CCTA’s view

The Canadian Radio-television and Telecommunications Commission hearing being held throughout November is all about telecommunications issues.How the telephone companies should be regulated, how their rates should be determined, and whether they should be allowed or encouraged to move into new services...

The Canadian Radio-television and Telecommunications Commission hearing being held throughout November is all about telecommunications issues.

How the telephone companies should be regulated, how their rates should be determined, and whether they should be allowed or encouraged to move into new services areas.

Every regulatory regime should be updated from time to time, and, given the reaction to recent applications for rate increases of 60% and 40% by Bell Canada and BC Tel, respectively, it is probably time to take a closer look at the issues surrounding telecommunications.

The cable television industry went through a similar major review in March of this year. An industry-wide vision was presented to the crtc based on giving consumers what they want – choice.

It also recognized that the future lies in developing and delivering new services such as home shopping and banking, travel planning and other information services.

There will be significant competition in providing these new services and we fully expect the telephone companies will be a major part of this competition.

The telephone companies profess to be in favor of competition as well, but their view of competition merits close examination.

The telephone companies have formed a cartel, Stentor, and have agreed not to compete with one another. They also control Telesat, Canada’s only satellite service, of which 60% of the business comes from broadcasting.

They say they favor competition and the development of new services, yet when two Canadian companies, Shaw Communications and Cogeco were awarded licences to provide new digital audio services, Telesat intervened with the federal government to have the decision sent back to the crtc.

The services are now on hold, pending further consideration by the crtc.

The telephone companies have proposed that they would like to co-operate with the cable industry in providing new services.

The history of their co-operation has not been positive.

In British Columbia, BC Tel has refused to allow cable company workers access to poles and other support structures to install and maintain cable equipment.

Fundy Cable in New Brunswick is on the verge of initiating legal action against N.B. Tel as a result of conditions it is imposing on Fundy’s installation of optical fibre equipment.

A similar problem has emerged between a Fort McMurray cable company in Alberta and agt.

While competition and co-operation are important in any market, the telephone companies will have to dramatically change the way they do business if such concepts are ever to become reality.

The difference between the approach of cable and telephone companies is that rather than concentrate on developing new services, the telcos would simply like to duplicate or take over existing cable services.

Without ever having applied for a broadcasting licence, Sasktel has experimented with delivering movies directly to homes, and has not been deterred by the high cost involved.

The crtc was finally forced to issue a cease-and-desist order.

The cable industry’s advice to the telephone companies is ‘stick to what you’re good at.’ Use your high speed switching capacity and excellent business/residential network to link consumers with services they want in an interactive fashion.

The words of John Malone at the press conference last month announcing the merger of Bell Atlantic and tci should guide us all:

‘The overwhelming majority of revenues we get by the end of the decade will be from services and products that have not yet been invented.’

The cable industry is paving the way for an explosion of such new services by going digital – the language of computers.

At the same time, digital compression technology will allow six to 10 times as many signals to be carried as at present.

Finally, our objective is to make the system fully addressable by the end of the decade, allowing consumers to choose what they want to watch when they want to watch it.

This technological revolution between now and the turn of the century will put the consumer squarely in the driver’s seat and in control of this electronic world.

The cable industry is preparing to bring this world to consumers. We are not trying to stamp out somebody else’s business, we are trying to develop completely new services that will meet consumers’ demands.

Others will undoubtedly want to be part of the action as well, including the telephone companies. We welcome the competition.

A range of services from different suppliers is in the consumer’s best interest. There is plenty of room in the market for all players, but the game will still require some rules and the crtc will be examining exactly what those rules should be.

Ken Stein is president and chief executive officer of the Canadian Cable Television Association in Ottawa.