OTTAWA and GATINEAU – While the CRTC said Monday it established “a new framework for wholesale services that will promote competition in wholesale and retail telecommunications markets based on sound economic principles,” market players say what, in fact, happened, was a confirmation of the status quo for the most part.
"Further to the government’s direction that the Commission rely on market forces to the greatest extent possible, we conducted a comprehensive review of our approach to the wholesale services provided by traditional companies," said Konrad von Finckenstein, chairman of the CRTC, in a statement. "We have now set out clear rules that are consistent with competition policy and current market conditions, and that will facilitate increased competition."
The new framework, says the Commission, was developed with a view to ensuring that existing and new competitors continue to have access to the services they need to compete, while at the same time providing incentives for innovation and investments in competing networks.
“There is a positive and that’s the treatment of fibre-based services – CDN (competitor digital network) and Ethernet, which will become deregulated in three to five years, depending on the specific service in question,” said Mirko Bibic, head of regulatory affairs at Bell Canada, in an interview with Cartt.ca. “That’s good, because I think it’s high time CDN and Ethernet were forborne and certainly the rates the CRTC mandated in 2005 were inappropriate and actually dis-incented competitors from building their own facilities… So, in large part, I view that as a positive, except for the long transition period (of three to five years to de-reg CDN and Ethernet).”
“The rest of it… it’s just the status quo,” explained Bibic. “It’s regulation as usual (and) I think it’s a missed opportunity. There was an opportunity here to be much bolder and I think the policy direction mandated the Commission to be much bolder.”
He said that unbundled local loops in major centres should certainly be deregulated. “Why they remain regulated in Montreal, Toronto, Ottawa, Calgary, you name it, it’s beyond me, with the competitors, the cable companies, being there.”
“It’s not a step backwards because it’s the status quo, but it could have been bolder.”
On the competitor side, “I think the CRTC did a pretty good job in balancing the ‘relying on market forces’ with… looking at the impediments faced by competitors,” Ted Chislett, president of Primus Canada told Cartt.ca.
“It’s good for consumers and for competition.”
"This decision recognizes that fair wholesale access is crucial to delivering the competitive benefits of choice, innovation and competitive pricing," said Chris Peirce, chief regulatory officer, MTS Allstream. "The three fold test of: is the network element required by a competitor; is it controlled by a company with market power; and is it feasibly duplicated by a competitor, is exactly the right test. We look forward to working with the Commission to ensure the appropriate application of the test to the network services required by competitors."
The Commission will maintain the requirement for telephone companies to provide interconnection services to competitors. Interconnection services allow competitors to access telecommunications networks in order that their customers may call individuals who have a different service provider. The Commission will also continue to mandate the provision of wholesale services used to provide services that are in the public interest, such as 911 and message relay services.
As part of this proceeding, the Commission revised its definition of an essential service. To be considered essential, a facility, function or service must:
* Be required by competitors to provide a retail telecommunications service,
* Be controlled by a company that could use its market power to lessen or prevent competition, and
* Provide a functionality that would not be practical or feasible for competitors to duplicate.
The Commission has identified a number of wholesale services that should no longer be mandated. These non-essential services will be deregulated over the next three to five years to ensure a smooth transition to a reliance on market forces.
It is expected that more than a third of wholesale services will be deregulated by the end of 2012. In 2013, the Commission will conduct a review of the services that are still mandated at that time. Alternatives to conditionally mandated services may emerge as the industry evolves and new technologies are introduced, and the Commission will entertain further applications to deregulate if the stipulated conditions arise.
In 2006, wholesale services accounted for approximately $3.3 billion of overall telecommunications revenues and major telephone companies held a 65% share of this market segment. The remaining share was held by major telephone companies operating outside their established territories and other service providers.
For more, go to www.crtc.gc.ca
