Industry leaders welcome the new policy directive issued to the CRTC, but how much impact the directive will have “remains to be seen.”
Canada’s Governor General signed off on Innovation, Science and Economic Minister Navdeep Bains’ policy directive on June 18th.
The directive instructs the Canadian Radio-television and Telecommunications Commission (CRTC) to “consider how its decisions can promote competition, affordability, consumer interests and innovation.”
More importantly, the new order notes that the Commission should “reduce barriers to entry into the market and to competition for telecommunications service providers that are new, regional or smaller than the incumbent national service provider.”
Residential, business and wholesale telecommunications provider TekSavvy welcomed the order.
Marc Gaudrault, the company’s CEO, said it was “up to the CRTC to make decisions so that competition lowers prices and improves service offerings.”
TekSavvy also said it hoped the CRTC would fix policies that “deny consumer choice and keep prices high, such as by setting fair wholesale rates, removing internet speed caps on competitors and finally opening up the wireless sector for competition.”
Effectiveness of directive is still “to be determined”
Michael Geist, Canada Research Chair in internet and e-commerce law at the University of Ottawa, said there’s “little doubt that the policy direction will have an impact and ultimately benefit consumers through more robust competition.”
“It represents a significant shift in government policy away from the view that competition starts and ends with a facilities-based approach,” he said. “I think the real key is that the government has abandoned an approach that the incumbents argued was the foundation of Canadian wireless policy. In doing so, it will influence regulatory decisions, government policy decisions, and the broader communications market in Canada.”
But he said that it “remains to be seen” how much impact the new directive will have.
Like Geist, Dwayne Winseck, director of the Canadian Media Concentration Research Project, said the directive can be “incredibly effective” but also noted that it yet “to be determined” how effective it will be.
Winseck said that a reason for why it may not be as effective is because a previous directive is still in front of the CRTC.
“[The new directive] sits uncomfortably cheek by jowl with the previous one so in some ways, it stands in the shadow of its big brother,” Winseck said.
Then-Conservative Member of Parliament and Industry Minister Maxime Bernier enforced the first directive. That directive focused heavily on market forces to determine prices and does not ask the CRTC to intervene if bigger carriers are taking advantage of market forces.
Relying on market forces would determine, for example, setting retail rates and that would foster the competition amongst carriers.
The new order now says that decisions must foster affordability and lower prices, “particularly when telecommunications service providers exercise market power.”
This would mean that the CRTC should intervene when carriers take advantage of market powers to decide on things like rates and should ensure that decisions are fostering affordability and lower prices.
2019 directive will ‘overtake’ 2009 directive when required
Winseck still questioned how much of the new directive would take precedence over the old one.
“I would have much preferred to have seen [ISED] rescind the former directive, and if they thought there were things in it that were worth keeping, then they could have stuffed it in the new one and did reconciliation there,” he said.
At the time that Bains introduced the directive, he told MobileSyrup that it “complements” Bernier’s in many ways, “and where there is a conflict this will overtake that.”
It is also worth noting that in the letter from the Privy Council dated June 16th, the Governor General indicates that “one of the purposes of the additional directions is to guide the Commission on how the 2006 Direction is to be implemented.”
Laura Tribe, executive director at consumer advocacy group OpenMedia, said that this means “this is the definitive direction for the CRTC moving forward and sets the frame for all future decisions from the Commission.”
“The order makes it clear that should the CRTC look back at the 2006 Direction, it has to do so through the lens of the objectives set out in this new direction,” she said.
“This dramatically shifts the way that all decisions need to be made, taking the focus away from a reliance on market forces – which have dramatically favoured the incumbents, and facilities-based competition. And instead of putting a strong emphasis on the interests of consumers, by promoting affordability, competition, and accessibility.”
MobileSyrup reached out to Bell, Telus and Rogers for a comment and will update this article with more information.
All decisions, not just regulatory, must consider direction
Tribe said that the most significant difference the new directive imposes is that for the first time, the CRTC must consider consumers when making any decision.
“Consumers were nowhere to be found in the previous direction…it was strictly written around the incumbents and how it affects them, so that’s the biggest difference,” she said.
Tribe also indicated that the wording in the directive also means that the CRTC has to take it into consideration when making any kind of decision, not just a regulatory one.
“Even if the CRTC is not regulating and is just issuing an order or any decision that comes out at all, even if it’s not a regulatory decision they have to take this into consideration,” she said.
CRTC received “spanking in public” with new directive: Winseck
It’s important to note that a directive is something that the CRTC should take into consideration when making decisions. The CRTC is an independent body and makes its own decisions.
Winseck, however, noted that a directive isn’t just something that is taken into consideration and that the government rarely imposes it unless it feels like it needs to intervene.
“[Every CRTC commissioner since 2006] bowed down to pay homage to [the previous directive] because it was a political acknowledgment of where ultimate authority rests,” he said.
“What [CRTC Chairman Ian Scott] needs to be reminded of is this is the big stick. The government doesn’t like to wield this big stick, for the government to have wielded this means that things have gone off the freaking rails and they have turned to this rarely used instrument in the legislation.”
This is only the second time that the government has implemented a policy directive and the last one was done so 13 years ago.
“This is a real rebuke of Scott and so he may have been playing diplomatic but he just got a spanking in public,” Winseck said.
Scott told MobileSyrup earlier this month that a directive isn’t a good thing or a bad thing, but that it is a “lens.”
“The key points are all in the Act, no one can ask us to consider something that isn’t in the Act,” Scott said, referring to Acts that are mandated by the CRTC.
“The government is saying ‘I want you to pay special attention to something’ so we will pay special attention and if we go ‘no this is not desirable,’ we will explain why and we will say we took into account the policy direction,” Scott said.
In a statement, the CRTC said it “took note of the final text of the” directive and that it will “continue” its work to ensure that there is more choice and affordable options for Canadians.