Competition in the telecom sector
On June 13, 2006, I gave the keynote speech as Minister of Industry at the Canadian Telecom Summit in Toronto. The speech announces the main points of the reform that I implemented in this sector during the year that followed. -- 6 April 2009
It is a great pleasure for me to attend this important gathering of the Canadian telecommunications industry.
I’m especially happy to meet so many of the people behind all these new products and services that are changing our lives and our economy.
It’s impossible to overstate how important the telecom industry is to our competitiveness, our productivity and our living standards. Our very future as a developed nation is increasingly dependent on information and communications technology.
As many of you may know, our new government has five priorities, but I can assure you that telecommunications is at the top of my action list.
In addition to its size and its importance to the Canadian economy, one reason the telecommunications industry has to be a priority is that things are changing so fast.
New technologies can be “cutting edge” one day and virtually obsolete the next.
In government, just as in business, we cannot afford to be slow in adapting. We cannot afford to lag behind while other countries leap forward.
When the Telecommunications Act was adopted in 1993, no one could foresee the extent to which the Internet and other technologies would revolutionize almost every aspect of our daily lives.
Today, no one can predict what the sector will look like a year from now. This pace of change has become a fact of life, and it forces us – on the government side – to adapt our ways.
Canada already has one of the most dynamic and competitive telecom sectors in the world. Since the introduction of competition in the 1990s, we have had a measured transition toward an increasingly open and competitive market.
Today, this transition is almost complete. Except for remote regions of the country, there are competitive pressures coming from all sides.
The introduction of competition has also led to the emergence of innovation, new technologies and services at affordable prices.
Several types of technologies – wireline and wireless – have been blended. And it is becoming increasingly difficult to define precisely what a market in telecommunications services is – where it starts and where it ends.
For example, not only is there more competition for traditional local phone services, there is also competition coming from other technologies.
More and more Canadians have no telephones plugged into the walls of their homes. They use only cell phones.
I read in a survey done last month by Decima Research that about 5 percent of all Canadian households have replaced their traditional telephone line with wireless telephone service. Another 17 percent are considering doing so.
Let me give you this clear message today: it is not the role of government to decide how this increasingly complex market should evolve. It is up to you – producers and consumers.
Likewise, our role is not to decide which technology is better and should be permitted to to grow faster. That is up to the marketplace to decide.
What this government wants to do is twofold: to ensure that all businesses -regardless of their size – have a chance to succeed.
As well, we want to ensure that consumers are protected and have access to the best services at an affordable price.
Our government is committed to modernizing the way the telecommunications industry is being regulated in Canada. Our goal is to remain among the most advanced and dynamic nations in the world in this field.
That is why I was very pleased to receive, last March, the final report of the Telecommunications Policy Review Panel.
Its three members – Gerri Sinclair, Hank Intven and André Tremblay – did extremely valuable work in analysing the state of the industry and in proposing ways to bring about this modernization.
Among its numerous recommendations, the Panel calls for extensive reform of Canada’s national telecommunications policy and the regulatory approaches used to implement it.
As the Panel wrote:
It is time to reverse the current presumption in the Telecommunications Act that all services should be regulated unless the CRTC issues a forbearance order. This should be replaced with a legislative presumption that services would not be regulated except in specified circumstances designed to protect end-users or maintain competitive markets.
Back in 1993 when the Act came into force, it introduced a transition to a competitive telecom landscape. That is why two of the policy objectives set out in the Act deal with this question.
One states: “to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications.” Another states: “to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.”
How these two objectives are interpreted is key to implementing many of the regulatory reforms recommended in the Panel’s report.
Over the years, as the report clearly states, these two objectives have been subject to a wide disparity of interpretations by parties who advocate diametrically opposed views.
For some, the objectives are interpreted to call for proactive measures to increase competition. For others, they mean that market forces should be permitted to work without regulation.
They have been used to justify both the increased regulation of essential facilities and their deregulation.
Specifically, the Panel recommended that the government issue a policy direction to the CRTC in order to help clarify this confusion. In doing so, we can immediately begin the modernization of our telecom regulation.
That is why the government tabled in Parliament today a proposed policy direction to direct the CRTC to rely on market forces to the maximum extent feasible within the scope of the current Telecommunications Act.
It calls on the CRTC to regulate telecommunications services only when necessary.
It is the first time since the adoption of the Telecommunications Act that such a policy direction has been issued. It will help clarify the meaning of the policy objectives set out in the Act when these are debated again in the regulatory proceedings of the CRTC.
The ultimate goal of this initiative is that all Canadian consumers and the economy as a whole benefit from this competitive environment – and from the greater innovation that it will spur.
As a former businessman, I of course wish each of you great success in your business pursuits, but as Minister of Industry, I have a responsibility to all Canadians.
Let me share some of my personal beliefs.
As you know, I have been in public life for only a few months now.
I came to this portfolio from the private sector with a strong appreciation for the benefits of markets and their ability to deliver results.
The record is clear around the globe. Economic freedom benefits individuals, communities and countries.
Countries where economic freedom flourishes – countries that are open to business and entrepreneurship – are countries that have faster-rising standards of living.
So, greater competition in the telecom sector – supported by a more coherent policy that relies on market forces to the greatest extent possible under the Act – will bring about even lower prices and better services.
It will encourage innovation and lead to higher productivity in how services are provided.
As changes to the regulatory environment take place, we will ensure that the needs and rights of consumers are protected.
In particular, 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.
These communities are not likely to see as much telecommunications competition as larger centres; they may continue to be served by only one provider.
Regulation, or some other form of government support, will continue to be essential to ensure that these consumers and businesses have access to an affordable, world-class communications infrastructure.
Although many of us take the power of technology for granted, we cannot be complacent in creating an environment where these technologies can grow and thrive.
That’s because it is through the use of telecom technology that our economy, our citizens and our country can compete and succeed in the global marketplace.
Let me close by saying again that our government endorses the concept of reliance on market forces to the maximum extent feasible under the Telecommunications Act while using regulatory tools to deal only with those issues that market forces cannot address.
I am committed to making every change necessary so that our telecom industry remains one of the most dynamic in the world.
I cannot wait to see all the new gadgets that you will bring to the market in the coming years to enhance our work and our lives, even though they may drive us all a little crazy!
We are entering an exciting new era of reform, and I hope I will have your support in going forward in this direction.
Thank you very much.