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Speech
Notes for an address
by David Colville
Vice-Chairman, Telecommunications
Canadian Radio-television and
Telecommunications Commission
before the Standing Senate Committee
on Transport and Communications
Ottawa, Ontario
March 17, 1998
(CHECK AGAINST DELIVERY)
On behalf of the Commission, I would like to express our appreciation for
the opportunity to appear before you today.
When I appeared before the House Committee on Bill C-17 in December of last
year, I expressed, on behalf of the Commission, its full support for the
bill, and in particular, those provisions relating to the Commission's powers
and duties.
As you know, the Commission has over the past few years taken major steps
to open up the Canadian telecommunications market to competition, not simply
for the sake of competition, but because of the benefits that competition
will bring to Canadian consumers and the Canadian economy in general.
As I stated before the House committee, the entry into force of the GATS
with respect to basic telecommunications will mark the advent of a new and
increasingly competitive environment for the international telecommunications
industry in Canada, with many new players entering the game. In this new
environment, the Commission will require new tools to ensure that the objectives
of the Telecommunications Act continue to be met.
Among those tools is the proposed licensing power, which would assist the
Commission in dealing with the problems that can arise, for example, when
a foreign carrier who is dominant in its home market establishes a resale
affiliate here in Canada for the provision of international telecommunications
services. A Canadian carrier is subject to the Telecommunications Act.
Unless the Commission has made a decision to forbear completely from regulating
the carrier's services, the carrier is prohibited from giving an undue preference
or advantage to any person, including a company that may be affiliated with
it. Foreign monopolists are not subject to the same constraint. At present,
the Commission has no direct way to ensure that a foreign-based monopolist
does not use its market power at home to unduly or unjustly favour an affiliate
here in Canada. Since the monopolist in this case is offshore, the Commission
needs authority over the affiliate itself, here in Canada, in order to prevent
competitive distortions. By giving the Commission that authority, the licensing
power would enable the Commission to ensure that a level playing field exists
for all players in the market for the provision of international
telecommunications services, and would allow the Commission to accomplish
that task with a minimal amount of interference in the market place.
While the Commission has in the past dealt with competitive distortions in
the provision of international telecommunications, specifically in the case
of Hong Kong Tel, we note that the process was a long and difficult one.
Moreover, that case took place in an environment where there was a monopoly
in the provision of local services and a monopoly in the provision of
international facilities. Since that time, the Commission has opened the
market to local competition and, come 1 October 1998, Teleglobe's monopoly
on overseas facilities will end. In such an environment, with multiple local
and international facilities-based service providers, the enforcement of
the rules necessary for a level playing field will become more complicated.
In addition, the specific rules that formed the basis for the Commission's
ruling in Hong Kong Tel are being examined in the international proceeding
currently being held by the Commission.
I would like to note that the Commission has stated in the Public Notice
which initiated its current international proceeding that it considers that
license conditions should not constitute a barrier to entry, but rather ensure
that the regulatory regime put in place with regard to international services
is respected by service providers. Further, the exercise of the licensing
power will be subject to the telecommunications policy objectives set out
in the Telecommunications Act. In furtherance of those objectives,
the Commission's decisions in recent years demonstrate its commitment to
increasingly rely on market forces where appropriate.
The Bill also contains provisions to address the demands of the increasingly
competitive domestic environment. As you know, last year the Commission issued
an historic decision, establishing a framework for competition in the provision
of local telephone service in Canada. This has called for the restructuring
of the way in which some telecommunications services have been provided to
date. Up until now, the monopoly telephone companies have performed a number
of underlying functions fundamental to the operation of the telecommunications
network and the provision of services in Canada. These functions involve
the administration of numbering, the collection of contribution, and the
operation of various databases. With the advent of competition, it is no
longer appropriate for the telephone companies to perform all of these functions.
Rather, these functions are best performed by a third party in a competitively
neutral fashion, consistent with Canada's GATS commitments.
The industry itself is developing mechanisms to accomplish this very end.
However, because the third parties who would administer central office codes
and number portability, which are
essential for local competition, are not Canadian carriers, the Commission
does not have direct powers over these parties. Yet, the functions they are
performing are essential to the maintenance of efficient and effective
telecommunications in Canada. Therefore it is important to clarify, as this
Bill would, that the Commission has the authority to ensure that these
fundamental services are administered in the public interest, to the benefit
of all Canadians.
With respect in particular to the administration of a central contribution
fund, I note that the proposed section 46.5 would enable the Commission to
continue to ensure that rates for basic local telephone service remain affordable
in an environment characterised by local competition. In this environment,
it is appropriate that the subsidies which flow from some telecommunications
services or service providers to the providers of basic local telephone service
be administered by a neutral third party rather than by the incumbent telephone
companies.
Just as it proved necessary to establish a competitively neutral mechanism
for numbering resources and a fund to support continued access to basic telephone
service, so it will likely prove necessary, in this rapidly evolving environment,
to establish similar mechanisms for other matters. The intention here is
to provide for less micro-regulation by the Commission. Rather, where necessary,
certain activities could be performed by a third party in a competitively
neutral fashion, subject only to the general oversight of the Commission.
These are all the initial comments I wanted to make today. I will be pleased
to answer any questions you may have.
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Contact: CRTC Communications Branch, Ottawa, Ontario K1A 0N2
Tel.: (819) 997-0313, TDD:
(819) 994-0423, Fax: (819) 994-0218
This document is available in alternative format upon request.
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