The CRTC has issued Telecom Decision CRTC 2006-53, its reconsideration of how to regulate VoIP.
In the Decision, it reaffirms its approach to the regulation of VoIP – basically saying that ILEC VoIP services are regulated the same way as TDM services. However, the CRTC is using the opportunity to launch a review of the way it regulates local phone services, a Decision that was released in April. Specifically the Commission plans to review the 25% market share loss criteria prior to forbearing from price regulation and and the 20% loss criteria prior to removal of winback restrictions.
There were dissenting opinions from 3 Commissioners. Commissioners Cram and Langford agree with the retention of the VoIP regulatory regime but disagree with a review of the Local Forbearance criteria. Commissioner Noel continues to believe that VoIP should have been forborne as a service at the outset. She agrees with the review of the criteria.
Background
In May 2006, the Federal Cabinet sent the CRTC’s 2005 VoIP Decision back for reconsideration. Recall that when the CRTC issued its Decision on May 12, 2005, it was largely consistent with the preliminary views it had issued in its April 2004 Public Notice. At the time, the CRTC was one of the world’s first regulatory bodies to make a pronouncement on what was then an embryonic industry in terms of the general marketplace.
The CRTC ruled that Voice is Voice regardless of the underlying technology; ILEC VoIP would therefore be subject to regulation – although the CRTC has allowed ILECs to price VoIP services differently and with greater pricing flexibility.
In May of 2006, in response to appeals launched by the ILECs, Cabinet asked the CRTC to review its Decision and report back in 120 days. At that time, Cabinet said
After careful study of the CRTC decision, and the subsequent appeals, the government believes it is in the public interest for the CRTC to reconsider its decision… This will give the CRTC the opportunity to take into account the increase in demand for VoIP services and changes to the overall regulatory environment since the original decision was announced last year.
The CRTC had a busy summer in order to complete this process in such a compressed schedule. Keep in mind that there were instructions to consider the increase in demand for VoIP (requiring exploration and testing of evidence), the proposed policy direction to increasingly rely on market forces (announced by Minister Bernier at The Canadian Telecom Summit in June), the recommendations of the Telecom Policy Review Panel and the host of submissions provided in response to its Public Notice. Review the original Decision in light of the new market conditions and policy directions.
A discussion of the Local Forbearance Decision and its criteria can be found in our April 6, 2006 posting.
Which brings us to today.
VoIP Regulation 2.0
We will be writing more over the next few days about what we think all of this means.
Although the ILECs may not feel relief for the VoIP services, it is almost certain that their local phone services will be eligible for deregulated pricing sooner.
It is fascinating to see the dissent within the Commission as well as the majority determination to review the CRTC’s Local Forbearance Decision so quickly (less than 6 months) after its release.
The Public Notice will be operating on an expedited schedule. The CRTC has already issued interrogatories to ILECs, CLECs and VoIP service providers in order gather market data. Those responses are due in 2 weeks. The schedule set out in the PN calls for the record to be closed by October 26 and a Decision to be released within 120 days.
That kind of speed is required in order to make the decision meaningful. As we wrote a few weeks ago, there are a number of markets that are going to exceed the current thresholds.
Let’s hope that the need for a speedy decision doesn’t outweigh the need to get it right. It isn’t in anyone’s interest, ILEC, competitor nor consumer, to have regulatory uncertainty created by ongoing reviews.
