A member of the federal telecom overseer has issued a rare objection to a ruling that partly deregulates its control over local phone exchange mergers, saying it abandons dozens of communities.
The Canadian Radio-television and Telecommunciations Commission (CRTC) said Wednesday that incumbent phone companies will no longer have deal with the regulator to handle requests to expand local calling areas in communities where there is at least one unregulated exchange.
Under existing rules, a local exchange area can be unregulated if there is an incumbent telco plus two facilities-based providers capable of providing service to 75 per cent of the exchange.One of the two can be an independent wireless carrier. For all intents and purposes, that includes all of the country’s large cities and many mid-sized ones.
There’s so much competition in such communities from telcos, cable wireless and Internet providers who offer expanded local and long distance areas in these communities there’s no need for regulation, the commission said.
The decision is good for carriers, because it takes some regulatory burden off their shoulders. Telus Corp. spokesman Jim Johannsson said, “We’re satisfied with the decision.” The ruling “sound fair to us.”
However, it means that communities who want to expand their local calling areas won’t be able to ask the CRTC for help. Instead, they’ll be at the mercy of the local phone company.
It also leaves 35 municipalities that have already applied to the commission to approve local area exchange expansion in the lurch, complained commissioner Louise Poirier.
“This strikes me as being unfair to the municipalities in question and their citizens,” she wrote in a dissent to the ruling.
“How can we justify the fact that a city such as Gatineau (Que.), which made a request to Bell Canada in 2002, obtained the expansion of its LCA [local calling area] on 16 August 2007, while requests made by the municipality of Brownsburg [Que.] (2 August 1999 request), the City of Sarnia [Ont.] (28 November 2000 request), and the Township of South Frontenac [Ont.] (21 November 2002 request), which were all similar and made on similar dates to [Bell], never received follow-up?
“How can we explain the fact that the municipalities of Black River-Matheson and Ramore [Ont.] (request made to NorthernTel), Clear Hills County [Alta.] (request made to Telus), Tiverton [Ont.] (request made to Bruce Telecom and HuronTel), and Cadillac and Rivière-Héva [Que.] (request made to Télébec), to name just a few, were successful, while, for 35 other municipalities that proceeded in the same fashion, the process will stop following this commission decision?”
How many communities are locked out of the CRTC process isn’t clear. In its ruling the majority of commissioners noted that dispensation from carrier regulation has been granted for almost 80 per cent of residential network access services and over 65 per cent of business network access services in the country.
The issue has a lot to do with money. Under certain conditions when a community applies for local calling area expansion, a carrier has to undertake a survey, figure out costs and come up with a local call surcharge to cover the revenue it will lose. Incumbent carriers can add unpopular surcharges to subscribers for three years to cover the loss of long distance revenue.
Telus, whose wired network covers most of B.C. and Alberta, raised the issue in 2008, saying the entire local exchange expansion regulated framework is “an anachronism” in an era of so much telecom competition. Its application was supported by BCE Inc. and Bell Aliant, whose wired networks cover most of Ontario, Quebec and the Maritimes.
When a local calling area is expanded, phone customers have to pay a surcharge to cover any integration costs and long distance losses and incumbent may incur.
While the majority of the commission agreed to end the regulatory process for unregulated exchanges, the good news for carriers ended there. The commission also said that the regulatory process will continue for communities that still have regulated exchanges. They don’t have the telecom competition other areas have and therefore need some oversight, the commission reasoned.
In addition, the CRTC also limited the ability of incumbent telcos to increase their rates in expanded regulated exchanges to cover implementation costs, as they have been doing.
From now on only rates of regulated services within the local calling area can be adjusted.
The telecom industry wasn’t completely behind Telus and Bell. Manitoba’s incumbent teleco, MTS Allstream and Toronto-based Primus Canada, an Internet, long distance and VoIP provider, said there were serious problems with the proposals and that some regulation should remain.
In addition the Federation of Canadian Municipalities also objected, saying the Telus plan would mean incumbent phone companies could decide local calling areas on their own. A number of towns and cities have been waiting in vain for their incumbent phone companies to merge local calling areas, it said.
To meet those complains the CRTC said incumbent telcos have 90 days to do an economic impact study required when local governments ask for merged local calling areas. In addition, incumbent telcos have 90 to apply to the commission for permission to proceed once a local government gives the green light for expansion.
A spokesman for Allstream said no one was available Wednesday to comment on the ruling. A spokesman for the federation said it is still reviewing the decision.
Officials for Bell Canada and Primus couldn’t be reached for comment.
