Speech

Notes for an address

by Richard French

Vice-Chairman, Telecommunications,
Canadian Radio-television and Telecommunications Commission

to the Standing Committee on Industry, Natural Resources, Science and Technology on Bill C-37, An Act to amend the Telecommunications Act

Ottawa, Ontario

April 20^th, 2005

(CHECK AGAINST DELIVERY)

My name is Richard French and I am CRTC Vice-Chairman, Telecommunications. With me today at the witness table are Ms. Barbara Ursel, CRTC Legal Counsel, and Mr. Arthur Gottlieb of the Gottlieb Group Inc., the independent consultant retained by the CRTC to advise us on certain aspects of a national Do Not Call List. We have other CRTC staff in attendance and seated behind us. Thank you for this opportunity to come before you to discuss Bill C-37.

Parliament's Direction

Parliament gave the CRTC the power in section 41 of the Telecommunications Act to prohibit or regulate unsolicited telecommunications to the extent that the Commission considers it necessary to prevent undue inconvenience or nuisance, giving due regard to freedom of expression. That's our starting point.

Because what Parliament has provided in the Telecom Act is pretty general, the CRTC has developed fairly specific telemarketing rules, via extensive public processes held over the course of more than a decade.

In developing these rules, the Commission has heard from and taken into account the evidence provided by many interested persons, ranging from consumer groups, telephone companies, marketing and advertising associations, call centre operators and associations, charities, bill collectors, fax telemarketers, associations of financial institutions, seniors' groups, survey and research groups, privacy commissioners, and thousands of individual Canadians. Groups who participated in these public processes are identified in the Commission decisions themselves.

Canadians are still complaining about telemarketing calls

Despite the CRTC's rules, many Canadians are still complaining about telemarketing. We have been monitoring their complaints. Many of the complaints demonstrate significant dissatisfaction. These complaints focus on the difficulties encountered by consumers in registering their dissatisfaction and preventing continued unwanted contact.

In 2001 the Commission commenced a public proceeding to determine if changes to its rules were required. Before the Commission completed its proceeding, the United States announced that it would have a national list. In 2004¹ the Commission acknowledged the merit of a national list where a consumer could register just once and effectively stop unwanted telemarketing calls.

A National Do Not Call List -- Three Missing Pieces

But the Commission could not change its rules to bring a national list into Canada because of three missing pieces. It detailed these missing pieces in its 2004 decision and described what government action was needed if Parliament wanted the CRTC to be able to go ahead with a national do not call system.

First -- the costs involved. In its 2004 decision, the Commission noted that it was aware of the reported costs of establishing the U.S. system and stated that implementing a national Do Not Call List in Canada without appropriate start-up funding would be counter-productive.

We have studied the U.S. cost experience and can share with you today what we've learned. A costing analysis, being prepared for us, is in the final stages of development. But, I can share with you where we're at now.

Based on information prepared for us by the Gottlieb consulting group, the total start-up costs associated with a Canadian Do Not Call List, are estimated to be between $1.5 million and $1.9 million. In addition, the Gottlieb information shows, for the 26-month period under study, which includes 5 months of actual operation of the list, an estimated on-going operating cost of $4.6 million to $5.9 million. Therefore, the total costs for this 26-month period are estimated to be between $6.1 million and $7.8 million.

We can file the Gottlieb consulting group report with you when it is completed and translated. In the meantime, we have provided you with tables containing a breakdown of these estimated costs based on Mr. Gottlieb's work. We also note that the United States Government Accountability Office, in its January 2005 report to Congressional Committees on the implementation of the U.S. National Do Not Call List, has noted that the Federal Trade Commission's 2004 costs related to the list for the Fiscal Year 2004, were approximately $14 million ( U.S. ). Mr. Gottlieb can address these figures with you in more depth if you wish.

The costs associated with establishing and administering a Canadian Do Not Call List may be funded on a cost recovery basis from the telemarketers themselves. However, resolution of implementation details such as exemptions, or terms of a third party contract to establish and administer the database, will have a bearing on the feasibility of cost recovery. If cost recovery is insufficient, it is important to note that some form of government assistance could be required to fund either the start up and/or on-going costs.

As for the funding of the CRTC's incremental costs associated with the start-up and on-going operation of a Canadian Do Not Call List, we note that Bill C-37 does not address this. The CRTC portion of start-up costs are estimated to be between $1.2 million and $1.5 million. There would also be annual incremental CRTC costs.

While we are discussing the administrative modalities, I should add that we foresee, based on preliminary information prepared by the Gottlieb consulting group, that the earliest possible date for full launch of a Canadian Do Not Call List would be approximately 19 months after passage of the legislation. I have provided you with a time line identifying key steps in this roughly 19-month process. This chart is based on Mr. Gottlieb's preliminary work.

The second missing piece was effective enforcement powers. In its 2004 decision the Commission also stated that it needed significant new enforcement powers to ensure compliance with a national Do Not Call List, such as the power to impose administrative monetary penalties, not available to the Commission under current legislation. Bill C-37 provides this.

The third missing piece was a separate administrator. In its 2004 decision the Commission stated that the establishment and maintenance of a national list would likely require legislation authorizing delegation to a separate administrator. The CRTC's expertise is not as a creator or operator of large databases. The Telecom Act already empowers the Commission to delegate to administrators matters involving numbering databases, for example. Our practical experience has been to work with consortia of affected persons to choose an administrator. Bill C-37 is modelled after these provisions.

Next steps

If Parliament decides that it is appropriate for the CRTC to have this role with respect to a Canadian Do Not Call List and the enabling legislation is passed, the Commission will immediately commence a public process seeking public input from interested parties on all aspects of a national Do Not Call List. If Parliament has not legislated with respect to exemptions, this will be covered by the Commission's process as well. I would like to take a few minutes to talk to you about exemptions.

Scope of existing CRTC Rules

Our telemarketing rules now cover unsolicited live voice, fax and wireless calls to residential and business numbers but only when the calls are made for the purpose of solicitation². That's because the Commission was persuaded, after hearing extensive evidence from many interested persons, that unsolicited calls that solicit have greater potential to cause inconvenience or annoyance than such calls placed for other purposes which may be perceived as beneficial by the called party.

Survey and polling calls are not made for the purpose of solicitation and therefore are exempt.

Political calls made with a view to getting out the vote are not solicitation and are also exempt. However, a call soliciting a contribution to a political party is not exempt.

With respect to calls soliciting donations by or on behalf of charitable organizations, the evidence brought before the Commission in its telemarketing public proceedings didn't persuade it that there was any material distinction, in terms of nuisance, inconvenience and invasion of privacy, between a call made to solicit on behalf of a charity and one made to solicit on behalf of a commercial organization. Therefore, charities have never been exempted from our rules.

The same is true of unsolicited calls to a client with whom a firm has an ongoing business relationship. They are not exempt if they are made for the purpose of solicitation.

These are the current exemptions in the CRTC's rules, developed after considering extensive evidence brought by a wide range of interested participants in CRTC public processes over many years.

Bill C-37 does not address exemptions. If it were left up to the CRTC to determine exemptions for a national Do Not Call List, our current rules would naturally be our starting point. We would expect to receive extensive submissions in the public process we would hold and we would make a decision taking that evidence into account.

If Parliament considers that certain exemptions from a national Do Not Call List are desirable, then the Commission would welcome this being set out in legislation.

Summary

In broad terms, that's the picture. Parliament has empowered the Commission to deal with telemarketing for the purposes it has set out in s. 41 of the Telecom Act. Bill C-37 addresses the three missing pieces that are prerequisites to a national Do Not Call List and which the Commission identified in its 2004 decision.

As I have indicated, the magnitude of total estimated costs is not insignificant and the process for recovering some of these costs is not certain at this time.

The earliest possible date for full launch of a Canadian Do Not Call List, if Parliament decides that the CRTC should be empowered to implement this, would be approximately 19 months after passage of the legislation, based on the preliminary estimates prepared by our independent consultant.

As the Commission indicated a year ago in its 2004 decision, key decisions relating to the establishment of a national Do Not Call List in Canada are up to Parliament to decide. If Parliament decides that it is appropriate for the CRTC to have this important role with respect to a Canadian Do Not Call List and enabling legislation is passed, the Commission will immediately commence a public process seeking public input from interested parties on all aspects of a national Do Not Call List. If Parliament has not legislated with respect to exemptions, this will be covered by the Commission's public process as well.

I thank you for your attention and welcome your questions.

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This document is available in alternative format upon request.

Source: Gottlieb Group estimates

Source: Gottlieb Group estimates

Footnotes

1 Telecom Decision CRTC 2004-35, 21 May 2004.

2 Solicitation is defined by the CRTC as the selling or promoting of a product or service, or the soliciting of money or money's worth, whether directly or indirectly and whether on behalf of another party.

3 Based on an estimate of costs from passage of Bill C-37.

4 Based on an estimate of costs for a one year period after contract award which includes 5 months of actual operation.

Date Modified: 2005-04-20

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