Speech by Chris Seidl, Executive Director, Telecommunications, Canadian Radio-television and Telecommunications Commission

To the Annual Convention of the Ontario Telecommunications Association

Huntsville, Ontario
June 10, 2012

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Good evening. Thank you for giving me the opportunity to join you in such a gorgeous setting for your annual convention. As someone who grew up and spent his career in Ottawa, I take any chance I can get to come out to Ontario’s cottage country and experience the beauty of the Canadian Shield.

I suspect many of you may not know me. I am, after all, new to the Executive Director role. So perhaps a few words of introduction are in order. I’ve been working at the CRTC for nearly a decade, serving most recently as Director General of Convergence Policy. Prior to my career in public service, I spent 18 years working in the telecommunications sector, most of that time with Nortel Networks. I look forward to applying my public and private-sector expertise in my new role.

As an aside, I will also say that I am very familiar with the service offered by smaller telecommunications companies such as yours. Our family cottage near Westport, Ontario is served by WTC Communications. Considering that cellphone reception is spotty at best, the service provided by WTC is an essential link to the outside world when we’re on holiday.

Part of my personal objective for 2012 is to reach out to the CRTC’s stakeholders. I’m making a point to come and meet with as many stakeholders as possible, not only to introduce myself but also to hear about the issues you face. I believe, and I think you will all agree, that businesses and governments can promote greater competition in the marketplace and choice for consumers when they cooperate.

What do I mean when I say we should cooperate? I mean that we should exchange ideas frankly. We should talk to understand each other’s position on a matter, and work together to arrive at solutions that benefit Canadians.

I’d like to start by bringing you up to speed on some of our recent telecom activities.

Recent decisions

During the last few years, our normal practice has been to refrain from regulating in cases where we believe market forces are sufficient to achieve the desired results for consumers. We want service providers to have the maximum flexibility to respond to market conditions and provide Canadians with a choice of innovative services.

How much progress has been made? All retail telecommunications services brought in total revenues of about $40 billion last year. Over 90% of that amount now derives from deregulated retail services.

As most of you know by now, the CRTC has moved to introduce local telephone competition across the country. Last year, the Commission re-confirmed a decision we took in 2006 that opened up competition in the markets of the small incumbent telephone companies. In December, we also took the step of opening local telephone service to competition in Northwestel’s operating territory, which is principally the Far North, and includes the Yukon, Northwest Territories and Nunavut.

Such steps enable other service providers to enter markets that were previously closed to them. As a result—and here is the key to our actions—consumers will have access to a broader range of products and services from small and large providers alike. This is one example of how we are making certain that Canadians in all parts of the country can reap the benefits of competition.

However, the CRTC cannot always refrain from regulating. Sometimes we must intervene to ensure competitors have access to the facilities they need to serve their customers. For example, we continue to have regulations in place for the provision of Internet services at the wholesale level.

Large companies are required to give independent Internet service providers (ISPs) access to their networks, under terms and conditions that are approved by the CRTC. Independent ISPs can, in turn, offer innovative services to consumers without having to always build their own end-to-end facilities. Last year we set rates for these competitor high-speed access services and the associated billing models including capacity-based billing.

Canadians today are increasingly using broadband and mobile broadband Internet services to participate in the digital economy. Last year, we set a target for broadband service across the country. By 2015, we expect all Canadians to have access to download speeds of at least 5 megabits per second (Mbps) and 1 Mbps for uploads, regardless of where they live. These are the absolute minimum speeds we believe consumers need to access online commerce, government services, as well as educational, medical and media content.

We are monitoring the industry’s progress and are confident that it will respond to consumer demands for access and faster Internet connections. Already, 88% of households have access to download speeds of 5 Mbps or higher. And you all are playing an important role in reaching the target.

On the mobile front, we have taken a hands-off regulatory approach since the mid-1990s. At that time, we judged that there was enough competition in the marketplace to guide industry growth and give consumers a broad range of service options.

In December 2011, the CRTC received an application requesting that it intervene in the wireless market to create a new code to standardize billing practices across the country. Given our long-standing approach, we asked for evidence that our intervention was required.

The deadline to submit comments on that matter was in May, so I cannot yet tell you which direction we’re leaning. But I can tell you that we were pleased to hear some forthright opinions on the subject. These submissions will very much be top of mind when we decide on next steps.

At the same time that we are paying closer attention to Internet and mobile issues, we have not forgotten about the voice networks that many Canadians still rely on for their communications needs. Increasingly, telecommunications services are being offered by companies that have adopted Internet Protocol (IP) in their networks.

Although many providers are migrating their networks to IP, most continue to rely on voice circuit-switched technology to transfer calls to and from other service providers. As a result, in January of this year, we established basic principles to guide the further evolution to IP-based voice interconnection. Our policy obliges companies that have begun to use IP but have not yet migrated certain interconnecting links over to IP technology to do so after receiving formal requests from other providers.

The end goal of such a policy is to help foster innovation in the marketplace and give companies the tools they need to serve their clients more efficiently. And by not setting a hard and fast deadline for the implementation of this policy, we allow the market to dictate the pace of the transition. That said, we hope the transition to IP will be achieved as soon as possible.

Let me say a few words about one of the consequences of our increased reliance on market forces: The possibility that there will be a greater number of competitive disputes. For example, what would happen if two providers are unable to reach an agreement regarding IP interconnection?

One solution is to come to us for assistance. The CRTC offers tools such as staff-assisted mediation and arbitration services to help disputing parties resolve their differences and get on with the business of serving consumers. I’m pleased to tell you that the use of such tools is often sufficient to break the impasse. However, in the event that the disagreement persists, parties can make a formal application or request an expedited hearing where they present their arguments before a panel of Commissioners for swift resolution.

Going forward, it will be all the more important for the CRTC to be vigilant and ensure the rules are being followed by everyone. This may take the form of co-regulation, as evidenced by our endorsement of the Commissioner for Complaints for Telecommunications Services. We have also stepped up our efforts to ensure compliance with our policies—such as the use of Internet traffic management practices—and take appropriate action where necessary.

Obligation-to-serve decision

Although I’m sure you appreciate the updates on the CRTC’s work, I expect you’re far more interested in the local competition framework for your territories. So let’s discuss the elephant in this room.

As you know, we have moved cautiously with the introduction of local competition in your markets. After they were opened up, we approved applications from competitors to enter three of them before stopping the process. The other applications were put on hold pending a review of the framework, which was completed last year. As a result, some competitors have been waiting more than four years for an opportunity to offer their services in your markets.

Meanwhile, I’m happy to see that some of you have taken advantage of previous CRTC decisions and are pursuing business opportunities outside your traditional territories. In fact, some of you have become strong triple-play competitors [local telephone, television and Internet services] not only in your home territories but also in new territories. That’s fantastic news. These are exactly the kinds of developments we had hoped to spur with our decisions. We want to see more and more small businesses like yourselves take the bull by the horns and bring choice and innovation to as many consumers as possible. Following the same reasoning, people who live in your home markets should also benefit from a competitive marketplace.

When we issued our obligation-to-serve decision last year, we were mindful of the need to strike a balanced approach. We wanted to create the conditions that will foster sustainable competition, while ensuring you are able to continue investing in your networks and serving your customers to the best of your abilities.

To ease the difficulty associated with opening your markets to local competition, special measures were put in place to help you recover some of your costs. For example, in recognition of your unique situations, we amended the subsidy provisions to ensure Canadians in rural and remote areas continue to have access to reasonably priced basic telephone service. We also shifted the start-up costs to new entrants in territories where the incumbent has fewer than 3,000 subscribers.

Yes, we were mindful of the OTA’s concern that you would still be required to serve those consumers in hard-to-reach areas. But we weighed this against the Telecommunication Act’s objectives that all Canadians have a choice of innovative telecommunications services. And although you may not agree with certain aspects of our approach, we believe it’s the right course of action.

I know that some of you are worried about the impact local competition may have on your businesses. However, you have a distinct competitive advantage over larger carriers that are looking to enter your markets. You have provided services to your home territories for many decades with an extensive network. You know your customers. You should be able to act faster and more nimbly than the large carriers, and you’re in tune to the precise needs of the communities you serve. For those reasons, your presence will always be valued and highly regarded.

Before I conclude, let me leave you with a final thought on our obligation-to-serve decision. At the moment, part of the difficulty in front of us—and here I mean you as service providers and the CRTC as a regulator—is the fact that there is a great deal of uncertainty surrounding this issue. At the moment, none of us knows how Cabinet or the Federal Court of Appeal will lean with their decisions. But let me say this. Eventually, we will obtain regulatory certainty on this subject. And when we do, we’ll have to work together to arrive at solutions that create the best outcomes for consumers.

Conclusion

Ladies and gentlemen, I said earlier that the CRTC’s goal is to ensure there is sufficient competition to provide a choice of innovative services to consumers in all regions of Canada.

This goal can only be achieved through a close partnership with our stakeholders. Although you may not always agree with the Commission’s decisions on some matters, you always have the opportunity to speak to us—formally through our proceedings and informally. Please consider my door, and those of my colleagues, open. Let me also remind you that the CRTC maintains a hotline for small telecom service providers, which can be reached at 1-819-997-4427.

Communication and collaboration, after all, is the key to creating the best outcomes for everyone.

Thank you.

 

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