Did the CRTC Goof?
Earlier this year, the CRTC introduced new rules for the traditional local telephone market to reflect growing competition as VoIP becomes more popular. At the time, Canada's telecom regulator said incumbent carriers such as Bell and Telus had to lose at least 25% market share before they could apply to be deregulated, which will give them the freedom to set prices based on market forces. Meanwhile, the CRTC decided to let rivals such as cablecos (Rogers, Videotron, Shaw, Eastlink, Cogeco) and independents such as Vonage the freedom to price how they wanted. The idea was this regulatory regime would encourage competition by "shackling" the dominant players until new players got a firm foothold. Today, however, the CRTC appears to be backtracking on its decision after issuing a statement it will re-examine the 25% threshold. This could see the threshold reduced to a more reasonable 15% or 20%, which would still give the competitors enough business to become sustainable before the ILECs are unleashed. So, did the CRTC goof earlier this year by under-estimated how quickly the cablecos would attract local customers? It's difficult to believe given Videotron posted strong subscriber growth last year, while Rogers and Shaw had modest growth only because the adopted a conservative approach to marketing and pricing. Perhaps the CRTC did get caught with its pants down, and today's statement is a mea culpa. Another statement made by the CRTC today was a re-affirmation of the VoIP rules, which regulate ILECs while giving rivals competitive freedom.
