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Ottawa, 13 October 1993
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Telecom Public Notice CRTC 93-64
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REGULATION OF WIRELESS SERVICES PROVIDED BY CANADIAN CARRIERS
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Background
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On a number of past occasions, the Commission has recognized the benefits of a greater reliance on market forces, where appropriate. For example, in Cellular Radio Service, Telecom Public Notice CRTC 1984-55, 25 October 1984 (Public Notice 1984-55), the Commission found it neither necessary nor desirable, as a matter of regulatory policy, to require Rogers Cantel Inc., as it is now known, and arm's length affiliates of the telephone companies licensed to provide cellular telephone service to file tariffs for the provision of the service to the public. The Commission based its conclusion on its opinion that the benefits that users might derive from this innovative service would likely be greater if the terms of its provision were governed, as much as possible, by market forces rather than by regulation.
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In the case of cellular telephone service, the Commission's decision to forbear from requiring the filing of tariffs was conditional on the existence of adequate safeguards to ensure that the cellular activities of telephone company affiliates were conducted at arm's length from the telephone company's regulated activities and that there was no cross-subsidization from monopoly service revenues.
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The Commission made similar decisions to forbear with respect to a number of other services provided by the carriers under its jurisdiction. In these decisions, the Commission expressed the view that, where sufficient competition exists, placing greater reliance on market forces would produce benefits in the areas of innovation, market flexibility, competitive pricing and user choice. In each case, the Commission emphasized the need for competitive safeguards to ensure that there would be no cross-subsidization from monopoly service revenues.
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In 1989, the Commission's forbearance approach was rejected by the Federal Court of Appeal in Telecommunications Workers' Union v. CRTC and CNCP Telecommunications (1989) 2 F.C. 280. Since that time, the Commission has required all "companies" within the meaning of the Railway Act to file for their services for approval.
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The Telecommunications Act
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In June 1993, Parliament enacted the Telecommunications Act, S.C. 1993, c.38 (the Act), which is to come into force on 25 October 1993. Section 25 of the Act provides that
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No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with and approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
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Section 2 of the Act defines a "telecommunications service" as "a service provided by means of telecommunications facilities and includes the provision in whole or in part of telecommunications facilities and any related equipment, whether by sale, lease or otherwise." It appears to the Commission that, under this definition, the provision of wireless telecommunications services, such as cellular telephone, radio paging, public cordless telephone and mobile radio services, may well constitute the provision of "telecommunications service". If so, where a "Canadian carrier", as defined in the Act, provides such services, the carrier would be subject to Commission regulation, including the requirement to file tariffs for the Commission's prior approval.
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Section 34 of the Act empowers the Commission, in the circumstances enumerated therein, to make a determination to refrain, in whole or in part and conditionally or unconditionally, from the exercise of certain of its powers or the performance of certain of its duties in relation to a telecommunications service or class of services provided by a Canadian carrier. The Commission's powers and duties referred to in section 34 relate to the conditions under which telecommunications services may be offered and provided by Canadian carriers (section 24); the approval of rates for telecommunications services to be contained in tariffs filed by Canadian carriers (section 25); the determination that such rates are just and reasonable and that the provision of a telecommunications service by a Canadian carrier and the rates charged by it are not unjustly discriminatory (section 27); the approval of interconnection and other agreements involving a Canadian carrier (section 29); and the authorization or prescription of a Canadian carrier's limitations on liability (section 31).
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Section 9 of the Act empowers the Commission to exempt any class of Canadian carrier from the application of the legislation, subject to any conditions, where the Commission is satisfied that the exemption would be consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act.
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The Commission's Proposed Approach
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On a preliminary basis, the Commission considers that it would be appropriate to make a determination to forbear from exercising and performing all or some of its powers and duties in connection with the provision of cellular telephone service by Canadian carriers. It is the Commission's preliminary view that such a determination would satisfy each of the statutory criteria set out in section 34, in that:
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(1) such a determination would be consistent with the Canadian telecommunications policy objectives set out in section 7, particularly the objective "to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective";
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(2) the provision of cellular telephone service by Canadian carriers is subject to a degree of competition sufficient to protect the interests of users; and
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(3) such a determination would not be likely to impair unduly the continuance of a competitive market for that service.
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Consistent with the views originally expressed in Public Notice 1984-55, the Commission considers that any determination to forbear in connection with the exercise or performance of powers and duties relating to approval of tariffs for cellular telephone services offered by telephone company affiliates should be conditional on the existence of adequate safeguards to ensure that the cellular activities of these affiliates are conducted at arm's length from the telephone company's regulated activities and that there is no cross-subsidization from monopoly revenues.
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With respect to public cordless telephone services, the Commission is similarly of the preliminary view that the statutory criteria set out in section 34 would be satisfied if the Commission were to forbear from exercising and performing all or some of its powers and duties in connection with the provision of these services by Canadian carriers.
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As noted above, the Commission considers that certain other wireless services (for example, radio paging and mobile radio services) would also likely be found to be telecommunications services, as defined in the Act, and that providers of those services, to the extent that they are Canadian carriers, would be subject to Commission regulation, including the requirement to file tariffs for the Commission's approval. However, it is not apparent to the Commission that there are any regulatory policy reasons to require such service providers to file tariffs or to fulfil other regulatory obligations imposed upon Canadian carriers. As with cellular telephone and public cordless telephone services, the Commission is of the preliminary view that the statutory criteria set out in section 34 would be satisfied if the Commission were to forbear from exercising and performing all of its powers and duties in connection with the provision of these other wireless services by Canadian carriers. The Commission is also of the preliminary view that it would be consistent with the telecommunications policy objectives contained in section 7 to issue an order, pursuant to section 9, exempting one or more classes of Canadian carriers providing such wireless services from the application of the Act.
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Interested parties are invited to comment generally on the approach proposed above with respect to the regulatory treatment of cellular telephone service providers, public cordless telephone service providers and providers of other wireless services. In addition, the Commission seeks comment on the following matters:
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(1) whether the provision of wireless telecommunications services such as those referred to in this Public Notice constitutes the provision of a "telecommunications service" as defined in the Act;
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(2)(a) whether the Commission should forbear from the exercise of its powers or the performance of its duties in connection with the services or classes of services provided or to be provided by each of cellular telephone, personal communications and other wireless service providers;
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(2)(b) if so, which of the powers and duties set forth in section 34 of the Act should the Commission refrain from exercising or performing;
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(2)(c) for each such power or duty, whether the Commission should refrain in whole or in part and conditionally or unconditionally;
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(3)(a) whether the Commission should, as an alternative to forbearance, issue an order pursuant to section 9 of the Act exempting one or more classes of wireless service providers other than cellular telephone and personal communications service providers from the application of the Act;
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(3)(b) if so, which class(es) should be exempted and what conditions, if any, should be set out in such an order.
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Procedure
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1. Persons wishing to participate in this proceeding must file a notice of intention to participate by writing to Mr. Allan J. Darling, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2 (fax: 819-953-0795), by 3 November 1993. The Commission will issue a complete list of parties and their mailing addresses.
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2. Parties may file comments with the Commission, serving copies on all other parties, by 17 November 1993.
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3. Parties may file reply comments with the Commission, serving copies on all other parties, by 1 December 1993.
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4. Where a document is to be filed or served by a specific date, the document must be actually received, not merely mailed, by that date.
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Allan J. Darling
Secretary General
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