Canada Gazette

The purpose of this proposal is to release a proposed policy direction which directs the Canadian Radio-television and Telecommunications Commission (CRTC) to rely on market forces to the maximum extent feasible and regulate, where there is still a need to do so, in a manner that interferes with market forces to the minimum extent necessary.

In April 2005, the Government appointed the Telecommunications Policy Review Panel (the Panel) to examine the policy and regulatory framework and make recommendations that would help ensure that Canada has a strong, internationally competitive telecommunications industry, with world-class services for the economic and social benefit of all Canadians. On March 22, 2006, the Panel proposed 127 legislative, institutional and social recommendations to improve the effectiveness of the current framework.

A fundamental finding of the Panel was that competition in telecommunications markets has evolved to the point where market forces can be relied upon to achieve many telecommunications policy objectives and the need for regulation should no longer be presumed. This concept of reliance on market forces to the maximum extent feasible fits with the Government's overall objective of improving the competitiveness and productivity of the Canadian economy. The Panel recommended specifically issuing a policy direction under section 8 of the Telecommunications Act, and the proposed policy direction draws heavily from the proposal recommended by the Panel.

Section 8 of the Telecommunications Act provides the Governor in Council (GIC) with the authority to issue policy directions of general application to the CRTC on broad policy matters with respect to the telecommunications policy objectives set out in the Act. The proposed policy direction to the CRTC will provide policy guidance on how the Commission should exercise its regulatory mandate and direct it to take a more market-based approach to implementing the Act.

Canada has a history of telecommunications leadership in innovation and deployment of telecommunications networks and services, including early introduction of digital networks and high-speed Internet. However, Canada has not remained at the leading edge of technological development and deployment in key emerging technologies, such as wireless and broadband. Canada's key challenges are threefold: telecommunications policy and regulatory frameworks, which were last modernized in 1993, have not kept pace with the rapid pace of technological change; not all Canadians have access to advanced telecommunications networks; and Canadian firms have weak investment performance in information and communications technologies (ICTs) relative to the United States. Maintaining the current regulatory framework is not a viable option if the Government wants to improve the productivity and competitiveness of the Canadian economy and ensure a strong, internationally competitive telecommunications industry.

More market-oriented regulation is one part of a comprehensive telecommunications strategy proposed by the Panel. It also made recommendations in a number of other areas, including amendments to the Telecommunications Act; development of an ICT adoption strategy; delivery of affordable and reliable broadband services in all regions of Canada; and reform of regulatory agencies, including the creation of new institutions. These recommendations involve complex issues that will require in-depth analysis and consultations before the Government can proceed. Delaying the release of the policy direction until the Government is prepared to respond in full to the Panel's report would delay regulatory change, and mean that Canadians are delayed in seeing the benefits of a regulatory regime that relies more on market forces. It is important to note as well, that the policy direction does not diminish legislated objectives in the Act, including the objectives to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada, and to contribute to the protection of privacy of persons. The power to issue policy directions was designed to be an instrument to provide timely policy guidance to the regulator. Issuing a policy direction enables timely change toward more market-oriented regulation in advance of any legislative change which would inevitably take longer.

The proposed policy direction would formally and transparently lay out the Government's vision for the telecommunications regulatory regime, a regime where market forces are relied on to the maximum extent feasible; regulation is minimally intrusive and clearly identifies the policy objectives which regulatory measures are intended to advance; and reduction or streamlining of regulation is continuously pursued.

The policy direction will guide the CRTC toward reduced and more targeted regulation and therefore, will reduce regulatory cost and burden. Expected benefits include fewer regulatory proceedings; more streamlined tariff approval processes; and more competitive markets.

Direct costs will include the costs of CRTC regulatory proceedings to implement the direction. Not proceeding with the proposed direction could delay changing a regulatory framework which an expert panel and many industry observers have argued is too intrusive and imposes too onerous a regulatory burden. The policy direction will contribute to more effective and efficient regulation in this vital industry.

Publication in the Canada Gazette, Part I, is the first step in seeking public comment on the proposed policy direction and is a requirement under subsection 10(1) of the Act. As required under the Telecommunications Act, the Minister has also consulted with the provinces and territories and with the CRTC.

Section 47 of the Telecommunications Act stipulates that policy directions issued under section 8 of the Act are legally binding on the CRTC. Subparagraph 1(b)(i) of the proposed policy direction requires the CRTC to demonstrate compliance with the direction. Finally, CRTC decisions can be reviewed by the GIC on appeal or on its own motion, which therefore provides another means to ensure compliance.

Leonard St. Aubin, Acting Director General, Telecommunications Policy Branch, Industry Canada, 300 Slater Street, 16th Floor, Ottawa, Ontario K1A 0C8.

Notice is hereby given, pursuant to subsection 10(1) of the Telecommunications Act (see footnote a), that the Governor in Council proposes, pursuant to section 8 of that Act, to make the annexed Order under Section 8 of the Telecommunications Act – Policy Direction to the Canadian Radio-television and Telecommunications Commission.

Interested persons may make representations with respect to the proposed Order within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Director General, Telecommunications Policy Branch, Industry Canada, 16th Floor, 300 Slater Street, Ottawa, Ontario K1A 0C8, or by fax: (613) 998-1256, or to the following e-mail address: telecom@ic.gc.ca.

ORDER UNDER SECTION 8 OF THE TELECOMMUNICATIONS ACT – POLICY DIRECTION TO THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION

1. In exercising its powers and performing its duties under the Telecommunications Act, the Canadian Radio-television and Telecommunications Commission shall interpret and implement the Canadian telecommunications policy objectives set out in section 7, and particularly in paragraphs 7(c) and (f), in accordance with the following principles:

(i) rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and

(ii) when relying on regulation, use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives;

(b) when it is determined that regulatory measures are required, then that regulatory measure should satisfy the following criteria:

(i) each regulatory measure should specify the telecommunications policy objective that is advanced by the measure and demonstrate compliance with this policy direction,

(ii) economic regulation, when required, should neither deter efficient competitive entry nor promote inefficient entry,

(iii) regulatory measures designed to advance non-economic objectives of regulation should, to the greatest extent possible, be implemented in a symmetrical and competitively neutral manner, and

(iv) interconnection arrangements and access regimes, including access to buildings, in-building wiring and support structures, should, to the greatest extent possible, be technologically and competitively neutral, in order to enable competition from new technologies and not to artificially favour either Canadian carriers or resellers;

(c) in order to promote efficient, informed and timely operations the Commission should adopt the following operational practices:

(i) provide for maximum efficiency in regulation by using only tariff approval measures that are as minimally intrusive and as minimally onerous as possible,

(ii) with a view to providing increased incentives for innovation, investment in and construction of competing telecommunications network facilities, conduct a review of its regulatory framework regarding mandated access to wholesale services, in order to determine the extent to which mandated access to wholesale services that are not essential services should be phased out and the appropriate pricing of mandated services to encourage investment and innovation in network infrastructure,

(iii) maintain and publish service performance standards for the various forms of regulatory proceedings it undertakes to ensure that regulatory measures, when required, are efficient, and

(iv) continue to explore and implement new approaches for streamlining its regulatory process to enhance the efficiency and effectiveness of regulatory measures; and