Speech by Jean-Pierre Blais, Chairman, Canadian Radio-television and Telecommunications Commission

To the Canadian Telecom Summit

Toronto, Ontario
June 4, 2013

Check against delivery

 

Thank you for your kind introduction.

It’s good to be with you today. I have met with many of you individually since my appointment as Chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), almost exactly a year ago. Others may have heard me speak last fall at the International Institute of Communications’ conference in Ottawa.

If you have read or heard about the changes taking place at the CRTC, you will know we are working to ensure Canadians have access to a world-class communication system. Today I’d like to define what I mean by that. And what it means for people in the telecommunications industry as we all define our place in the digital world.

New convergence

Our sense of this digital world is all wrapped up in technology and the overworked buzzword of recent years—convergence.

Most of us understand this to mean the merging of telephone, video and data communication within a single network. Or the merger of previously diverse industries into single entities that capitalize on new technology platforms and tools to target new markets.

Today, I want to propose another definition of convergence. One that people in your sector have as great a stake in.

I’m talking about the new convergence of public and private sector interests.

A new convergence that is both client-centric and Canadian-centric.

Dynamic companies recognize that convergence is not just about marrying marketing and technology. Its main value is that it enables businesses to gain insights into the interests and preferences of their customers.

Why do this? Well, because intelligence can help build relationships with customers, which can lead to improved service and, in turn, increased profits. Information can be integrated into an organization’s core business to better anticipate, and respond to, clients’ needs.

Canadians at the heart of their communication system

My definition of a world-class communication system encompasses this understanding. Canadians must be at the heart of theircommunication system.

Canadian families spend an average of $2,100 a year on communication services. In a digital world, they need the very best of what the system has to offer. This demands a dynamic marketplace, with healthy competition among multiple service providers—all across the country, not just in major populated areas.

We want to see empowered consumers who have greater choice and who are able to make informed choices.

My definition also includes better informed and better protected citizens.

What does this mean concretely?

It means making sure all Canadians have access to essential communication services vital to their health and safety. Things like 911 service. Enhancements for Canadians with hearing or speech impairments that enable them to communicate with 911 call centres via text message. I’m also talking about emergency alerts and privacy protection.

A world-class communication system promotes the interests of creators too. I’m clearly referring to Canadian content, for which there is a growing global appetite. And increased employment opportunities for creative people involved in productions.

But creativity applies equally to the service providers who distribute content—Canada’s broadcast and telecommunications industries. More than ever, this sector needs to be creative to remain competitive. Sticking to the tried and true no longer works in a world where change has become our constant. Innovation is essential to survival in a fast-changing, digital world.

My vision for our communication system also includes an industry that realizes it has social responsibilities towards all Canadians. An investment in a communication company is more than a venture that seeks a return on investment for shareholders; it is a venture that must also serve the interests of the public.

Because public and private interests are not mutually exclusive. Those interests converge.

As the late Mary Kay Ash, named the Most Outstanding Woman in Business in the 20th Century, once said,

"Everyone has an invisible sign hanging from their neck saying, 'Make me feel important.' Never forget this message when working with people."

Mary Kay understood that paying close attention to customers’ interests and making them feel valued builds loyalty. She recognized, too, that focusing solely on quarter-to-quarter profits might mean missing the big picture. Maybe losing out on long-term trends.

Her company’s success underscores that the convergence of public and private interests is good for the bottom line.

What’s good for Canadians—citizens, creators and consumers alike—is every bit as good for you. These are your clients. The people you need to please to succeed in business.

I know many of you already ‘get it,’ given the wireless industry’s decision to voluntarily take action on the growing problem of stolen handsets. This is a perfect example of the new convergence I’m talking about. The convergence of public and private interests.

I applaud the Canadian Wireless Telecommunications Association for adopting the International Mobile Equipment Identity to verify that a device hasn’t been reported as stolen. And to deny services to those that are blacklisted. I hope others in the communication industry will follow this lead.

Because I believe it’s in your interest to do so.

If you respond to consumer’s concerns and make your customers feel valued, there will be a convergence of private-sector business objectives—to remain profitable—and public outcomes—ensuring Canadians can benefit from your services in a digital world.

Achieving the Vision

Let me take a few minutes to describe some of the ways we, at the CRTC, are actively working to advance these same goals.

I’m referring to initiatives that look out for the interests of all Canadians, regardless of their postal code, income bracket or level of ability. Measures designed to ensure everyone has access to, and benefits from, a world-class communication system so they can participate fully in today’s digital society.

Even if it’s not always perceived to be in the short-term interests of big business.

Wireless code

A case in point is the new wireless code we issued yesterday.

Canadians increasingly rely on the phones in their pockets or their purses for their communication needs. Every day, Canadians send close to 350 million text messages. But that’s just one of countless uses made possible by smartphones and robust wireless networks.

You know, better than anyone, that wireless devices are at the very core of our lives—enabling us to work, engage in social media, play games, watch movies, get directions, buy products and so much more.

Your products and services have become an extension of our jobs, our families, even our personalities. They have become essential to achieving our economic and social goals.

That is why fostering a more dynamic marketplace is fundamental to the public interest.

Before developing the code, we carefully examined the terms and conditions of the wireless services companies like yours provide to Canadians. We took into account information from The Commissioner for Complaints for Telecommunications Services, which received roughly 8,000 complaints about wireless services during the previous fiscal year. That's over 60% of all the complaints it received.

We listened to Canadian consumers through their interventions and responses to online consultations. We also heard from Canadians during the public hearing. Thousands of people told us about their frustration with the length of wireless contracts, cancellation fees and roaming charges, among other industry practices.

We also listened to you, the wireless industry. We took note of your concerns and how you are already working to address some of these consumer frustrations. We also considered the potential costs for companies to implement changes to their systems.

In response to what we’ve learned, we are instituting new standards for wireless contract obligations. Some of you already meet some of these standards. That’s a good thing. But we at the Commission have to be concerned about all Canadians wherever they live.

Going forward, service providers will have to clarify the terms of the contracts with their customers.

Better informed consumers will be empowered to make educated choices about the service options that best match their needs and interests.

In turn, this will inspire innovation as businesses compete to keep or win over customers—leading to a more dynamic marketplace.

This will require regular rendezvous between companies and consumers. You will need to have discussions with your customers at regular intervals to make sure you understand and remain responsive to their needs.

So, what’s changing?

  • To start with, service providers will be required to provide Canadians with contracts that are easy to read and understand, as well as a summary of the critical information;
  • The amortization period for cellphones will be limited to two years. After that, consumers will be able to change providers with no cancellation penalties, regardless of the length of contract;
  • Providers will not be able to unilaterally change key contract terms, such as the price for monthly service or the length of the contract. The customer must be given an opportunity to accept or decline those key changes;
  • In addition, companies will have to notify customers 90 days in advance of the expiration of their contract. Once a contract ends, it can only be extended on a month-to-month basis rather than renewing automatically for a few more years;
  • Monthly data caps will be implemented: $50 for domestic data and $100 for international roaming data. This should mitigate much of the bill shock consumers face when they unknowingly exceed the data limits spelled out in their contracts; and,
  • At the consumer’s request, service providers must unlock cellphones after three months. This will free consumers to switch providers if they so choose and making it easier for them to use their wireless services abroad.

Right now many Canadians feel trapped in arrangements they can’t refuse. Going forward, Canadians will receive offers they can refuse. Wireless service providers will have to make Canadians freely choose them.

Canadians will have choice. Ultimately, they will benefit from a more dynamic marketplace.

If you keep your customers satisfied, and you give them good reasons to stay, they will. Your clients won’t be stuck with you because of contract restrictions. They will want to stick with you as their service provider because your prices are fair and your service is good.

The Commission believes the wireless code strikes a fair balance between the needs of consumers and the business realities of wireless service providers. It provides a baseline for the rights of consumers and the responsibilities of providers. Feel free to do more!

The new wireless code will take effect on December 2. Given that it will apply to new contracts, providers will have enough time to prepare as existing contracts gradually expire over the next few years.

Look ahead

The changes you’ve seen over the past year are a taste of what to expect in the months and years ahead.

Like service providers, the CRTC has to stay abreast of, and be responsive to, the changes taking place around us. This applies not only to consumer-oriented issues. We have to keep our eye on the big picture too.

For example, Internet and wireless services will be enormously important to Canada and its cultural, social and economic future. How can we capitalize on their potential?

Our Three-Year Plan sets out an ambitious agenda to ensure Canadians—as citizens, creators and consumers—continue to have access to a world-class communication system that promotes opportunities to participate in the digital economy.

The CRTC has already, or will soon, launch several major initiatives to make this a reality.

Northern communications

Following our earlier decision to increase competition in Northern Canada, we will take the next steps in the modernization of the region’s communication system.

We have had serious concerns about the services available north of 60. We’ve heard from Northerners who are unhappy about the quality, prices and variety of the communication services available. We’ve also heard complaints about frequent services outages. In response, we ordered Northwestel to develop a plan to update its aging network.

We will hold hearings in Inuvik and Whitehorse later this month to hear directly from Northerners on these issues. In addition to examining Northwestel’s modernization plan, the hearings will explore the subsidy regime to fund telecommunications services in the North, the implementation of competition and the wholesale services used by competitors.

Wholesale services

The CRTC will also undertake a review of the policy for wholesale services used by competitors, as well as the essential services definition.

You may remember that, in 2008, the Commission established a new framework for wholesale services to promote competition in wholesale and retail telecommunications markets. At the time, we made it clear we would rely on market forces as much as possible.

Accordingly, we identified a number of wholesale services that should no longer be mandated. As a consequence, more than a third of wholesale services were deregulated by the end of March 2013.

We also pledged to conduct a review of the services that are still mandated, recognizing the marketplace would evolve in the intervening years. This review will include the current pricing model for these services.

Are there different approaches that we could be using? Our goal is to make sure the wholesale service regime supports the development of a competitive telecommunications market in Canada. But, make no mistake, we will have to be persuaded that the course chosen is in the best interests of Canadians.

Another review will explore whether additional wholesale high-speed access services should be mandated, including fibre-to-the-premise facilities. We will hold a proceeding to determine whether competitors should have mandated access to these high-speed fibre networks—and, if so, when, where and at what cost.

I know this is one proceeding everyone in this room will be watching very closely.

Our objective will be to facilitate the development of a competitive Canadian broadband market, while balancing the incentives to invest in innovative networks.

We fully appreciate need for a return on investment. At the same time, we recognize that the better the network, the more you can do and the better you can serve Canadians. That is the ultimate objective.

Basic service objective

The Commission will also hold a public hearing to review the minimum level of service that should be provided to Canadians. This is known as the basic service objective. It currently includes an individual telephone line and access to dial-up Internet at local rates.

Back in 2011, the Commission maintained this objective for large telephone companies in regulated areas, which are mostly rural and remote communities.

We also set a target for broadband Internet access services across Canada.

By the end of 2015, the CRTC expects all Canadians to have access to broadband speeds of at least 5 megabits per second (Mbps) for downloads and 1 Mbps for uploads. This is the minimum speed we believe Canadians should be able to receive.

It’s time to prepare to take another look at our basic service objective, something we will do in 2014-2015.

Should broadband be considered a basic service for Canadians across the country?

That’s one of the key questions we will be asking when we start our review. We will also look at whether there should be changes to the subsidy regime and national contribution mechanism.

Engaging Canadians

We welcome your views on these issues, along with those of all Canadians. Because advancing the public interest is not something the Commission can do in isolation.

We want to be sure we are doing the right things, the right way, for the right reasons. So we will continue to apply a consumer lens to our work and engage Canadians in the conversation.

This focus on the interests of Canadians is not simply the dictate of a new Chairman. It’s what Canadians have been telling us they want, and expect. Like you, the CRTC has to remember that Canadians have an invisible sign hanging from their neck that says to us: Make me feel important.

Since rejoining the Commission, I’ve travelled all across Canada. I have met with a wide cross-section of people—both individuals and organizations—beyond the traditional CRTC stakeholder circle.

Whether meeting with members of the local Chamber of Commerce or regional consumer groups, I have heard repeatedly that people want greater transparency and accountability. From us.

I’ve also been told, again and again, that people just want a chance to be heard.

We are still figuring out how best to go about that. We are utilizing new tools and technologies like Skype, online consultations and social media.

For example, during the hearing on the wireless code, we hosted an online discussion forum where Canadians could post comments in real-time. We made it easier for Canadians with disabilities to participate in proceedings.

During another hearing—the CBC licence renewal—we offered evening sessions during our hearing, assuming it would make it easier for people interested in these issues to show up after work. Turns out, we were wrong about that. Our evening sessions were a flop. This just reinforces that we need to do a better job of reaching out, and listening, to Canadians. We have to continually innovate, like everyone else.

It’s the only way the CRTC can remain responsive in a dynamic communication environment.

Conclusion

Our Three-Year Plan is designed to keep pace with the evolving interests and priorities of Canadians. This is indispensable to fostering a world-class communication system. It is just as essential to build greater trust and confidence between the public and the CRTC.

In the same way, factoring in the needs of your customers—Canadian citizens, creators and consumers—should be a critical factor in your business planning.

Beyond the breakneck rate of technological innovation that drives your sector, responding to the constantly-changing needs of Canadians should be front and centre in your thinking as you define your place in the digital world.

As the likes of Mary Kay Ash demonstrated, doing so makes your customers feel important. That’s good for business and it’s good public policy.

I am confident that if we optimize this new convergence—the convergence of both the public and private sector interests, we can all look forward to a future that satisfies our collective needs—cultural, social and economic. I look forward to working with you as we do.

Thank you.

 

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