Thank you, Mr. Chair.
Members of the committee, thank you for inviting me, Dr. Gerri Sinclair, and André Tremblay to appear before the committee to speak about the report we prepared as members of the Telecom Policy Review Panel. Unfortunately, prior commitments prevented Dr. Sinclair and Monsieur Tremblay from joining me here today. They've asked me to represent the panel and to do my best to assist the committee in its deliberations.
The TPR panel was established in April 2005 to undertake the first comprehensive review of Canadian telecom policy and regulation in about 30 years. Our panel's mandate was to conduct an independent review covering three broad areas, namely, the telecom regulatory framework, access to broadband and advanced telecom services, and the adoption of information and communications technologies by Canadians. The panel was assisted by a secretariat that included some of the top telecom experts and consultants in Canada. We received written input from a wide range of Canadian stakeholders in the telecom sector. We held several public fora, and met with Canadian and international telecom experts, regulators, policy-makers, and members of the general public.
We presented our final report on March 22 of last year. Three major themes underline many of the recommendations of our final report. The first is the need to clarify the objectives of Canadian telecom policy and regulation.
We proposed that the objectives of the current policies contained in the Telecommunications Act be clarified in order to emphasize three main objectives: first, promoting affordable access to advanced telecommunications in all regions of Canada; second, achieving certain specific and important social objectives such as access to telecommunications for persons with disabilities, improved public safety, protecting privacy and limiting public nuisance caused by telecommunications networks; and, third, improving the efficiency of telecommunications markets and the productivity of the Canadian economy.
The first of these objectives is not radically different from those traditionally pursued by Canadian regulators. Both relate to providing affordable access to telecommunications for Canadians. However, our report also suggests that more emphasis needs to be placed on a third set of objectives, those related to economic efficiency and productivity.
A second theme underlying our report is that telecom policy should rely on market forces as much as possible to achieve Canada's telecom policy objectives. Regulatory intervention should be reduced in areas where market forces can do the job as well or better.
A third theme of the report provides that where the market won't achieve important telecom policy objectives, then smarter and more targeted policy initiatives and regulatory intervention should be developed to achieve those objectives.
It has now been almost a year since the panel released its final report. The report has been well received in industry and policy circles as well as in the media. Most commentators have said that the recommendations were timely and consistent with Canadian needs, as well as with international trends and telecom policy and regulation.
The government has taken some significant first steps to implement the panel's recommendations. In particular, the government has issued a policy direction to the CRTC, as it is authorized to do under section 8 of the Telecommunications Act, requiring the commission to interpret the rather broad and sometimes conflicting objectives of that act in a more market-oriented way.
This policy direction is based on the one recommended by the panel, and it brings the Canadian government's expressed regulatory policy for the telecom sector more closely in line with that of our trading partners.
In addition, the government's orders in council on VOIP and forbearance are consistent with the panel's recommendations to rely more on market forces where those will achieve Canada's telecom policy goals, and to reduce regulatory intervention that interferes with the achievement of those goals.
Today's fixed local telecom access markets, including the VoIP market segment, are highly competitive, with a range of sophisticated and well-financed service providers vying to provide Canadians with among the highest quality and lowest priced services in the world. The new entrants to local telecom markets, including the Canadian cable industry, have demonstrated themselves to be first-class providers of advanced broadband and now VOIP services, who can easily hold their own against the incumbent telecom carriers such as Bell Canada and Telus.
The TPR panel recognized the reality that the CRTC, Industry Canada, and other government policy makers had worked hard to achieve for over two decades, namely, making Canada's telecom markets among the most competitive and dynamic in the world. Today our telecom suppliers are, in most market segments, producing the types of low-cost advanced services that we need to maintain and increase Canada's economic and social welfare.
The panel saw the shift towards a more market-oriented and less regulated local telecom sector as being essential for Canadians to take advantage of the potential that new telecom technologies offer. Today's markets are very dynamic, and the technologies and trends are increasingly global. It would be very risky for Canada to require or permit our regulators to devise regulatory approaches aimed at supporting one particular technology or one business model, and to handicap others in order to achieve a predetermined industry structure. Yet this was the effect of some of the CRTC's regulatory approaches over the past years.
Some of the commission's more intrusive regulatory approaches were aimed at supporting CLECs that relied heavily on the resale of wholesale network services by the incumbent telephone companies. Despite this regulatory support over the past decade, few CLECs have survived. In the meantime, the Canadian cable industry, without significant regulatory support, has become a strong and successful provider of competitive telecom services to Canadians. The market players, and not the regulator, have succeeded in bringing the benefits of competition to Canada.
This experience and that of other countries we studied illustrates why the panel recommended more market-based approaches to regulation of local telecom markets. The experience also indicates why we believe the government has acted appropriately in implementing some of the panel's recommendations to deregulate local access markets.
While we would commend the government on starting the job of reforming Canadian telecom policy, my colleagues and I on the panel feel strongly that the government and Parliament should now move on to complete the job.
l would like to address some of the main areas of our report where we believe future action is urgently required by the Canadian government and by Parliament.
First, we believe that it is high time for Canada to modernize its telecom legislation to meet the requirements of 21st-century telecommunications. Most of our trading partners did this long ago. While we did enact a new Telecommunications Act in 1993, and l was privileged to be the chief external legal adviser on that legislation, l can share with you what our instructions were. We were asked to update, but not to change, the basic regulatory framework established for Canadian telephone and telegraph companies in the 1906 Railway Act. We were asked only to draft a few specific new initiatives, such as those introducing foreign ownership restrictions and overruling a Federal Court case in order to establish the forbearance power. While there have been several amendments since 1993, such as those related to international service licensing and telemarketing, there have not been changes to the fundamental legislative approach to economic regulation of the telecom industry since 1906, just over 100 years ago.
The legislative approach in the law today gave the board of railway commissioners and its successors, up to and including the CRTC, broad powers to do whatever they considered appropriate to achieve two very vague goals: to ensure that rates are “just and reasonable”, and that there is no “unjust discrimination” in the provision of telecommunications services. These two broad objectives have been interpreted heroically by the CRTC to regulate the telephone and now the telecommunications industry. They form the basis of a complex web of economic regulation that can change, depending on the views of current CRTC commissioners, without government or Parliament having any role in the matter. For example, the same two broad objectives have been used over the years to justify both monopoly and competitive provision of telecommunications.The law never changed. This is why the panel recommended that new telecom legislation be introduced, to establish a clear regulatory framework.
l don't have the time to describe all the recommendations in detail. That's done in our report. Let me just highlight a few points.
First, whatever one thinks of the government's recent orders to vary CRTC decisions, l don't think anyone in a modem industrialized democracy believes that the political arms of government should regularly interfere with the decision-making process of an independent professional telecom regulator. Many observers believe that it was timely and appropriate for the government to change the policy direction of the commission in both the VOIP and local forbearance areas. However, over the longer term, government and Parliament should develop clearer policy directions, which should then be administered by an independent professional regulator, and that should be done in legislation.
Next, our panel recommended that the new regulatory approaches set out in the telecom legislation should be more closely aligned to competition policy, rather than to monopoly public utility regulation principles. This is the clear trend in legislation in the U.S., the U.K., Europe, and among our other trading partners.
Our panel also noted that all industrialized countries recognize the importance of maintaining an independent professional telecom regulator, separate from the competition authorities. The only exception to this rule, New Zealand, declared its attempts to rely solely on economy-wide competition law to be a failure, and they have recently re-established a telecommunications regulator with specific expertise in the area.
So after looking at best international practices, our panel recommended a simple approach to applying the necessary expertise in telecom and competition policy to the telecom industry. We proposed a form of joint panel of the CRTC and the Competition Bureau that we called a “Telecom Competition Tribunal”, or TCT, as the most efficient solution to developing and applying good economic policies in the regulation of the telecom industry. The TCT would be a practical way to combine the telecom industry expertise of the CRTC with the expertise of the Competition Bureau in the economics of competition.
The TPR report recommended other legislative approaches that would bring Canada in line with, or in a leadership position in, telecom regulatory approaches adopted by OECD countries.
Finally, our panel recommended a number of new policy initiatives to meet the needs of 21st century Canada. While our core conclusion was that Canada should rely on market forces as much as possible to achieve important objectives of Canadian telecom policy, we also recommended that where the market does not achieve these objectives, the government and regulators should utilize smarter and more targeted policy and regulatory initiatives to do so.
There are a number of areas in which we thought such initiatives were necessary. I'll just list them very quickly.
First, we recommended that the CRTC be clearly empowered to order removal of some of the remaining barriers to entry by new telecom competitors--barriers including the existing restrictions on access to telephone and electrical poles, towers, rooftops, in-building wiring, and public property--so that existing and new competitors can compete more effectively.
Second, we recommended the use of radio-spectrum policies to ensure that adequate spectrum is available to new and existing companies, in order to provide advanced and competitive telecom services to Canadians in all areas of Canada.
Next, to ensure that vulnerable consumers are protected in the more competitive and less regulated telecom markets of the future, we recommended a number of initiatives.
The first is a specific legislated duty on incumbent telephone companies to continue to provide basic telephone service and to prevent abandonment of customers.
Second, we recommended the establishment of a new form of ombudsperson's office, called the telecom consumer agency, to resolve complaints from individual and small business retail customers against all telecom service providers, not just the currently regulated ones. Based on well-accepted models in the U.K., Australia, and elsewhere, we recommended that this agency run as a self-funding, independent, industry-established agency subject to guidelines set by the CRTC.
Finally, in the consumer area we recommended a regulatory power to confirm the right of Canadian consumers to access publicly available Internet applications and content by means of all public telecom networks that provide access to the Internet.
Consistent with this same approach, we believe the marketplace will continue to provide Canadians with one of the highest levels of broadband connectivity in the world. But our study suggested that for a small number of communities, often first nations communities and remote areas, it was unlikely the market would provide broadband connectivity. Therefore we recommended the U-CAN program--for “ubiquitous Canadian access network”--to ensure broadband access to these areas.
Finally, in recognition of Canada's lagging productivity performance and low level of adoption of information and communications technologies, the panel recommended a number of government policies to promote both, particularly among small and medium enterprises.
In summary, the panel saw its various recommendations as balanced and interrelated parts of a single new policy framework. This policy framework would result in deregulation in areas where market forces can best achieve Canada's long-term policy objectives while providing smart and targeted policies and regulation in areas where the market fails to do so.
We hope that the government and other stakeholders in the industry have the perseverance to complete what the TPR report has started--to make Canada a leader in terms of telecom policy--and by doing so maintain leadership in terms of the performance of our telecom sector for many years to come.
I remain available to provide as much information as possible to assist and fuel the thinking of committee members.
Thank you very much.
