Some
doomsayers had predicted that the move would lead to higher
prices, fewer services and a return to a monopoly situation
following the disappearance of competition. Seven months
later, none of this has of course happened or is likely to
happen.
The second initiative was
a Policy Direction issued by Cabinet to the CRTC in December,
2006, which tells it how to interpret the
Telecommunications Act. Essentially, it directs the
regulator to rely on market forces to the maximum extent
feasible and, when relying on regulation, to use measures
that are efficient and proportionate to their purpose and
that interfere with the operation of market forces to the
minimum extent necessary.
Since then, the
Commission has issued several rulings which, on the basis of
this new interpretation, have all gone in the direction of a
gradual removal of regulatory shackles on the former
monopolies, even in areas that were not deregulated last
summer.
Among other changes,
optional services and bundled service rates are no longer
subject to pricing constraints. The restriction that
required incumbents to offer the same rate to all customers
in the same area for the same service, which prevented them
to respond to specific situations, has been removed. And
proceedings have been initiated to decide if the CRTC should
stop regulating short-term promotions and adopt an automatic
approval mechanism for retail tariffs.
Finally, earlier this
month, again as a direct consequence of the Policy
Direction, the CRTC announced that certain wholesale
services that incumbents are forced to provide to
competitors will be phased out of regulation over the next
three to five years. Unfortunately, it decided that
unbundled loops will still have to be made available at
mandated prices. These are the connections between homes and
telephone exchanges that competitors rent from incumbents to
avoid having to build their own network.
Although the ruling did
not go nearly far enough, it would probably have been worse
without the Policy Direction. All in all, there is more
competition today in the telecommunications market, which
can only benefit Canadian customers.
The lesson in this story
is that it's possible to reverse the tendency of regulators
to constantly expand their turf. What is needed is a clear
stand in favour of the free market on the part of the
legislator. Perhaps the principles laid out in the Policy
Direction should be copied and applied to all other sectors
where the government intervenes.
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