Telecoms face new uncertainty

Canada’s telecommunications sector is bracing for an uncertain regulatory future as the federal government increasingly undermines its watchdog.

What began with a simple Twitter post

What began with a simple Twitter post by Industry Minister Tony Clement late Wednesday – he pledged to block a ruling on Internet pricing by the Canadian Radio-television and Telecommunications Commission – has morphed into a controversy over the independence and future of the regulator.

It’s the latest indication of how Prime Minister Stephen Harper’s minority government is increasingly willing to step in and override the telecommunications regulator on decisions that become politically unpopular.

On Thursday, CRTC chairman Konrad von Finckenstein said he would review and delay the decision on Internet pricing. It would allow large Internet providers just as BCE Inc. and Rogers Communications Inc. to charge small players, which lease space on their networks, on the basis of how much data their clients use, effectively killing their popular "unlimited" download plans.

"We are convinced that Internet services are no different than other public utilities, and the vast majority of Internet users should not be asked to subsidize a small minority of heavy users," he told a hearing, adding he had decided to delay the ruling on his own the day earlier.

Recently, this before obscure regulatory change on pricing exploded into a full-scale battle over Internet charges, with all three major political parties criticizing the CRTC for delivering what they called an anti-competitive ruling that allowed large telecom companies to skewer consumers on price.

Now, with Industry Minister Tony Clement urging the regulator to reconsider, and warning he will overturn any decision that limits use, the industry is tense, awaiting the possible disruption of the Canadian Internet business.

The message to the industry

The message to the industry, it seems, is that complicated telecom policy can be subject to a political whim that many feel has turned acutely against big telecom players in recent years, in favour of popular moves like approving Globalive and overturning a decision that could raise Internet prices. Both the foreign ownership issue, which could lead to a dramatic reshaping of the sector, and the wireless spectrum auction, which is for valuable airwaves, are on the horizon – and the general sentiment about them from big telecoms is pretty grim.

The 1993 Telecommunications Act lays out the federal government’s powers to alter or overrule decisions by the CRTC. The Harper government has clashed with the broadcasting regulator several times in the past five years, including its decision this week on usage-based Internet billing.

CRTC rules: The CRTC lays out a plan to loosen regulation of local telephone service in specific areas of the country, depending on the market share of the service providers there.

CRTC rules: Seeking to foster competition in phone services run over the Internet, the CRTC decides to regulate voice over Internet protocol services by telecom companies.

CRTC rules: The regulator forbids Globalive Wireless Management Corp. from starting a new cellphone brand, Wind Mobile, in Canada. It argues that Globalive violates foreign ownership rules because most of its equity is owned by Orascom Telecom Holding of Egypt.