Adam Scott, Vice-Chairperson, Telecommunications
Canadian Radio-television and Telecommunications Commission (CRTC)
Check against delivery
Before I begin, I would like to acknowledge that we are on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee and the Wendat peoples. I thank them and pay respect to their Elders.
I'm happy to be back at the Telecom Summit. I'm always grateful for the opportunity to speak to the business leaders in Canada's telecom sector-the ones actually building the networks, running the companies, and connecting the customers.
As a regulator, sometimes we get accused of living in an Ottawa bubble, or even an ivory tower. Those of you who have been to the CRTC offices know that our ivory tower is in fact a modest 7-story office building from the 1970s utilitarian school of architecture.
We are undergoing some renovations, but ultimately, nobody cares how the regulator looks. People care about how clearly the regulator can see. So, I thought I would start today by sharing what I see when I look out my window as Vice-Chair of Telecom.
I see more Canadians with access to advanced networks, more Canadians subscribing to faster Internet services, and an intensification of mobile and high-speed Internet competition from providers entering new geographic markets.
I see much better pricing being offered overall, but I still see some consumers not reaping the pricing benefits of stronger competition.
I see satellites providing faster and more reliable Internet connectivity than they ever have before, with pricing that is trending dramatically downward. I see more Low Earth Orbit competitors poised to launch and give Canadians choice between multiple broadband services in areas where, for a long time, people considered it almost impossible to get even one.
I see wireless companies partnering with satellite operators to fill in some very difficult and critical gaps in mobile coverage. With the very real prospect that in the foreseeable future you may never be outside of coverage again.
And I see telcos ready to deliver Next Generation 9-1-1, which will be transformative, once all the provincial and municipal public safety answering points complete the necessary upgrades.
In short, I see Canadians having better connectivity, at better prices, that will unlock the social, economic, resiliency, and safety benefits of the next generation of telecom services.
But I also see intense competition putting pressure on top line revenues and making investment cases more challenging. I see population growth slowing and putting further downward pressure on revenue growth. I see pricing that some financial analysts call "irrational" but that consumers call "a really good deal."
I see capital budgets, as well as jobs, being cut, which makes clear the linkages that exist between the policy objectives we are trying to balance - affordable prices, investment in quality networks and broad network coverage. Overall, I see a better balance than we have seen in a long time, but those linkages are real, and we need to proceed thoughtfully.
It's with this view in mind, that I would like to discuss four aspects of our work. The first couple of topics cover two of the CRTC's tentpole regulatory frameworks - wholesale high-speed access, or HSA, for broadband competition, and mobile virtual network operator, or MVNO, access for mobile wireless competition.
Then I'd like to talk about empowering consumers to take advantage of the new competitive reality that is out there.
And finally, I want to talk about going faster as a regulator.
The HSA framework
Let's start with HSA.
A little less than two years ago, the CRTC issued a decision that revamped wholesale competition in the broadband market.
The decision was based on two key hypotheses that emerged from an evidence-based proceeding with more than 300 interventions, expert testimony, and a week-long public hearing.
First, we hypothesized that as consumers continued to migrate towards higher broadband speeds, it would be important for competitors to have a workable form of wholesale access to fibre.
Our second hypothesis was that additional large, experienced competitors could have a major positive impact on consumer pricing for Internet, just as we saw in mobile. And therefore, large ISPs should not be blocked from using wholesale in new geographic markets.
Those two hypotheses formed the basis of our approach to wholesale access, which can boost broadband competition. Without it, Canadians would have less choice. Getting this framework right matters for every household and every business that depends on affordable, reliable, high-speed connectivity.
Getting it right also matters for the network operators; and we put several important measures in place to maintain support for investment. Foremost among these was the adoption of wholesale rates that reflected the actual underlying costs.
Updating the framework for fibre and finalizing rates was a heavy lift. But, with the heavy lifting done, we can move forward with implementation and results. Implementation means finalising remaining regulatory elements, actively monitoring, and stepping in when necessary to resolve disputes.
Preliminary evidence shows that the framework is having positive impacts. We are seeing large ISPs move outside their traditional serving territories to bring new competitive dynamics. In total, these large ISPs are offering, or planning to offer, new choices to about 8.5 million homes.
As it stands, you would be hard-pressed to convince me that Canadian consumers were better off when large ISPs only competed in their own backyards.
The MVNO framework
On the mobile front, we have an MVNO framework in place that grants wholesale access to facilities-based carriers holding spectrum licenses. At first glance, that might seem counterintuitive - isn't MVNO access meant for resellers that don't have mobile networks? Well yes and no.
The CRTC landed where it did by following the evidence from a public proceeding, which showed that mobile prices were significantly lower in areas where a fourth facilities-based carrier had a sizeable market share. So, the selected approach was to encourage the expansion of facilities-based players through a resale model but also maintain the incentives for all players to invest in their networks.
An important element of the solution was to put a seven-year time limit on the framework. The hypothesis was that a fixed window for MVNO, with access linked to spectrum licences, would kickstart service expansion and network investment by competitors.
It is often pointed out to me that few countries have a mandated MVNO framework. I like to note that for decades, neither did Canada. And unlike many other countries, commercial MVNO activity did not evolve here via market forces.
The presence, or absence, of voluntary commercial MVNO agreements says a lot about the competitiveness of a mobile market and can be a major factor in determining the degree to which regulatory intervention is necessary.
Various parties are speculating about what we might do beyond 2030 when the seven-year mandate ends. Let's forget about speculation for a minute and look at some facts.
The MVNO mandate is not yet at the halfway mark.
Competitors have used wholesale access to offer service to nearly 100 new communities in 7 provinces.
We have a fourth player that is emerging as a national competitor and has made public announcements about build-out plans.
Millions of Canadians have more choice than they did before.
We have Statistics Canada data showing that wireless prices have been trending downwards over multiple years, during a period of inflation when prices for nearly every other consumer good have increased. Prices have come down almost 50% since 2019.
You can sometimes find promotional offers for a 60 GB plan on a 5G network that includes US roaming for less than $30 a month. That was unheard of in Canada not too long ago.
Concerted efforts to kickstart more wireless competition are yielding results. Increased competitive intensity is delivering more choice and the benefit to Canadian consumers is showing up in better pricing.
The intent of that kickstart was to establish a high degree of competitive intensity that is self-sustaining beyond 2030, for the long-term benefits of consumers.
Empowering consumers
Speaking of consumers, the next point I'd like to touch on is something that's been at the top of my mind for a while: the difference between what Canadians are paying and what they could be paying if they subscribed to the best available price in the market.
The frameworks we have in place are putting downward pressure on pricing; the deals are out there - but Canadians need to be empowered to take advantage of them. If a price falls in the forest, but nobody is around to hear it, does it make a difference?
Here are some highlights of the Consumer Protections Action Plan we rolled out to make sure Canadians hear the prices falling and are empowered to reap the benefits.
First up were cancellation switching fees. Consumers should not have to pay a surcharge for the ability to accept a better deal. So, we placed a prohibition on fees that act as barriers to switching cellphone and Internet plans.
Next up were consumer notifications. It's a pain to track when your plan or promotion is about to expire. So, we put notification rules in place to make sure consumers have the plan and pricing information they need at the moment they need it. This makes it easier to benefit from the more competitive offers we're seeing in the market.
Third up was customer interaction. It is frustrating to wait on hold just to make a simple change to your plan. In the age of online portals and mobile apps, it should be as easy for consumers to save money, as it is for them to spend money. So, we're giving consumers the ability to change or cancel their plans quickly and easily without having to speak to a customer service representative.
We also have an ongoing proceeding that is looking at ways to make shopping for Internet deals easier. Customers should be able to see, quickly and clearly, the key features of the service they are buying. This will make it easy for Canadians to comparison shop and, once they are signed up, to verify that they are getting the service they pay for.
Last but not least, in the coming months we will begin a proceeding to merge our four consumer codes into one simplified and consistent code.
We're doing all this because we consider consumer empowerment to be fundamental to the competitive process.
Going faster
The last thing I want to touch on is speed. The industries we regulate move fast. Technologies change. Disputes happen in real time. The longer we take, the more uncertainty there is. This raises risks, delays plans, imposes real costs, and leads to frustration. So as a regulator we have a responsibility to move as quickly as we can.
We are an independent quasi-judicial tribunal, with nine voting members, supported by an expert staff. We have a duty to work transparently and fairly through public proceedings and to make decisions based on the evidence on the public record. We have held true to those fundamental principles while also finding ways to move more quickly.
We closed nearly 50% more telecom Part 1 applications last year than the year prior, while managing a 40% increase in those applications.
In the last round of Broadband Fund applications, we began to roll out funding decisions approximately 40% faster than we did in the program's first call.
Let's talk about final offer arbitration, or FOA, for a second. Normally we set rates through costing proceedings, which can be lengthy given the volume of data submitted and the amount of analysis required. For MVNO, the market structure and facts on the ground were such that we saw an opportunity to try an approach that would get rates in place more quickly. We let parties commercially negotiate, with the CRTC available to arbitrate if necessary.
Some MVNO rates were successfully negotiated without us. That's the fastest approach of all. When we were asked to arbitrate, we issued FOA decisions within 90 days of submission. You might have loved our FOA decisions, you might have hated them - but you got to love them or hate them quickly. And all other things being equal, quick is better than slow.
Not all services lend themselves to FOA, but we will look for other opportunities to use it when and where it makes sense.
International roaming is another example I like to point to. Canadians weren't happy with the rates they were paying, and other jurisdictions around the world had better selections of roaming packages than were available to Canadians.
Rather than launching a lengthy proceeding that could have piled on new regulatory obligations, we chose a different path. We put a spotlight on the issue and gave companies a chance to address the problem themselves.
It worked. Additional information about existing options came forward almost immediately. And within a few months, we started to see more affordable options that hadn't been offered before. That's meaningful progress with minimal process. And, of course, monitoring continues.
Finally, disputes happen. But a formal CRTC proceeding isn't always the fastest way to resolve them. So, where it makes sense, informal dispute resolution can be fast and effective, provided that parties come in prepared to have reasonable, good faith discussions.
We are moving faster, and we will move faster still.
We will continue to find more cases where we can take our fastest regulatory tools and apply them in more contexts. We will keep looking at approaches used in other industries, or other jurisdictions, that we can add to our toolkit. We'll continue to leverage new technology and innovative approaches to get from consultation to analysis to final decision more quickly, without sacrificing rigour, transparency or fairness.
Conclusion
I started my remarks by giving you a broad sketch of what I see playing out in telecommunications in Canada. But I would like to leave you with just three key messages.
First, following much heavy lifting, our frameworks for broadband and mobile wireless are in place. The evidence to date shows that they are increasing the competitiveness of the broadband and mobile markets and we'll be monitoring the effectiveness of those frameworks going forward.
Second, the CRTC's focus is now on empowering consumers, so that they can take full advantage of the new competitive offerings that are available.
Third, we have to keep moving faster as a regulator, and we will, while still respecting the principles of fairness, transparency and evidence-based decision-making that are fundamental to our role as an independent quasi-judicial tribunal.
There is some irony in concluding a two-thousand, five hundred word speech with a promise to be quick.
Proof, I suppose, that there is always room for improvement.
Thank you.
