Wednesday, November 15, 2006


Cabinet makes final call on VoIP

Maxime BernierAs reported by the Globe and Mail this morning, the federal cabinet has overturned the CRTC's conviction that all VoIP services should be regulated like conventional voice service.

In his speech today to the Economic Club of Toronto, Canadian Industry Minister Maxime Bernier announced that it is telling the CRTC to deregulate access-independent VoIP services. This will impact services like Bell's Digital Voice Lite, but not their full Digital Voice product. As a result, the announcement will not immediately impact the more reliable managed VoIP services that compete more directly against the cable companies.

The Minister stated:
...many people believe that it is up to the government to bring about economic growth. As one once said, such a view of the economy could be summed up in a few short phrases: if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. This is not a view that I share.
Today's announcement is more likely a further indication of policy direction, rather than having substantial impact on the marketplace.

The CRTC's position, set out in a decision in May 2005, was that the Commission has always adhered to principles of technology neutrality and VoIP was just another technological means to deliver wireline voice. In May 2006, responding to an appeal from the incumbent telcos, Cabinet asked the CRTC to reconsider its position and told it to report back in 120 days.

On September 1, the CRTC affirmed its original decision that voice is voice, regardless of the underlying technology. To some, it seemed as though the Cabinet and CRTC were talking on a VoIP line while their staff were downloading Schwarzenegger films: every other word was garbled so the messages just weren't getting through.

In a white paper, we offered a solution that leads to the conclusion endorsed by the Minister today - unbundle the service from the access and examine the state of regulation on the access component to determine how to regulate the service. Our solution allows the CRTC to remain true to its principle of technological neutrality while considering the market and political realities.

As we mentioned on Monday evening, the Telecom Act allowed Cabinet 90 days to 'vary or rescind' the CRTC's September 1 decision. Today's announcement instructs the CRTC on how it must deal with the issue.

The clock is also ticking on a number of other files, including the Minister's Policy Direction to the CRTC. In his speech today, he indicated that he is still reviewing "comments before commencing the finalization process."

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