Regulation & Policy: Stand and Fight

Opposition members of the House of Commons Standing Committee on Ind-ustry, Science and Technology were not happy last month. The Bloc Quebecois, Liberals and the NDP were upset with the way Industry Minister Maxime Bernier is deregulating the telecommunications industry. They believe more discussion is required on telecom deregulation, and its impact on consumers and small telecom service providers. Opposition members called the committee back to discuss the situation. The return, scheduled for January 29 – just as Telemanagement went to press – would come mere weeks after the minister furthered his deregulation agenda. On December 11, Bernier rewrote the local forbearance regime, discarding the CRTC’s ruling. Instead of requiring that ILECs must lose 25% market share before they can apply for forbearance, Bernier’s new benchmark required only that the area in question has three facilities-based competitors. ILECs still have to meet quality-of-service indicators, but Bernier suggested only nine compared to the 14 under the CRTC’s regime. Then on December 18, the minister disregarded an October 24 decision by the Standing Committee to further study the proposed policy direction to the CRTC. The committee agreed to hold more hearings and report back to Parliament by March 1, 2007. As a show of force, consumer groups, small ISPs and VoIP providers joined the Bloc Quebecois for two press conferences on Parliament Hill on January 15. They denounced the minister’s actions as catering to the big incumbent telephone companies while forgetting that consumers will be the ones paying higher prices as a result of decreased competition. Despite opposition efforts to study local telephony deregulation further, it seems nothing can be done to stop the adoption of the minister’s regime. Lawson Hunter, executive VP and chief corporate officer with BCE Inc., says the committee "can certainly hold hearings and call witnesses, but it’s really more politics than legal, if I can put it that way. And obviously politics are going to play a role in a minority government." Coalition Backs BernierThe Coalition for Competitive Telecommunications (CCT) has lent its support to the new local forbearance regime proposed by Minister Bernier. Referring to the original local forbearance framework, the CCT wrote: "Taken together, the many requirements set out in Telecom Decision 2006-15 that must be met before deregulation can take place create a hurdle so high that little or no deregulation is likely." It is for this reason, noted the coalition, that the minister’s proposed forbearance regime must be adopted; it recognizes the intense competition that already exists in the business and institutional markets. Deferral Account KerfuffleIt seems as though Industry Minister Maxime Bernier isn’t finished changing the telecommunications rules as set out by the CRTC in the last couple of years. The latest decision under scrutiny is the deferral accounts ruling (Telecom Decision 2006-9). The accounts were set up in 2002 following the creation of the price cap regime. The accounts accumulated overpayments from phone subscribers’ monthly bills. Urban subscribers pay an inflated rate, and part of the money goes to subsidize local phone service in rural and remote areas. Issued last February, Decision 2006-9 determined that the best use for the deferral money would be to give it to the ILECs and allow them to expand their high-speed networks into under-served locations. A portion of the money was to be used to improve services for the disabled, and if there was money left over it was to go back to subscribers for rate reductions. While the ILECs were generally satisfied with the ruling, consumer groups, represented principally by the Public Interest Advocacy Centre (PIAC), were outraged. They believed the money should be returned to the subscribers who paid into the accounts. PIAC appealed the ruling to the Federal Court last year. It’s unclear at this point what the minister plans to do, but based on a simply analysis of the issues at play, it seems his decision might not please his biggest supporters: the incumbent telephone companies. First, the minister could decide all of the money – about $620 million at the time of the ruling – should be returned to those who paid into the accounts. This would satisfy PIAC, but anger the ILECs. Alternatively, Bernier could opt for a more inclusive approach, and allow competitive providers to access portions of the money. Some parties suggested this during the public consultation that led to the ruling. Either way, Bernier’s move would surely displease the incumbents, which otherwise would have gained access to a substantial pot of money. Which way will the minister go? Telemanagement will report on further developments. Stay tuned.

Regulation & Policy: Stand and Fight

News | February 1, 2007

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