Gillian Shaw
Sun
Canada’s largest phone companies denounced a Canadian Radio-television and Telecommunications Commission decision early Friday to stand by an earlier ruling and continue to regulate the price the companies can charge for Internet-based phone calls.
Although the CRTC promised to review certain aspects of the regulatory framework regarding local phone service in the wake of expanding competition, the major phone companies were not appeased.
But the news was welcomed by smaller competitors in the Voice over Internet Protocol (VoIP) market, which argue that there was no reason for the CRTC to reverse a ruling made in May, 2005.
The CRTC has said that large telephone companies could not use their pricing power to undercut smaller businesses and such newcomers into the market as cable companies. However, the government has indicated it wants the CRTC to let market forces play a larger role, and the issue came under review after the federal Cabinet asked the CRTC to re-examine its earlier ruling.
“Obviously, we are certainly disappointed with the decision today,” said Janet Yale, executive vice president of corporate affairs for Telus. “The government clearly sent the [issue] back to the CRTC for consideration because they weren’t happy with the [2005] decision.”
While the CRTC won’t allow the large companies like Bell and Telus to offer VoIP service below cost, new companies entering the market aren’t bound by such regulations.
Also Friday, the CRTC said a rapid increase in competition for local residential phone lines is leading it to reconsider a rule that only allows large phone companies to get out of pricing regulations if they can demonstrate they have lost 25 per cent of their market share.
“The real losers are consumers,” said Yale. “If we can’t make our best offers to customers because we are regulated and constrained as to what we can offer, our competitors don’t have to be sharp and nimble, and consumers don’t get the benefit of full competition.
“It’s very frustrating for us.”
The frustration was echoed by Lawson Hunter, executive vice president and chief corporate officer for Bell Canada. He said he was surprised that the CRTC made no change to its earlier VoIP decision in light of the Cabinet’s review.
“The decision in my opinion is just more of the same,” he said. “It doesn’t substantially change anything. It tries to give the impression they are seeing the market is moving quickly, but they are not moving quickly. And in the meantime consumers don’t have the benefit of vigorous competition from the telephone companies.”
In a statement issued with the decision, CRTC chairman Charles Dalfen said the commission’s “objective of a fully competitive local service market is well on its way to being met.”
“Our objective is to reduce the scope of regulation where market forces are sufficiently strong to protect consumer interests,” Dalfen said in a press release.
Bill Rainey, president and chief executive officer of VoIP provider Vonage Canada, welcomed the decision
“We’re quite pleased and encouraged,” he said. “By reaffirming the original VoIP ruling we felt that it was saying, ‘Yes, the CRTC got that right the first time’.
“For us, it is a very good decision. It is recognition that it is the small companies that are bringing innovation and choice to the country, not the telephone companies.”
The Coalition for Competitive Telecommunications added its voice to criticism of the CRTC.
“Today’s reconsideration report clearly ignores the government’s director and fails to reflect the spirit of the Telecommunications Policy Review Panel report,” Ian Russell, chair of the coalition which represents more than 12,000 companies, through various associations and agencies, including the Canadian Bankers Association, Canadian Manufacturers and Exporters, the Canadian Newspaper Association and others, said in a release.
© The Vancouver Sun 2006
