The CRTC has issued a Public Notice (PN 2006-14) to examine the regulatory framework for wholesale services and definition of essential service.
This proceeding will be significant and it includes live hearings scheduled to be held in Gatineau in October 2007. Yes, a year from now. Following the hearings, there will be further exchange of arguments and reply, meaning that the file won’t close until January 2008. A decision will be rendered within 180 days.
The timing should be perfect for The 2008 Canadian Telecom Summit.
This is a major regulatory proceeding. Among the more more significant issues in looking at relaxing regulation of retail services is whether there is still a need to regulate wholesale services. If so, what are the essential wholesale services that should be regulated, as contrasted with those that are provided according to what the market will bear.
As the CRTC notes in the Public Notice:
The Commission notes that to date it has not conducted a comprehensive framework proceeding with respect to wholesale services and that, as noted above, its current regulatory regime for wholesale services evolved on an incremental basis. … The Commission, therefore, considers there is a need to conduct a comprehensive proceeding to review the regulatory framework for wholesale services, including, in particular, a review of the definition of essential service and the associated pricing principles.
…
The Commission notes … that the complexity of the interrelationships between several of the wholesale services means that to deal with them in isolation could create unforeseen problems.
The Commission’s conclusion … is that any limitation of scope in the interests of time would ultimately create a longer overall timeline as it would be necessary to conduct several significant lengthy related proceedings in sequence.
[PN 2006-14, p.15-21]
The report of the Telecom Policy Review panel looked at the issue of wholesale services and the CRTC’s public notice appears to be advancing in a manner consistent with a number of the TPR recommendations. For example, recommendation 3-19 states:
The regulatory framework should continue to require owners of essential wholesale facilities to make them available to competitors at regulated wholesale rates. Regulatory requirements to provide non-essential wholesale services or facilities should be phased out in order to provide increased incentives for innovation, investment and more widespread construction of competing network facilities.
The TPR report also calls for
A working group of CRTC and Competition Bureau members should be established as soon as possible to develop recommendations to the CRTC on the definition of essential facilities and its application to today’s telecommunications networks.
The CRTC’s public notice recognizes the draft Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry, issued by the Competition Bureau in September. This type of cooperation with the Bureau is consistent with TPR panel recommendations for joint activity on wholesale services.
Key to relaxing the regulation of retail services is for us to get the regulation of wholesale services right. This Public Notice will set the tone for the future of competition in the telecom industry.