CRTC ruling begins new era of telecom competition
Canada's telephone regulator on Wednesday granted Telus and Bell Canada Inc. subsidiary Aliant the freedom to set their own local home telephone rates in four markets across the country, opening a new round of competition in the nation's phone wars.
The Canadian Radio, Television and Telecommunications Commission approved Telus' application to deregulate residential rates in Fort McMurray and Aliant's applications to do so in parts of Nova Scotia including Halifax, parts of New Brunswick and Prince Edward Island.
Wednesday's decision does not allow the companies to raise prices of basic telephone service, but they can cut them, and will be allowed to make independent price changes for options such as call waiting and voice mail, and be able to bundle phone service with Internet access, which the CRTC blocked them from doing in the past.
Phone companies made their applications following last April's decision by federal Industry Minister Maxime Bernier that set the conditions under which rate deregulation could take place, and reversed previous CRTC rulings on the matter.
Where incumbent phone companies can show a market has three effective competitors that each have their own infrastructure -- one of which can be a wireless company -- and can show they haven't blocked competitors from their own networks, they can apply for deregulation.
"I think consumers are the big winners," Telus spokesman Shawn Hall said in an interview. "We're going to have tremendous ability to react to the marketplace quickly [and] creatively to bring new loyalty programs and bundles of services and content [to customers]."
Hall added that Telus is waiting for CRTC decisions on five other deregulation applications, including for the Greater Vancouver and Victoria residential markets, and plans to push for deregulation in all the markets in B.C., Alberta and eastern Quebec that meet the competition criteria.
"Consumers in deregulated markets will benefit from increased competition between local telephone service providers," CRTC chairman Konrad von Finckenstein said in a statement.
It was an opinion shared by Bernier.
"The deregulation of local telephone service in these regions will further encourage innovation and competition in the telecommunications industry," Bernier said in a statement.
Kevin Restivo, a telecommunications industry consultant with the Seaboard Group, said the new pricing policy puts the telephone companies on a more even footing with cable companies such as Shaw, Rogers and Videotron, which have signed up 1.8 million home-telephone clients in the past two years, but never faced the same restrictions over bundling services.
"This is good news for Telus and the other companies," Restivo said, "and I would expect consumers will see new offerings from these companies soon, if not immediately."
However, Restivo says he doubts there will be a race to cut prices for basic telephone lines, because the companies still rely too heavily on the revenue for basic service, and in Western Canada at least, the cable competitor hasn't made a move to introduce cheaper basic phone service.
"The dream of a price war for consumers is just that, it's a dream," Restivo said.
That is the worry of the B.C. Public Interest Advocacy Centre, which represents seniors groups and low-income consumers.
Patricia MacDonald, a staff lawyer at the advocacy centre, said she worries that local price deregulation will be similar to what happened with deregulation of long-distance telephone service, where heavy users did get a break, but low-income customers saw their bills increase.
"What [competition] has actually done is brought a lot more choices," MacDonald added. "Choice is not necessarily a bad thing, but it doesn't necessarily bring down prices."
She added that consumers will have to pay more attention to the contracts they sign and be aware that they may be locking themselves into multi-year deals that come with penalties if they cancel services before they expire.