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Regulatory reforms aim to motivate investment

|Written By Mark Bourrie

The wheels are in motion for a radical change to Canada''s broadcast and telecom regulatory system.

First, a new Conservative government is expected to re-write the broadcast and telecommunications acts.

And, later this year, CRTC Chairman Charles Dalfen will retire. Dalfen, a booster of telecom deregulation, was still seen by some industry observers as too interventionist. The Harper government will appoint his successor and fill several vacancies that will arise on the commission.

On March 22, a three-member panel delivered a report to the federal government recommending greater deregulation of the telecommunications industry.

Panel member Hank Intven, a partner with McCarthy T?trault LLP and an internationally renowned lawyer with a specialized practice in telecommunications law that spans over 25 years, says there needs to be a revamping of the system.

"We concluded that it's time to reverse the current presumption in the Telecommunications Act that all services should be regulated unless the CRTC issues a forbearance order," Intven said when the commission report was released.

"This should be replaced with a presumption that telecommunications services will not be regulated except in specified circumstances, where regulation is clearly necessary to protect consumers or to maintain competitive markets," he said.

"We made a number of specific proposals that will have the effect of significantly deregulating telecommunications markets ? that is removing requirements for CRTC approval of the introduction, pricing, and packaging of services by all telecom companies."

The review commission recommends the phasing out of regulation of the wholesale prices and conditions on which the major telecom companies make their networks available to competitors.

"Our goal here is to provide incentives for telecom companies to invest in new advanced infrastructure ? and not just to buy it from the major companies at low regulated rates," Intven said.

"We recognize that economic regulation will continue to be necessary in areas, such as rural markets, where there are monopolies or what economists define as 'significant market power.' However, we have made a number of recommendations to streamline regulation in those areas."

Intven said the panel's 400-page report is the most comprehensive review of Canada's telecommunications sector in almost 30 years. Its recommendations "reflect the lessons learned in Canada and other countries in recent decades about letting the marketplace and competition work, and about using targeted government measures only when the market will not achieve our economic and social goals."

Panel chair Gerri Sinclair, a former academic and Microsoft executive, said reform of the policy framework needs to begin now.

"Although our telecommunications policy has served Canada well, we have concluded that it is now time we started to make fundamental changes. Other-wise, our competitiveness and productivity will lag, and Canadians will be deprived of the full benefits of continuing technological innovation and the increasing competitiveness of our telecom industry."

The federal government must create a national ombudsman to protect consumers from a viciously competitive and complex communications industry, the panel recommends.

"A properly designed [ombudsman's] office should be less intimidating to customers and should resolve disputes in a less formal and less time-consuming manner than current arrangements," says the report.

The United States, United Kingdom, and Australia each have ombudsman offices to deal with complaints in the communications sector, the panel said.

Its report said the Telecom-munications Act should be amended to give the agency the authority to award monetary compensation to consumers, in limited circumstances, of up to $10,000, but shouldn't interfere with the competitive process of the communications industry.

The report contains 127 recommendations. Highlights include:

?    Changes to the objectives outlined in the Telecom-munications Act to put the focus on promoting affordable access to telecommunications services throughout Canada, enhancing the efficiency of Canadian telecommunications markets and the productivity of the Canadian economy, meeting the special access needs of disabled Canadians, enhancing public safety and security, and protecting personal privacy and limiting public nuisance through telecommunications networks;

?    A call for explicit guidelines in the act to promote reliance on market forces to the maximum extent possible to achieve the goals set out in the act, and to limit the use of regulation to instances where market forces are unlikely to achieve these goals;

?    Reforming Canada's regulatory framework for telecommunications to accelerate the deregulation of markets, while retaining essential protections for consumers, and for the maintenance of competitive markets;

?    Establishment of a joint CRTC and Competition Bureau "telecommunications competition tribunal" to serve as a transitional mechanism to expedite the change from the traditional Canadian approach to telecommunications regulation to the more competitive deregulated approach called for in the report;

?    Strengthening and clarifying key areas of technical regulation to ensure the safe and efficient use of telecommunications facilities and networks, clarify the CRTC's regulatory powers and legal authority so it can deal more effectively with access disputes involving telecom infrastructure, and move responsibility for spectrum management from Industry Canada to the CRTC;

?    Including in the Telecom-munications Act an affirmation of consumer access rights to the Internet and to Internet applications, as well as the creation of a new industry-funded "telecommunications consumer agency" to resolve complaints from individual users and small-business customers about any telecommunications service provider;

?    A new initiative by the federal government to accelerate the adoption of advanced information and communications technologies (ICTs) by Canadian governments, businesses, and institutions, and the completion of a "Ubiqui-tous Canadian Access Network" (U-CAN) by 2010 so Canadians will have access to broadband Internet services no matter where they live;

?    Changes to Canada's key policy-making and regulatory institutions to strengthen the policy-making capacity of Industry Canada, and to streamline and enhance the professional capacity of the CRTC.

The commission notes Canada's position as a world leader in terms of the number of citizens connected to the Internet has slipped in the last few years. In 2003, Canada ranked second for the number of subscribers among all Organization for Economic Co-operation and Development countries, but the country had dropped to sixth place by June 2005.

One of the major gaps in creating cross-country broadband access is the remoteness of huge portions of the country.

The report also urges the government to commit to extending broadband Internet access to the entire country, particularly on First Nations reserves and in remote towns, which are largely dismissed as unprofitable by major communications companies.
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