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Speech


byAndrea Rosen

Chief Telecommunications Enforcement Officer
Canadian Radio-television and Telecommunications Commission

 

to the 7th Annual Telecommunications Forum

Ottawa, Ontario

November 9, 2010

(Check against delivery)

Thank you for your introduction. I appreciate this opportunity to talk about “The Challenges of a Regulator in the Current State of Constant Change.”

As some of you may know, after spending nearly three decades at the Competition Bureau, I joined the CRTC’s as its first Chief Telecommunications Enforcement Officer earlier this year. My main responsibilities are to enforce the National Do Not Call List rules and to prepare for the anti-spam legislation currently before Parliament.

Anti-spam legislation

In the coming weeks, the government hopes to pass Bill C-28, also known as the Anti-Spam Bill. Spam and related online threats such as malware, spyware and phishing, as well as various viruses, worms and Trojans, are a multi-billion dollar problem. They also undermine consumer confidence in the digital economy.

Spam is a global problem and requires cross-border solutions. It is important to align national laws with one another so that spammers will understand that they have no place to hide.

When the Canadian law is passed, the main enforcement responsibilities for spam will fall to the CRTC, including: 

  • the “no spam” provisions
  • violations involving the alteration of transmission data in an electronic message, and
  • prohibitions against installing software or causing it to be installed without express consent.

Most interesting for our discussion is the range of tools to enforce the Act, if passed. There are two types of enforcement mechanisms available.

First, individuals and companies will be able to sue spammers through the right of private action. This approach falls outside the purview of the regulator because individuals and companies provide their own enforcement through the courts.

Other countries have found this to be very effective in reducing spam and related online threats. In fact, a California court rendered a judgment against a Montreal-based Internet marketer who had posted spam messages on Facebook. This judgment was recently upheld by the Quebec Superior Court, which ordered the marketer to pay Facebook more than $1 billion in fines.

But Bill C-28 provides another set of tools to both the CRTC and the Competition Bureau. Both organizations will have the authority to seek or impose administrative monetary penalties—or AMPs—on individuals or corporations who break the law. 

In the case of the Anti-Spam Bill, the penalties can be very high: as much as $1 million per violation for an individual and up to $10 million for a business.

In this way, the Anti-Spam Bill would give the regulator a meaningful and targeted tool to ensure compliance with the rules. We would be able to stop to the breach in the rules, and send a signal to others as to what they can expect if they act in a similar manner.

The amount of the penalty would be determined by the seriousness of the infraction, as well as other factors. 

Perhaps the infraction was a minor one. In that case, a warning or light penalty would be appropriate, and provide for an opportunity to educate the industry regarding compliance expectations. 

Or perhaps the wrong-doer has deliberately or repeatedly ignored the rules to secure an advantage in the marketplace. The Commission would then be able to invoke a high penalty to send a strong signal about how seriously we take the violation.

I want to emphasize this point, because there is some concern in the telecom community that an AMPs regime would result in a very heavy sledgehammer being used to tap in even the smallest of nails. 

Such is not the case. In fact, the strength of an AMPs regime comes from its ability to make the punishment fit the infraction within a fair, predictable and transparent process.  It provides enforcement options, with penalties that range from the very light to the severe.

Enforcement activities under the National DNCL

For an example of how this continuum is already applied, look at the National Do Not Call List (DNCL) that the CRTC established to reduce unwanted telemarketing calls. After two years of operation, we recently expanded our toolkit in order to enhance compliance with the Unsolicited Telecommunications Rules.

At the outset, the CRTC takes steps to ensure that telemarketers understand the rules and register with the National DNCL operator before making any calls.

In responding to a complaint, the CRTC contacts the telemarketer and may request specific information. We may interview the telemarketer or make on-site visits, and we have the authority to request information from third parties such as telecommunications service providers.

If, after this investigation, we conclude that there has been a violation of the Unsolicited Telecommunications Rules, we take steps to bring telemarketers into compliance. 

At the light end of the continuum, in certain circumstances, we may simply issue a citation and require the telemarketer to take corrective action. The telemarketer can claim a defence or an exemption, and if the claim is valid, we will revoke the citation. But if the citation is upheld, we expect the telemarketer to amend their practices to ensure compliance. No penalty is imposed with a citation.  If they continue breaking the rules, we will commence an investigation, and then issue a notice of violation and impose an AMP.

A second approach available to us is to negotiate an agreement with the telemarketer that would correct the situation. This may include the payment of an administrative monetary penalty or other monetary payment. 

The earlier a telemarketer approaches us to resolve the potential violation, the better the terms of settlement are likely to be for that telemarketer. These measures represent the middle portion of our enforcement options.

Just last month, we negotiated an agreement with Telus Communications. The case involved the use of automated calling devices to notify prepaid mobile customers of an upcoming service interruption and how to purchase more minutes to avoid it.

We approached Telus to discuss the issue: that express consent is required when using automated calling devices to sell or promote a product or service.

While Telus did not admit fault regarding its use of automated calling devices, it immediately ceased making these calls. It will review its compliance policies to ensure that it adheres to the rules.

Furthermore, Telus made a charitable donation of $200,000 to establish a scholarship fund to support graduate studies in regulation. This was not an AMP; it was a type of monetary payment in lieu of an AMP. Monetary payments and AMPs generally are paid to the Receiver General for Canada. The CRTC does not view charitable donations as a standard practice, but will determine each case on its merits. This remedy was considered appropriate for this particular situation.

An AMP regime does give considerable scope for enforcing the rules without coming down with a heavy hand. But at the more severe end of the continuum, we can issue a notice of violation to a telemarketer. The notice will identify the violation and set out an administrative monetary penalty. 

When considering the quantum of the AMP, the CRTC will take into account such factors as:

  • the facts of the case and conduct at issue
  • the nature of the violation
  • the number and frequency of complaints and violations
  • whether the penalty would provide an incentive for compliance
  • the potential for future violations, and other factors, as appropriate.

The administrative monetary penalty for each violation can run as high as $1,500 for individuals and $15,000 in the case of a corporation. 

Bear in mind: these penalties are for each infraction. Sometimes a telemarketer will incur three penalties for one call: 

  • one for failing to register with the National Do Not Call List operator
  • a second for not having purchased a subscription to the National DNCL
  • and a third for calling a number that was on the list.

A business could potentially face a total penalty of $45,000 for a single phone call. 

The bottom line is that the range of penalties available under an AMPs regime is very wide. We have the ability to make the punishment fit the severity of what has been done.

As mentioned earlier, telemarketers may approach the Commission at any time to come to terms, even if a notice of violation is being issued. Cooperation leading to a resolution in the public interest is always welcome and reduces costs for everyone. Needless to say, compliance is the ultimate goal.

Need for new regulatory tools

Currently, outside the telemarketing regime, the Commission is forced to rely on sub-optimal tools to address non-compliance, rather than expanding its toolkit to provide for more timely and effective incentives, such as AMPs. Most G20 member countries have granted their communications regulators the authority to issue AMPs.

The Commission, in a recent decision, strongly emphasized the need for AMPs. It stated that “AMPs could be used to address some of the following areas should licensees or operators be found offside on regulatory requirements:

  1. under the broadcasting regime, non-compliance with digital television transition requirements, findings of undue preference or unjust discrimination, findings of non-compliance with conditions of licence, including accessibility-related obligations, failures in meeting Canadian content development commitments and delays in meeting filing deadlines, among others; and
  2. under the telecommunications regime, findings of undue preference or unjust discrimination and failure to provide regulated telecommunications services, including wholesale services and findings of non-compliance with Net Neutrality principles, among others.”

Consumers and the industry would benefit from the implementation an AMPs regime. There would be a reduced need for costly, time-consuming and process-laden hearings, which are now the only means of deterring non-compliance, and then only doing so long after the offending conduct has been detected. AMPs would allow the Commission to deal with offenders and repeat offenders in the most direct and timely manner possible, and provide for regulatory certainty, making sure that "the punishment fits the crime."

For instance, the penalty amount could be determined by taking into account a variety of factors, such as:  What kind of harm has been done, if any?  What kind of profit has been made as a result of the actions?  Will the violator be required to provide some kind of redress?  

The power to issue AMPs would not only achieve the objectives I have just mentioned, but also allow the Commission to undertake a holistic review of its existing regulatory policies and procedures. This would provide an opportunity to remove overlapping and outdated ex ante regulations that may no longer be necessary to further important policy objectives.

Time is of the essence – both for businesses in dealing with the Commission and for the Commission to acquire the authority to issue AMPs. In defining our role and priorities within the digital economy, the Commission needs to have the tools to cut through delays, curtail regulatory bureaucracy and act in the least intrusive and least invasive manner.

Little wonder, then, that in the spirit of regulatory reform that has been a priority for the current government, the Commission has been advocating that administrative monetary penalties be added to its toolkit. This could be achieved through an amendment to the Canadian Radio-television and Telecommunications Commission Act.

We hope that the government will take this suggestion to heart and act quickly to amend the Act, giving the Commission the tools it needs to regulate effectively in the age of convergence.

Conclusion

AMPs would introduce a less restrictive approach to communications regulations, and would enable the CRTC to respond quickly and with appropriate force to issues as they arise. They would put our regulatory enforcement more in line with that of Canada’s trading partners.

That is why, when talking about “The Challenges of a Regulator in the Current State of Constant Change,” I want to make a strong case for the superiority of a fair, predictable and transparent ex post regime, and the importance of administrative monetary penalties in fostering compliance in the public interest.

Thank you.

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This document is available in alternative format upon request.

Date Modified: 2010-11-09

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