The Silent Revolution of 2014: The Regulation of Telecoms

The present Government is known for presenting amazingly lengthy and complex budget implementation bills (BIAs) that often contain new policy directions that have never had a public airing. The current Bill C-43 does not disappoint in this regard: it vastly expands the regulatory reach of the CRTC and subjects even the smallest and most peripheral players in the telecoms market to intrusive and costly regulation.

philip palmerThe Telecommunications Act was deliberately designed to limit regulation at the federal level to those carriers who do or might have market power: facilities based carriers who control the wires and air waves that deliver telecommunications services to Canadian businesses and residential subscribers. While in the years since the Act was adopted in 1993 there has been much progress on deregulation, and there are lively areas of competition that didn’t exist twenty years ago, the fact remains that in most areas of the country there is limited competition in delivering the last mile of service. As cable carriers have increasingly adapted their networks to be able to deliver two-way telecommunications services, a healthy duopoly of services is available to the vast majority of Canadian homes and businesses.

Against this background of reduced regulation of the nation’s largest telecommunications carriers, it is surprising to find in a budget bill a provision that extends regulation to a new population of players who do not have market power in the economic sense, who have no or limited telecommunications facilities, and whose services are entirely optional to the customer.

The offending provision, Section 195 of the current BIA, provides as follows: 

24.1 The offering and provision of any telecommunications service by any person other than a Canadian carrier are subject to any conditions imposed by the Commission, including those relating to

(a) service terms and conditions in contracts with users of telecommunications service

(b) protection of the privacy of those users;

(c) access to emergency services; and

(d) access to telecommunications services by persons with disabilities.

This seemingly innocuous provision is, in fact, a radical extension of the Telecommunications Act from the regulation of the facilities based carriers (Canadian carriers in the language of the Act) to all resellers of telecommunications services, including those offering voice telephony, internet access services, video services and telecommunications services that are merely ancillary to other business offerings. No one has any idea of how many businesses may be caught by these provisions, and so no one can know what the potential impacts may be.

To be clear, there are literally hundreds, if not thousands, of businesses that provide some form of telecommunications service in the course of providing services to their customers. The cost of that telecommunications service may be directly billed to their customers, or may be included within the pricing of the principal product or service. It is not clear that ever business that may provide a telecommunications service within the meaning of the Telecommunications Act may even be aware of the fact that they are telecommunications service providers. The definition in the Act is very broad, and circular. That was not a terrible problem when the Act addressed only the services of Canadian carriers – the extension of the regulatory authority of the CRTC to this immense new population brings all kinds of new issues to the fore: ones for which neither the CRTC nor the Federal government is well placed to address. Frankly, the CRTC has scarcely the resources necessary to regulate the Canadian carriers without having to reach into unexplored corners of the telecommunications market.

The background notes issued by the Department of Finance in explanation of C-43 elaborates no policy rationale for this regulatory extension, nor have I found any news releases or speeches by Industry Canada figures justifying this extraordinary measure.

This is not a good measure. It is not a necessary measure. Given its inclusion in a budget bill, it will be law before there has been serious discussion of the implications for both businesses and consumers of this folly.

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