‘Competition’ definition key to impact of new CRTC directive: experts

The new policy direction for the CRTC announced by the federal government Tuesday is a blunt message to the regulator to make some changes, but the extent to which it will lead to changes in policy depends on how “competition” is ultimately defined, according to former CRTC commissioners and a former chairman. At issue is whether the new direction -- which would require the regulator to consider how regulatory measures can "promote competition, affordability, consumer interests and innovation” in issuing new regulations and rulings -- is interpreted to refer to facilities-based competition, or service-based competition. “Basically, it’s the government telling the CRTC ‘hey, you’re going the wrong way’,” former CRTC chairman Konrad von Finckenstein said in a phone interview Wednesday. “I see it as a fairly large rebuke of the CRTC and the way they have been interpreting things.” The new direction is a sharp contrast to the policy that’s currently in place, which emphasizes relying on market forces to the maximum extent possible. That policy dates from when Maxime Bernier was Industry Minister in Stephen Harper’s Conservative government. One of the elements the new order tells the CRTC to consider is the extent to which regulatory measures “encourage all forms of competition.” Von Finckenstein said the policy direction informs all CRTC decisions because “everything you do has to be justified in accordance with these directions.” But one thing that hasn’t been specified is what the government means by competition. Von Finckenstein said he hopes the process leading up to a final order deals with that question and specifies that it means competition by any means -- not just facilities-based. He said that although the government hasn’t spelled it out, “clearly, that’s the direction that they’re heading.” The effect of the new order will depend not just on the final wording, but also on how the CRTC ultimately interprets it, he said. The government is currently consulting on the proposed order, and then it must wait 40 sitting days in Parliament before it can come into force, according to the Telecommunications Act. One aspect that’s unclear is whether the new directive would replace, or be added to, the one that’s currently in place. Bains’ office didn’t respond to questions about that by deadline Wednesday. Former CRTC vice-chairman of telecom, Peter Menzies, said in an email that the direction is “more likely to have an impact on process than outcomes.” Menzies said that in the months to come, the new directive should be reflected in the kind of questions commissioners ask in hearings or the kinds of interrogatories they issue. “I wouldn’t assume that will result in different decisions because frankly all of the features listed have generally been among the matters considered in the past decade or so. And it’s unclear to me yet how much weight each area of concern should be given,” Menzies said, also adding that 'competition' still has to be defined. He noted facilities-based has been "the objective for the past four governments,” so a change in that definition “would be quite a shift.” “It would be sensible to give some discretion but all this is being done in the shadow of a legislation review and an election, so I expect it will remain a relatively nonspecific aspiration for the time being. " Former CRTC commissioner Tim Denton said in a phone interview there a number of factors that determine the effect of the directive, including: whether the CRTC believes the current state of competition is adequate, the “favoured direction of the chairman,” along with statements by ministers and cabinet, and pressure from the public. “The thing it always comes down to in these debates is between those who think competition is adequate now, and for whom competition as a word implies owning your facilities and having your right to direct how they may be used, and those who paradoxically think there’s going to be more competition if there’s more intervention by government to equalize some of the terms of access to their facilities,” Denton said. Denton declined to speculate on whether the directive as it’s currently worded will have any effect on how the CRTC interprets that, but he said the CRTC will have "received a strong indication from the minister that he is not pleased and the department is not pleased with the current direction.” While the new directive was greeted with praise by small telecoms and consumer advocates, the big three wireless providers were largely silent. Rogers Communications Inc. said in an emailed statement that the company is "guided by these same considerations when we develop our innovative services for our customers, and continue to offer great value to meet our customers’ needs through our Rogers, Fido and chatr brands." Telus Corp. didn’t respond to a request for comment. BCE Inc. spokesman Marc Choma said in an email the company would be “highlighting the critical importance of government policy that encourages investment in high-quality broadband networks to ensure Canadians continue to enjoy affordable wireless and Internet access." "Investment is an especially important focus for the consultations as the Canadian industry prepares for the move to 5G communications.” One of the CRTC policies that’s most directly affected by the facilities-based versus service-based competition debate is whether mobile virtual network operator (MVNO) are entitled to mandated roaming. The CRTC has so far maintained that MVNOs aren’t entitled to roaming access on wireless providers’ networks, despite Bains sending that decision back to the commission for reconsideration. In a note Wednesday, RBC Capital Markets analyst Drew McReynolds said the announcement “raises the regulatory temperature” ahead of the CRTC’s review of that policy, set to begin in the next year, but it is "premature to conclude that this directive represents a wholesale shift in wireless regulatory policy away from facilities-based competition.” He added telecoms are “making inroads on wireless affordability with lower-cost, data-only data plans” -- mandated and recently approved by the CRTC -- and a relatively nascent but increasingly effective defacto four-player wireless policy.” Samer Bishay, CEO of Sugar Mobile, said he hopes it means a change in direction on MVNO policy. “We are encouraged by Minister Bains’ announcement and we are optimistic that this new direction, if implemented, will allow us to finally offer Canadians new, cost-effective services like Sugar Mobile,” he said in a release. “Talk is cheap -- unless it’s on a Bell, Telus or Rogers phone -- so we will be monitoring the situation closely.” University of Ottawa law professor Michael Geist, who has been critical of current CRTC Chairman Ian Scott and the regulator’s recent track-record on consumer issues, wrote on his blog the decision is Bain’s “most significant policy step to date” when it comes to assuaging concerns about telecommunications policy direction. He said it sends an “unmistakable signal” that the next wireless review should result in new competition, including MVNOs. Canadian Communication Systems Alliance (CCSA), Canadian Network Operators Consortium Inc. (CNOC), Distributel Communications Ltd. and TekSavvy Solutions Inc. all issued statements welcoming the policy directive. “We have long-argued that Canadians living in the smaller communities our members serve should enjoy the benefits of competition in wireless services, and that regulatory steps need to be taken to make this happen,” CCSA CEO Jay Thomson said in a release. Distributel CEO Matt Stein said it was “tremendous news for Canadian consumers,” while TekSavvy’s CEO Marc Gaudrault said Bains “stood up for Canadian consumers.” OpenMedia circulated a graphic on its social media channels applauding the decision and declared it a “big win.” https://twitter.com/OpenMediaOrg/status/1100522565766909952?ref_srctwsrc%5Etfw%22 John Lawford, executive director of the consumer advocacy group the Public Interest Advocacy Centre (PIAC), said the Liberal government is signalling it wants the CRTC to “change course” and “put consumer interests first.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and reporting and editing by Kyle Duggan at kduggan@thewirereport.ca

‘Competition’ definition key to impact of new CRTC directive: experts

News | February 27, 2019

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‘Competition’ definition key to impact of new CRTC directive: experts

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