The new direction also axes ‘market forces,’ a remnant from the 2006 directive
By Ahmad Hathout
OTTAWA – A new telecommunications policy directive to the CRTC proposed by Innovation Canada today has replaced the 2006 directive that focused on market forces and added an emphasis on improved wholesale rates, but the department at the same time denied a petition to reverse a CRTC decision that did not review lower rates.
There is no mention in the new proposed directive of a requirement for the CRTC to view decisions that allow for market forces to the greatest extent possible, which was central to that directive and often a focal point of incumbent challenges to previous CRTC decisions. Instead, the new direction carries over much of a 2019 directive, which requires those determinations be made with a mind to innovation, competition and “crucially” affordability.
A government official said in a technical briefing Thursday that the “market forces” language was “not relevant in the current context,” adding the overarching goals of the government are to improve competition, lower prices, and provide better services. “Sometimes that involves regulations, sometimes that involves market forces, but the goal of the direction is about results for Canadians,” the official said.
The timeliest aspect of the direction is that CRTC decisions must pay mind to requiring large companies to “continue to give access to competitors at regulated rates so they can offer better prices and more choices to Canadians,” said a backgrounder provided to reporters. “The CRTC must take action to have more timely and improved wholesale rates available.”
With that, the federal government on Thursday also denied petitions to overturn the CRTC’s decision last year, declining to recorrect wholesale rates it proposed in the summer of 2019. In that 2019 decision, the CRTC proposed significantly lower costs that smaller providers would have to pay large ones to rent capacity off of their broadband networks – which never went into effect. Instead, the regulator decided to scrap the 2019 rates after appeals from some of the incumbents and instead opted to put into effect the higher interim rates set in 2016.
A government official said the CRTC had clearly outlined errors in those 2019 rates, so it won’t reverse or force the CRTC to revisit that. The official also said work began on a new policy directive last year when the government began reviewing those petitions.
The official said the new direction, which will open for comments and is expected to take effect by the fall, should impact the CRTC’s review of its methodology on those rates going forward.
The policy also preserves the aggregated wholesale model, which gives third-party carries access to the larger carriers’ middle-mile and last-mile facilities together. The CRTC has been moving toward a disaggregated model, which unbundles those two facilities in exchange for third-party access to the last-mile fibre facilities of the incumbents.
An ISED official said in a technical briefing that both models can exist in “parallel.”
The policy also directs the CRTC to ensure the large companies are making speeds that Canadians are demanding available to competitors. Third parties have often complained about being constrained have been constrained in what they can offer their customers.
On the mobile wireless side, the policy also directs the CRTC to “improve” on its decision to allow certain regional carriers that have spectrum and infrastructure to rent wireless capacity from the large carrier networks on a regulated basis, which was an effort to broaden the horizons of these competitors and increase competition throughout the country.
Last month, the federal cabinet denied a petition asking it to reverse a CRTC decision that declined to provide large carrier wireless network access for full MVNOs – those companies that do not have spectrum or infrastructure.
The policy also directs the CRTC to improve access to infrastructure, such as poles owned by utilities and telecoms, to allow third parties to quickly deploy new services. Telecoms both big and small have complained for years that access to those structures has either been too slow or not afforded; it was cited as one of the biggest impediments to broadband expansion when the CRTC opened a public comment period on it.
The new policy also directs the regulator to improve measures to combat bad sales practices and improve transparency on service pricing, require mandatory broadband testing to ensure customers are getting the speeds they are paying for, improve accessibility to telecom services, and strengthen the telecom watchdog, the Commission for Complaints for Telecom-television Services.
Despite largely leaving behind the main pillars of the 2006 directive, the new direction still requires the CRTC to balance economic regulation with competition and investment considerations, the latter being a central argument for many issues incumbents have raised when trying to reconcile building and improving their networks with allowing third parties to ride on them.
