CRTC regulation of telecommunications obsolete according to the Montreal Economic Institute

Montreal, May 13, 2004 – An Economic Note published today by the Montreal Economic Institute (MEI) concludes that new developments in technology have made Canadian Radio-television and Telecommunications Commission (CRTC) intervention obsolete in the field of telecommunications and that complete deregulation is desirable from an economic standpoint.

“In the field of telecommunications, the CRTC protected monopolies against entry when it should not have, and it now grants privileges to their competitors while there are no more economic reasons to do so,” wrote Valentin Petkantchin, author of the Note and MEI research director.

Until the 1990s, the CRTC protected regional telephone monopolies, such as Bell and Telus. It then began to allow regulated competition, but maintains that competition is still insufficient. In a public notice last December, the CRTC suggested imposing handicaps to former monopolies to artificially favour new incoming competition. Now it proposes extending these handicaps to the new Internet telephony sector.

Competition from new technology

The MEI research director rejects this perspective: “Putting aside the CRTC’s static approach to measuring competition, which is based on the number of businesses in the market, the telecommunications field is characterized by considerable competition.”

Competition exists thanks to new technologies such as Internet telephony (VoIP), cable telephony, and cellular phone service. Telephone companies, cable operators, Internet service providers and even electricity utilities will soon all offer the same range of telecommunications and broadcasting services, according to Valentin Petkantchin.

The Economic Note concludes that even if it could be argued that telephone services were a natural monopoly before the emergence of new technologies, this is no longer the case, and the CRTC’s regulation of this sector is no longer necessary.

The document, Do we still need to regulate telephone services?, has been sent to the federal Minister of Industry, as well as all members of the House of Commons’ Standing Committee on Industry, Science and Technology.

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For more information: Patrick Leblanc, Director of Communications, MEI / Tel: (514) 273-0969 / Cell.: (514) 347-4006 / Email: pleblanc@iedm.org