CRTC upholds Canada VoIP decision

Big news for all those in the Canadian VoIP industry hit the headlines on Friday, and the biggest players lined up to take sides immediately.

The Canadian Radio-Television and Telecommunications Commission, an independent public authority that regulates and supervises broadcasting and telecommunications in Canada, has upheld a ruling allowing the body to set prices for VoIP services, a decision larger phone companies such BCE Inc., Telus Corp., and Sasktel have complained is "unfair." Meanwhile, private firms such as MTS Allstream back the decision, seeing potential for growth in the Canadian market.

Telecom Decision CRTC 2006-53, entitled "Reconsideration of Regulatory framework for voice communication services using Internet Protocol," the CRTC reaffirmed the current regulatory regime for local VoIP services, entitled "Regulatory framework for voice communication services using Internet Protocol, Telecom Decision CRTC 2005-28."

The original ruling from the CRTC came down in May 2005, at which time CRTC ruled that VoIP would be subject to identical regulatory framework as extant traditional phone services. Telus and BCE appealed that decision, presenting their case to the federal government. Wasting no time, Canadian federal minister of industry Maxime Bernier referred the CRTC’s decision back to the commission, reportedly "giving the CRTC clear instruction to make pro-market changes" that same month.

Nevertheless, the CRTC has upheld the earlier decision, comprising slightly with one caveat: The market share percentage that the huge firms must shed before CRTC ceases regulation will be rethought and, in all likelihood, reduced. That rate currently stands at 25 percent. The main issue remaining unchanged issue is VoIP services’ classification as either regulated telephone service or a free market internet service when provided by extant telephone companies.

With Bernier’s request in mind and additional evidence presented by the above-mentioned firms and others, the CRTC concluded that the "threshold established in Forbearance from the regulation of retail local exchange services of 25 percent market share that incumbent local exchange telephone companies must lose in order to qualify for regulatory forbearance should be re-examined in a public proceeding." Common wisdom holds that this rate will be taken down to about 20 percent.

According to the public statement released by the CRTC, local competition data which had been collected since the time of the last ruling, "showed that competitors are making significant investments, are rapidly extending their customer service offerings, are keeping most of the customers they attract and are achieving or exceeding their business plans."

On the face of it, the ruling sounds like good news for all. The CRTC sees healthy market competition increasing in Canada’s VoIP sector, with plenty more money to be made. Some larger telecom companies disagree. Vehemently.

SaskTel, Saskatchewan’s full-service telecommunications provider, was quick to release statements in response to the decision. Deb Higgins, the minister responsible for SaskTel called CRTC’s regulatory approach "simply bad public policy" and that her firm "believes this decision is wrong for Canada and for Saskatchewan."

Higgins’ argument is that such regulation directly limits consumer choice, will result in higher prices than would be attained under the auspices of regular market forces, and ultimately "handicaps Canadian companies in favour of foreign-based providers and other large domestic companies."

John Meldrum, SaskTel’s vice president of regulatory affairs, was willing to go even further in blasting the CRTC’s decision: "This most recent decision demonstrates that the CRTC is incapable of aligning the regulatory framework to current technology, market and consumer realities." Meldrum went on to call for immediate intervention by the federal cabinet in order to "ensure that Canada does not lose its position as a world leader in telecommunications."

Meanwhile, the Coalition for Competitive Telecommunications, an organization which claims representation of some 12,000 Canadian businesses, flat out "denounced the failure of the Canadian Radio-television and Telecommunications Commission to change the Voiceover Internet Protocol regulatory regime."

Said coalition chair Ian Russell: "Today’s reconsideration report clearly ignores the government’s directive and fails to reflect the spirit of the Telecommunications Policy Review Panel report." Russell went on to urge that the government overturn the CRTC decision under terms of the Telecommunications Act.

Meanwhile, at least one company is willing to speak out in favor of the decision: Manitoba-based communication solutions provider and fiber optic armed MTS Allstream. MTS Allstream chief regulatory officer Chris Peirce praised the CRTC decision, stated that the CRTC had demonstrated "a commitment to a responsive and fact-based regulatory approach." As Peirce sees it, the regulation will help ensure sustainable competition in Canada.

Regardless of the spin put on the CRTC regulation by one firm or another, it seems certain that this decision, too, will be appealed to a federal commission. At present, the Canadian government has 90 days to overturn the CRTC decision.

SaskTel is Saskatchewan’s largest full-service communications provider, offering telephone, internet, web hosting, cellular and wireless data, security monitoring, text and messaging services. SaskTel also has a presence in Alberta and British Columbia provinces via its Navigata Communications.

Established in 2003, the Coalition for Competitive Telecommunications represents all Quebec school boards and more than 12,000 Canadian businesses through its associative network, which includes the Association of Canadian Acquirers; the Association of Canadian Travel Agencies; the Canadian Bankers Association; Canadian Manufacturers & Exporters; the Canadian Newspaper Association; the Insurance Bureau of Canada; the Investment Industry Association of Canada; the Investment Funds Institute of Canada; Megatrade Communications Services Corporation; le Société de gestion du réseau informatique des commissions scolaires; and Canadian Depository for Securities Limited.

MTS Allstream is a communication solutions provider to both individuals in Manitoba and enterprises throughout Canada. Its enterprise solutions division features IP-based connectivity, managed network services, and other business services.