Speech by Chris Seidl, Executive Director, Telecommunications, Canadian Radio-television and Telecommunications Commission
To the Annual Meeting of the Association des Compagnies de Téléphone du Québec
September 17, 2012
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Thank you, Serge [Désy, ACTQ President and CEO]. I am delighted to be here with you at the ACTQ’s annual meeting. This is a first for me and I appreciate the opportunity to meet you. The Association has chosen a beautiful location for its meeting this year. This is my first time in the Eastern Townships, and I will be sure to return with my family.
Before I begin, I would like to mention that Suzanne Lamarre, Regional Commissioner for Quebec, is also here today. Suzanne gave the opening speech at your meeting last year in La Malbaie, and we have had some interesting discussions since I took up this position. She knows your companies very well and the issues you are concerned about. My colleague Mario Bertrand, Director of Dispute Resolution and Decisions, is also here today.
As Serge said earlier, I was appointed as Executive Director of Telecommunications nearly a year ago. I first arrived at the CRTC in 2003 and have held several positions, including Director General of Convergence Policy. I also worked in the private sector for 18 years, namely at Nortel Networks.
I took up my new position with extensive knowledge and experience to draw upon, as well as plenty of energy and motivation. The significant challenges you are facing require constructive dialogue within your industry. I promise to meet with as many stakeholders as possible in the coming months to gain a better understanding of your situation. This meeting is an important point of contact for me, and I look forward to hearing your perspective and sharing mine with you. In my opinion, this is how we can move issues forward: in a climate of openness, good faith and discussion.
The theme of your 64th meeting, Une i-société en milieu rural, reflects the future of communications in your markets. We have the same idea of the i-société: a connected, modern society that evolves to reflect the consumer who wants, and deserves, the latest products and services.
Your i-société is echoed by the CRTC Three-Year Plan 2012–2015, which was just published a few days ago. The plan’s overarching objective is to ensure that Canadians have access to a world-class communication system. This objective emphasizes our focus on the consumer.
The overarching objective is supported by three pillars: create, connect and protect.
- The first pillar, “create,” refers to the CRTC ensuring that Canadians have access to compelling creative content, from diverse sources, on a variety of platforms. This means encouraging the creation of programming that reflects Canada’s diversity and enables Canadians to participate in their country’s democratic and cultural life.
- The second pillar, “connect,” supports the objective of ensuring that Canadians can connect to high-quality, innovative communications services at an affordable price. This includes services that facilitate access to the communication system by Canadians with disabilities.
- The third pillar, “protect,” refers to the CRTC’s activities that enhance the safety of Canadians: for example, access to emergency communication services, such as 911 and public alerting systems. This pillar includes the promotion with, and enforcement of, CRTC regulations, which that enhance the interests of the public. The rules regarding unsolicited communications are also included under this pillar.
To situate the Three-Year Plan in the context of consumer services, two weeks ago the Chairman announced the establishment of the position of Chief Consumer Officer. This organizational change will help us improve our understanding of consumers’ concerns and incorporate them into the decision-making process. Jean-Pierre will be joining us later this afternoon for the cocktail hour, and he will be pleased to discuss these new developments with you.
Today, I would like to talk about two issues:
- the evolution of the industry, and
- the CRTC’s commitment to ensuring that Canadian consumers have choice.
A rapidly evolving industry
Technology continues to transform the communications landscape in Canada and around the world. This transformation has significant consequences for our markets and Canadians’ consumption habits.
To illustrate this point, let me give you some recent figures from the CRTC’s Communications Monitoring Report, which has just been published. The report describes the situation in 2011 and compares it with the figures from 2010.
- Overall, revenues from communications services increased 3.3%, rising to $59.3 billion in 2011. This figure represents 4.6% of Canada’s gross domestic product.
- The report states that 87% of households have access to Internet services offering download speeds of at least 5 megabits per second (Mbps). In 2011, the Commission aimed to ensure that all Canadians had access to speeds of at least 5 Mbps by the end of 2015. This figure shows that we are on track to meet this objective, but more work remains to be done.
- Last year, 78% of Canadian households subscribed to Internet services, compared with 76% the previous year. Many prefer services with a high download speed. The percentage of households with Internet download speeds of 5 mbps or greater has risen from 51% to 54%.
- The number of wireless subscribers has also risen 6% to 27.4 million, while the number of landline subscribers has dropped 2.7% to 12.2 million. This shows that many households are using wireless services for their home phone.
- Canadians purchased 9.4 million service bundles. It is therefore an advantage for providers to sell telephone, Internet, television and wireless service bundles.
Convergence in the broadcasting and telecommunications sectors has given rise to innovative services that have been immediately adopted by Canadian consumers: for example, IP networks, cloud computing services, innovative applications, and video technology that is accessible on wireless devices.
Right now, we are pleased to note that ACTQ members play an important role in offering innovative services in the regions: in total you have over 50,000 subscribers; you offer telephone, television and high-speed Internet services—ranging from 10 Mbps in the case of Courcelles and Upton to 50 Mbps in the case of St-Éphrem; and at least one of your companies offers wireless telephone services.
Canadian communications and the CRTC’s approach
We are carefully monitoring industry and market movements while keeping the consumer perspective in mind. The Commission ensures that market evolution is included in its policies, including the Telecommunications Act. I would like to highlight three of the major objectives of the Act:
- to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada;
- to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; and
- to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.
The “connect” pillar of the new Three-Year Plan echoes these three major objectives. The CRTC’s goal is to facilitate the development of a communications system that ensures that all Canadians have access to a choice of high-quality services.
To get there, the CRTC has decided to focus on promoting competition, because there is a direct relationship between healthy competition in the market and the quality of services offered. We therefore prefer to let the market evolve when it is able to meet the needs of consumers.
For example, the Commission has refrained from regulating certain aspects of retail services, including Internet, television, telephone and wireless services. We opened up the local telephone market to competition across Canada in 2011. As a result, the market has been moving over a number of years from a monopoly structure to a new era that fosters competition. Companies have greater flexibility in negotiating commercial arrangements and responding to changes in the market.
What is the goal of this approach? To broaden the choice of affordable services offered to Canadian consumers.
However, not everything is exempt from regulation! Protecting the public interest is a major concern for the CRTC. As part of the “connect” and “protect” pillars of the Three-Year Plan, the Commission is maintaining regulation for wholesale and other services such as 911. When the CRTC needs to establish regulations and policies, it ensures that they can be enforced as symmetrically, equitably and neutrally as possible over the entire market.
Even though the CRTC is relying less on prescriptive regulations, it still has tools to ensure that the rules are followed: for example, in situations where a company decides to give undue or unreasonable preference, including to itself. Other examples of measures that can be taken include investigations related to the National Do Not Call List and Internet traffic management practices.
In the current environment, all players must cooperate to achieve the best results. This model has been successful on a number of occasions. For industry, for example, such cooperation is beneficial when companies agree to establish interconnections to increase their competitiveness. Cooperation is also helpful when the Commission calls upon industry experts for help finding solutions to technical issues. An example of this is the CRTC Interconnection Steering Committee, whose work has resulted in a significant improvement to the 911 service for wireless users. Canada is now one of few countries in the world where 911 operators automatically receive information about the caller’s location when the call is made from a cellphone.
This excellent example of collaboration shows that everybody wins—especially consumers.
By the same token, the CRTC is working closely with the Commissioner for Complaints for Telecommunications Services. The mandate of this consumer protection organization is to resolve complaints from residential and small-business clients regarding their service providers.
Small incumbent local carriers and recent decisions
Now we come to the issue of the regulatory framework that affects local competition in your territories.
The CRTC’s role is clear: to ensure that broadcasting and telecommunications systems respond to the needs and interests of Canadians. We were therefore careful in introducing local competition to your markets. Obviously, competition is not an end in itself, but it does help reduce the regulatory burden and allows market forces to maximize the benefits for consumers.
We have noted that a number of you have already adopted strategies to take advantage of this less regulated environment. Some small incumbent local carriers have ventured outside of their territories in order to offer bundled telephone, television and Internet services. It must be acknowledged that, despite the size of your companies, you have a clear advantage over the competition: you know your territory inside and out; you have been established there for generations; your clients know you and you know everyone; and you know how to adapt to market pressures, as you have demonstrated year after year.
Recent changes in the competition file have included the following:
- In 2006, the CRTC set out the framework for local competition in the territories of small incumbent local carriers.
- In 2011, we released our decision on the obligation to serve. The decision included specific measures for recovering some of your costs associated with local competition.
- The ACTQ and the Ontario Telecommunications Association filed various appeals to amend certain aspects of the decision.
- Last July, Cabinet endorsed the CRTC decision.
With regard to the review of the regulatory framework that applies to small companies, we believe that the consultation process should have moved forward with your involvement since the summer of 2011. This would have been advisable given its impact on you and your customers.
We decided to re-launch the review process in July, and I have been informed that you already submitted your memorandum. I see this as a new impetus for cooperation. The time has come to act. The events of last year are now in the past, and we all need to move to the next step in a spirit of collaboration and discussion. Rest assured that the CRTC is examining your concerns about the regulatory framework, and we expect to release our decision in early 2013.
As I read the conference agenda, I see that you are resolutely turning toward the future, in spite of your concerns with the current situation. Today and tomorrow, you will hear from experts talking about consolidation and the long-term survival of small companies. Your resilience does you credit and is a testament to your business acumen.
The main message I want to leave you with today can be summed up in one word: cooperation. By maintaining ongoing, open and transparent dialogue, the industry and the CRTC can continue to jointly explore solutions and the best mechanisms to put in place so that all of us can meet our objectives.
My colleagues and I are very attentive to the issues that the industry faces. We are here to listen and get a good understanding of your concerns. In this regard, it is very important for me to continue and strengthen the dialogue between ACTQ members and the CRTC. I look forward to getting to know you and hearing the ideas that will circulate throughout the conference. I hope to head back to Gatineau in the certainty that our lines of communication are active and ready for collaboration.
Thank you for your time. Have a great meeting!
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