IF CANADA’S INCUMBENT TELEPHONE companies want total deregulation quickly, they’re going to have to do it for (and to) themselves, in the marketplace.
Yesterday Industry Minister Maxime Bernier told the Economic Club of Toronto, with numerous telecom executives in the audience, that the federal government will force the CRTC to deregulate "access independent" VOIP services, no matter which company offers them or where.
The voice services offered by Primus and Vonage are prime examples. The consumer buys a special box, perhaps downloads some software and "poof", they have VOIP service in their homes –and perhaps portably, too.
The Commission’s 2005 VOIP decision (which it reconfirmed in September) rendered any move by a big telco to offer such a service very difficult because regulations would apply in its traditional territories, and not to the newcomers. That means tariff filing, win-back restrictions and other limits.
The advantage of Wednesday’s shift in policy is that the traditional telcos may now be able to offer a fully bundled package of voice, wireless, data and video – or parts of that quartet, the same way Canadian cable companies can – and do. Plus, the telcos won’t have to ask the CRTC for tariff approval, abide by the 90-day win-back rules and can price their access independent VOIP service differently in Regina and Saskatoon, for example, if they wish.
"It’s a fair compromise," Rogers Communications vice-president, regulatory, Ken Englehart, told Cartt.ca after the speech. "(The minister) is trying to open things up a bit… and it’s a reasonable thing to do… We were particularly worried about access dependent VOIP because it’s really plain ordinary telephone service with a different backbone technology."
"This decision is probably a good sign, practically," added Chris Peirce, MTS Allstream’s regulatory head. "It’s not going to overturn the whole VOIP decision."
"The notion of presumption of regulation should be completely reversed and to hear the minister say that’s where they want to go is encouraging," said Bell Canada’s EVP Lawson Hunter. "The Commission is starting to change (but) obviously I wish it were faster."
On the surface, today’s announcement is a small move. A compromise that seems to have most everyone either pleased or not-too-unhappy. However, one could also see it as an ingenious kick in the pants to the big telcos, if (and that’s a big if) Canada’s incumbent local exchange companies – Bell Canada, Bell Aliant, Telus, SaskTel, MTS and the other smaller ones – act aggressively on this newer playing field.
Right now, of the big ILECs only Bell offers a VOIP service (expect that to change, though). But, Bell doesn’t push it – keeping it only as a last line of defense – and since the "access independent" rules aren’t known for sure because they’re not yet cast in legislation, it’s not clear if Bell’s VOIP product would qualify as such.
Industry Canada’s director general Leonard St-Aubin, who was on hand for the minister’s speech, told Cartt.ca that the CRTC will be told to use the access independent definition found in its May 12, 2005 VOIP ruling. "It’s not a managed network IP voice service like you could get from many cable companies," he explained. "It’s a service that you, the consumer, obtain through the broadband Internet connection," a-la Vonage.
So, Bell Canada offering VOIP over the Bell net would not, on the surface, seem to qualify as "access independent".
"’Access independent VOIP’ – we’ll have to see what that is in the marketplace," said Peirce. "How would you have a Bell or a Telus not using their own facilities?"
If they can’t, how can Bell (to use it as the example) take advantage of the new rules? Simple – offer Sympatico Phone, or whatever it might be called, to anyone, anywhere. Got Rogers High Speed? Sell them Sympatico Phone to use on the Rogers cable system. Shaw Internet? Sympatico Phone. Telus High Speed? Sympatico Phone.
And it’s probably a pretty sure bet that the ILECs will come up with some way to offer "access independent" VOIP on their own networks. That would mean that Telus – or any of the other ILECs, could offer VOIP from Vancouver to Halifax.
What’s Bell’s plan? "We’ll see. We’ll have to assess what this decision means and in the long run the more important thing for us is to be deregulated on our wireline services and not just access independent services," replied Hunter.
If the telcos act instead and expand their boundaries, those ILECs will more quickly tear down their own walls of regulation because according to the local forbearance decision, in order to get to deregulation, a telephone company has to lose 25% of its wireline customers in a given market and provide good interconnection service to the PSTN to competitors. Now the CRTC is re-examining that 25% figure, but Telus says it has lost over 25% market share in Fort McMurray and Aliant has lost well over 30% market share in some regions of Nova Scotia. The marketplace is moving very quickly.
It only stands to reason that the more players there are competing, the quicker that 25% target in the individual markets will be reached. Granted, the traditional telcos would then be stealing each other’s customers, but so what? They’d also be adding new ones in new places, likely with multiple services. This is the brand new competitive world we’ve chosen (or have had reluctantly thrust upon us, depending on your point of view).
To be fair to the Commission, though, the ILECs could be doing this right now if they wished, outside of their own territories. Even before Wednesday’s speech, there was nothing stopping Telus from launching VOIP in Toronto or SaskTel from offering it in Moncton.
So will Canada’s legacy telcos throw their traditional wireline business under a bus and push VOIP, VOIP, VOIP? Of course not. Will they stay on their current course, losing thousands of customers while trying to ramp up terrestrial video service? Not possible. Will they attempt to adopt some sort of hybrid marketing in the middle: VOIP and quad play bundles for the early adopters, POTS for the lethargic/happy?
Of course, we’ll have to wait and see what "access independent" truly means, but while ILECs lose customers by the arena-load waiting, they could instead be acting to speed full deregulation along, while adding new customers all on their own.
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