Yesterday’s announcement to overturn the CRTC’s local forbearance decision is expected to more speedily open full price competition for local phone services.

Included in the changes is a 120 day countdown timer for the CRTC to respond to applications for forbearance once the criteria are met. As Minister Bernier stated in his announcement:

About 60 percent of the Canadian population lives in regions that meet the competitive infrastructure test, including most major urban centres. For Canadians living in remote areas of the country where there is limited choice, our government will be there to ensure universal access to telecommunications services at a reasonable price.

As pre-condition, however, the major incumbents, Bell and TELUS, will still need to improve their performance on Quality of Service for facilities that are provided to their competitors. Reports are that the ILECs still have failing grades, even on the subset of metrics under the new rules; improvement on this requirement will result in better service for customers of all industry players.

In the meantime, restrictions on promotions are being lifted, as are the prohibitions associated with winbacks. Both of these should provide more immediate visible signs of competition for consumers. We’ll continue to look at the implications of the impact of the relaxation of these rules in the coming days.

It is becoming clear that Competition Bureau chief Sheridan Scott will be taking on an increasingly important role for the telecom sector. Her experience at both the CRTC and Bell make her well suited for the task. She will be speaking at The Canadian Telecom Summit in June.

Following up on last week’s introduction of legislation to put oversight of abuse of dominant position in the hands of the Competition Bureau, the Minister of Industry has proposed to overturn the CRTC’s local forbearance decision, recognizing some of the missteps that were identified when the decision was first released in April.

Today’s announcement by the Minister is at least the 4th directive to the CRTC in the past 6 months. VoIP was dealt with twice, in the context of a reconsideration order and a ruling overturning the reconsideration. On its own, the CRTC almost immediately recognized the flaws in its Local Forbearance decision and began its own reconsideration of certain details, some of which are dealt with in the Minister’s announcement.

The Minister is introducing a simple presence test, rather than a market share loss threshold. In the case of business services, there needs to be at least one other facilities based wireline service provider. For residential service, there needs to be at least one more wireline provider, besides the ILEC, plus one other competitor, which could be a cellular service provider. All three must be independent of each other.

Interestingly, most people in Western Canada are able to choose between 4 facilities based players – TELUS, Shaw, Rogers wireless and Bell Mobility. In the east, Rogers cable and Rogers wireless only count once. In any case, the simple presence test will be met in most population centres in Canada.

The CRTC had been holding informal discussions in respect of its requirement for the ILECs to conform to 14 QoS metrics; today’s announcement reduces the requirement to adherence to only 9 of these, including some of the more difficult QoS metrics, such as due dates met for Competitor Digital Network services. TELUS and Bell had recently tried to negotiate relief from that specific indictor.

Consumers will immediately see more vigourous competition with a relaxation of the winback rules and further relaxation of rules for promotions. The proposed order explicitly permits the waiving of service charges for residential local winbacks, among other promotions. Previously, consumers that may have wanted to try out a cable company’s voice service may have been deterred by the risk of having to pay a telco service charge to come back.

More vigourous price competition and moves to include wireless into the local services mix make consumers the biggest winners. We’ll have more observations and comments tomorrow.