|
|
Speech
A PROMISING FUTURE FOR THE WIRELESS COMMUNICATIONS INDUSTRY
Notes for an address by Françoise Bertrand, Chairperson
Canadian Radio-television and Telecommunications Commission
to the Canadian Wireless Telecommunications Association
Montréal, Quebec
June 3, 1997
(CHECK AGAINST DELIVERY)
Good day, ladies and gentlemen.
First I would like to thank you for inviting me to your convention, and for
giving me the opportunity for the first time to address the representatives of
the wireless communications industry.
This convention that is opening today marks an important step for your
industry. The decisions recently announced by the Commission are aimed at
reflecting the changes stemming from a more competitive environment, that will
have a major impact for the industries, the people of Canada, the international
community and the regulators. Fair and open competition, a broader choice for
subscribers, and measures to protect consumers are themes common to all these
policies. Implementing them will promote the emergence of a new competitive and
convergent universe that should enable all Canadians fully to benefit from and
participate in the new electronic era.
In this context, it seems clear to me that you are among the players who are
in the best position to meet the challenges of the information highway and to
stimulate the market through your expertise and experience. In recent years you
have succeeded in offering products and services that have paved the way for new
forms of communication for all Canadians. Technological difference, your ability
to innovate, research and development, and the special relationship you have
developed with your customers are; in my view, major assets in a rapidly
expanding market. And the prospects for growth are far from saturated. New
technology is being developed at a rapid pace: examples are the local multipoint
communication systems (LMCS) or the multipoint distribution systems (MDS), for
which a licence application hearing was held last week. These new possibilities
present so many opportunities for you to create a competitive environment that
will benefit all the other players, and thereby consumers as well.
Decisions on competition in local telephone service
The world of telecommunications is rapidly changing, and the Commission must
also adapt. That is the spirit underlying the decisions we have published in
recent months, and which I would like to discuss in greater detail. The Mayday
decisions define the rules of the game to facilitate the introduction of
competition in the local residence and business telephone services market, to cap
the prices for local services established by the telephone companies and to
increase the number of contributing interexchange services. All these decisions
lay the foundations for the communications universe of the 21st century.
First let us look at the principles underlying the decision on local
telephone competition. To begin, the new competitors will be treated as
equals or co-carriers, not as clients of the present telephone companies. Changes
to the present consumer service networks will be reduced to a minimum, without
limiting the prospects for innovation; thus all the newcomers will be able to
access these facilities. Furthermore, the retail prices of the services offered
by the new competitors will not be regulated. Also, subscribers will be
completely free to choose among local service suppliers, wireless communication
services and long distance services companies. Lastly, these decisions apply to
all those involved, regardless of the technology used.
Although we are encouraging the newcomers to enter the market as soon as
possible by means of a resale regime, we are stressing competition based on the
facilities in the medium and long terms. This is a real opportunity for the
wireless communications industry. You have facilities throughout the country, and
you are building new ones every day. Clearly, you have a real advantage in
carving out a choice position for yourselves in this market, as new suppliers of
personal communications services, local multipoint communication systems (LMCS)
or cellular telephone service suppliers. In the final analysis, and in terms of
the business opportunities that seem most promising to you, the decision of
whether to position yourselves in this market is entirely up to you. You will be
free to act as new competitors by honouring certain obligations or by continuing
under the present system.
As for funding, the Commission has decided that there will be only one
explicit source of funding, the contribution to the shortfall in local and access
services paid to the existing telephone companies by long distance services
suppliers. Here I would like to raise a point that will be of particular interest
to you. In its decision on the Scope of Interexchange Contribution Paying
Services , the CRTC stated that suppliers of wireless services, other than
pager services, should be required to pay a contribution, as of 1 January 1998,
to the extent that they use the switched public telephone system to carry their
interexchange traffic. However, in broadening the contribution obligation, the
Commission removed the prohibition against these same suppliers providing long
distance services between land-linked fixed stations.
The Commission also decided to freeze the amount of the interexchange
contribution at 2 cents a minute for the first four years of price cap
regulation. The rates will be set during the proceedings aimed at implementing
price cap regulation for the Stentor member telephone companies. This funding
will be "portable", meaning that all local services undertakings offering
services eligible for a subsidy will be able to receive it from a central fund
that will eventually be managed by a neutral third party.
Also, we have not authorized full rate rebalancing, for fear of restricting
access to some services. We have approved, in our decision on price caps,
a maximum increase of $3 per month, on a weighted average basis. The additional
income from this third round of rate rebalancing will be used to reduce the long
distance contribution rate to a minimum of 2 cents a minute. Any amount remaining
from this increase will be used to reduce or eliminate the shortfall in the area
of depreciation that the telephone companies will have had to absorb before the
price cap period began. These "market entry" rates will be set after a public
hearing in which consumers and all interested parties will have the opportunity
to express their points of view. There will not be another round of rate
rebalancing as long as the price cap period lasts.
Finally, we have obliged all interexchange undertakings to ensure that their
local numbers are portable, and we will require them to cover the implementation
cost. To do this, the Commission has set up task forces consisting of industry
representatives with the goal of solving the remaining technical problems. This
approach is based on the conviction that you are the experts, and we sincerely
believe that the industry is in the best position to solve the complex questions
to remove the barriers to competition. I would like also to take this opportunity
to thank you for participating in the long process that led to the Mayday
decisions. It is indeed through your contribution and that of many parties that
we have been able to accomplish this, and the reactions we have received so far
have been very positive. According to our internal statistics, those 30 months of
work resulted in 24 days of public hearings, filled more than 129 binders and
produced 32,000 pages of documents! All these interventions have enabled us to
make balanced decisions, which respond to the interests of all parties and those
of all consumers. I invite you to continue working together in the same spirit.
We need to maintain a proactive dialogue, because much work related to
implementation remains to be done. That is why I am asking you to keep us
informed of progress as these decisions are implemented.
Competition in broadcasting distribution
Now let us look at competition in broadcasting distribution; the policy in
this area should come into force on 1 January 1998. Those of you who would like
to provide such services are no doubt interested in the regulatory framework for
competition in this sector. The policy has two basic objectives: to promote fair
and lasting competition in the distribution market, and thereby give consumers a
wider choice; and at the same time, to sustain and increase the amount of quality
Canadian programming in our broadcasting system.
Concerning the promotion of fair and lasting competition, we believe we have
struck a reasonable balance between the interests of consumers and those of the
cable distributors and the new competitors in these markets, through the
following measures:
- we have established policies that will require new entrants to meet the
same rules as the cable distribution undertakings with which they compete
directly, in the areas of distribution and signal substitution;
- we have removed barriers faced by new competitors in order to give them a
reasonable chance to establish themselves in the market. For example, their
rates will not be regulated, they will not have any service obligation, and
they will have guaranteed access to programming;
- we have of course kept in place certain safeguards to address concerns that
might persist until competition is well established in the cable industry. We
will introduce regulations aimed at preventing the distributors from granting
themselves undue preference in the acquisition or distribution of programming
services; and
- the new regulatory framework will give distributors full latitude for
assembling and distributing programming services, thus definitely giving
subscribers a broader choice.
As for the second objective I mentioned, which is to ensure the presence of
high quality Canadian programming, this is of course one of the foundations of
Canada's broadcasting system. That is why, beginning in January 1998, all
distributors, except very small systems in rural and remote regions, will be
required to pay 5% of their gross revenue toward supporting Canadian programming.
The imminent arrival of new players on the broadcasting scene will give rise
to new challenges. The broadcasting sector will have to explore innovative
concepts and services to attract viewers. The already existing convergence on the
Internet and on on-line services will provide increased access to radio,
television, music and film services on demand. The development of technology and
video compression will inevitably change the present environment to a more
interactive one. The Internet could eventually serve as a discussion forum,
possibly joined by video broadcasts reflecting the ideas and opinions expressed
by the viewers. Those are various avenues you will certainly be interested in
considering. For our part, the convergence of technologies invites us to reassess
the paradigms, and we must adapt to this new reality.
Role of the CRTC in this new context
In this respect, the Commission must change, and must review its methods. As
we move forward in a universe based on market forces, we will be called upon to
play increasingly the role of a referee, because the transition between a
regulated monopoly and a deregulated competitive market cannot be made overnight.
Thus for the next few years, the Commission will have to be there, with its
expertise and experience, to ensure access to an open and interoperable network
and to accompany the implementation of fair and lasting competition. While we
will fulfill the responsibility incumbent on us as a regulator, we will not
hesitate to stand aside each time we can do so. From that point of view, we have
undertaken a "visioning" exercise internally. Our objective is to identify the
stakes associated with the new environment in which the communications industry
is evolving, in order to review our strategies and processes and to formulate new
avenues for future action, because we want to take part in creating the new
world, not in holding it back.
Serving consumers better
In conclusion, I am firmly convinced that the future of the wireless
communications industry is exciting and highly promising, to say the least. I
think you have everything you need to compete directly with the conventional
services, precisely because you do not operate in the conventional manner and
because you are demonstrating great entrepreneurship. Also, the new rules will
give you the opportunity to improve service to consumers. In that connection I
want to applaud a number of initiatives you have taken in order to better serve
the public interest. I commend you in particular for launching the Canadian
LifePage program which, with the support of a number of organizations, supplies
pagers to patients in all areas of the country who are waiting for organ
transplants. I also want to highlight your efforts to find ways of enabling
telephone emergency services to trace calls. These are tangible examples of
services that help improve the quality of life for all Canadians.
The decisions I referred to earlier, and the principles underlying them,
indicate that we have just made a fresh start: the era of single distributors
using only one technology is truly past. The new regulatory frameworks will open
up the world of telecommunications and encourage you to play a dynamic role in
these markets. The new technologies, like personal communications services and
LMCSs, will help enrich our lives in all areas, both in our private and
professional lives and in sectors like health and education.
On this subject, I cannot help recalling the words of Roger Poirier in a
letter he wrote to us in Wireless Telecom magazine last year
[Translation]: "Canada could hardly permit itself to maintain discriminatory
regulatory policies for the sector of the communications industry that is
experiencing the most rapid growth." As you can see, not only did we read what
you had to say, we also heard the message clearly! In all this, the match now
beginning between all the participants will be fascinating. These are new
challenges that pose very real opportunities for the industry, and when you take
them up, the expectations and needs of all consumers can be met.
I wish you all a good convention, a good reception, and good celebrations, not
only of your past successes, but also for the innumerable successes to come!
Thank you.
- 30 -
Contact: CRTC Public Affairs, Ottawa, Ontario K1A 0N2
Tel.: (819) 997-5427, TDD: (819) 994-0423, Fax: (819) 994-0218
This document is available in alternative format upon request.
Date Modified: 1997-06-03 |
