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CRTC reaffirms VoIP regulatory regime and initiates a proceeding to reassess certain aspects of local forbearance framework

In a decision issued today re-affirming voice over Internet protocol (VoIP) service as telephone service, the Canadian Radio-television and Telecommunications Commission (CRTC) declared that competition in local telephone service is taking hold more firmly than anticipated. As a result, the CRTC is taking steps to reassess certain aspects of its local forbearance framework. These rulings foster an increased reliance on market forces, and ensure that Canadian consumers continue to receive the benefits of competition, including greater choice and lower prices.

In today's Telecom Decision CRTC 2006-53, Reconsideration of Regulatory framework for voice communication services using Internet Protocol, the Commission reaffirmed the current regulatory regime for local VoIP services established in a decision last year, entitled Regulatory framework for voice communication services using Internet Protocol, Telecom Decision CRTC 2005-28, 12 May 2005, as amended by Telecom Decision CRTC 2005-28-1, 30 June 2005.

However, based on evidence presented in its review of the earlier decision, the Commission concluded that the threshold established in Forbearance from the regulation of retail local exchange services (Telecom Decision CRTC 2006-15, 6 April 2006), of 25 per cent market share that incumbent local exchange telephone companies must lose in order to qualify for regulatory forbearance, should be re-examined in a public proceeding. Local competition data, eighteen months more current than data available for the forbearance decision, showed that competitors are making significant investments, are rapidly extending their customer service offerings, are keeping most of the customers they attract and are achieving or exceeding their business plans.

The CRTC also indicated its intention to include as part of this review the market-share threshold of 20 per cent for removing the winback rule as it applies to the major phone companies. Telecom Public Notice CRTC 2006-12, Proceeding to reassess certain aspects of the local forbearance framework established in decision 2006-15, sets out the details of the proceeding that will reassess the two thresholds.

The Commission established its regulatory framework for local VoIP services in May 2005. The Government, in accordance with section 12 of the Telecommunications Act, referred the decision back to the CRTC for reconsideration in May of this year (Order of the Governor in Council P.C. 2006-305, 4 May 2006). The Government's action in sending the decision back to the CRTC for further review triggered a process of re-evaluation of local competition which revealed stronger progress than anticipated. Today's decision is the result of the Commission's reconsideration.

"We are actively monitoring market conditions and reacting quickly in order to minimize the lag between market developments and the process of deregulation," said Charles Dalfen, Chairman of the CRTC. "Our objective is to reduce the scope of regulation where market forces are sufficiently strong to protect consumer interests. During the last 12 months, the CRTC has reduced the period for winback promotions from 12 to three months, provided greater pricing flexibility for certain (VoIP) services, initiated a public process to review the merits of extending that same flexibility for all other regulated services, and begun a proceeding to review wireless services as a possible substitute for local wireline services. A single adaptable regulatory framework for local forbearance is the appropriate mechanism to achieve a fully competitive local service market. We are pleased by the results that we are seeing. Our objective of a fully competitive local service market is well on its way to being met."

The CRTC

The CRTC is an independent, public authority that regulates and supervises broadcasting and telecommunications in Canada.

Reference documents:

Telecom Decision CRTC 2006-53, http://www.crtc.gc.ca/eng/whatsnew.htm

Telecom Public Notice CRTC 2006-12,

http://www.crtc.gc.ca/eng/whatsnew.htm

Telecom Public Notice CRTC 2006-9,

http://www.crtc.gc.ca/archive/ENG/Notices/2006/pt2006-9.htm

Telecom Public Notice CRTC 2006-6,

http://www.crtc.gc.ca/archive/ENG/Notices/2006/pt2006-9.htm

Order in Council P.C. 2006-305, http://www.pco-bcp.gc.ca/oic-ddc/OIC-DDC.asp?lang=EN&txtOICID=2006-0305&txtFro mDate=&txtToDate=&txtPrecis=&txtDepartment=&cboDepartment=&txtAct=&txtChapterN o=&txtChapterYear=&txtBillNo=&rdoComingIntoForce=&DoSearch=Search+%2F+List&OIC Key=66209

Telecom Decision CRTC 2006-15,

http://www.crtc.gc.ca/archive/ENG/Decisions/2006/dt2006-15.htm

Telecom Decision CRTC 2006-12,

http://www.crtc.gc.ca/archive/ENG/Decisions/2006/dt2006-12.htm

Telecom Decisions CRTC 2005-28 and 28-1,

http://www.crtc.gc.ca/archive/ENG/Decisions/2005/dt2005-28.htm ,

http://www.crtc.gc.ca/archive/ENG/Decisions/2005/dt2005-28-1.htm

Telecom Decision CRTC 94-19,

http://www.crtc.gc.ca/archive/ENG/Decisions/1994/DT94-19.HTM

Copies of today's documents are available through our Internet site (http://www.crtc.gc.ca) or by contacting the documentation centre of any CRTC office. These documents are available in alternative format upon request.

For further information: Media Relations: MediaRelations, (819) 997-9403, Fax: (819) 997-4245; General Inquiries: (819) 997-0313, TDD: (819) 994-0423, Fax: (819) 994-0218, Toll-free Number: 1-877-249-2782, TDD - Toll-free Number: 1-877-909-2782

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