Telecom Competition in Canada - How Much is Enough?

We are a land of compromise, that's for sure. This is one of my pet peeves about Canada - it works for some things, and not for others.

Our telecom regulator is the CRTC - Canadian Radio Television and Telecommunications Commission. The Globe & Mail reports that today they are about to embark on the latest set of public hearings to define the competitive landscape for VoIP. Apologies - I don't have a direct link to the article yet.

One of the key issues is to determine the level of competition from which incumbent telcos can be deregulated so they can compete on a level playing field with everyone else for VoIP.

In the telco corner we have the facilities-based incumbents - Bell, Telus, Aliant, etc. They say the level should be 5%. So, once competitiors reach 5% market share for local access service, their view is that they get to play by the same rules as everyone else.

Not surprisingly, the cablecos see things differently - Rogers, Shaw, Videotron, Cogeco, etc. They say the level should be 30% - once competitors take this much away from the ILECs, then deregulation kicks in.

Most sources peg the ILEC market share in Canada to be 97% or 98%. If that's not a monopoly in this day and age, I don't know what is. That's the position the cablecos argue from. Telcos just have too much market dominance, and the CRTC's position is that they have to let competitors have a fair shot. That's not unreasonable. So, for cablecos, having competition rise in share from 2 points to 5 points is hardly going to give them a foothold - which may well be true.

On the other hand, waiting until it hits 30% is quite a stretch. What if it never gets that high? What if VoIP just gets so-so market traction - which is my view for Canada - and competitors only take 20% away? Does that mean telcos never get a chance to play fair in the VoIP game?

The hearings should be interesting for sure, and I suspect they will reach a compromise. Both sides know how to play the CRTC game very well. The recent launches of cable VoIP have been successful - by Canadian standards - and will probably help the telco's cause in terms of getting things to go their way. On the other hand, the incumbents have done very little so far with consumer VoIP - aside from Bell's very recent launch - and the cablecos would argue that their dominance for local access is still basically intact, and this will only change if they get a fair chance.

Stay tuned!