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

To the annual convention of the Independent Telecommunications Providers Association

Niagara Falls, Ontario
June 9, 2013

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Good evening. It’s a pleasure for me to join you again this year.

When I spoke at this conference last June, I was relatively new to my role as the CRTC’s Executive Director of Telecommunications. I told you at the time that my goal for the year ahead was to spend as much time as possible meeting with stakeholders such as yourselves. This would allow me to introduce myself and gain a better understanding of the issues you face in serving rural communities.

It was therefore a great benefit for me to not only attend this conference and that of your counterparts at the Association des Compagnies de Téléphone du Québec, but also visit the territories of several of your members.

On those visits, I learned a great deal about the remarkable history of the companies you represent. You are a trailblazing lot. You own and operate companies that, for more than a hundred years, have delivered services to rural residents and businesses. At the turn of the 20th century, telephone services didn’t exist for your customers. But through sheer persistence and force of will, you built and maintained stable communications companies that became essential links to neighbouring communities—and beyond—for so many people.

The task before you wasn’t always easy. In fact, it was often very difficult. In their infancy, many of the companies you represent were dealing with challenges such as marrying telephone infrastructure with new hydro installations, ensuring the efficient use of batteries to power phones and occasionally restoring services to customers in the aftermath of damaging snow and rain storms. But you persevered. You learned and drew strength from those experiences.

Today, the services you offer are vastly more sophisticated and diverse. So too are the challenges you face. For example, some of the customers you serve do not have local power supplies to support fibre-to-the-home installations. You’re therefore turning to alternatives such as solar technology to deploy these next-generation innovations. Yet the spirit with which you deliver your services is proudly unchanged from a century ago.

You’re committed to providing cutting-edge technology and world-class services to your customers with the kind of consumer-first focus that most businesses only dream of. In fact, your fibre-to-the-home networks are leading edge and, in many cases, you know your customers on a first-name basis. You see them at the grocery store, at hockey practice and in the bank. You find that level of approachability and special commitment to customers only among smaller service providers.

As the telecommunications industry changes—and we all see every day how quickly it is changing—the difficult task will be to keep pace. How will each of you react to changes in the economy, increased competition and technology advancements while still delivering exceptional customer service? No one has the answers to those questions, but I’m glad to see that you will explore many of these themes between now and Tuesday. I hope you gain valuable insights.

CRTC vision

What I can tell you about is how the CRTC’s vision will affect your daily decision-making environment.

As you know, nearly a year ago, Jean-Pierre Blais was appointed Chairman of the CRTC. Since then, he has shared his vision of a CRTC that ensures Canadian citizens, creators and consumers have access to a world-class communication system. A system that gives them access to compelling and diverse creative content. A system that ensures they can connect to innovative communications services at reasonable prices. And a system that enhances the safety and interests of Canadians.

But it’s not only a question of access; Canadians must also be at the centre of their system.

Service providers such as you have an important role to play. Our view is that business knows best how to conduct itself in the market. As much as possible, we will step aside and allow you to do what you do best: innovate, compete and serve. Having said that, we won’t hesitate to intervene when there’s a market failure or when we see that the public interest is not being adequately served.

We want successful companies—large and small, national and local—to compete with one another in the marketplace with the needs of Canadians firmly in mind. Because when that happens, everyone wins.

Overview of the regulatory framework

That brings me to one of the key issues I want to discuss: competition in your local markets. This time last year, I came to this conference with the message that local competition was very much on its way. And I said that to help you manage such a fundamental change, the CRTC had put in place special measures and was reviewing the regulatory framework that applies to your companies.

I know that some of you were apprehensive at the time. You worried about how competition in your markets would affect business. You were concerned about the extent to which the CRTC’s obligation-to-serve would require you to serve the hardest to reach customers in your territories. And you did not know how the CRTC’s regulatory framework review would change the conditions under which you operate.

A lot of water has passed under the bridge since then, and I think we’ve all benefitted from a little more certainty. Local competition is, or soon will be, present in more than one-third of the territories you serve. Admittedly, it’s still early days for some of you, but I hear that difficulties have been minimal. That’s great news. During my time here at the conference, I’d like to hear more from each of you about how competition is rolling out in your own market.

The big news since last year is that the CRTC issued its regulatory framework decision in March. This new set of rules gives you regulatory certainty, and the means and incentives you require to innovate and be more efficient. It also reduces the regulatory burden you face. It’s a framework deliberately aligned with the one already in place for large service providers, but which also takes into account the particular differences of smaller service providers. Let me explain.

Our decision continues the existing price cap regime with only small changes. First, the regulatory framework has no fixed duration. It also gives you more flexibility when pricing services. You may now use rate ranges and rate de-averaging to be more creative when pricing packages of services. What’s more, we at the CRTC are not going to ask you to submit detailed cost studies when providing new services. That’s one way the new framework will help you compete in open markets.

A second is that the CRTC will allow you to offer bundles and promotions—and hold market trials—without our prior approval. In an open market, you will need to move quickly to respond to an evolving marketplace. By cutting away some of the red tape associated with the CRTC’s approvals process, we are giving you the leeway to be more nimble in the face of competition.

The third and final key aspect of the new framework is the long-distance, or toll interconnection, regime. Our decision signals a clear intent to change this regime. From the evidence we’ve seen, the rates you collect can be reduced. Having said that, our decision on this matter is not final. Either the CRTC can peg your toll interconnection rate at the same rate used by TELUS Quebec or you can conduct your own cost study to determine a more appropriate rate. The choice is yours. The CRTC will continue to work with you to arrive at a solution that makes good sense for you, for other carriers and for consumers.

Flexible and streamlined, our new framework creates exactly the regulatory conditions under which each of you can excel. It won’t always be easy to respond to the changes that competition creates. But, armed with cutting-edge technologies and exceptional reputations for service, you will persevere and your customers will be the better for it.

Recent decisions of interest

Let me turn your attention briefly to a handful of other decisions and actions—some already taken, others planned by the CRTC—that will further contribute to our vision.

Earlier this week, we issued a wireless code that will apply to contracts for mobile devices starting on December 2, 2013. The wireless code will help individual and small business consumers understand their contracts and ensure fair practices throughout the industry.

Given that the cellphone has become the most important consumer electronics device in Canada today, it goes without saying that this is a significant and foundational document for consumers and service providers.

Some of the new standards that will soon be in place include requirements for service providers to offer easy-to-understand contracts to consumers and to unlock cellphones after three months to enable consumers to easily change service providers. The amortization period for cellphones will be limited to two years, enabling consumers to exit their contracts at that time with no cancellation fees.

In February, we established final wholesale rates for the high-speed access services used by independent service providers to offer Internet access and other services. Our decision requires large telephone and cable companies to use a single billing model and offer the same rates for business and residential end users. The result will be a more straightforward billing process for independent service providers.

Later this year, we will dig into a full review of the wholesale telecommunications services rules that we introduced in 2008. Our goal for this review is to ensure we have a wholesale services regulatory framework that facilitates the development of a competitive telecommunications market that provides consumers with choice and access to innovative and affordable services.

Closely related to that initiative is the issue of pricing wholesale services. We recently introduced more transparency in the rate-setting process. The next step will be to consider how we set wholesale rates and ensure our models and processes remain relevant and sustainable, and appropriate for the needs and interests of Canadians.

Our new Three-Year Plan also requires us to delve deep into four issues of particular significance for your businesses.

As you can see, there’s a lot on our plate that will bring us closer to our vision of enabling a world-class communication system for Canadians.

A moment ago, I said I’d be pleased to hear feedback from you about the state of local competition in your markets. In fact, that invitation extends to all these issues I’ve just described to you. The ITPA and the regulator have enjoyed a long history of working together to resolve issues of mutual interest. I want to make sure that relationship remains just as strong today—and into the future—as it has been in the past.

What the future holds

Before concluding, I want to come full circle to the point I raised at the outset of my remarks: that the telecommunications industry is changing. Technology and market trends and developments are driving changes to your business—and mine—at speeds never seen before.

Wireless technologies that were never even dreamed of a century ago are making significant demands on today’s data networks. So too is the movement to cloud computing and the emergence of big data. Each of these is driving us to respond to new challenges every day.

The forecast growth in machine-to-machine communications promises significant impact not only on the wireless sector but also on the sector more broadly. We will have to stay on top of this new development if we are to gauge its impact on Canada’s communication system.

The demand for broadband, both fixed and wireless, will challenge you to offer new and faster services to your customers, and it will task us with the job of facilitating a competitive national broadband market while balancing incentives to invest in such innovative networks.

Amid such changes, we will all have decisions to make. For you, the question will be how to respond to such innovations. Which technologies, business practices and services do you adopt and how? For us, the question is whether and how to regulate. How can the CRTC give you the leeway you need to do your jobs to the best of your abilities while also supporting the needs and interests of Canadians?

If the CRTC is to be successful in its vision of being a trusted institution that ensures Canadians have access to a world-class communication system, we must not act alone. All stakeholders—consumers, providers, developers and governments—have a role to play in making such a dream a reality.

You work on the front line of next-generation network deployments. You understand your customers’ needs. Your input into the issues and procedures I’ve just described is critical to that success.

I look forward to further discussions and to working with you towards achieving this vision.

Thank you.

 

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