Navdeep Bains, Minister of Innovation, Science and Economic Development, speaks to media following a cabinet meeting on Parliament Hill in Ottawa on Jan. 29, 2019.Sean Kilpatrick/The Canadian Press
Ottawa says it plans to direct the federal telecom regulator to put more emphasis on different forms of competition, lower prices and the protection of consumer rights.
Navdeep Bains, Minister of Innovation, Science and Economic Development (ISED), said Tuesday that the government has tabled a proposed policy direction that would provide new guidelines for the Canadian Radio-television and Telecommunications Commission (CRTC) to consider when it makes regulatory decisions.
The policy directive sets out a list of factors for the CRTC to consider, including “all forms of competition,” affordability, consumer protection, reducing barriers to entry for new and smaller service providers and encouraging the use of new technologies.
This is in contrast to a policy direction passed under the previous government, in 2006, which directed the CRTC to take into account “market forces,” and encourage telecom companies to make investments in building their own networks (which is known as “facilities-based investment”).
Both affordability and promoting reliance on market forces are already listed as general objectives of Canadian telecom legislation. But the 2006 policy direction tends to carry additional weight, with the CRTC often explaining how it took the directive into account.
If finalized, the new policy direction could influence decisions such as an impending CRTC review of the wireless market that could see the regulator support a mobile reseller business model, University of Ottawa law professor Michael Geist said in an interview Tuesday. Under such a model, large carriers could be required to resell cellular service to smaller players who have not built their own networks; those players would then sell the data or voice services directly to consumers and could offer lower prices or different service models to stand out.
“This is a government saying we think competition is good, not just facilities-based competition,” Mr. Geist said. “This is a dramatic shift from the CRTC’s seemingly preferred approach of facilities-based competition approach.”
“I think we should not underestimate the implications of this,” he said, pointing to the wireless market review, which is planned for later this year, as well as the influence the new policy direction could have on proposals such as a tax on internet services to support Canadian content, which could increase prices for consumers. “The government is saying to the CRTC that it needs a change in direction, one that prioritizes all forms of competition, better affordability and consumer rights.”
Canada’s three national carriers, BCE Inc., Telus Corp. and Rogers Communications Inc., as well as regional operators such as Shaw Communications Inc.'s Freedom Mobile and Quebecor Inc.'s Vidéotron, are opposed to a mobile reseller model, saying it would reduce their incentives to invest in building high-quality networks.
For more than a decade, governments under both the Liberals and Conservatives have made wireless competition a priority and while Freedom and Videotron have both increased their market share, the Big Three continue to control about 90 per cent of the market. Wireless prices have declined in some cases, but a CRTC report last year showed Canadians still pay higher prices for many services than people in other Group of Seven countries.
In response to a request by the CRTC last year, the Big Three agreed to offer certain low-cost data packages. The Competition Bureau, which has previously highlighted the “market power” the incumbent operators hold, warned in a filing made after the CRTC request that setting low prices through such plans is "not a substitute for true competition in this industry.”
In a news release on Tuesday, Mr. Bains called the move a “clear direction to the CRTC that Canadian consumers must be at the forefront of all future decisions.”
“We are ensuring that telecommunications policy will be made through a consumer-first lens to ensure Canadians have access to quality services at more affordable prices,” he said. He noted that wireless prices are lower in parts of the country where there are more competitors.
There are several steps the government must take to make the policy change through an order under the Telecommunications Act. These include publishing the proposed direction in the Canada Gazette, consulting with the CRTC as well as the provinces and territories, and allowing the passage of 40 sitting days of Parliament.
Dani Keenan, press secretary for Mr. Bains, said the Minister has been in touch with his provincial and territorial counterparts and that a notice will be published in the Canada Gazette in March. She said the government tabled the proposed policy direction now so that an order could be finalized before the end of this sitting of Parliament, in about mid-June.
“That’s very much the reason we tabled it when we did," she said.
Patricia Valladao, spokeswoman for the CRTC, commented, “The CRTC takes note of the government’s proposed policy direction and will implement it once it comes into force.”