Industry Minister Maxime Bernier has overruled and admonished the CRTC by deregulating part of the growing Internet phone service market — and making clear the decision is a small, first step in his plans to unshackle the country's telecommunications industry.
Companies that sell phone services delivered over the Internet — such as Vonage Canada Inc. — will now have to face unfettered competition from the former phone monopolies, led by Bell Canada and Telus Corp. Until Wednesday, if one of the former phone monopolies wanted to use the Internet as a technology to offer phone services, it needed regulatory approval for its prices. The minister's decision, announced Wednesday, partly overturns a policy of the Canadian Radio-television and Telecommunications Commission.
“Barriers to entry in this market are very low. There is no reason to regulate it,” Mr. Bernier told the Economics Club of Toronto. “It is time to have a level playing field from which consumers and small businesses will benefit.”
It was not clear whether there would be any immediate benefits for consumers. Bell portrayed Mr. Bernier's announcement as minor, opening up an opportunity that it may or may not take advantage of. Vonage said it was confident that its services were competitive enough to hold on to its market share.
“In our opinion, what does this really change?” Joe Parent, Vonage's vice-president of marketing and business development, asked rhetorically. “I guess it remains to be seen.”
Lawson Hunter, a BCE executive vice-president, said Mr. Bernier's message about further deregulation was more important than the decision itself. “In some ways the most important part of it is his continuing direction, in that the government actually overturned, or varied, the commission on this.”
The Industry Minister did not mince words that he would have no patience with a CRTC that interferes with market forces. “We want it to regulate only when necessary,” Mr. Bernier said. “And, when regulation is necessary, we want to ensure that it interferes in the least way possible with market forces.”
He reminded the CRTC in his speech and in a press release that he has tabled in Parliament a government directive that will narrow the scope of the commission so that it will only regulate when market forces falter.
“Our goal is to reshape telecommunications policy so that it supports an internationally competitive and robust telecommunications industry here in Canada.”
Those words send an important signal to the global telecommunications industry, experts say, because Mr. Bernier is in the midst of reviewing the government's long-standing protection of the Canadian industry.
“Today's announcement is more likely a further indication of policy direction rather than having substantial impact on the marketplace,” said Mark Goldberg, of telecom consulting firm Mark H. Goldberg and Associates Inc.
Mr. Bernier would not give details Wednesday about when he would decide how to encourage more competition, investment and innovation in the sector. Industry officials questioned whether he would be able to push any major deregulation through cabinet while his Conservative Party only holds a minority in the House of Commons.
Jeff Leiper, an analyst at Yankee Group in Ottawa, called Mr. Bernier's announcement a “half-step” toward what the big phone companies want, which is more dramatic deregulation.
With files from Catherine McLean in Toronto and Simon Tuck in Ottawa
