under a new administration monetary penalty (AMP) plan. The plan will give the CRTC the authority to fine companies a maximum of $10 million for the first offence and $15 million for a subsequent offence. Individuals can be fined up to $25,000 for a first offence and $50,000 for a subsequent offence.
Industry Canada’s Malcolm Andrew said AMPs will give the CRTC the ability to expedite what is currently a lengthy and arduous process.
“It’s trying to make the CRTC a more efficient and effective regulator, enabling it to move more quickly,” said Andrew, senior policy advisor, telecommunications policy branch, Industry Canada. “That’s to the advantage of the industry generally.”
Currently individuals and companies who have disobeyed the Act or CRTC decisions are only punishable through a criminal proceeding in the courts. Under Section 73 of The Telecommunications Act a person can be fined a maximum of $50,000 for a first offense and $1 million for a subsequent offence; a corporation can be fined up to $500,000 for a first offense and up to $1 million for a subsequent offense.
Both Telus and Primus Canada pushed for stiffer fines in their submissions to the Telecom Policy Review panel, which was appointed in May by Industry Canada Minister David Emerson. The carriers agree that something needed to be done when it comes to giving the commission more freedom to flex its regulatory muscle.
“For the market to work all players have to play by the rules and abide by the rules,” said Ted Chislett, president, Primus Canada. “Giving some teeth to the CRTC and the ability to fine acts as a check and balance to ensure that people do that and there are consequences if they don’t.”
Similarly, Ian Scott, vice-president of federal government relations and broadband policy, Telus, said the implementation of AMPs will ensure all of the market players follow the rules.
“Giving the CRTC adequate enforcement tools including the use of administrative monetary penalties is really a prerequisite for effective regulation in today’s competitive environment,” said Scott.
The telecommunications landscape has become an increasingly competitive one thanks to technologies such as Voice over Internet Protocol, allowing new entrants like cable companies and other service providers to enter a market dominated by incumbent carriers. The latest CRTC numbers, which were released at the end of last month, show that the incumbents (Bell, Telus) continue to hold 97 per cent of the residential market share.
Prior to this legislation, many new entrants complained that the large carriers, namely the incumbents, could break the rules because the fines were too low and therefore could be viewed as the cost of doing business.
“The criticism is there isn’t enough of a punishment there,” said Andrew. “The big companies, if they choose to, can flaunt rules and know that eventually might get caught and all that will happen is they will tell me not to do it anymore.”
The amendments also propose giving the Commissioner of Competition improved access to commercially confidential information filed with the CRTC, allowing the Competition Bureau to give better advice to the CRTC and subsequently foster competition in the telco sector.