Telecom regulation and competition law in canada
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Telecom Regulation and Competition Law in Canada . American Bar Association -Telecom Antitrust Fundamentals II – Globalization and Telecom June 27, 2007 – Washington, D.C. David Teal Mergers Branch, Competition Bureau of Canada ([email protected]). Overview.

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Telecom Regulation and Competition Law in Canada

American Bar Association -Telecom Antitrust

Fundamentals II – Globalization and Telecom

June 27, 2007 – Washington, D.C.

David Teal

Mergers Branch, Competition Bureau of Canada

([email protected])


Overview

  • Overview of the Canadian telecom sector

  • Canadian regulatory environment

  • Recent developments


Overview - Canadian Telecom Sector

  • 2005 revenues of $34.5 billion.

    • ILECs = 65%;

    • out-of-territory ILECs = 11%;

    • facilities-based competition = 19%;

    • resellers = 2%.

  • ILECs serving territories are provincially based.

  • 2005 ILEC share of retail local – 92% of revenues and 90% of lines (vs. 2004: 94% of rev. and 94% of lines).


Overview - Canadian Telecom Sector (cont.)

  • 95% of population lives in a cable serving territory.

    • 89% are in a high speed cable serving territory.

  • 64% of households have Internet access.

  • 51% subscribe to high speed Internet - 54% of that total is with cable.

  • 3 national wireless carriers - 2 ILEC owned and 1 cable; small number of wireless resellers.


Regulatory Overview

  • Within the federal government, the Minister of Industry (Industry Canada) is responsible for:

    • Telecom policy and legislative initiatives involving the Telecommunications Act.

    • Regulation of spectrum management (under the Radiocommunications Act).

    • Policy/legislative initiatives involving the Broadcast Act are responsibility of the Minister of Canadian Heritage.

  • Canadian Radio-television and Telecommunications Commission (CRTC) is the regulator responsible for the regulation of both the telecom and broadcast sectors.


Regulatory Overview (cont.)

  • Canadian antitrust legislation is the Competition Act.

  • Enforcement is the responsibility of Competition Bureau

    • an independent agency within Industry Canada, reporting to Parliament through the Minister of Industry.


Regulatory Overview (cont.)

  • Law of general application - applies to all sectors, including the telecommunications sector.

  • Contains both civil provisions (e.g., merger review, abuse of dominant position, refusal to deal, exclusive dealing, tied selling) and criminal prohibitions against anti-competitive conduct (e.g., conspiracy, bid rigging, predation, resale price maintenance).


Regulated Conduct Defense

  • S. 34 of the Telecom Act: the CRTC:

    • may refrain from regulation when it is consistent with objectives of Telecom Act; or

    • shall forbear from regulation of specific provisions of the Act where competition is sufficient to protect the interests of users.

    • forbearance may be either conditionally or unconditionally.

    • forbearance power addresses the requirements to file tariffs, conditions of service, approval of agreements.


Regulated Conduct Defense (cont.)

  • To the extent that the CRTC has forborne from regulating conduct relating to a telecommunications service or class of services, anti-competitive conduct can be dealt with under the Competition Act.


Recent Developments in Canadian Telecom - Telecom Policy Review Panel

  • Telecommunications Policy Review Panel (TPRP)

    • Panel of three industry experts, appointed by the Minister of Industry, to review Canada’s telecommunications policy framework.

    • Final report March, 2006 -127 recommendations.

  • Underlying theme of the report:

    • “Canada's telecommunications markets have evolved to a point that justifies replacement of the current legislative presumption favouring regulation with one favouring reliance on market forces.”


Recent Developments in Canadian Telecom – Policy Direction to CRTC

  • S. 9 of the Telecom Act sets out 9 objectives for the TelecommunicationsAct.

  • Pursuant to theme of the TPRP recommendations, Minister of Industry issued a policy direction to the CRTC pursuant to S. 8 of the Telecom Act.

  • “rely on market forces to the maximum extent feasible and regulate, where there is still a need to do so, in a manner that interferes with market forces to the minimum extent necessary.”


Recent Developments in Canadian Telecom – CRTC Local Forbearance

  • CRTC regulatory proceeding to establish necessary conditions for forbearing from continued regulation in local telecom markets.

  • CRTC Decision 2006-15: established a market share loss threshold of 25% (and various quality of service requirements) for forbearance.

  • April 18, 2007 - Governor in Council Order varied the decision.

  • Market share loss test dropped in favour of one of two tests: alternative competitive presence test or competitive market analysis proposed by the Bureau.


Recent Developments in Canadian Telecom – Draft Telecom Abuse Bulletin

  • Sept./06 - Bureau issued a Draft Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry” (TAB).

  • Developed following TPRP report and with input from staff from CRTC. Consistent with the Bureau’s general Abuse Guidelines.

  • Part of the Bureau’s ongoing effort to maintain a transparent and predictable enforcement policy.


Recent Developments in Canadian Telecom – Draft Telecom Abuse Bulletin (cont.)

  • Describes the Bureau’s approach under the abuse of dominance provisions to the telecom industry.

  • Discusses market definition, examples of anticompetitive practices likely in telecom and the test for a substantial lessening or prevention.


Recent Developments in Canadian Telecom – CRTC Proceeding on Essential Facilities

  • CRTC PN 2006-14 – initiated a review of the regulatory framework for wholesale services and definition of essential service.

  • Bureau position: primary objective underlying the regulation of wholesale telecom services should be the development of competition between networks.

  • Effective competition is most likely to come from independent, facilities-based providers that control their own networks.


Recent Developments in Canadian Telecom – CRTC Proceeding on Essential Facilities

  • Bureau’s test for determining whether a facilityis essential considers whether:

    • the firm controlling the facility is dominant in both the upstream (wholesale) market for the facility and the downstream (retail) market in which it is used as an input, and

    • assesses the competitive impact in the downstream market of mandating access to the facility.

  • Proceeding is ongoing - decision expected April, 2008.


References

  • Commissioner Scott’s speech to the ABA’s 55th Antitrust Law Spring Meeting: http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=2301&lg=e

  • CRTC Monitoring Reports: http://www.crtc.gc.ca/dcs/eng/pub_arch.htm

  • Telecommunications Policy Review Panel Final Report: www.telecomreview.ca

  • Governor in Council Policy Direction to the CRTC: http://canadagazette.gc.ca/partI/2006/20060617/html/regle5-e.html


References

  • Governor in Council Order Varying Telecom Decision CRTC 2006-15: http://canadagazette.gc.ca/partII/2007/20070418/html/sor71-e.html

  • Draft Telecom Abuse Bulletin: http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=2180&lg=e

  • CRTC Public Notice PN 2006-14, Review of regulatory framework for wholesale services and definition of essential service: http://www.crtc.gc.ca/PartVII/eng/2006/8663/c12_200614439.htm


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