Commentary from the Chairman of the CRTC, as published in the Globe and Mail on April 26th, 2006
A quiet telecommunications revolution is unfolding in Canada and around the globe, driven by technological advances.
Those of you who have opted for local telephone service delivered over the internet by your phone company or your cable television provider are experiencing the revolution first hand. The rise of “internet protocol” (IP) as the means for carrying phone conversations is great news for consumers. At the same time, IP is shifting the ground under the telecommunications industry. Old business models are fading as new ones emerge. If you’re in the telephone business, this is a time of great opportunity and great uncertainty.
A recent independent report commissioned by the federal government has proposed how we as a nation should respond to these major changes. Most of the proposals touch directly on the organization that I lead and which regulates telecom services in Canada, the Canadian Radio-television and Telecommunications Commission (CRTC). The Report of the Telecommunications Policy Review (TPR) Panel is a significant entry into the debate on telecom policy. This policy has a direct impact on every Canadian business and individual that uses a telephone. In light of the Report’s recommendations, I’d like to give you my own view on the way forward.
As the head of the CRTC, I must ensure that our telecom system serves the public interest. That means, among other things, having the best possible service at the lowest possible prices, as well as a telecommunications industry that is financially strong and technologically adept. Marrying those objectives – happy consumers and a robust industry – is the central challenge faced by the CRTC.
The laws, regulations and policies that determine what the CRTC can do must change with the times. And change, indeed, is what the Panel’s report proposed. It offered 127 recommendations, though not before rightly acknowledging that the Canadian telecom sector, today, is very healthy. Canada has the third lowest prices for residential users and the fourth lowest prices for business users among the OECD countries. And, as a result of competition between the telecommunications and cable industries, Canada is a world leader in deployment of broadband internet. Should we rest on these laurels? No. But clearly the industry, the government and the CRTC have together done much to be proud of.
Notwithstanding this success, the Report criticizes the Commission for being slow to adapt, isolated from international trends, and out of synch with the reality of the telecom industry.
What do I make of this? Let’s just say that regulation is as much an art as a science. Few regulatory questions invite simple “right” or “wrong” answers. The Panel members had to wrestle with issues on which reasonable people might disagree. This goes with the territory – a reality driven home to me in my time at the helm of the Commission.
I want to focus on how industry, the government and the Commission – should work together to further strengthen our already robust telecom system. To this end I have set up an internal working group to review each one of the Report’s recommendations. Where there are recommendations we could implement expeditiously, I expect that we will do so. Where legislation may be required or where we do not fully agree with the recommendations, we look forward to participating fully and constructively in the debate.
One of the Report’s fundamental recommendations with which we are in full agreement is that Cabinet should take responsibility for making telecommunications policy. The CRTC has had to deal with issues when successive governments did not define clear policies, even though they have had the authority to do so. The Commission has had no option but to fill this vacuum. If we have been a policy-maker, it has been by default, not by choice.
The Panel also held that competition in the few telecommunications markets that remain regulated is now strong enough, on its own, to protect consumers. The Panel argued, therefore, that the CRTC should stop making regulated companies file pricing or service proposals in advance. Instead, providers should be given carte blanche to introduce services or change prices, and if they then fail to comply with regulatory requirements, the CRTC should intervene after the fact. I agree, but only if the CRTC is also given the power (which it now does not have) to levy fines, without which such regulation would be toothless and a disservice to consumers. The Panel has done a service by recommending this combination of after-the-fact regulation and the introduction of a fining power.
It is important to also remember, the Panel’s recognition that we should not be misled by the lively degree of competition seen in urban telecom markets. The situation faced by vulnerable, disadvantaged and rural Canadians is vastly different. As the Panel observed, these consumers will need the protection afforded by regulation for some time to come.
At the Commission, I have heard from Canadians that some regulation is desired. They want to receive telecommunications services at competitive prices and look to the government to ensure that they get this through a level playing field and competition. Canadians want choice and believe the government should ensure that choice is available to them, and this what the CRTC has done.
The Panel’s report confirms, to my mind, that the issue is not “to regulate or not to regulate”, but rather “how to regulate best.” Nor is the fundamental question about whether or not to unleash market forces. These are already at work in our telecom markets. The real issue – the tough issue – is about channelling the power of markets in a way that balances the interests of all Canadian individuals and enterprises.
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Date Modified: 2006-04-26
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