IF RHETORIC AND HYPERBOLE were gasoline, a single spark would have razed the entire Toronto Congress Centre this week.
The speeches from Bell Canada Enterprises CEO Michael Sabia and Telus CEO Darren Entwistle at this week’s excellent Canadian Telecom Summit – as well as comments from a few others who work under them – suggest that not only are the communications of all Canadians utterly crippled by wacky regulation, but that our CRTC stands in the way of all Canuck creativity, innovation and productivity.
It’s an absurd notion, really. But it’s one much of the nation’s consumer media has surely bought, judging by recent reportage.
In Sabia’s speech today, he scolded the nation’s businesses for not investing enough in ICT (information, communications and technology, or information and communications technology – your choice). He went on about how not adopting ICT is hurting business, hurting Canada. "It’s hurting our economy as a whole," he said.
Fair enough. ICT investment is a good idea.
But, his real bogeyman began to come into focus a little later when he said businesses thrive on innovation, not regulation, doing their best in the marketplace, competing, which is true of course.
Buuut: "That’s not the policy environment we’ve had in telecom in this country. Instead, we have a regulatory framework which protects competitors, not competition. Which stifles innovation instead of rewarding it. Limits choices for consumers instead of expanding them. And dampens rivalries instead of encouraging them (his emphasis)."
So of course, the policy directive issued by the Federal Government which went along with what Canada’s incumbent telcos have wanted (Industry Minister Bernier’s speech was so exactly what the ILECs wanted he sounded like a Bell executive), was received enthusiastically, but the BCE CEO went further, sounding like former GM chief executive Charlie Wilson, who has been famously misquoted as saying "What’s good for GM is good for the country".
"The minister’s speech was a clear recognition of the importance of ICT as a driver of economic change," said Sabia. "Integral to productivity. Essential to creating prosperity. Indispensable to raising Canadians’ standard of living."
Who knew that the CRTC was standing in the way of all that? I feel pretty productive, prosperous and am satisfied with my standard of living. But if new telecom regs are going to make it even better, really, I’m all for it.
But oh, the spin (and believe me, cable had its own spin-meisters, too).
Except for the win-back restrictions, I can’t see how, in real terms, the current Commission rules and practices stand in the way of anything. It seems to me that new products and services stream out of Bell and Telus especially on a weekly basis. MTS, Aliant and SaskTel are no slouches either.
Tariff decisions are getting done inside of seven days now. The ILECs and the CRTC have an agreed-upon range of rates so that the telcos can change pricing whenever they want. Even the prohibition against targeted pricing (on Bell’s VOIP service) has been provisionally lifted, pending further review.
Entwistle hauled out the old chestnut that the ILECs have no market power when it comes to telephony delivered over IP. But what consumer is going to split that hair? Telco and cableco field staff are told not to say that VOIP is telephony delivered via the Internet, but that it’s regular ol’ phone service, just better and a bit cheaper. If it’s phone service, it’s phone service and to say Telus has no market power based on that invisible-to-the-consumer distinction, is a bit disingenuous.
The real reason behind all the rhetoric is the alarming customer losses for the old telcos. Videotron is closing in on a quarter of a million telco customers in Quebec – and they only offer telephony to 60% of its 1.5 million customers. It’s a phenomenal penetration rate – and scary for Bell. Shaw Communications started its telephony launch later out west and is seeing similar growth rates. Rogers is adding thousands a week and Cogeco can’t connect people fast enough.
Now having said all that, and ignoring all that propaganda, pushing the Commission harder to recognize market forces and to move towards deregulation is a good thing. Indeed, there’s little the cable industry can stand on against it because if there’s one thing the entrepreneurial cable industry has always asked for, its less regulation.
Down south, the U.S. market is wide open and from an outsider’s point of view, seems pretty competitive to me. There’s little reason to believe that just because the government here wants less regulation that any of the MSOs – or Vonage or Primus or other competitors – are going to fold their tents and give up.
At the Summit, after the minister’s announcement, I chatted with an executive from an independent Ontario cable company which very successfully offers VOIP to its customers and asked him what he thought of all this. What if Bell came to their territory with a $20 a month telephony plan, I asked. "We’ll adapt," he said. "Philosophically, I’m in favor of less regulation."
Will the new regulatory direction mean lower prices? Maybe. When one listens to men like Sabia and Shaw and Rogers and Audet and Entwistle constantly tell their shareholders they’re all about rational pricing and not price wars, it sounds like they all plan to hold the line. But when Videotron persists in offering its $15.95 a month basic local rate, one wonders why Bell hasn’t yet responded in that market. Is it to hold the line on prices or to drive home the point they need looser regs before they get really aggressive?
Deregulation is just going to happen and those in the local telecom space will have to accept that.
The actual directive to the CRTC is instructive in what it doesn’t say (as was pointed out by a friend). The multiple-claused proposed policy directive is a darn-near close copy of what the Telecom Policy Review Report (otherwise known as the New ILEC Bible) recommended in Chapter 10. The TPR said the government should issue a policy directive to the CRTC but what the government’s directive left out speaks volumes to the fact that it doesn’t care a whit about who has or hasn’t significant market power.
Here’s the wording that wasn’t included:
"(b) Regulatory measures shall be applied only where
(i) market forces are unlikely to achieve a telecommunications policy objective within a reasonable time frame, and
(ii) the costs of such measures do not outweigh the benefits.
"(e) Economic regulation shall apply only if there is a finding of significant market power in respect of a telecommunications service or class of services provided by a Canadian carrier. The (CRTC) should continuously review telecommunications markets on a timely basis to ascertain the appropriate degree of regulation or forbearance under section 34 of the Telecommunications Act."
With the VOIP decision and the local forbearance decision centred around significant market power and with this type of wording ignored by the Conservative government, its very clear where we’re headed.
Personally, I sure hope we’re going down the lower prices road because I’m tired of paying, for example, $5.60 a month for "touch-tone service" (!)
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