The cable-telephone wars started in earnest yesterday when Telus Corp. filed an application requesting rival Shaw Communications Inc. stop marketing or offering local phone service until it provides evidence that it's complying with telecommunications regulations.
Telus, the largest phone company in western Canada, said Shaw launched its Internet-based phone service over its cable system last month before meeting all of the obligations for competitive local exchange carriers (CLECs).
The application with the Canadian Radio-television and Telecommunications Commission is about ensuring all market participants play by the rules, according to Telus. The company had been working informally with Shaw in an effort to avoid going to the CRTC, but wasn't able to resolve the issue, a Telus executive said.
"It sends a really bad message if people get to pick and choose which rules they think are important and which ones they have to abide by," Janet Yale, executive vice-president of legal, government and regulatory affairs at Telus, said in an interview.
The application shows phone companies aren't pleased with the increasing competition they face as cable-TV operators introduce voice over Internet protocol (VoIP) services, Shaw chief executive officer Jim Shaw said yesterday, adding that he hadn't seen the application and didn't know the details.
Shaw introduced its VoIP service on Feb. 14 in Calgary, competing directly for phone customers in one of Telus's biggest markets. Within a year, Shaw -- Canada's second-biggest cable operator -- plans to launch the service in all its major markets across British Columbia, Alberta, Manitoba and Saskatchewan.
Ms. Yale declined to comment on what impact Shaw's VoIP launch has had on Telus.
"It looks like another example of where use of regulation is trying to impede customer choice," Mr. Shaw said.
"It's probably another example of why the commission should be slow to deregulate existing telcos for competition, as it shows they're not very pro."
Mr. Shaw said he assumes that his Calgary-based company complied with the regulations, but he acknowledged that Shaw could have missed something.
Last year, Shaw registered as a CLEC. On the CRTC's website, Shaw is listed as a proposed CLEC -- a smaller carrier that doesn't own all of its facilities. Telus believes Shaw should have had CLEC status before it entered the market. It said in its application that Shaw went ahead with its VoIP launch before it could provide equal access to interexchange service providers, which would let Shaw's subscribers choose a different long-distance company.
Telus also said that it didn't receive documentation from Shaw certifying that the cable company understands and complies with its CLEC obligations.
The CRTC will look at whether Shaw is a CLEC or a reseller, which has a lot fewer obligations, according to CRTC spokesman Denis Carmel. The CRTC can't levy fines, but it can order phone companies to comply with the rules. If they don't, it can take them to court.
