Canadian ILECs Appeal CRTC Ruling
In the wake of the CRTC's VOIP decision last month, ILECs have started to launch their appeals. In a filing to the Federal Court of Appeal yesterday, Bell, Sasktel and Telus argued a provision in the decision that prevents them from contacting residential customers who leave for another service provider for a year. This covers local phone, high-speed, LD, VOIP and TV. The ILECs are appealing based on freedom of speech in the Canadian charter. The truth is they should be appealing the CRTC ruling on silliness. It's one thing to hobble the ILECs from competing freely in the VOIP market so competition can be encouraged; it's quite another to shackle them in a variety of ways. The CRTC wants competition yet it seems intent on not letting ILECs compete. The CRTC also ignores a key issue in its VOIP ruling: the emergence of alternative tools that make the local market share numbers cited by the regulator look suspect. You can't make a ruling on local service if you ignore the fact there are 10 million wireless phone users out there.
That said, I believe ILECs are also engaged in another battle with the CRTC. In some respects, these appeals are as much PR campaigns as they are crucial business strategies. At the end of the day, ILECs don't want to be regulated by the CRTC for any service. The final hurdle is the $10-billion local phone market. With the VOIP decision, there will be active competition, and it may not be long before cablecos and players such as Vonage have 5% or 10% of the market. At some point, the CRTC is going to have to look at the competitive inroads and decide regulation is no longer needed. Then, it will let ILECs to do what they want. That's when things could get very interesting.
June 14th, 2005 at 9:47 am
It's one thing to hobble the ILECs from competing freely in the VOIP market so competition can be encouraged; it's quite another to shackle them in a variety of ways. The CRTC wants competition yet it seems intent on not letting ILECs compete. Look, clearly you've spent a lot of time listening to the ILECs arguments, but their line (and yours) that CRTC isn't letting ILECs competing rings a little bit hollow on two counts. One, the ILECs continue to have almost the entire market. Two, the ILECs aren't preventing from innovating in any way they'd like; the only real “shackles” are to their sales teams (from calling me at suppertime) and to their marketing teams (from pushing PSTN-VoIP as the latest, greatest thing).
The ILECs are free to unroll any kind of VoIP services they can think of, charge whatever the heck they want for them, and market them to anyone they choose. The big hardship is to let the CRTC know about new pricing on PSTN-identical services a week in advance? There's a weird mismatch between the rhetoric and the reality — the real question is what the ILECs are really looking for in all this, and it ain't about PSTN-VoIP regulation.
The CRTC also ignores a key issue in its VOIP ruling: the emergence of alternative tools that make the local market share numbers cited by the regulator look suspect. You can't make a ruling on local service if you ignore the fact there are 10 million wireless phone users out there.
Again, this no doubt sounds like a good line when served up by Bell lobbyists, but the real world is a little bit more complex. The CRTC is certainly aware of the argument; it's been made at every hearing the ILECs have been involved with for years now.
The fact is that wireless isn't yet a wireline substitute. Study after study shows it. Personal experience for most of us confirms it. (But if the National Post is thinking about jettisoning its wireline to give everyone mobile phones anytime soon, do let us know! My coverage just isn't good enough or the sound quality full enough for me to go there.) The ILECs have literally put millions into cranking up their regulatory rhetoric over the last year, even setting up their own corporate lobby to sponsor industry events and so on. Why, we know not. We do know that, if there were any convincing evidence for them to present to the CRTC on substitutabiity, they'd have done so. They haven't. There're a couple reasons for that. One, it's a lot easier to convince newspaper reporters than dig up hard evidence — especially when, two, that evidence doesn't exist.
June 14th, 2005 at 12:34 pm
I'm not sure I agree with Mark's viewpoint on this one. Here are my reasons:
a) These large telco's are companies that have been proven in courts to be anti-competitive. The CRTC in these cases has been forced to regulate them in order to allow “small fish” to swim in the same pond as the “big sharks”. As an employee of an Independant ISP, I have first-hand experience with the way large telco's give with one hand (to please the CRTC and other regulatory bodies) while very wuickly taking with the other (to build their own client base and line their own pockets) making it very difficult for smaller companies to compete.
b) Mark argues that regulation would stiffle innovation. Large companies that exert monopoly-like influence (ie. Telus in Alberta) rarely innovate. At least, not when they can maintain the status quo. There is very likely a pronounced difference in areas of the country where Telus and Bell actually compete against each other, but not here in Alberta. The following all are casualties of monopolies: pricing, service, innovation, and ethics.
I beleive the CRTC is right in regulating VoIP, at least for now. Once the industry becomes more established is when you can give free reign to anyone to try and grab as much market as they like.
June 14th, 2005 at 2:10 pm
The one thing I'd add is that the CRTC isn't really regulating all VoIP, only some VoIP — PSTN VoIP. Bell can compete with MSN Messenger, Skype, and Web-push-to-talk sites to its heart's content, at any prices it likes.
In fact, the only kind of VoIP which is regulated is the non-innovative kind.
Which is why it's particularly ironic to hear the ILECs talk about innovation being stifled: how does a service that's identical to the PSTN innovate, exactly?