Telecom policy review opens door to deregulation

In response to emerging technologies such as Internet Protocol, a government-appointed review panel called for extensive changes to regulation that governs the telecommunications sector.

As expected, the Telecommunications Policy Review Panel, which was established by the previous government on April 11, 2005, Wednesday presented its final report to the Hon. Maxime Bernier, Minister of Industry. Industry Canada will spend the next weeks and months reviewing the report, Bernier said in a press release. Bernier went on to say that, “the telecommunications sector is of critical importance to Canada’s economy and our future well-being.” Bernier was not available for further comment, according to a department spokeswoman.

One of the panel’s key recommendations in the 392-page report is to make amendments to the Telecommunications Act that would possibly allow for the deregulation of the market to “promote reliance on market forces to the maximum extent possible” and to “limit the use of regulation to instances where market forces are unlikely to achieve these goals.”

The panel, which is comprised of Dr. Gerri Sinclair, chair, Hank Intven, member, and Andre Tremblay, member, issued statements following the public release of the report. In her statement, Sinclair urged the government to start working on policy reformations immediately.

“It is now time we started to make fundamental changes,” the statement reads. “Otherwise, our competitiveness and productivity will lag and Canadians will be deprived of the full benefits of continuing technological innovation…”

Joel Finlayson, principal, Secor Consulting, said if the recommendations are rolled into policy, there will be more deregulation across telecom and cable, which is good news for the incumbents, BCE and Telus.

“You’re going to get a leveling of the playing field,” said Finlayson. “Sure they’re big players, but they’ve had their hands tied behind their backs in terms of launching and rolling out new products.”

The incumbents, for example, have to file rate plans with the CRTC for services such as VoIP whereas cablecos like Rogers currently do not, Finlayson added.

But Chris Peirce, chief regulatory officer, MTS Allstream, doesn’t buy that argument.

“That’s a specious argument that’s made by the incumbents,” said Peirce. “Despite the fact we’re the ones that provide alternatives for IP services to businesses in Canada, we have to use the facilities of Bell and Telus. We pay those guys for network access.”

Finlayson said the panel’s recommendations are also good news for small startups looking to grab a piece of the hotly-contested IP market.

But other telecom providers, like MTS Allstream, are worried that some of the panel’s recommendations, such as the establishment of a joint CRTC and Competition Bureau, called the Telecommunications Competition Tribunal, will decrease the amount of competition and slow the pace of technical innovation. The tribunal would serve as a vehicle to help the industry make the transition between its traditional approach to telecommunications regulation to a more deregulated version, according to the panel. The report also calls for a “Telecommunications Consumer Agency” to act as an obudsman on behalf of consumers and small business customers regarding any telco service provider.

“Having new and further bodies look at the same issues that the CRTC has been looking at for some years we believe is a waste of efforts,” said Peirce.

On the consumer side, Philippa Lawson, executive director of the Canadian Internet Policy and Public Interest Clinic (CIPPIC) at the University of Ottawa, said while most people wouldn’t disagree with getting rid of unnecessary regulations, the panel has ignored those that the CRTC currently has in place to protect the consumer.

“They’re missing a big chunk of important public interest and social well being issues of consumer protection,” said Lawson. “Phone companies are required to provide print directories to us free of charge. Why wouldn’t they start charging for that?”

Lawson added that phone companies that were sending out phone bills without details on services that customers had purchased were ordered by the CRTC to provide detail on the monthly bill.

The panel’s recommendations also called for a new government initiative to increase the adoption of Information and Communications Technologies (ICTs) by public and private sector organizations. A recent report by the Institute for Competitiveness and Prosperity called for governments to introduce incentives such as tax credits to foster investment in new technologies as a way to help close the prosperity gap between Canada and the U.S. Bernard Courtois, president and CEO of the Information Technology Association of Canada (ITAC), said the ICT industry is one of the key drivers of productivity in the Canadian economy.

“On the business side in the small and medium enterprises, we are under-investing in ICT and it’s hurting Canada tremendously in terms of productivity and prosperity,” said Courtois.

A government incentive might come in the form of a tax credit, which Canadians probably won’t see until the next federal budget.

The report also recommended that the government clarify the CRTC’s regulatory powers and legal authority so it can better handle disputes relating to telecom infrastructure. ITAC’s Courtois like Peirce said the government has to be careful that those powers don’t hurt Canadian technical companies’ ability to innovate.

“There’s a huge opportunity waiting there for consumers,” he said. “The challenges are technical and operational. What you want is regulation not to be an added drag to that process.”

As part of innovation, the panel also recommended that the government ensures that by 2010, all Canadians will have access to Internet services.

The report concluded by calling for a review of Canada’s broadcasting policy framework. The panel said because IP allows providers to offer voice, video and data services on the same network, broadcasting is becoming increasingly linked to telecom.

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