The CRTC is stepping up pressure on the telecom industry to improve wireless Internet access by calling for a surprise public hearing that could reshape how rural Canadians access the Web.
The federal telecommunications regulator has issued a notice that it will hold a policy hearing in October to examine whether carriers should be required to provide high-speed Internet access to poorly served rural regions.
It has also said it is considering whether new rules are necessary to ensure that smaller wireless service providers have fair and equal access to wireless networks in an industry dominated by three major players: BCE Inc.'s Bell Canada unit, Telus Corp. and Rogers Communications Inc.
The move by the Canadian Radio-television and Telecommunications Commission highlights growing concerns among policy makers about the implications of a rapid shift of Internet traffic from wired, desktop computer connections to high-speed wireless networks that serve increasingly popular devices such as the iPhone and the BlackBerry.
The CRTC's question, at essence, is: Shouldn't Canadians all have access to broadband service? The problem for everybody is, that's a nice idea, but who is going to pay for it? You're talking about hundreds of millions of dollars if you're going to extend wire line, broadband Internet to rural communities Michael Hennessy, Telus's senior vice-president for government and regulatory affairs
One of the key challenges created by rapid innovations in wireless products is that they are widening the gap between those in urban areas who have access to the fastest download speeds, and those in rural communities who have slower connections.
The October hearing has executives at the major telecoms worried that the regulator could force them to make costly upgrades to their networks to serve lightly populated areas.
Michael Hennessy, Telus's senior vice-president for government and regulatory affairs, said the hearing will be "pivotal" for the future of the industry, since many rural communities still rely on low-speed, or dial-up, Internet access.
He said the CRTC's mandate to promote universal access would be "prohibitively expensive" for high-speed Internet access, known as broadband.
"The CRTC's question, at essence, is: Shouldn't Canadians all have access to broadband service? The problem for everybody is, that's a nice idea, but who is going to pay for it?" Mr. Hennessy said. "You're talking about hundreds of millions of dollars if you're going to extend wire-line, broadband Internet to rural communities."
The CRTC has traditionally sought to ensure universal access to telecom services by offering subsidies to phone companies to offer rural communities basic land-line phone and Internet services. Wireless Internet services are not subject to such rules.
Sheridan Scott, a technology specialist with Bennett Jones LLP and former Commissioner of the Competition Bureau, said the CRTC's hearing sends a strong signal that the regulator is rethinking "in a big picture way" its regulation of wireless access to the Internet.
"They are doing a broad review of the issues relevant to the use of wireless technologies for local use," she said.
The planned hearing caught the telecom industry off guard. A number of carriers have fired off letters to the CRTC expressing concern that the hearing could open the door to broad federal regulation of wireless data services, which has been virtually unregulated because of the initial limited reach of early wireless products such as cell phones and pagers.
At stake is a multibillion-dollar wireless industry that has come under consumer criticism for high rates and limited competition. A 2008 report from the Organization for Economic Co-operation and Development said Canada's Internet providers had one of the worst cost-to-speed ratios in the developed world.
The Canadian Wireless Industry Association said in a letter to the CRTC that it has "serious concerns related to the scope of the proceeding." Keith McIntosh, manager of regulatory affairs with the association, said he believes the CRTC's hands-off approach to wireless regulation "has led to the quality and wonderful services that are available and we don't believe these services should be re-regulated."