Keep what works, throw what doesn’t: CCTA says of upcoming telecom review

The Federal Government has announced its intent to have a wise-persons panel that will make recommendations concerning Canada’s telecommunications policies by year-end. On the tenth anniversary of the Information Highway Initiative, CCTA believes that the panel provides an excellent opportunity to deliver a report card on convergence. At the time this article was submitted, the panel’s terms of reference had yet to be identified, thus leaving all pundits and industry players free to fill the void and offer advice as to the objective and ideal scope of this crucial review. If we start with the Government’s own words, we get a clear impression this is about something much bigger than how the CRTC regulates telephone companies:…the panel will be asked to make recommendations before the end of the year on how to move Canada to a modern telecommunications framework in a manner that benefits Canadian industry and consumers. A framework that benefits industry and consumers requires an understanding of the significant differences in interests and needs of business and residential consumers. The communications needs of a national bank are very different from those of a family. CCTA will strongly encourage the panel and the Federal Government to move forward in a manner that takes into account these distinct realities. As a starting point, there is a reasonable consensus that all market participants as well as business and residential consumers of communications services, require a dynamic and truly competitive industry that promotes consumer choice, innovation and investment. To fully reap the economic and social benefits that come from an advanced, broadband-based communications infrastructure, we need to encourage constant investment and innovation by simplifying or removing regulations, including those on content, that impede progress and the optimal use of available technologies. We must ensure that consumers, and not the regulator, are driving the process forward and that regulatory intervention is limited to acts relevant to the protection of consumer interests and the promotion of sustainable facilities-based competition. The panel will be successful and serve Canadians well, if it performs the following tasks: it must advise Government on the framework that will best deliver what consumers want from their communications providers; promote the benefits that flow from a competitive communications industry that is able to respond to those needs; and ensure that consumer demand, not regulation, directs the integration and convergence of communications policy. Business vs. Residential Markets The panel must establish a framework that responds to and separately deals with two classes of consumer: business and residential. Both classes are concerned with optimizing the value of the resources, intelligence, content and technology available. However, different customer markets perceive value in different ways. For business, value is measured in terms of productivity, cost reduction and contribution to profit. For consumers, value is measured by enhanced communication, information and entertainment experiences. Further, existing market conditions vary. Businesses benefit from competitive alternatives offered by no less than three ILEC-affiliated national companies and still more regional and national competitors. Contrast this to the home market where ILECs maintain on average a 97% market share of local phone services. In the latter case, consumer interests cannot be assured solely through market forces and, in such circumstances, continued oversight of incumbents is pro-competitive and consistent with ensuring a modern telecommunications framework. In a manner quite distinct from business users, residential consumer interests and needs, with respect to communications technologies and services, are increasingly driven by their passion for content. CCTA considers it imperative the panel address this convergence reality by recommending policies that promote consumer choice and control over content accessible through these technologies. The development of public policy in the area of convergence has become too fragmented. Separate mandates for Industry Canada, Canadian Heritage, the CRTC and the Copyright Board do not reflect the changes resulting from the integration of entertainment, information and communications. Competitive Environment To assist the government, the panel must ensure this review is about more than telephone company regulation. The review is about establishing a framework that will support the 21st century economy’s most critical infrastructure and maintaining Canada’s leadership in investment and productivity in business; as well as connectedness and innovation in communications and content delivery. The key features of an industry framework capable of delivering the anticipated benefits are straightforward and flow from a recognition that Canada’s future depends on the promise of broadband networks. Interconnected broadband networks provide the platform for all forms of communication, information and entertainment in a digital world. As demonstrated by the Internet itself, the vitality of the networks comes not from entrenching and reselling a single network, but from creating the conditions that promote the establishment and interconnection of many networks. Sustainable facilities-based competition provides the surest path to continued innovation. Old arbitrage models that helped introduce competition in a monopoly environment will not simulate efficiency and investment. Mandated unbundling, indeed any resale policy that is not market driven, only provides impediments to the advancement of Canadian industry. Moving forward also requires establishing an environment supportive of investment and that promotes access to capital. This involves, but is not limited to, removing the foreign investment limits and simplifying regulatory oversight to only that which is necessary to protect the interests of consumers and to promote true competition. The panel is in an enviable position. From the starting point of a modern Telecommunications Act that has proven sufficiently robust to accommodate the deregulation of long distance, wireless, retail Internet, and most data services markets. The panel has little cause for concern over whether the Act can handle the case for reducing regulation of traditional local phone service once circumstances warrant. Canada’s communications infrastructure and framework is, in many respects, already world-class. This frees the panel to address the critical issues for the future – competitive models, convergence, investment, and mechanisms to integrate policy within government. The panel need not start with a blank sheet. It must recommend the preservation what works, the abandonment of what doesn’t and the introduction of what’s needed. CCTA looks forward to assisting the panel and the Federal Government in this task. Michael Hennessey is the president and CEO of the Canadian Cable Telecommunications Association.

Keep what works, throw what doesn’t: CCTA says of upcoming telecom review

News | April 13, 2005

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