Time to ‘reinvent’ and rename CRTC, legislative review panel recommends
An expert panel is calling for significant changes to Canada’s telecom regulations, with an eye to making the Canadian Radio-television and Telecommunications Commission more active and more nimble in how it deals with wireless and internet markets.
The recommendations are part of a 235-report by the Broadcasting and Telecommunications Legislative Review panel that was released Wednesday afternoon in Ottawa.
Among its 97 recommendations, the BTLR report calls on government to expand the scope of the CRTC and rename the regulator as the Canadian Communications Commission.
“Looking ahead, the CRTC must shift to a more proactive and forward-looking style of regulation,” the report said. “Rather than an administrative tribunal that hears evidence commissioned and presented by third parties, the CRTC must be reinvented with an enhanced focus on strategic foresight and research.”
The report also suggested that the regulator should be much more active in regulating all sectors of telecommunications. The authors noted that the CRTC has relied heavily on its “forbearance” option to essentially opt to not use regulatory powers it has been given by the law.
“Today, as a result of CRTC forbearance orders, no widely used retail telecommunications services remain subject to rate regulation outside remote regions,” the BTLR said. “The CRTC has estimated that, since 2013, 96 per cent of telecommunications revenues were generated from forborne services.”
The BTLR recommended a different approach, where the CRTC would be encouraged to regulate some part of every consumer telecom service, either at the retail level, or further upstream.
It called for the Telecommunications Act be revised such that “the CRTC must either mandate supply of related wholesale inputs or explain why it is unnecessary or inappropriate to do so” as a condition of forbearance from rate regulation.
That recommendation is notable because the CRTC will hold hearings next month as part of its five-year Wireless Review, and part of that review will involve a look at whether to implement a structure for mobile virtual network operators (MVNOs) which would force the big wireless networks to sell access to smaller companies at wholesale rates, so that they could offer competing services to consumers.
We are still reviewing the report and its recommendations, but were encouraged to see the panel’s acknowledgement of the importance of investment …
In an election promise, and follow-up commitments in the throne speech, the Liberal government has said it will bring down cellphone bills by 25 per cent, with MVNOs being a potential avenue to do so.
Last week, as Rogers Communications Inc. reported earnings, chief executive Joe Natale said in the context of the MVNO debate that if regulation of wireless networks became too onerous, it could force his company to cut investment, which would stall the rollout of 5G networks in Canada.
Adam Shine, an equity analyst covering the telecom companies for National Bank, said that he wasn’t surprised by any of the BTLR recommendations, but that it remains to be seen how much of the report actually gets enacted in law.
Shine noted that a heavy-handed regulatory approach can undermine investment, but he said that some reform is needed.
“Added efforts to better monitor and measure key metrics in the markets would provide the regulator with more up-to-date data with which to make better decisions instead of relying on information that is one or two years old heading into key hearings,” Shine said in an email to the Financial Post.
The BTLR report also called calls for legislative changes to prevent lengthy appeals processes to CRTC.
That recommendation was welcome news to Matt Stein, chief executive of Distributel, one of the small telecom companies that relies on wholesale rate access to the big telecoms’ networks.
The resellers won a favourable decision from the CRTC in 2019 on wholesale rates, but Rogers and BCE Inc. are now appealing that decision to the courts.
“I especially like that they’ve called out the need to change and curtail the appeals process,” Stein said. “Parties have used the appeal process just to delay inevitable decisions.”
Spokespeople for Bell, Telus and Rogers said in emailed statements that they were reviewing the report.
“We are still reviewing the report and its recommendations, but were encouraged to see the panel’s acknowledgement of the importance of investment, as well as its recommendations promoting deployment of network infrastructure to facilitate a smooth transition to ultra-broadband services,” Telus said in a statement.