Canada Gazette, Part I, Volume 153, Number 10: Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation
March 9, 2019
Department of Industry
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Access to and the affordability of high quality telecommunications services are increasingly important for Canadians to participate and thrive in a digital economy and society and are fundamental to sustain and grow Canada’s competitiveness in the global economy.
Canadian consumers of telecommunications services, such as individuals, families and businesses, expect and deserve access to world-class telecommunications services. Further, Canadians deserve a competitive marketplace where consumers have real choice and are treated fairly.
The Government is concerned about consumer outcomes in the telecommunications sector such as competition, affordability, choice, consumer protection, and innovation in service offerings.
The Telecommunications Act (the Act) establishes Canada’s telecommunications policy objectives. The Canadian Radio-television and Telecommunications Commission (CRTC), which operates at arm’s length of government, is charged with the implementation of those objectives.
For more than a decade, the Government and the CRTC have acted to increase competition and affordability, promote the interests of consumers and enable innovation. The various measures used have included relaxing foreign investment restrictions in the Act, reserving wireless spectrum in auctions for smaller regional wireless carriers to support competition, implementing regulatory frameworks that support retail competition through the provision of wholesale services and creating the Commission for Complaints for Telecom-television Services (CCTS) as a body to administer consumer codes of conduct and assist consumers in the resolution of their complaints with service providers. The Government has also invested to expand access to broadband Internet connectivity in underserved areas.
Despite progress in the advancement of consumer outcomes, significant issues remain. Canada’s incumbent carriers possess and have exercised market power. footnote 1 Prices are high relative to those in peer countries for comparable plans. footnote 2 The affordability of telecommunications services challenges Canadians, and in particular low-income Canadian families, with financial constraints. footnote 3 The Competition Bureau has concluded that the national mobile wireless incumbents coordinate their behaviour, resulting in higher prices for Canadians. footnote 4 Further, Canadians have expressed substantial concern regarding the sales practices used by large telecommunications carriers, and reports have alleged that those carriers have used misleading and aggressive sales practices and abuse information asymmetries to their benefit and at the cost and harm of Canadian consumers. A decreasing but still significant number of Canadian households remain without access to high-quality services, particularly in areas that are underserved by competition.
Section 8 of the Act provides the Governor in Council (GIC) with the authority to issue directions of general application to the CRTC on broad policy matters with regard to the telecommunications policy objectives set out in the Act. In 2006, the GIC issued the first policy direction to the CRTC (the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives, SOR/2006-355). This order directed the CRTC to rely on market-based solutions to the maximum extent feasible as a means of achieving the policy objectives, and regulate, where there is still a need to do so, in a manner that interferes with market forces to the minimum extent necessary, among other things.
Based on evolution in the market and regulation, which has seen telecommunications services grow in importance as a fundamental pillar of the economy and society in general, an updated policy direction to the CRTC is both appropriate and necessary.
The proposed policy direction would formally and transparently lay out the Government’s priorities for telecommunications policy, namely that the CRTC should consider promotion of competition, affordability, consumer interests and innovation. Providing this general policy direction will guide the CRTC in making decisions.
The purpose of this proposal is to release a proposed policy direction that directs the CRTC to clearly consider how measures used in the implementation of the Canadian telecommunications policy objectives can promote competition, affordability, consumer interests and innovation, namely the extent to which they
- encourage all forms of competition;
- foster affordability and lower prices, particularly where there is potential for telecommunications service providers to exercise market power;
- ensure that affordable access to high quality telecommunications services is available;
- enhance and protect the rights of consumers in their relationships with telecommunications service providers;
- reduce barriers to entry and barriers to competition for new and smaller service providers;
- enable innovation in telecommunications services, including new technologies and differentiated service offerings; and
- stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services.
The CRTC would also be required to state which policy objective in the Act is advanced by its measures.
As required under the Act, the Minister has consulted with the CRTC on the proposed order. The Minister will consult with the CRTC again on the proposed order in its definitive form before it is made by the GIC.
Publication in the Canada Gazette, Part I, is the first step in seeking public comment on the proposed policy direction and is a requirement under subsection 10(1) of the Act.
The Minister will also have consulted with the provinces and territories before making a recommendation to the GIC.
In accordance with the Act, the Minister will also have the order laid before both Houses of Parliament for a period of 40 sitting days during which it will stand referred to committees designated by each House.
Modern treaty obligations and Indigenous engagement and consultations
The proposal has been assessed for modern treaty implications as per the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. The Initial Assessment examined the geographical scope and subject matter of the proposal in relation to modern treaties in effect and did not identify any potential modern treaty impacts.
The Government and the CRTC have over a period of years used a range of measures to increase competition, affordability, consumer protection and innovation in telecommunications.
The Government considers that an updated policy direction is the appropriate instrument to address the issue in light of the evolution in the market and regulation since issuance of the 2006 Policy Direction.
While the CRTC will ultimately be responsible for the direct outcomes of the use of this instrument, the Government expects immediate direct outcomes to be the clear consideration of the promotion of competition, affordability, consumers’ interests and innovation in the CRTC’s decision making and its demonstration of compliance with the policy direction, for example, in its published decisions.
Benefits and costs
This proposal results in no real incremental costs to the Government. For the CRTC, it is expected that compliance with this proposed policy direction can be completed within existing resources.
The policy direction will guide the CRTC in making decisions. Clearer consideration by the CRTC of the promotion of competition, affordability, consumer interests and innovation as a result of the policy direction will benefit the public’s understanding of how CRTC considers the extent to which its decisions benefit consumer outcomes.
This policy direction will exist in complementary fashion to the previous policy direction, which among other things, directs the CRTC to use streamlined and efficient practices in order to reduce regulatory burden and costs for the Government, the CRTC and the telecommunications industry. The CRTC has made great strides in streamlining its processes and using efficient practices and the Government expects that this will continue. The proposed policy direction is not expected to have material impacts on regulatory compliance costs borne by the sector, and any impact should be at least balanced by benefits to consumer outcomes.
Small business lens
No specific small business impacts are anticipated.
The proposal has no impact on administrative burden costs.
Regulatory cooperation and alignment
The proposal is not related to a work plan or commitment under a formal regulatory cooperation forum.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
The proposal has been assessed for gender-based analysis plus (GBA+) implications. The Department conducted a GBA+ of the proposal and concluded that it is excluded due to low risk. There is no single specific client base/target audience as this proposal involves an issuing a direction to the CRTC. However, future decisions made by the CRTC will be impacted by the new direction which may impact various demographics.
Implementation, compliance and enforcement, and service standards
The Order would come into force on the day on which it is registered, and would be binding on the CRTC beginning on the day on which it comes into force. Subject to subsection 11(3) of the Act, the proposed Policy Direction to the CRTC would apply in respect of matters pending before the CRTC on the day on which the order comes into force.
Compliance and enforcement
The CRTC is bound to exercise its powers and perform its duties under the Act in accordance with the terms of any order made under section 8 of the Act. Subparagraph 1(b) of the proposed policy direction requires the CRTC to demonstrate compliance with the direction. Finally, CRTC decisions can be reviewed by the GIC on appeal or on its own motion, which therefore provides another means to ensure compliance.
Telecommunications and Internet Policy Branch
Innovation, Science and Economic Development Canada
235 Queen Street, 10th Floor
PROPOSED REGULATORY TEXT
Notice is given, pursuant to subsection 10(1) of the Telecommunications Act footnote a, that the Governor in Council, pursuant to section 8 of that Act, proposes to make the annexed Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation.
Interested persons may make representations concerning the proposed Order within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Director General, Telecommunications and Internet Policy Branch, Innovation, Science and Economic Development Canada, 235 Queen Street, 10th Floor, Ottawa, Ontario K1A 0H5 (firstname.lastname@example.org).
Ottawa, February 26, 2019
Assistant Clerk of the Privy Council
Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation
1 In exercising its powers and performing its duties under the Telecommunications Act, the Commission must implement the Canadian telecommunications policy objectives set out in section 7 of that Act, in accordance with the following:
- (a) the Commission, when relying on regulation, should consider how the measures used can promote competition, affordability, consumer interests and innovation, namely the extent to which they
- (i) encourage all forms of competition,
- (ii) foster affordability and lower prices, particularly when there is potential for telecommunications service providers to exercise market power,
- (iii) ensure that affordable access to high quality telecommunications services is available,
- (iv) enhance and protect the rights of consumers in their relationships with telecommunications service providers,
- (v) reduce barriers to entry and barriers to competition for new and smaller telecommunications service providers,
- (vi) enable innovation in telecommunications services, including new technologies and differentiated service offerings, and
- (vii) stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services; and
- (b) the Commission, when relying on regulation, should demonstrate its compliance with this Order and should specify how the measures used can, as applicable, promote competition, affordability, consumer interests and innovation.
Effect of Order
2 This Order is binding on the Commission beginning on the day on which it comes into force and applies in respect of matters pending before the Commission on that day.
Coming into Force
3 This Order comes into force on the day on which it is registered.