Industry Canada

Industry Canada

December 11, 2006 16:05 ET

Canada's New Government Proposes to Accelerate Deregulation of Local Telephone Service in the Interests of Canadian Consumers

OTTAWA, ONTARIO--(CCNMatthews - Dec. 11, 2006) - The Honourable Maxime Bernier, Minister of Industry, today announced a government proposal to change a decision by the Canadian Radio-television and Telecommunications Commission (CRTC) that would put in place a revised framework to determine when to deregulate retail telephone prices of the former monopoly telephone companies.

"Canada's new government has an ambitious policy agenda for the telecommunications sector, the essence of which is a new regulatory framework that is more modern, flexible and efficient," said Minister Bernier. "The government's proposal is intended to stimulate competition and innovation among local telephone service providers so that Canadian consumers and businesses will benefit from even more choice, improved products and services, and lower prices."

In June of this year, Minister Bernier tabled a proposed policy direction to the CRTC, signalling the government's intention to direct the CRTC to rely on market forces to the maximum extent feasible under the Telecommunications Act and regulate only when necessary.

Earlier this year, the CRTC issued Telecom Decision CRTC 2006-15 (Forbearance from the regulation of retail local exchange services), which laid out a framework for price deregulation of local telephone service provided by traditional telephone companies. Minister Bernier consulted and reviewed this decision, and will now propose to replace the CRTC's market-share test with one that emphasizes the presence of competitive infrastructure in a given geographical area.

The proposed variance is linked to proposed amendments to the Competition Act that would establish financial penalties to deter anti-competitive behaviour in deregulated telecommunications markets, which were introduced by the Minister in Parliament on December 7, 2006.

"This initiative reflects our agreement with the advice we've received from the Telecom Policy Review Panel to rely on market forces to the maximum extent feasible," said Minister Bernier. "This is another step towards our goal of reshaping telecommunications policy so that it supports an internationally competitive and robust telecommunications industry here in Canada."

Backgrounder

Government's proposed changes to the CRTC's local forbearance decision

Competition is essential for a vibrant, healthy telecommunications sector. The importance of competition in a telecommunications policy framework was underscored in the recommendations of the Telecommunications Policy Review Panel (TPRP) when it released its final report in March 2006. The Panel recommended Canada modernize its telecommunications policy framework to allow market forces and competition to guide the growth of the industry.

The proposed policy direction to the Canadian Radio-television and Telecommunications Commission (CRTC), tabled by the Industry Minister in June 2006, followed the advice of the TPRP, directing the CRTC to take a more market-based approach to implementing the Telecommunications Act and regulating only when necessary.

In Telecom Decision CRTC 2006-15 (Forbearance from the regulation of retail local exchange services), the CRTC laid out its criteria for determining when it would forbear, or refrain, from regulating local telephone service provided by the former monopoly telephone companies. It determined forbearance would occur only after the former monopoly telephone company had lost 25 percent market share in a defined geographic area, provided access to certain services to competitors, filed rates for certain competitor services and met 14 quality of service standards for services provided to competitors. The CRTC also maintained regulations on marketing until the former monopoly telephone company had lost 20 percent market share in a defined geographic area.

In response to this decision, the Governor in Council received a joint petition from Aliant, Bell, SaskTel and TELUS as well as separate petitions from the Government of Saskatchewan and the Coalition for Competitive Telecommunications. These appeals argued that sufficient competition already existed in the market and deregulation should proceed more rapidly.

The government is proposing to change the CRTC decision to accelerate deregulation of retail telephone prices of the traditional telephone companies and has introduced amendments to the Competition Act to deter anti-competitive behaviour, thus benefiting consumers. On December 16, 2006, the proposal to change the CRTC decision will be in the Canada Gazette for a 30-day public comment period: canadagazette.gc.ca/partI/index-e.html.

The government is proposing to replace the CRTC's market share test with one that emphasizes the presence of competitive infrastructure. Infrastructure-based tests identify the presence of more than one facilities-based network in a given geographical area. Competitive infrastructure is a durable form of competition that disciplines the market and strengthens investment, while delivering the greatest benefits to consumers.

The proposal also suggests using smaller, more appropriate geographic areas, streamlining deregulation conditions that require the former monopoly telephone companies to meet standards for services they provide to competitors, and proposes to end the marketing restrictions.

The proposal would maintain existing safeguards that protect consumers such as a price ceiling for stand-alone residential service and continued price regulation in regions where there is little competition. As well, the government has introduced in Parliament proposed amendments to the Competition Act to establish financial penalties to deter anti-competitive behaviour in deregulated telecommunications markets.

Consumers will benefit from more choices and improved products and services. For the telecommunications industry, innovation will be encouraged as a result of more intense competition between traditional telephone companies and their competitors. The proposal reduces unnecessary regulation as well as increases reliance on market forces and encourages competition in telecommunications.

Contact Information

  • Office of the Honourable Maxime Bernier
    Minister of Industry
    Isabelle Fontaine
    613-995-9001
    or
    Industry Canada
    Media Relations
    613-943-2502