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Speech

Notes for an address

by Konrad von Finckenstein

Chairman, Canadian Radio-television
and Telecommunications Commission

to the 2007 Telecommunications Invitational Forum

Montebello, Quebec

April 25, 2007

(CHECK AGAINST DELIVERY)

Good evening, and thank you for inviting me to speak to you.

New reality

The ground is rapidly shifting in telecom regulation. Five recent developments come to mind.

First, we had the Telecommunications Policy Review Panel and its report. It was critical of the way the telecom file has been handled by the government and the CRTC.

Second, we have a Minister of Industry who is a fervent believer in free markets and does not hesitate to express his views forcefully and to pursue his objectives.

Third, we have the policy direction from the government and the order that varied the Commission's decision on forbearance of local telecom services. These are clear signals regarding the way the CRTC should implement telecommunications policy.

Fourth, we have a direction from the government to oversee the creation of a consumer protection agency for telecommunications.

And lastly, there is my appointment, a former Commissioner of Competition, as Chairman of the CRTC.

Clarity of message

These events speak for themselves, and the message is clear: the government wants to move quickly toward more reliance on market forces in telecom services, less regulation and smarter regulation.

I welcome the clarity, and I welcome the variation order. While it isn't precisely what we would have chosen to do, it is a feasible alternative and you can be sure that we are going to implement it in a way that captures the spirit as well as the letter of what the government has said it wants to accomplish.

Another thing that I would say about the variation order is that it is as significant for what it did not change as for what it changed.

I'm talking about competitor quality of service standards. While the number of standards has been reduced, the ones that remain are at the heart of the matter with regard to creating conditions that will allow for robust competition.

The government's message on service standards echoes the position the Commission has traditionally taken: fair play by incumbents in their dealings with competitors is a prerequisite for deregulation, and consumers should benefit, not suffer, from deregulation of local services.

At the CRTC we have changed our basic approach in recognition of this new reality. We are moving quickly toward more reliance on market forces, less regulation and smarter regulation.

Cooperative relationship

As we move forward on this new footing, you might want to know that one thing I always bear in mind is that a regulator should – as they say in the medical profession – “do no harm”. That means that the Commission must, among other things, avoid introducing any unnecessary elements of uncertainty into the regulatory environment. In fact, I want us to reduce uncertainty wherever and whenever we can.

Achieving that goal is for the most part entirely our responsibility. But to some extent it will depend on the quality of the relationship between the Commission and the industry – a relationship that needs to be based on cooperation and mutual respect.

In the past I think that both sides have usually done a pretty good job of maintaining that kind of relationship, and I see no reason why this will not continue.

“Cooperation and respect” do not, however, mean that we will always agree. To the contrary, a healthy debate is essential to good cooperation and good regulation. But when we do disagree, let's do so on matters of substance, and not engage in polemics.

The recent criticism of the Commission seen in industry press releases about our decision on forbearance of local services in Fort McMurray, Alberta, is exactly the sort of thing that I'm talking about. We all know that even under the terms of the government's variation order on forbearance, TELUS would not have met the competitor quality of service standards when we made our decision. And yet that is exactly what the various press releases suggested. The result was to mislead the public, and I was compelled to publicly set the record straight.

I trust this is a thing of the past and we will not see the likes of it again.

Principles of regulation

I've spoken about how I expect the industry to behave. Now let me talk about the kind of behavior you can expect from the Commission under my leadership.

My approach to regulation – which will determine how I manage the CRTC and the standards to which I will hold its staff – is based on four principles. I put them into practice during my seven years as Commissioner of Competition, but in my view they apply to all regulatory agencies.

The four principles are:

  • transparency;
  • fairness;
  • predictability; and
  • timeliness.

By transparency, I mean that we are going to be as open as open as possible in our dealings with stakeholders. And we are going to have service standards that govern our decision-making process, and we will be prepared to have our performance judged against those standards.

By fairness, I mean that we will aim to strike the right balance in our decisions between the needs of the industry and the expectations of consumers, all with a view to doing the best job of serving the broader public interest.

By predictability, I mean that we will provide clear reasoning for the decisions we make so that you know how to arrange you own affairs to be in compliance with law and regulation, and so that you can feel comfortable projecting how we might approach future issues.

By timeliness, I mean that we will always move as quickly as possible, without compromising the depth and rigor of the information gathering and analysis that backs up our decisions. I understand that unnecessary slowness translates into uncertainty and into real financial consequences for the industry.

And on this last question of timeliness, I can report to you that during the 12-month period up to the end of March, the Commission had an almost perfect record in meeting its service standards for processing retail tariff applications.

For example, we were over 99 per cent effective in meeting our benchmarks of:

  • making 85 per cent of interim decisions within 10 business days; and
  • issuing 85 per cent of initial dispositions within 45 business days.

While we have succeeded in raising the bar in this area of our performance, progress must still be made elsewhere. Our speed in dealing with a variety of non-tariff applications – known technically as “Part VII applications” – must improve. I intend to make this a priority.

Succession issues

Dealing with regulatory policy and practice is only one part of my job. As the CEO of the Commission, I also take responsibility for the strength, health and capacity of the organization.

Among other things, I need to ensure that we have the right people to do the job, today and in the future. For example, like many government organizations, the Commission faces a challenge regarding succession. The baby boomer generation is leaving and, while we have very promising and bright young people, there is a bit of a hole in the middle.

They way we manage the exodus of knowledge and experience over the next few years will be very significant for the future of the CRTC. That is why I have announced an initiative focused on succession planning, to be headed by Diane Rhéaume, our current Secretary General. A new Secretary General, Robert Morin, has been appointed on an interchange basis for three years. One of his principal tasks will be to mentor his successor.

Communications

Another organizational issue that is a priority for me is communications. I want to ensure that we do an excellent job of communicating both inside the Commission, and between the Commission and its external stakeholders. This is especially important in the current regulatory climate.

Inside the organization we all have to be singing from the same song sheet. And externally, as I said before, we must nurture strong relationships with stakeholders. Clear and consistent communication will be a big part of that.

And so I have restructured our internal and external communications, bringing them under one roof in a new Strategic Communications Branch that will be headed by a Director General who is new to the CRTC, Renée Fairweather.

Consumer Protection Agency

I believe that the industry is going to face its own kind of communications challenge as we move into this new era of lighter regulation. It is going to have to send out a convincing message that it is capable of policing its own behavior.

It is with this in mind that the government recently issued a direction to the CRTC to oversee and approve the creation of a consumer protection agency.

The direction is unusually clear and detailed. These are the government's key instructions:

  • An independent agency should be created.
  • The agency should have a CEO not affiliated with a telecom service provider and a board primarily composed of similarly independent members.
  • The agency should be funded by all telecom service providers.
  • The agency should include all telecom service providers.
  • There should be a code of conduct adhered to by all telecom service providers.
  • The agency should investigate and resolve all small-business and consumer complaints.
  • Failures to adhere to the agency's code of conduct, or to comply with its ruling, should be reported publicly.
  • The mandate and the structure of the agency, including its governance, should meet with the approval of the CRTC.
  • Until the agency is operational, the CRTC will collect and publish annually data on consumer and small business complaints.

The government has thrown down a challenge. Using our powers under Section 24 of the Telecommunications Act – particularly our power to approve tariffs for essential services – we will do everything we can to meet the challenge. It will be particularly important to me to see that failure to comply with the agency's code of conduct, and with its rulings, will be dealt with in a meaningful way.

In my view, there is nothing about this proposed agency that involves plowing new ground. A similar organization was established when long-distance services were deregulated. And other jurisdictions, Australia being one notable example, have similar regimes in place.

In that spirit, I think it would ideal if we could have the new consumer agency up and running once the first forbearance orders become operational, that is, once the ILECS meet the competitor quality of service standards.

If we are not, within a reasonable period of time, successful in launching an agency that meets the standards set by the government, then we face an alternative that neither we nor, I'm sure, the industry would like to see. That is, we face legislation to protect the interests of users.

If adequate progress is not made, I would have no choice but to ask for legislation along the lines of the Australian model, i.e., mandated “voluntary codes.”

On the other hand, if the agency is up and running and successful, I don't see any reason why its mandate could not be expanded to include complaints from customers in non-forborne areas. In such an eventuality, the whole retail rate adjustment plan regarding failure to meet quality of service standards would become redundant, and the Commission would have no hesitation to abolish the current regime.

Summary

The current year is shaping up to be an historic one in terms of tilting the balance away from regulation and toward market forces. On the policy front, the Commission is going to do everything in its power to advance this shift in a way that nurtures robust competition and ensures that consumer interests are protected.

We're also going to put our own house in order, continuing to work on speeding up our processes, and taking care of succession planning and communications.

The creation of the consumer agency will be an important test of how well the Commission and the industry can work together to respond to an important challenge. I'm confident that the industry can and will do whatever is necessary to make the consumer agency a success.

I've already seen, in my short time as Chairman, how the industry can get its act together and take the necessary steps to respond to policy and regulatory directives. The smooth implementation last month of wireless number portability was a perfect case study of telecom service providers taking a business-like approach to dealing with the regulator. It was about understanding what needed to be done, and getting on with it.

I look forward to working with telecom service providers, and with all of our stakeholders, in a business-like way so that we can all focus our time and energy on the most important challenges that face us.

Thank you.

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This document is available in alternative format upon request.

Date Modified: 2007-04-25

 

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