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See the Industry Canada press release after this CBC news story ...

From http://www.cbc.ca/canada/story/2006/12/11/phones.html

Ottawa accelerates deregulation of local phone service
December 11, 2006 - CBC News

Canada's established phone companies have won their longstanding fight for less regulation of their local phone business — a move the telcos say will benefit consumers.

On Monday, Industry Minister Maxime Bernier gave BCE (Bell Canada), Telus and the country's other incumbent telcos the power to set their own prices, as long as there is sufficient competition in the local area.

Current policy has prevented the big telcos from charging what they want for local phone service.

In a directive released last April, the CRTC declared that deregulation of the local phone business would not be allowed as long as the established phone companies held at least 75 per cent of the market in a particular region. As of 2005, they had 92 per cent of the market nationally.

The broadcast regulator was worried that without a minimum foothold in the marketplace, "new entrant" competitors could be driven out of business by price-cutting incumbents.

But the former phone monopolies have been lobbying for more deregulation for years. They say they've lost hundreds of thousands of customers to rival providers of local phone service — especially the cable companies — who can charge what they want for phone service.

Monday's move throws out the old CRTC threshold policy and further reinforces Bernier's reputation as a minister who favours free-market solutions to telecom issues.

The new proposal "replaces the CRTC's market-share test with one that emphasizes the presence of competitive infrastructure in a given geographical area," a release from Industry Canada said.

60 per cent of Canadians will benefit: Bernier

At a news conference, Bernier estimated that 60 per cent of Canadians, mainly in urban markets, would benefit from the change in policy. In rural areas where there is little competition, it would be "status quo" for now, he said. 

"Where consumers have access to telephone service from a traditional telephone service company, a cable company offering telephone service, and at least one unaffiliated wireless provider, deregulation will occur," Bernier said.

Last week, amendments were introduced to the Competition Act designed to "deter anti-competitive behaviour" in deregulated markets. 

Telus welcomed the policy change, calling it a "positive development" for consumers and the industry.

"By giving the market more freedom to determine outcomes, we can begin to unleash the full benefits of competition for our customers, and foster enhanced innovation and investment in the Canadian economy," said Darren Entwistle, Telus president and CEO, in a release.

Bell Canada also praised Bernier's announcement, saying it "catches up to market reality."

"He is trying to give consumers more choice and Canada a telecom framework that is internationally competitive — and that is a most welcome development both in terms of the Canadian economy and in terms of Canada's productivity and competitiveness," Michael Sabia, president and CEO of BCE and Bell Canada, said in a release.

In June, Bernier told the CRTC to rely more on market forces and less on regulatory fiat when drafting policy for the phone industry. That followed the March release of a major federal panel report that "Canada should rely primarily on market forces" and a drastic deregulation of the rules that govern the country's phone, cable TV and internet services.

Last month, Bernier also overruled the CRTC on the regulation of internet phone service (VoIP), saying there is no reason to regulate some telephone services offered through broadband internet connections.

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Industry Canada press release ...

Canada's New Government Proposes to Accelerate Deregulation of Local Telephone Service in the Interests of Canadian Consumers

OTTAWA, December 11, 2006 -- The Honourable Maxime Bernier, Minister of Industry, today announced a government proposal to change a decision by the Canadian Radio-television and Telecommunications Commission (CRTC) that would put in place a revised framework to determine when to deregulate retail telephone prices of the former monopoly telephone companies.

"Canada's new government has an ambitious policy agenda for the telecommunications sector, the essence of which is a new regulatory framework that is more modern, flexible and efficient," said Minister Bernier. "The government's proposal is intended to stimulate competition and innovation among local telephone service providers so that Canadian consumers and businesses will benefit from even more choice, improved products and services, and lower prices."

In June of this year, Minister Bernier tabled a proposed policy direction to the CRTC, signalling the government's intention to direct the CRTC to rely on market forces to the maximum extent feasible under the Telecommunications Act and regulate only when necessary.

Earlier this year, the CRTC issued Telecom Decision CRTC 2006-15 (Forbearance from the regulation of retail local exchange services), which laid out a framework for price deregulation of local telephone service provided by traditional telephone companies. Minister Bernier consulted and reviewed this decision, and will now propose to replace the CRTC's market-share test with one that emphasizes the presence of competitive infrastructure in a given geographical area.

The proposed variance is linked to proposed amendments to the Competition Act that would establish financial penalties to deter anti-competitive behaviour in deregulated telecommunications markets, which were introduced by the Minister in Parliament on December 7, 2006.

"This initiative reflects our agreement with the advice we've received from the Telecom Policy Review Panel to rely on market forces to the maximum extent feasible," said Minister Bernier. "This is another step towards our goal of reshaping telecommunications policy so that it supports an internationally competitive and robust telecommunications industry here in Canada."

For more information, please contact:

Isabelle Fontaine
Office of the Honourable Maxime Bernier
Minister of Industry
613-995-9001
Media Relations
Industry Canada
613-943-2502