THAT SOUND YOU HEARD from Ottawa late Wednesday afternoon was that of Industry Minister Maxime Bernier jangling his keys to the shackles Canada’s incumbent telephone companies have said repeatedly they are burdened with.
The regulations holding back Bell Canada, Telus, Bell Aliant, MTS, SaskTel and the other smaller ILECs are on their way out far sooner than the CRTC perhaps envisioned when it made public its local forbearance decision a year ago tomorrow.
In that decision, the Commission set out a number of conditions that had to be met before any traditional incumbent telco could be granted deregulation. Until telcos lost 25% of its customers in certain geographic regions and met 14 quality of service standards, the incumbents had to abide by a 90 day win-back restriction, file for rate approvals and face some promotional restrictions.
The telcos appealed of course and in December, Bernier announced his second policy directive of the year to the CRTC, setting new, simpler conditions for deregulation and cutting the QoS standards that need to be met from 14 to an average of nine.
After the Standing Committee on Industry, Science and Technology heard from all stakeholders through the winter (covered extensively by Cartt.ca), today’s announcement on the final version of the policy directive really shows little change.
The primary competitiveness test – where as long as there are three facilities-based telcos (including wireless) in a certain exchange it can be deregulated for residential customers – remains. As does the requirement for two such competitors on the business side.
The government did listen to the vociferous complaints from small cable companies – who said that if the original order stayed as it was written that rural Canada would end up with no local phone choice – and altered the final order so that small cable operators will get an 18-month head start if and when they decide to enter the market.
It defines those independents as companies with fewer than 20,000 telco subs anywhere in Canada.
But that head start isn’t all of what Canada’s small cable operators required. Today’s final order abolishes the 90-day win-back restriction as soon as it is Gazetted on April 18th and those small cablecos who choose to offer local voice service will have to face large ILECs permitted to win-back new telephony customers with lucrative offers before they make the switch because the operators need interconnection to the PSTN and to transfer the phone number from the ILEC.
"The new win-back rules are a joke… and clearly reflect a sad understanding of what is happening in the real world," a disappointed Persona Communications CEO Dean MacDonald told Cartt.ca Wednesday evening. Persona is just beginning to offer voice in its largest markets but serves about 240,000 cable customers in hundreds of small communities across the country.
"We listened to Canadians and specifically to the small cable companies and I think the most important change is the 18-month head start rule," Bernier told a conference call of telecom analysts on Wednesday afternoon. "We decided to do that to make sure the small cable company will have the same chance like the big cable companies, who had around a year to build a customer base."
The large telcos all pronounced themselves pleased with Wednesday’s news.
“SaskTel is very encouraged with the federal government’s commitment to a new regulatory telecommunications framework,” said John Meldrum, vice-president corporate counsel and regulatory affairs. “Although today’s order does not fully establish a level playing field in all parts of Saskatchewan, it is a substantial step in the development of a new modern and flexible regulatory framework that sets the stage for SaskTel to more effectively compete in the future.
SaskTel intends to file an application with the CRTC in the immediate future to end price regulation of local telephone service in Saskatoon.
"This government has seized the opportunity for a new model for telecom policy, and that is great news for Canadian consumers and businesses, the telecom industry and, most importantly, Canada’s prosperity," said Michael Sabia, president and CEO of BCE and CEO of Bell Canada. "Customers will see the benefits of increased competition, including greater value through more choice and new offers as soon as the order takes effect – new promotions, win-back initiatives, and ultimately new and innovative local service bundles."
Bell will also file local forbearance applications in qualifying areas of the six largest communities identified by the Cabinet in Ontario and Quebec – Toronto, Montreal, Ottawa-Gatineau, London, Hamilton and Quebec City – in the coming days. Additional applications for forbearance in other qualifying areas will follow shortly.
"Today’s decision recognizes the competitive nature and significant choice that exists in today’s marketplace and is good news for our customers," added Janet Yale, Telus executive vice-president of corporate affairs. "The decision also removes a number of outdated marketing restrictions so Telus can compete on an even playing field and continue to invest in technology and innovation to the benefit of Canadian consumers and the competitiveness of our business. Telus now has the flexibility to swiftly move towards deregulation of local phone services in key markets across B.C., Alberta and eastern Quebec."
Look for deregulation to start happening by this fall.
At Rogers Communications, the company was resigned to this sort of decision, which will not affect its telephony rollout.
"It’s basically the same as the draft order and that’s not surprising," said vice-president, regulatory, Ken Englehart. But, he added, "it also seems a little weird that they’re asking an ombudsman be set up. If market forces can look after consumers then why do we need an ombudsman?"
"(And) they didn’t change the win-back rules for the small cable operators… I don’t think they’ve helped the small cable operators at all."
