Telecommunications Service in Canada: An Industry Overview

Section 6: The Evolution of Competition in the Canadian Telecommunications Service Market

6.1 Introduction

Competition has been introduced gradually to the Canadian telecommunications service market over a number of years through policy and regulatory initiatives by the federal government and its regulator, the Canadian Radio-television and Telecommunications Commission (CRTC). The process started in 1979 with the end of the telephone companies' monopoly on private lines interconnected with the public switched telephone network. This was soon followed by similar liberalization in 1980 of the market which provides telephones and other customer premises equipment. In the 1980s, competition was allowed in the resale of certain telecommunications services. In 1984, the government established a more competitive industry structure in the mobile cellular telephone market, through its licensing of two providers in each region of the country.

The pace of liberalization accelerated in the 1990s. In 1992, the market for public long distance voice services was opened to competition. This was consistent with the policy objectives of legislation introduced by the government earlier that year, which passed into law in 1993 as the Telecommunications Act (the Act). The Act provided the legislative framework for future initiatives to introduce competition in the telecommunications market. Through the licensing of Personal Communication Service (PCS) spectrum in 1995 under the Radiocommunication Act, two more competitors were allowed into the mobile cellular telephone market. In 1997, the CRTC announced the regulatory framework for competition in local telephone services. In 1998, the CRTC liberalized the public pay telephone service market. Also in 1998, the CRTC opened the facilities-based international telecommunications market to competition and established a new regulatory framework for all international services, thus fulfilling part of Canada's commitment in the World Trade Organization (WTO) Agreement on Basic Telecommunications Services. In further fulfilment of the WTO agreement, Canada ended Telesat Canada's monopoly on satellite telecommunications carriage, effective March 1, 2000.

In southern Canada there are a few geographic areas served by "independent" local telephone companies which are not yet fully open to competition but are in the process of being liberalized. These companies serve rural areas and small towns, and represent less than 5% of total telecom revenue. In the case of northern Canada, (Northwest Territories, Yukon, Nunavut and northern British Columbia), the CRTC issued a decision in November of 2000 that introduces long distance competition in the territory served by Northwestel.

Following the brief description of the roles of the government of Canada and the CRTC set out below, this section provides a description of the 1993 Telecommunications Act. It then traces the evolution of competition in the Canadian telecommunications industry by describing the major regulatory and policy initiatives that contributed to the development of what has become a very open and competitive industry structure. Table D-1 in Appendix D, provides a list of major milestones in this evolution.

Government of Canada

Industry Canada, the government department headed by the Minister of Industry, has responsibility for telecommunications policy and international submarine cable licensing under the Telecommunications Act, as well as responsibility for spectrum policy and management under the Radiocommunication Act.

Under the Radiocommunication Act, licences issued by Industry Canada are required for the use of radio spectrum to provide a wide range of radiocommunication services including satellite and wireless communications services. Industry Canada allocates the spectrum with a view to advancing public policy objectives, preventing harmful interference and enforcing international obligations. When exercising powers under the Radiocommunication Act, the Minister of Industry may take into account all matters considered relevant for ensuring the orderly establishment or modification of radio stations and the orderly development and efficient operation of radiocommunication in Canada. The Minister may also have regard to the Canadian telecommunications policy objectives set out in the Telecommunications Act.

More information regarding international submarine cable licensing requirements can be found in section 6.3 of this document. In addition, more information on spectrum policy and management can be found on Industry Canada's Spectrum Management and Telecommunications Web site at http://strategis.gc.ca/spectrum.

The Canadian Radio-television and Telecommunications Commission (CRTC)

The CRTC is responsible for the regulation and supervision of telecommunications and broadcasting services in Canada. The CRTC is an independent federal agency with quasi-judicial status. Its institutional structure and powers are outlined in the CRTC Act, the Broadcasting Act and, as described above, the Telecommunications Act. The CRTC Act provides for up to 13 full-time and 6 part-time members (Commissioners), to be appointed by the Governor in Council for terms not exceeding five years. The CRTC currently functions with 13 full-time members and no part-time members.

More information about the CRTC can be obtained on the CRTC's Web site at http://www.crtc.gc.ca or by calling toll free at 1-877-249-CRTC (2782) or TDD 1-877-909-2782.