Canada’s Murky Local Phone Rules

For anyone interested in telecom competition in Canada, Fort McMurray, Alberta could be a fascinating case study on what the future holds. As the town booms because of all the oil activity, Shaw (Canada’s second-largest cableco) has emerged as a major telephone service provider to the point where Telus applied to the CRTC to deregulate the market. Telus’ request was based on its belief that competitors now have 25% of the market, which meets a key criteria established by the CRTC. The CRTC, however, turned down Telus’ request because the regulator claims Telus hasn’t met “quality of service” standards, which Telus claims are unattainable.

In a nutshell, it’s a messy situation that reflects the continued murkiness of the deregulation of Canada’s $10-billion local telephone market despite decisions made by the CRTC. As much as the CRTC wants, in theory, to deregulate the local market, it is obviously intent on micro-managing the process so competition can flourish. It seems like the CRTC wants to eat its cake and have it too.

This regulatory uncertainty will likely compel the federal government (specifically Industry Minister Maxime Bernier) to directly get involved. Bernier is proposing that carriers can apply for deregulation in residential markets where there are at least three phone providers, and business markets with at least two suppliers. There would also be nine quality of service standards to meet. Bernier’s proposal is a different flavor of deregulation than the CRTC’s current rules. Of course, there are a lot of unknowns such as who qualifies as a service provider and whether these suppliers would have to have a minimum number of customers so it’s unclear if Bernier’s plan will work any better than the CRTC’s.

Note: Check out these stories in the Globe & Mail and National Post, as well as this blog post by Mark Goldberg.

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