CRTC has revamped its image, but not its effectiveness

Regulator is consumer friendly, but high rates still abound across key services.

jean pierre blais, crtc, poor tv service

CRTC chairman Jean-Pierre Blais.

CRTC Image Versus Effectiveness:

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By regulatory standards, six months is pretty quick. That’s the amount of time between when “skinny basic” television rules took effect on March 1 and a CRTC inquiry last week into why television providers have done such a poor job of implementing them.

Back in February, CRTC chairman Jean Pierre Blais promised he would “not hesitate to take action” if providers didn’t adhere to both the letter and the spirit of the rules, which were designed to give Canadians cheaper TV options. The plan, the regulator hoped, was that service providers would offer bundles of basic channels for no more than $25.

Naturally, providers found numerous, creative ways to skirt the spirit of the spirit, if not the letter.

Some, like Bell, don’t include popular U.S. networks in packages and require customers to also sign up for internet service. Others, like Rogers, charge onerous equipment rental fees and don’t apply service bundle discounts to skinny basic packages.

Uptake has been poor as a result – about 100,000 households have signed up, or fewer than one per cent of the country’s total – while complaints have been numerous, prompting the CRTC to “spring” into action. Remember, six months is quick by regulatory standards.*

Last week, CRTC commissioners grilled the country’s big cable providers – Bell, Rogers, Shaw and Videotron – and seemed to have impressed their point. They aren’t pleased, so clarifications and tightening of the rules are likely coming before Dec. 1, which is when the companies will also have to offer consumers individual “a la carte” TV channels.

Sensing the crackdown, some are taking pre-emptive action. Bell, for example, announced it will de-couple its TV from internet subscriptions. It’s funny how even the threat of regulation can spur action.

Not coincidentally, The Globe and Mail ran an excellent and well-timed profile over the weekend on Blais and how he has transformed the CRTC in his four years on the job.

The chairman, whose term is up next year, has worked toward changing the agency’s image from one that was perceived to be in bed with industry to one that champions consumer interests. It’s hard to argue with his success – today’s CRTC certainly does appear to be more on the side of consumers than any previous iteration.

But image is one thing and effectiveness is another – and the regulator’s actual achievements are less clear.

As recent reports have found, Canadians still pay among the highest prices in the world for their various telecommunications services despite efforts such as the CRTC’s Wireless Code, introduced in 2013, at curbing them. The makeover has thus been one of style, but not so much of substance.

This is because the CRTC still doesn’t appear to understand the forces it’s up against – giant, vertically integrated companies with many lines of business, where clampdowns in one area merely provoke price hikes in others.

The Wireless Code’s ban on three-year contracts was a good example of how good rules often translate into bad results.

While the move to eliminate what was a uniquely Canadian abuse by wireless carriers was necessary, it wasn’t hard to predict that price hikes would follow – and they did, and did again, and again.

Indeed, Canada’s world-leading wireless rates may very well be the spout of the funnel that regulations in other service areas lead to. Ding the companies with restrictions on internet or TV service and they inevitably raise wireless rates to make up for the shortfall.

The CRTC had a great chance last year to at least partially address this whack-a-mole problem when it examined how wireless carriers charge each other for connections.

But, while Blais and company continue to back the effectiveness and desirability for wholesale rules when it comes to internet and TV services, they opted against imposing similar requirements on wireless despite the market’s obvious uncompetitiveness.

Had the CRTC gone the other way, it would have enabled mobile virtual network operators (MVNOs), or the same sort of wholesale service providers that are found in other telecom services. Wholesale providers aren’t magical bullets that instantly slay high prices, but they have been proven to increase competition to at least some degree.

If the CRTC is to be truly effective in spurring more competition and bringing prices down for consumers, it must acknowledge the fact that the nation’s telecom companies are like veritable rivers that flow around all obstacles put in their way, just as they have done with the skinny basic TV rules. It must take action accordingly.

The best way to stop such inevitability is with a dam – an approach coupled with rules that are both broad and comprehensive that apply across all service areas. It’s easier said than done, but it has to start with an attitude that acknowledges the challenge.

Assuming that Blais doesn’t have enough time left in his mandate to effect such a relatively major change in the CRTC’s thinking – and remember, this is a world in which six months is quick – he will ultimately leave the regulator much as he found it.

The CRTC may look and talk more consumer-friendly than ever before, but ultimately it can’t do much to help Canadians where it counts – with the pocketbook.

UPDATE: Bell added the big U.S. networks to its skinny basic package on June 20. The CRTC’s updated subscriber numbers for skinny basic, as of June 30, are 177,000, or about 1.3 per cent of total households.

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