CRTC announces new rules for wholesale telecommunications services



    OTTAWA and GATINEAU, QC, March 3 /CNW Telbec/ - The Canadian
Radio-television and Telecommunications Commission (CRTC) today established a
new framework for wholesale services that will promote competition in
wholesale and retail telecommunications markets based on sound economic
principles.
    "Further to the government's direction that the Commission rely on market
forces to the greatest extent possible, we conducted a comprehensive review of
our approach to the wholesale services provided by traditional companies,"
said Konrad von Finckenstein, Q.C., Chairman of the CRTC. "We have now set out
clear rules that are consistent with competition policy and current market
conditions, and that will facilitate increased competition."
    The new framework was developed with a view to ensuring that existing and
new competitors continue to have access to the services they need to compete,
while at the same time providing incentives for innovation and investments in
competing networks.
    The Commission will maintain the requirement for telephone companies to
provide interconnection services to competitors. Interconnection services
allow competitors to access telecommunications networks in order that their
customers may call individuals who have a different service provider. The
Commission will also continue to mandate the provision of wholesale services
used to provide services that are in the public interest, such as 911 and
message relay services.
    As part of this proceeding, the Commission revised its definition of an
essential service. To be considered essential, a facility, function or service
must:

    
    - be required by competitors to provide a retail telecommunications
      service,
    - be controlled by a company that could use its market power to lessen or
      prevent competition, and
    - provide a functionality that would not be practical or feasible for \
      competitors to duplicate.

    The Commission has identified a number of wholesale services that should
no longer be mandated. These non-essential services will be deregulated over
the next three to five years to ensure a smooth transition to a reliance on
market forces.
    It is expected that more than a third of wholesale services will be
deregulated by the end of 2012. In 2013, the Commission will conduct a review
of the services that are still mandated at that time. Alternatives to
conditionally mandated services may emerge as the industry evolves and new
technologies are introduced, and the Commission will entertain further
applications to deregulate if the stipulated conditions arise.
    In 2006, wholesale services accounted for approximately $3.3 billion of
overall telecommunications revenues and major telephone companies held a
65-per-cent share of this market segment. The remaining share was held by
major telephone companies operating outside their established territories and
other service providers.

    The CRTC

    The CRTC is an independent, public authority that regulates and supervises
broadcasting and telecommunications in Canada.

    Telecom Decision CRTC 2008-17 http://www.crtc.gc.ca/eng/whatsnew.htm

    Reference document: Telecom Public Notice CRTC 2006-14
http://www.crtc.gc.ca/archive/ENG/Notices/2006/pt2006-14.htm


            Backgrounder on wholesale telecommunications services

    Wholesale services

    Regulated wholesale services are telecommunications services that major
telephone and cable companies make available to other competitors at rates and
terms that are mandated by the Commission. According to the most recent CRTC
Telecommunications Monitoring Report, wholesale services accounted for
approximately $3.3 billion of overall telecommunications revenues in 2006,
which totalled $36.1 billion. Major telephone companies held a 65-per-cent
share of this market segment.
    During the past decade, the Commission's framework for wholesale services
evolved on an incremental basis as competition in retail telecommunications
markets increased significantly. Given the current environment, it is unlikely
that competitors can duplicate in their entirety the facilities owned or
controlled by the major telephone and cable companies. No major telephone or
cable company today provides all of their services through their own
facilities. A healthy telecommunications market should allow for competitors
to provide services by using a combination of their own facilities and those
leased from other service providers.
    The Commission initiated a proceeding to review its framework to ensure
that it is based on the appropriate definition of an essential service and
current market conditions, and that is consistent with the government's policy
direction
(http://canadagazette.gc.ca/partII/2006/20061227/html/sor355-e.html).
    Under the new framework, the CRTC has divided wholesale services into six
categories: interconnection, public good, essential, conditional essential,
conditional mandated non-essential, and non-essential subject to phase-out.
    More than a third of wholesale services were assigned to the
"non-essential subject to phase-out" category and will be deregulated by the
end of 2012. In addition, services assigned to the "conditional essential" and
"conditional mandated non-essential" categories could also be deregulated,
upon application, if the stipulated conditions arise.
    Alternatives to conditionally mandated services may emerge in the next few
years as the industry evolves and new technologies are introduced. The
Commission will therefore conduct a review in 2013 of the services that are
still mandated following the phase-out period.

    Categories of wholesale services

    a) Interconnection

    Interconnection services allow competitors to access telecommunications
networks in order that their customers may call individuals who have a
different service provider. Their provision will continue to be mandated.

    These services permit interconnection between:

    - local networks,
    - local and long-distance networks, and
    - wireless and wireline networks.

    b) Public good

    Services in this category are mandated because they provide important
social benefits to Canadians.

    These services include:

    - emergency services,
    - message relay services, and
    - access to support structures.

    c) Essential

    To be considered essential, a service must be required by competitors to
provide telecommunications services and controlled by a firm that could use
its market power to lessen or prevent competition. Moreover, it would not be
practical or feasible for competitors to duplicate the functionality provided
by this service. Services that provide subscriber listing information are
essential services.

    d) Conditional essential

    Conditional essential services meet the criteria for essential services
and will be mandated until there are sufficient and comparable alternatives.
Certain access facilities, such as unbundled local loop facilities, are
conditional essential services.

    e) Conditional mandated non-essential

    Services in this category do not meet the criteria of an essential
service, but continue to be mandated for a variety of reasons, principally
because they are closely linked to conditional essential services. It may be
necessary to deregulate any or all of these services at some point in the
future due to changes in market conditions that would cause the link to be no
longer relevant. However, these services will remain in this category until
the reasons that caused them to be mandated are no longer present.

    f) Non-essential subject to phase-out

    Services in this category include those that do not meet the revised
definition of an essential service, as well as those that fall outside the
categories described above. As a result, they will be deregulated over the
next three to five years. This approach will ensure a smooth transition to a
reliance on market forces and give competitors time to adjust their business
plans.
    




For further information:

For further information: Media Relations: MediaRelations
(http://support.crtc.gc.ca/CRTCSubmissionMU/forms/Mediarelations.aspx?lang=e),
(819) 997-9403, Fax: (819) 997-4245; General Inquiries: (819) 997-0313, TDD:
(819) 994-0423, Fax: (819) 994-0218, Toll-free # 1-877-249-CRTC (2782), TDD -
Toll-free # 1-877-909-CRTC (2782), On-line services
(http://support.crtc.gc.ca/crtcsubmissionmu/forms/main.aspx?lang=e); These
documents are available in alternative format upon request.


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