Government Rejects Usage Based Billing Decision

Blog, Disruption, Les Routledge

The Harper government will overrule a recent decision by the Canadian Radio-television and Telecommunications Commission that effectively kills unlimited Internet-pricing packages — unless the telecommunications regulator backs down first, Postmedia News has learned. (see article)

While this decision should be welcomed by opponents of the CRTC  decision, the bigger question is why was the CRTC placed in this position to begin with?

The presence of bandwidth caps and usage fees that are at odds with international comparisons suggests that there is deeper problem than a questionable decision by the CRTC.  In a competitive market, prices tend to converge on the marginal cost of providing the good or service.  With bandwidth fees marking up incremental costs by 1,000% or more according to some analysis, it would appear that the industry structure is not a functioning competitive market.

As a follow up to over turning the CRTC decision, it is time for a third party review to examine if the current regulatory regime and resulting industry structure is meeting the objectives of the Telecommunications Act.  In particular, a review needs to examine if steps should to be taken to inject more competition and diversity into the market to achieve the following objectives:

(a) to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions;
(b) to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada;
(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
(f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective;
(g) to stimulate research and development in Canada in the field of telecommunications and to encourage innovation in the provision of telecommunications services;
(h) to respond to the economic and social requirements of users of telecommunications services;

In order to advance on those objectives, the definition of the term “to promote” in the following objectives should also be reviewed

(d) to promote the ownership and control of Canadian carriers by Canadians;
(e) to promote the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada;

Reliance on market forces for the provision of telecommunications services is a worthy goal.  The challenge is figuring out how to ensure that those forces are strong and dynamic instead of muted and suppressed.