In June, Bev Oda, the Minister of Canadian Heritage, asked the CRTC to examine the future technological environment facing the Canadian broadcasting industry.
The CRTC today issued its report entitled “The Future Environment Facing the Canadian Broadcasting System”.
the report notes that Canadians, and younger Canadians in particular, are increasingly accessing programming through unregulated electronic platforms, such as the Internet and mobile networks. The CRTC considers that new audio-visual technologies will have an increasing affect on broadcasting undertakings over time. As a result, the detailed and ongoing monitoring of developments in the evolution, contribution and impact of audio-visual technologies will be an essential foundation to an informed public policy response.
According to CRTC Chair Charles Dalfen:
Based on the information provided to us, the CRTC concludes that public policy action will need to be taken within the next three to seven years if it is to have the desired effect, otherwise it may well come too late.
The big news from the TELUS guidance conference call may have been a small footnote on the year-end 2006 wireless net additions. TELUS (TSX: T) is now expecting only 550,000 net adds for 2006, a drop from a range of 560-590,000 given in their guidance only a month ago. In the 4th quarter of 2005, TELUS added 235,000 subs. The revised guidance is pointing to less than 200,000 in the year end rush of 2006, more in line with numbers last seen in 2003 and 2004.
The Christmas season is not delivering the results that TELUS was looking for, possibly pointing to brighter lights shining at other carriers, including the cable resellers and discounted brands like Rogers’ Fido and Bell’s Solo.
As I mentioned in yesterday’s posting, there are some real issues to be explored during the very brief consultation period associated with the Industry Minister’s proposed variance of the CRTC’s local forbearance decision. The proposal is scheduled to be published in the Canada Gazette on Saturday, with inputs due on January 15, 2007.
Business services have typically been the first to be exposed to competition. Enterprises have endorsed and embraced competition and choice long before alternatives were even available for residential users. According to the CRTC’s statistics, competitors for business services have captured 14% of the local market, double the share of competitors for residential services (7.6%).
For these reasons, it was not surprising that the proposed criteria for business services forbearance announced on Monday were lighter than those for residential. In the case of residential services, the Minister is proposing the existence of competition from an alternate wireline provider (eg. the cable company) plus an independent wireless service provider. For business services, there needs to be an independently owned, facilities-based wireline competitor, offering local telephone services throughout that market.
What does it mean to offer facilities-based competitive local telephone services throughout a geographic market?
For residential services, given the ubiquity of Canadian cable companies, it is somewhat understandable that residential competition either exists or it doesn’t in a given geographic area.
Business services are very different. Cable companies generally do not have appropriate telephony facilities ‘throughout’ business locations. Facilities-based competitive access to buildings, corporate campus locations, industrial parks, etc. can be spotty. For optical-based data services, we have written in the past that there is no incumbent advantage; but voice grade services are a different situation.
On one hand, we can see that competition for business services is vibrant; on the other hand, it is not clear that competitors have ubiquitous facilities-based access.
This is why access to wholesale services are so important. It is precisely why wholesale quality of service performance is the second leg of the forbearance test.
How do we ensure that the forbearance test and conditions continue to enable this to flourish? How do we define an appropriate and clear assessment of an ability to offer business services throughout a market, to identify when that market is ready to be forborne?
This will likely be among the most important areas of input to Industry Canada’s consultation process currently underway.
Videotron has announced that it will be the the presenter and main partner of the Just For Laughs Festival for the next three years.
In addition to presenting the Festival, Videotron will be the main distributor of Just For Laughs content on several of its platforms, including video on demand, high speed internet and mobile wireless service, as well as a partner in the concept and content development process.
Robert Depatie, President and CEO of Videotron said:
This partnership goes beyond presenting the Festival and distributing Just For Laughs content. In addition to using our technology to support Just For Laughs’ content, we will work together, at the very inception of the creative process, on possible projects such as the development of exclusive series for the Web and humour capsules conceived and produced for mobile telephones and other emerging content distribution platforms.
Given the Minister’s announcement on Monday, I thought it may be helpful to provide a brief lesson in the mechanics of cabinet intervention in a CRTC telecom decision.
Students – you’ll be tested on this, so take notes.
Cabinet appeals are covered under Sections 12 and 13 of the Telecom Act. Section 12(1) says, in simplified terms, that a cabinet appeal has to be launched within 90 days of a CRTC decision. Cabinet (the Governor in Council) has a year from the date of the original decision to either refer the decision back to the CRTC or issue a variance to the decision. Cabinet does not require an application to act – it can act of its own motion.
The CRTC’s local forbearance decision was issued on April 6, 2006. Aliant, Bell, SaskTel, and Telus filed their appeal on May 12, 6 weeks after the Decision and only half the time permitted under the statutes. The Government of Saskatchewan and the Coalition for Competitive Communications also filed appeals within the deadlines.
The Minister’s announcement and publication of the proposed variance order will constitute the notice to the provinces required under Section 13 of the Telecom Act.
However, the clock is ticking since the final order must be delivered prior to April 6, 2007, the end of the one year period specified in Section 12(1). Comments are due January 15, 2007 to enable Industry Canada to digest the submissions and polish up the Order for proclamation by Cabinet. It will be a busy holiday period for a number of regulatory affairs departments to address some of the missing details.
There are a number of areas that require genuine consultation, as we will discuss over the next few days.
Here is the snap quiz on what we learned so far: If there is a 1 year time limit for cabinet review, how could the Minister’s proposed variance include changes to the winback rules (June 2005) and the promotions rules (April 2005)? Why hasn’t the review period expired on these decisions? Answer: as it turns out, both of these decisions were reviewed by the CRTC in the local forbearance decision (April 2006), so the 12-month clock for cabinet review was restarted.
By the way, while you are studying the cabinet’s role in regulation, you can also look up the process for the Minister’s unprecedented proposed policy direction to the CRTC, announced at our June Canadian Telecom Summit, made pursuant to Sections 8, 10 and 11 of the Telecom Act.
It is also worthwhile noting that Recommendation 9-5 of the report of the Telecom Policy Review panel recommends that the ability to launch cabinet appeals be eliminated.
A little ironic, isn’t it, that these initial implementations of the report’s recommendations are derivatives of appeals that may not be permitted when reform is completed?
