TORONTO – Last week’s Canadian Telecom Summit saw the leaders of Canada’s largest ILECs stay relentlessly on the attack, hitting at the CRTC as well as Canadian cable companies.
While Bell Canada Enterprises CEO Michael Sabia’s keynote on Tuesday said the telecom regs were just plain wrong, Telus Communications CEO Darren Entwistle backed him up the next day.
Both executives are peeved at the May 12th voice over Internet protocol regulatory decision which said, mainly, that for the incumbent local exchange carriers VOIP will be regulated as their traditional circuit-switched systems in that they must file tariffs each time they want to alter their pricing.
Telephony newcomers, cable companies included, do not have to file such tariffs and the ILECs are appealing the decision to the Federal Cabinet.
“Bell and Telus are now each other’s most formidable competitor in the business market – there is no longer a de facto national ILEC as in the days of the Stentor alliance,” explained Entwistle, talking about the former pan-Canadian association of regional ILECs which disbanded in the late 1990s.
“This is hardly a revelation to our respective companies, customers and shareholders but it seems to have eluded the CRTC,” he continued. “In the residential market, cable companies have invested heavily in high-speed Internet and are now entering the telephony market. EastLink, and more recently Shaw and Videotron, have entered the local residential market.
“Meanwhile, Rogers is acquiring Call-Net. This complements its purchase of Microcell, making it Canada’s largest wireless operator with 5.6 million customers. Rogers and Shaw are both well-established, well-run and well-financed organizations with a combined market capitalization of approximately $16.3 billion,” he continued. (Bell and Telus’s market cap number is about $42 billion)
“The new entrants of the past started from ground zero having no facilities, no services, no customers, and no brand recognition. Today’s cable TV entrants into telecommunications are completely different and come to market well resourced with a dominant market presence in entertainment distribution that can be exploited to deliver telephony.”
Basically, they’re either big enough to be regulated, or big enough to withstand de-regulated competition from Telus or Bell or Aliant or Sasktel.
“Are the cable operators really the Davids who need regulatory protection from the Telco giants? The answer is no,” said Entwistle.
“Notwithstanding this, in the world of regulation perception is everything and the cable companies are certainly deserving of a theatrical award for the best performance as an underdog.”
Despite all the technological changes which have swamped the industry, especially wireless and high speed data and the enormous number of new products and services that can now be offered, Entwistle said he’s frustrated that the regulations haven’t caught up with that.
“The CRTC still measures the quality of competition by antiquated parameters such as the number of competitors in the market or the ILEC’s share of wireline access lines,” he says (where ILECs still hold 97-plus% of the business). “In the world of ubiquitous wireless and high-speed Internet infrastructure, these concepts are no longer appropriate…
“The Commission’s suggestion that there is nothing significantly different about the telecommunications marketplace today, compared to the start of the decade is not only wrong, but informs us of three important things about the regulator’s approach to the future:
“First, that it still relies on an outdated assessment of market conditions; second, that it continues to pursue a strategy seen through a rear view mirror; and third, that the Regulator still believes that contrary to the evidence, competition can only develop by providing a regulated head start to competitors at the expense of the ILECs.
“To be clear, the notion that we do not need to change anything in the price cap regime because nothing much has changed in the competitive marketplace misses a fundamental change in circumstances,” Entwistle added.
“We are at a critical juncture and it is important for the CRTC to recognize the need to adapt the regulatory framework to the disruptive nature of IP and wireless. That made the decision on voice over IP a major test of the CRTC’s vision and ability to regulate for the 21st century.
“I am deeply disappointed with this decision. It is the wrong decision, at the wrong time.”
– Greg O’Brien
