The Independent Telecommunications Providers Association is asking the CRTC to release its members providing wireline phone services of some of the “regulatory burden” they carry, as they try to compete with larger wireless providers in the market.  

The Independent Telecommunications Providers Association (ITPA) represents 21 independent incumbent telecom companies in Ontario, British Columbia, and Quebec. Its members range in size from one telephone exchange to 25 exchanges, it says, with the average number being three to four exchanges per incumbent member. 

Because many small incumbent local exchange carriers (SILECs) are former monopoly service providers in their local service areas, they are still subject to “extensive tariff regulation” where they are not already forborne from regulation, the ITPA wrote in a recent Part 1 application filed to the CRTC. They work with regulatory measures such as price caps meant to keep the rates customers pay at a reasonable level. 

But while they might have once held the lion’s share of their local markets, the dominance of businesses providing primarily wireline services has dwindled due to national competitors in wireless service, as well as the emergence of voice over internet protocol (VoIP) services. The ITPA pitches that the regulations its members are still subject to no longer make sense, given that wireless services have brought with them increased competition in pricing and overall services offered.

The group is asking the CRTC to forbear from regulating SILECs’ local exchange services, meaning that instead of regulating this group of businesses itself in their relevant areas, the CRTC would rely on market forces to do the work to protect consumer interests. The ITPA argues that the increased presence of wireless services in SILECs’ service territories is indeed facilitating that goal. 

“These larger, better resourced competitors are not subject to the same regulatory burden and restrictions imposed on SILEC local exchange services, with the result that their substantial existing competitive advantages are magnified, and SILECs are less able to compete against them,” the association wrote. 

“By unshackling ITPA members from legacy regulation, the commission will provide an incremental degree of pricing flexibility that will permit them to compete more effectively against their far larger wireless competitors. It would also relieve these small service providers of a layer of regulatory obligations with respect to services that are currently tariffed, making their operations and decision-making more efficient as a result,” the ITPA wrote. 

Wireline market has shrunk while wireless market grew, ITPA notes

In its application, the ITPA cites data from the CRTC’s communications market reports, stating total telephone lines across all telecom service providers (TSPs) have declined by 33.7 per cent over ten years, from 16.9 million in 2013 to just 11.2 million in 2023.

According to the IPTA, the percentage of households with a landline is approximately four per cent in B.C., five per cent in Ontario, and nine per cent in Quebec. 

The ITPA compares those numbers with the growth in mobile wireless service subscribers in Canada, citing data showing the total number of such subscribers has risen by 30 per cent from 2013 (28.4 million) to 2023 (37 million). 

“Given the availability of Canada-wide, unlimited calling plans, these services are clearly substitutes for the local telephone services offered by SILECs. SILEC customers have been canceling their wireline service with ITPA members and replacing that service with the wireless services of the national wireless carriers,” the group wrote. 

The ITPA argues that prices offered by wireless companies are “one of the key factors” in the spread of such services. 

“In the recent past, consumers would have hesitated to rely solely on wireless services by giving up their landline due to the comparatively high combined price of wireless data, toll charges and even separate charges for SMS texting,” the group said. 

But now, those services are more widely available at prices that “match or better ITPA members’ tariffed and price-capped primary exchange service rates,” the ITPA said. 

The CRTC’s price cap regime applies to a company’s tariffed services, “and generally places upward constraints on prices that these companies can charge their customers,” the commission wrote in 2020. It had been reviewing the price cap and local forbearance regimes at the time. 

The ITPA noted the CRTC said in that 2020 review that “another proceeding is required to determine whether any changes are necessary to these regimes.” Five years later, that “promised follow-up proceeding has not been launched,” the association states.

When asked whether or not the CRTC has considered launching such a proceeding, a spokesperson for the regulator told The Wire Report in an email Monday, April 14 that it would “not be appropriate to comment further” as the matter is before the CRTC. 

Customers stand to benefit, ITPA argues

In its application, the ITPA wrote that its members are up against “incredibly aggressive retail promotion pricing by all of the large national and regional carriers.

“Without forbearance, the large national and regional carriers know that SILECs cannot mount an effective defence to their promotions, which are temporary and ultimately may not be to the long-term benefit of customers. Forbearance will give additional tools to SILECs to respond more effectively to these promotions,” it said. 

Customers stand to benefit from its pitch, the IPTA argues. 

“If local exchange services are forborne it would increase the pricing flexibility available to ITPA members in the face of their far larger competitors. While SILECs are generally unable and unwilling to compete with the larger national wireless carriers and other TSPs on price alone, the ability to adjust their responses to competitive threats on a real-time, dynamic basis would be of great assistance to their efforts to retain customers,” it wrote. 

The ITPA highlights the broad cross-Canada coverage of BCE Inc., Rogers Communications Inc., and Telus Corp.’s networks, as well as the presence of Space Exploration Technologies Corp.’s (SpaceX) Starlink in the market, which the group notes can support VoIP services. 

“It is clear that ITPA member’s landline voice services are subject to multiple sources of effective competition in their home exchanges,” the group said. 

“While some ITPA competitors may argue that there are irregular gaps in mobile wireless coverage across ITPA members’ incumbent exchanges, the ITPA would reiterate the commission’s determination that 100 per cent network coverage has never been a requirement for local forbearance,” it said. 

“The national wireless carriers offer customers resident in these exchanges telephone numbers from neighbouring exchanges as seamless substitutes — that ‘look and feel’ as if they are native to the SILEC’s exchange,” the ITPA also noted. 

hdaley@thewirereport.ca