Notes for an address
by Jean-Marc Demers
Commissioner, Canadian Radio-television
and Telecommunications Commission

at the conference on "Nouvelles réalités dans
la gestion d’immeubles" presented by the
Institut international de recherche

Montréal, Quebec
April 7, 1999

Good afternoon, ladies and gentlemen.

It is a pleasure for me to be invited to speak at your conference.

The conference theme, "Nouvelles réalités dans la gestion d’immeubles", is highly relevant in these times when everything is changing at a dizzying pace. It is true that today I will give you the viewpoint not of the manager, but of the regulatory agency to which I belong. However, since everything is interrelated in this world of frequent and rapid communications, I think that it is useful to take a look together at the increasingly convergent field of telecommunications, where competition is growing. For you and for us, this evolution leads to challenges that we must meet with our acquired experience of course, but also, with considerable imagination and innovative solutions.

First I would like to tell you a little about the CRTC. I will be brief, because we are giving you a file containing detailed information about the Commission. You can also find information on our Internet site (www.crtc.gc.ca), which you can consult at your leisure for further details.

The CRTC was created in 1968; it is an independent quasi-judicial body reporting to the Minister of Canadian Heritage. It monitors and regulates the broadcasting and telecommunications sectors. It employs 440 persons and currently has 12 commissioners. Our head office is in Hull, and we have offices here in Montreal, and also in Toronto, Halifax, Winnipeg, Regina and Vancouver.

We regulate about 5,600 broadcasters (public and private – radio, television and cable) and 85 telecommunications service providers. In 1998 we issued some 2,000 decisions, 543 in broadcasting and 1,433 decisions and orders in telecommunications.

Over the past 10 years, the Commission has opened up a number of traditionally monopolistic markets to competition, both in broadcasting services distribution and in the telecommunications sector.

With new technology and the globalization of markets, the good old simple, quiet environment we were accustomed to has literally exploded. In broadcasting, cable is facing competition from direct-to-home satellite broadcasting, microwave wireless cable, multi-point multi-channel distribution systems and many others.

Telecommunications have not escaped this tidal wave either. Since the day the CRTC introduced free competition in the long distance market (in 1994) and the local telephone market (in 1997), the door has been wide open to new players in all segments of this industry. Thus today we have a communications landscape in which the supply of telephones, national and international long distance services, local services and pay telephones are and will be competitive from now on.

All these efforts have unquestionably brought many advantages to consumers. They benefit from lower long distance rates (in some cases lower than those in the United States), a wider supply of new services, and a choice of suppliers that were unavailable under the old monopoly system.

The series of decisions the Commission made to open up the telecommunications market to competition is totally in keeping with the achievement of the objectives of the Telecommunications Act. These include ensuring that the widest possible range of services is available and protecting the public interest. Still, the rise of competition has created serious challenges, both for the companies doing business in this sector as owners, tenants or managers of systems or facilities, for owners and tenants of commercial buildings who are also the users of these services, and also for us as the regulatory agency. These are daunting, complex issues.

Let us look at what is happening. The more service providers there are, the more facilities and other equipment are required to provide those services.

Where possible, the Commission has adopted regulatory frameworks designed to avoid duplication of facilities. In other words, we have tried not to force the providers to build two of everything. That is true in broadcasting, and it is even more true in the telecommunications sector, where the very nature of the networks used to provide the services has enabled the Commission to require the licensees to unbundle their networks so that the newcomers can lease the facilities they need to provide their services.

Also, we have learned over the years that the real advantages of competition do not appear until the suppliers invest and establish their own facilities. That enables them to control their internal costs and not to be at the mercy of the rates and profit margins of third parties, which after all are their competitors.

The Commission is well aware that the growing number of providers and facilities is forcing the owners and tenants of multi-tenant, residential or office buildings to solve highly complex access questions.

Previously you dealt only with one or two service providers; now you have to cope with a number of competing companies trying to gain access to your buildings and win new clients among your tenants. And of course those tenants are always entitled to choose the provider they prefer. That right is spelled out in full in the CRTC decision on local telephone competition. It says: "The Commission is of the view that an important objective of local competition is to increase consumer choice. The Commission considers that, in order to facilitate such choice, it is in the public interest that end-users have the right and the means to have access to the LEC of their choice in all situations."

The principle that occupants of multi-tenant buildings must have access to competitive providers is easier stated than applied. The immediate questions are: where do the local services undertakings obtain this access? At the meter or at the main terminal in the building’s basement? At the first point of entry to a dwelling or office? At the distribution panel on each floor? Must the building owner or manager grant a right of access to all undertakings that request it? Must this access be priced accordingly? Where does the provider’s network end and the building’s internal wiring begin? What about exercising the right of ownership?

To find answers to these questions, the Commission took two steps. It first created a sub-working group within its Interconnection Steering Committee (CISC). I should say that the CISC is a team formed in 1996, consisting of representatives of the CRTC, the industry and consumers, whose mandate is to identify needs and develop systems to promote competition. As for the sub-working group, it was tasked with studying questions of building access and inside wire specifically.

Throughout the fall, the telephone companies (licensees and competitors), consumer associations, various citizen interest groups, the Building Owners and Managers Association of Canada and the Canadian Institute of Public Real Estate Companies participated in this working group and had the opportunity to state their viewpoints to the Commission. One of the key questions they debated was the location of the demarcation point for the inside wire in multi-tenant buildings. This point is generally defined as the point where the local loop (which is the responsibility of the local exchange carrier) ends and the inside wire (which is the responsibility of the customer) begins.

After analysing the opinions submitted, it became clear that the location of this point could affect the enforcement and implementation of the policy on local exchange carrier access to multiple-unit dwellings. Also, the possible impact on end-users of transferring responsibility for inside wire to the building owners or tenants was not clear. Finally, there is another major aspect to this whole issue: the rights of users and the rights of owners. On this subject the Commission heard representations from realty developers, municipalities and owners concerning access to their buildings and their ability to exercise their ownership right.

Because of the complexity of this problem, the CRTC also took a second step. On December 2, 1998 it issued a Public Notice and called for comments from all interested parties on a series of questions, including the following:

• What is the most appropriate location for the demarcation point in multi-tenant buildings, with regard to the Commission’s policy of end-user choice set out in Decision 97-8?
• What are the implications, if any, of having different demarcation points in different ILEC serving territories?
• If the demarcation point is not established in the main terminal room, should LECs that own or control in-building wiring be required to interconnect with another LEC’s facilities at the main terminal room, with the corresponding obligation to unbundle their in-building wiring from the main terminal room to the demarcation point and to provide tariffed access to in-building wiring?
• What would be the potential impact on end-users of the transfer of responsibility for in-building wiring to building owners/landlords?

The Commission has received comments from the interested parties, and we are now studying them. Because the decision-making process is in progress, you will understand that I am not able to discuss it with you today. The decision is expected to be issued in the spring.

One thing is clear, however: our decision will not be taken without consultation or taking into account the opinions submitted to us. The discussions we have held with representatives of the public and the industries involved have been a valuable tool in helping us adapt the regulations to a world of telecommunications that is constantly evolving.

As I said at the beginning, managing change calls for flexibility and open-mindedness, to enable us to understand the social and economic imperatives, and to find innovative solutions that can meet the needs of those we serve.

If you have any questions, I will try to answer them, to the extent that my non-disclosure obligation permits; I must ask you to pardon me for that restriction.

Thank you.

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Contact:  Denis Carmel, Ottawa, Ontario K1A 0N2
               Tel.: (819) 997-9403, TDD: (819) 994-0423, Fax: (819) 997-4245
               e-mail: denis.carmel@crtc.gc.ca
               Toll-free # 1-877-249-CRTC (2782)