The introduction of Internet telephony has rendered the regulation of Canada’s telecommunications industry “”unnecessary”” and “”obsolete,”” according to a recent economic note published by the Montreal Economic Institute.
telephony has generated “”considerable competition in the telecom sector, not only from telephone companies, wireline or wireless, but also from other sectors that offer the same range of telecommunications and broadcasting services such as cable operators, Internet service providers and electricity utilities,”” said Valentin Petkantchin, the MEI’s research director and author of the recent economic note entitled “”Do we still need to regulate telephone services?””
This new competition means the CRTC must change its “”static”” approach to measuring competition, which is based on the number of businesses in the market, he added. “”(This approach) doesn’t account for the evolution of the market.””
Until the 1990s, the CRTC protected regional telephone monopolies such as Bell and Telus, Petkantchin explained. When the federal body began to allow regulated competition, it maintained that competition in the sector was still insufficient, he added.
In a public notice last December, the CRTC suggested imposing handicaps on former monopolies to “”artificially favour”” new incoming competition, and now it proposes to extend these handicaps to the Internet telephony sector, said Petkantchin.
This proposition is anti-competitive and will have negative consequences not only for business but for residential customers, he said.
“”We’re talking about lower price flexibility, a lower range of bundled services and lower innovation when, for example, there is telephone over Internet protocol.””
In a preliminary report last April, the CRTC suggested it would regulate voice over Internet Protocol in the same way as regular telephone services. The commission expects to release its final report in the first or second quarter of 2005. Until then, the federal body cannot comment on MEI’s findings, said Philippe Tousignant, CRTC spokesman.
“”He (Petkantchin) raises the issue of VoIP proceedings and forbearance questions about local telephone service,”” he said. “”And these are big issues before us at the moment, so I cannot express any views on his views.””
Jeff Pulver, CEO of Pulver.com and co-founder of Boston-based Vonage, agreed that some of the CRTC’s actions are counterintuitive.
“”Why should the incumbent be penalized for being an incumbent and be regulated in their territory when anyone else coming into their territory can (forgo) regulation?””
Like Petkantchin, Pulver said the regulation of incumbent carriers discourages much of the innovation that emerges from the telecom sector.
“”In some ways, it’s the incumbents who are investing in this technology more than anyone else. And if anyone’s going to pave the groundwork for other people to follow, chances are it’s the incumbents. So why create a social policy that discourages innovation?””
On the other hand, Pulver understands where the CRTC is coming from. Sooner or later, VoIP will have to be regulated, but why not hold off three to seven years so the young market can grow, and why not create a playing field that’s level so people can compete fairly across the board? Pulver asked.
“”The idea that I have to be treated a certain way just because of my legacy puts me in a caste system where I’m tainted for life without having the chance to be better or different.””