Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy: SOR/2023-23
Canada Gazette, Part II, Volume 157, Number 5
SOR/2023-23 February 10, 2023
P.C. 2023-110 February 9, 2023
Whereas the Governor in Council, in 2006, issued to the Canadian Radio-television and Telecommunications Commission an order entitled Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives footnote a (the “2006 Direction”);
Whereas the Governor in Council, in 2019, issued to that Commission an order entitled Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation footnote b, one of the purposes of which was to guide the Commission on how the 2006 Direction is to be implemented;
Whereas the telecommunications market and its regulation have changed since 2019 and the Governor in Council is of the opinion that new directions should be issued to the Commission as a result of those changes;
Whereas, under subsection 10(1) of the Telecommunications Act footnote c, the Minister of Industry had a copy of the proposed Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy, published in the Canada Gazette, Part I, on June 4, 2022, substantially in the annexed form, and a reasonable opportunity was given to interested persons to make representations to the Minister with respect to the proposed Order;
Whereas, under subsection 10(1) of that Act, the Minister laid the proposed Order before each House of Parliament and 40 sitting days of Parliament have elapsed since the proposed Order was tabled in both Houses;
Whereas, under subsection 10(2) of that Act, the Minister consulted the Commission with respect to the proposed Order before it was published and laid and consulted the Commission again with respect to the proposed order in its definitive form;
And whereas, under section 13 of that Act, the Minister, before making a recommendation to the Governor in Council for the purposes of this Order, notified the minister designated by the government of each province of the Minister’s intention to make the recommendation and provided an opportunity for each of them to consult with the Minister;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Industry makes the annexed Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy under section 8 of the Telecommunications Act footnote c.
Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy
Direction and Key Objectives
1 In exercising its powers and performing its duties under the Telecommunications Act, the Commission must implement the Canadian telecommunications policy objectives set out in section 7 of that Act in accordance with this Order.
2 The Commission should consider how its decisions would promote competition, affordability, consumer interests and innovation, in particular the extent to which they would
- (a) encourage all forms of competition and investment;
- (b) foster affordability and lower prices, particularly when telecommunications service providers exercise market power;
- (c) ensure that affordable access to high-quality, reliable and resilient telecommunications services is available in all regions of Canada, including rural areas, remote areas and Indigenous communities;
- (d) enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility;
- (e) reduce barriers to entry into the market and to competition for telecommunications service providers that are new, regional or smaller than the incumbent national service providers;
- (f) enable innovation in telecommunications services, including new technologies and differentiated service offerings; and
- (g) stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services.
Principles of Effective Regulation
Transparency, predictability and coherence
3 The Commission should ensure that its proceedings and decisions are transparent, predictable and coherent.
Efficiency and proportionality
4 The Commission should ensure that the measures that it imposes through its decisions are efficient and proportionate to their purpose.
Market monitoring, research and strategic foresight
5 The Commission should further develop strong and timely market monitoring, research and strategic foresight skills and use the results that it obtains from these activities in the exercise of its powers and the performance of its duties.
Decisions based on sound and recent evidence
6 The Commission should base its decisions on sound and recent evidence and should exercise its powers to obtain necessary evidence.
Timely proceedings and decisions
7 The Commission should conduct proceedings and issue decisions in a timely manner, in recognition of the need for market clarity. The Commission should consider whether adopting new processes or engaging external experts would help reach this objective.
Decisions of an economic nature
8 In making decisions of an economic nature, the Commission should balance, in addition to any other objectives that the Commission considers relevant in the circumstances, the objectives of
- (a) fostering competition;
- (b) promoting investment in high-quality networks;
- (c) improving consumer choice;
- (d) supporting the provision of innovative services; and
- (e) encouraging the provision of services at reasonable prices for consumers.
Considerations for Fixed Internet Competition
9 In order to foster fixed Internet competition that is sufficient to protect the interests of users, the Commission must
- (a) maintain a regulatory framework mandating the provision — at just and reasonable rates — of wholesale services for fixed Internet;
- (b) monitor the effectiveness of the framework; and
- (c) adjust the framework as necessary and in a timely manner, including by making proactive adjustments.
Aggregated wholesale high-speed access service
10 The Commission must mandate the provision of an aggregated wholesale high-speed access service — that is additional to any other types of wholesale high-speed access services that are mandated — until it determines that broad, sustainable and meaningful competition will persist even if the provision of an aggregated service is no longer mandated.
Variety of access speeds and costs
11 The Commission must mandate the provision of wholesale high-speed access services with a variety of speeds, including low-cost options, for the purpose of ensuring affordable options for consumers while allowing for the modernization of networks.
12 The Commission should set interim and final tariffs expediently, including by reforming the tariff-setting process and considering external expertise or international best practices.
Equitable application of regulatory framework
13 The Commission should ensure that its regulatory framework mandating the provision of wholesale services for fixed Internet applies equitably to carriers that are subject to the framework.
Considerations for Mobile Wireless Competition
Mobile wireless competition
14 In order to foster mobile wireless competition that is sufficient to protect the interests of users, the Commission must
- (a) maintain a regulatory framework mandating access — at just and reasonable rates — to wholesale roaming services;
- (b) monitor and assess the effectiveness of its approach to a mandated wholesale facilities-based mobile virtual network operator access service, considering factors such as the specific characteristics of lower-density or remote regions and how these characteristics affect the time needed to deploy wireless networks; and
- (c) adjust the facilities-based approach referred to in paragraph (b), including by extending the duration of the mandate to provide the service, if the Commission determines that it is necessary.
Revision to approach
15 The Commission should revise its approach to encourage broader service-based competition if the effectiveness of the approach in fostering mobile wireless competition is lessened due to changes in the mobile wireless market structure or circumstances of competition.
Periodic review and adjustments
16 The Commission should
- (a) periodically review the effectiveness of its mobile wireless services regulatory framework in meeting its objectives and, in doing so, consider factors that could harm competition, such as coordinated conduct between carriers; and
- (b) make any necessary adjustments to the framework.
Approach to Consumer Matters
17 The Commission must enhance and protect the rights of consumers in telecommunications markets by
- (a) strengthening the ability of the Commission for Complaints for Telecom-television Services to better fulfill its mandate, including by
- (i) increasing its operational capacity,
- (ii) ensuring that the perspectives of consumer and civil-society groups are better reflected in its governance,
- (iii) improving compliance with its rules, and
- (iv) increasing public awareness of its complaint-resolution process;
- (b) strengthening the position of consumers in their relationships with service providers, including by
- (i) taking additional measures to protect consumers from unacceptable sales practices, such as the measures identified in the Commission’s Report on Misleading or Aggressive Communications Retail Sales Practices,
- (ii) adjusting its consumer codes by harmonizing the provisions of its codes if doing so would be advantageous to consumers and providing for consumer protection measures in the event of a service outage or disruption,
- (iii) taking measures to promote clarity and transparency of pricing information and service plan characteristics in service providers’ marketing materials, and
- (iv) taking measures to ensure that consumers can promptly, affordably and easily cancel, downgrade, transfer or otherwise change their services;
- (c) proactively identifying, removing and preventing barriers relating to telecommunications services, in particular for persons with disabilities; and
- (d) regularly collecting, reporting publicly and making available to consumers information relating to mobile wireless coverage and fixed Internet services, including service quality metrics during peak periods and any other information that the Commission considers to be in the public interest, by
- (i) requiring that service providers participate in the testing of the performance of their fixed Internet services, including services based on commonly used technologies in rural areas, and
- (ii) developing and implementing a standardized and robust approach for reporting mobile wireless coverage.
Measures Supporting Deployment and Universal Access
18 The Commission should continue to take measures, in concert with other government measures, to support the objective of universal access to high-quality, reliable and resilient fixed Internet and mobile wireless services, including the following measures:
- (a) continuing to administer a funding mechanism, making any adjustments that the Commission determines are necessary; and
- (b) mandating improved access to support structures, such as telephone poles and conduits, as well as identifying and addressing other barriers to timely deployment of telecommunications networks, such as exclusionary practices and unreasonable administrative practices.
19 The Commission must, when it reviews its funding mechanism, consider whether to prioritize funding for mobile wireless services and operating costs of telecommunications networks in order to foster
- (a) improved access to, and more affordable prices for, retail telecommunications services in underserved areas; and
- (b) better coordination of public funding.
20 For the purposes of sections 18 and 19, the Commission must take into account evolving
- (a) technologies;
- (b) service-performance needs and user needs; and
- (c) gaps in telecommunications network services.
Effect of Order
21 This Order is binding on the Commission beginning on the day on which it comes into force and applies in respect of matters pending before the Commission on that day.
22 The following Orders are repealed:
- (a) the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives footnote a; and
- (b) the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation footnote b.
Coming into Force
23 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Telecommunications services are critically important to Canadians. In order to serve Canadians with high-quality services at competitive rates, industry stakeholders need certainty from the legal and regulatory frameworks they operate within. Among other things, this certainty allows stakeholders to make strategic business decisions like capital investments or, more broadly, to consider areas of business focus and decisions regarding the sustainability of their business. Decisions made under these frameworks can impact stakeholders differently and views tend to be interest-driven and therefore do not always align. These differences need to be reconciled while also keeping pace with the needs of Canadians.
These issues are particularly acute with respect to decisions about the regulatory framework that mandates access to wholesale services for fixed Internet. This framework, established by the Canadian Radio-television and Telecommunications Commission (CRTC), is critical to supporting competition in the retail Internet services market. Without wholesale access services, most Canadians would have at most two options for their home Internet service. In a 2019 market study, the Competition Bureau found that Internet Service Providers (ISPs) making use of wholesale services had a positive impact on the market and that it remains important that the competition brought by the wholesale framework “be preserved and capitalized on going forward.”footnote 1 It further stated that “one of the best ways to ensure vigorous competition in broadband services is to maximize the independence of wholesale-based and facilities-based competitors, as well as working to minimize regulatory uncertainty.”footnote 1
The wholesale services framework and rates would benefit from clearer direction and more efficient decision-making, which would in turn promote enhanced regulatory certainty. As an example, stakeholders and the public would benefit if mandated wholesale access to fibre-to-the-home networks were to be fully implemented. Further, decisions made on wholesale rates have had outcomes that varied substantially. There has also been further uncertainty due to ongoing plans to transition the wholesale framework from one model to another, while in parallel, there are ongoing processes and challenges regarding the underlying rate methodology.
A variety of data and evidence regarding competition in fixed Internet services has been taken into consideration in determining that further measures to improve the regulatory framework are required. For example, the CRTC reported that the share of residential Internet access subscriptions provided by wholesale-based ISPs has declined in two consecutive years since its peak in 2019.footnote 2 Prices for select incumbent affiliated flanker brand plans in the market are below what a competitor ISP could reasonably charge based on the wholesale rates. At the same time, prices for typical plans have been increasing. A large number of service providers have identified that the lack of predictability with regard to the framework makes it difficult to make business decisions.
There are also currently two existing policy directions in place, and while they are complementary in nature, it is not always clear how they will be applied. The Government has made guiding statements over time, such as in response to past petitions to the Governor in Council, in its order to the CRTC on misleading and aggressive retail sales practices, and in Canada’s Connectivity Strategy, but stakeholders may not know to consult these sources or how to interpret them.
It is important to take action now as there is an important opportunity to clarify some of the prevailing uncertainty around the guiding policy for the regulatory framework and prevent some issues from continuing that could further harm the industry. This opportunity is in part driven by the Government’s obligation to respond to petitions regarding the CRTC’s 2021 wholesale Internet rates decision (Telecom Decision CRTC 2021-181). It is not appropriate to put in place rates the CRTC has determined are based on material errors across different cost factors, as the petitioners have requested. Nor will the Government set alternative rates. Therefore, the Government has let the decision stand. The Government, however, acknowledges concerns about competition in the Internet services market and the part that these rates have to play in driving these concerns. If the response to the petitions had been issued on its own, it would have misrepresented the Government’s broad policy, and risked sending the wrong message to stakeholders.
There are other areas of telecommunications regulation that would similarly benefit from actions to be taken now. For example, measures like those the CRTC identified in its “Report on Misleading or Aggressive Communications Retail Sales Practices” could be implemented. Consumers still face challenges with the lack of clarity in pricing and understanding whether they are actually getting the service quality for which they are paying. For example, in the two most recent annual reports by the Commission for Complaints for Telecom-television Services (CCTS), “disclosure” was the leading issue raised (over 9 000 times), meaning consumers continue to have concerns about information not being fully or clearly provided.footnote 3 The longstanding issue of access and affordability in rural and remote areas remains and has been exacerbated by the COVID-19 pandemic. In 2021, a little over 99% of urban households had access to 50/10 Mbps versus only 63% of rural ones.footnote 2 While there are CRTC processes planned or underway on many of these issues, there is uncertainty as to how they will be dealt with.
The Telecommunications Act (the “Act”) establishes Canada’s telecommunications policy objectives. The CRTC, which operates at arm’s length of government, is charged with implementing those objectives.
Within this framework, the Government remains focused on three foundational priorities of quality, coverage and price — with competition as a key driver of all three. It is important that Canada’s telecommunications networks are able to support the latest applications; that they are available to all Canadians in the communities where they live and work; and that service prices are affordable. Competition between facilities-based providers to offer the best network speeds and coverage drives investment in high-quality telecommunications networks, and retail competition between service providers puts downward pressure on prices. While Canada’s telecommunications market performs well in certain respects, more needs to be done to lower the prices Canadians pay for Internet and mobile wireless service plans and to address consumers’ needs.
Section 8 of the Act provides the Governor in Council (GIC) with the authority to issue directions of general application to the CRTC on broad policy matters with regards to the telecommunications policy objectives set out in the Act.
There are currently two directions under section 8 in force. In December 2006, the GIC issued the first policy direction to the CRTC (the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives, SOR/2006-355). This order directed the CRTC to rely on market-based solutions to the maximum extent feasible as a means of achieving the policy objectives, and regulate, where there is still a need to do so, in a manner that interferes with market forces to the minimum extent necessary, among other things. In June 2019, the GIC issued a second policy direction (the Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation, SOR/2019-227). This second order directed the CRTC to consider promotion of competition, affordability, consumer interests and innovation in its decisions. The second direction was to guide the CRTC in making decisions, including how the 2006 Policy Direction is to be interpreted with regards to achieving the telecommunications policy objectives.
The new Policy Direction sets out the Government’s priorities for telecommunications policy and provides clear direction and guidance on a number of important matters to the CRTC, as well as offering more regulatory certainty for the marketplace. The Policy Direction requires the CRTC to put in place or maintain rules to improve competition, leading to lower prices and better telecommunication services for Canadian consumers. This new approach sets out to enhance wholesale Internet access, increase wireless competition, improve consumer rights, speed up broadband service deployment and universal access, and build better regulations for a world where telecommunications is essential.
The new Policy Direction replaces the 2006 and 2019 directions. It directs and guides the CRTC in several broad telecommunications policy areas, summarized below.
This section maintains the requirement from the 2019 Policy Direction that the CRTC considers how its decisions can promote competition, affordability, consumers interests and innovation, and also retains the more specific guidance on those goals from that direction.
Principles of effective regulation
This section sets out several principles for the CRTC to consider in its work, such as the importance of evidence, market monitoring and strategic foresight; transparency and timely decision-making; and ensuring any economic regulations balance important objectives. It also includes the instruction that regulatory measures should be efficient and proportionate to their purpose — which is maintained from the 2006 Policy Direction.
Considerations for fixed Internet competition
This section directs the CRTC to maintain its regulatory framework mandating access to wholesale services for fixed Internet on an indefinite basis. It also requires the CRTC to maintain the existing (aggregated) model alongside the new (disaggregated) model it is seeking to implement.footnote 4 The section also ensures that the framework provides adequate options in terms of speeds of services for competitors on a timely basis, and is applied equitably across carriers.
Considerations for mobile wireless competition
This section directs the CRTC to continue with its facilities-based approach to mandated mobile virtual network operator (MVNO) access to promote wireless competition, as set out in Telecom Regulatory Policy CRTC 2021-130. This approach requires that service providers own their own network or plan to build out their network in the future in the regions where MVNO access is granted. However, it also sets out an expectation that the CRTC should adjust the facilities-based approach, including by extending its duration, if challenges arise deploying in certain remote areas. Further, the CRTC should revise its policy to encourage broader competition if the current approach does not achieve the desired result.
Additionally, this section requires the CRTC to monitor and periodically review the broader mobile wireless services regulatory framework and make any necessary adjustments, taking into consideration factors that could harm competition, including coordinated conduct between wireless carriers.
Approach to consumer matters
This section directs the CRTC to continue to enhance and protect the rights of consumers in the telecommunications market. The section directs the CRTC to strengthen the telecommunications complaints resolution organization, the CCTS, by increasing its capacity, improving compliance with its rules, ensuring it reflects consumer perspectives and by increasing the public’s awareness of its complaints resolution process. Additionally, this section directs the CRTC to implement additional measures to protect consumers from unacceptable sales practices; promote clarity of pricing information for telecommunications services; ensure consumers can easily cancel, transfer or downgrade their services; and to harmonize consumer protections across the CRTC’s codes of conduct when it benefits consumers. Furthermore, it directs the CRTC to improve the accessibility of telecommunications services for Canadians with disabilities and to conduct performance testing with broadband providers to verify the performance of the services that Canadians receive.
Measures supporting deployment and universal access
This section directs the CRTC to continue with its approach of supporting universal access in concert with other government measures, but to consider prioritizing operating costs and mobile services for the use of funding drawn from the National Contribution Fundfootnote 5 for this objective. It also directs the CRTC to mandate improved access to support structures, such as telephone poles.
Telecommunications policy is an area with frequent ongoing consultation and communication with stakeholders. As a matter of course, Innovation, Science and Economic Development Canada (ISED) closely monitors CRTC proceedings for stakeholder views. ISED officials regularly meet with key stakeholders such as incumbent and competitive telecommunications service providers as well as CRTC officials. The Policy Direction took into consideration ongoing concerns from these stakeholders, in particular, related to competition in fixed Internet services, consumer rights, and timeliness of CRTC decisions.
The CRTC’s regular proceedings welcome views from all interested stakeholders, and it also holds proceedings targeted to pro-consumer measures, such as the Internet and Wireless codes of conduct for service providers, measures to address unsolicited telecommunications, and actions to advance accessibility. Recently, the CRTC was also required to report on misleading and aggressive retail sales practices. The Policy Direction addressed a number of concerns raised during these proceedings.
A Canada Gazette consultation on the petitions to the GIC of Telecom Decision CRTC 2021-181 was conducted. Fourteen submissions and 46 emails from individuals were received. Submissions were received from six large incumbents (Bell and the cable carriers), five wholesale-based ISPs, two consumer groups, two business associations, one association of municipalities and one consultant. The Policy Direction balanced these viewpoints, principally for the section on fixed Internet competition.
Prepublication in the Canada Gazette, Part I
The Policy Direction was prepublished in the Canada Gazette, Part I, on June 4, 2022, followed by a 45-day comment period. ISED received 47 submissions (predominantly from telecommunications service providers, municipalities or related organizations, and consumer groups), 40 letters from individuals, and 1 633 identical letters from a campaign. All comments were published and given due consideration.
Stakeholders in telecommunications matters often hold diverging views on matters of policy. In contrast to this, there was broad support for the “Key objectives” and “Principles of effective regulation” sections.
There was more difference in opinion for the sections on competition and consumers. For these sections, stakeholders generally advocated on one hand for the Policy Direction to be more specific in line with their particular interests or, on the other hand, for it to be less direct or altogether omit portions which they perceive go against their interests. For example, TekSavvy, the largest independent wholesale-based service provider, recommended that the direction go further by setting a number of binding deadlines for CRTC decisions on the wholesale framework including rates. In contrast, TELUS and the Canadian Wireless Telecommunications Association (CWTA) suggested to cut whole sections on competition and consumers, as they believe these sections will deter from the achievement of policy objectives.
The proposed order was drafted to appropriately balance competing interests and direct CRTC policy towards the Government’s objectives. Therefore, suggestions that were inconsistent with a balanced approach or that diverged from the Government’s intentions were not adopted in the final order.
The Rogers’ network outage of July 8, 2022, was cited by several respondents. Incumbents argued that it showed the importance of investment and facilities-based competition while others argued it prompts for more regulation. For example, the Public Interest Advocacy Centre suggested that the Policy Direction should direct the CRTC to create a network outage compensation framework. Given the importance of these issues, the objectives of reliability and resiliency have been added along with a new instruction in the consumer section regarding service outages or disruption.
BCE, Rogers, TELUS, the CWTA and McCarthy Tetrault suggested or argued that certain sections would exceed the authority of the GIC under section 8 of the Act. TELUS further argued that certain sections would be in conflict with provisions of the Act and therefore inoperable. The Government considered and disagrees with these views.
Additionally, minor additions were made to improve the clarity of the Government’s original intent and based on the feedback received from respondents.
Tabling in Parliament
The proposed order was also tabled in both Houses of Parliament on May 31, 2022. Forty sitting days of Parliament have since taken place, enabling the Governor in Council to make the order per the requirement in subsection 10(6) of the Act.
In response to comments made by Members of Parliament about the proposed Policy Direction, the Government made amendments to subsection 17(d) for the final order. Specifically, the amendments now specify that the service testing is to be done “regularly,” is to be done specifically for “fixed Internet” service, and is to include “service quality metrics during peak periods and any other information determined to be in the public’s interest.” Further, the amendment to paragraph 17(d)(i) clarifies that the service providers are to test according to the direction set by the CRTC.
Provincial and territorial governments consultation
In accordance with section 13 of the Act, the Minister of Industry notified ministers responsible for telecommunications for each province and territory of his intention to make a recommendation to the GIC for the purpose of an order under section 8 and provided an opportunity to consult with him by exchange of correspondence during the public consultation period. By convention, these consultations are done confidentially to promote a candid exchange of views between the ministers. The Minister received several responses which were taken into consideration.
As required by subsection 10(2) of the Act, the Minister consulted with the CRTC on the proposed Policy Direction and again in its definitive form before it was made. The CRTC responded expressing support for the measures and expectations contained within it. While no substantial changes were made as a result of these consultations, the CRTC suggested minor amendments to ensure flexibility in the subsection relating to its broadband funding mechanism and to specify and focus the intent of the measure ensuring that the wholesale framework for fixed Internet provides adequate options in terms of speeds of services for competitors. The Government adopted minor amendments in these areas.
Modern treaty obligations and Indigenous engagement and consultation
The Policy Direction was assessed for modern treaty implications as per the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. The initial assessment examined the geographical scope and subject matter of the Policy Direction in relation to modern treaties in effect and did not identify any potential modern treaty impacts.
A Policy Direction is the appropriate instrument to address the issues cited above.
In recent years, the Government has received multiple petitions to intervene on technical matters. The Government’s view is that it is more appropriate for the CRTC to adjudicate and implement these matters in consultation with industry based on policy guidance provided by the Government. The current policy guidance in the form of the Act and the two policy directions in force may not be sufficiently clear and may contribute to the debates leading to these petitions to the Government.
The Government has provided guidance on its intent on using other tools, such as in response to petitions to the GIC, through non-binding statements, and in Canada’s Connectivity Strategy. However, these approaches have not fully addressed the underlying issues that have been accumulating over time. The duration of regulatory proceedings has grown, as has the lack of clarity among stakeholders. For example, some argue that the wholesale framework should be repealed in its entirety, while others argue that rates can be set very low without any consequence. There is also confusion on the interpretation of the two existing policy directions.
These issues of delay and uncertainty have been present over the past six years and have only grown more acute. Non-regulatory mechanisms have not been successful in addressing them. There is a risk that, without taking action, these issues will continue and possibly worsen. There is also a risk of delays continuing to spill into other telecommunications regulatory areas.
The use of this regulatory instrument permits the Government to repeal the existing directions and replace them with a new one to address the above-cited challenges and concerns. It also brings together guidance from other sources, such as responses to past petitions to the GIC, to enhance clarity.
The Policy Direction has been designed as an outcome-based regulation. In this sense, its measures are direct but give considerable discretion to the CRTC, which will be responsible for elaborating any changes to its own activities or any compliance actions by industry. The “Key objectives” and “Principles of effective regulation” sections will guide the CRTC as it implements the direction.
Legislation is another instrument that could be used to address the issues cited above; however, the CRTC already has the legislative tools to implement the measures in the Policy Direction and achieve the intended outcomes. Further legislative measures are therefore not required, and may not be as timely.
Benefits and costs
The majority of the provisions in the Policy Direction affect the CRTC’s implementation decisions regarding policies or initiatives that already exist or are under consideration, rather than new policies or initiatives. In some cases, the CRTC may incur low costs by re-prioritizing resources to implement some measures rather than other elements of its ongoing work.
Depending on the implementation of certain measures by the CRTC following their public proceedings, there could be additional compliance actions for industry resulting in additional cost. However, these would be assessed when they are proposed and are not directly attributable to this Policy Direction. Further, the sections related to fixed Internet competition and mobile wireless competition have been assessed to not have any material incremental costs, given that they do not contain new regulatory compliance activities. Industry may face incremental costs in supporting the CCTS, as the instruction to strengthen its ability to better fulfill its mandate may require additional resources. These resources are provided by telecommunications service providers proportionate to their revenues and/or by the number of complaints received from their customers. Industry also faces some degree of incremental costs to implement measures related to broadband testing requirements. Any new costs associated with this Policy Direction would be less than $1 million annually.
The Policy Direction will indirectly result in incremental benefits to consumers of telecommunications services. By directing the CRTC to ensure that effective fixed Internet wholesale regulations and tariffs are in force, monitored for effectiveness and adjusted as necessary, the Policy Direction will ensure the competition brought about by the wholesale access regime is preserved and enhanced. This will provide greater choice for consumers and may lead to lower prices and/or improved services. The CRTC reported there were 14.5 million home Internet subscriptions in Canada in 2021, representing 93.7% of Canadian households.footnote 2
Industry stakeholders have identified that the prolonged consideration of wholesale Internet rates decisions has impacted investment and other business decisions. It is expected that the Policy Direction will foster greater clarity and regulatory certainty that will lead to greater competition in the market and positive outcomes for consumers, including more affordable telecommunications services, continued investment in telecommunications networks, innovative services, and choice of providers.
It is further expected that the Policy Direction will lead to the CRTC prioritizing additional developments in consumer-focussed regulatory measures that will lead to a fairer marketplace in a timely manner.
Small business lens
Analysis under the small business lens concluded that the Policy Direction will not impact Canadian small businesses.
The Policy Direction has no impact on administrative burden on business. It repeals two existing regulatory titles and replaces them with one new regulatory title; as a result, a net of one title out is counted under the rule.
Regulatory cooperation and alignment
The Policy Direction is not related to a work plan or commitment under a formal regulatory cooperation forum, and is solely within federal jurisdiction. Federal jurisdiction in telecommunications promotes an interconnected Canadian telecommunications market that facilitates interprovincial commerce.
One area where provinces and territories are more active is in relation to funding to expand high-speed Internet infrastructure. The Policy Direction respects this area of cooperation. Further, it is aligned with Canada’s Connectivity Strategy, which recognizes ISED’s federal-provincial-territorial coordination role. One of the goals of this role is to ensure that projects are funded through the most appropriate vehicle while respecting the independence of arm’s length bodies such as the CRTC.
Internationally, telecommunications policy and regulation are widely an area of primarily domestic responsibility. ISED closely follows the identification of best practices and recommendations by policy research organizations, such as the Organisation for Economic Co-operation and Development (OECD). The Policy Direction is highly consistent with the OECD’s 2021 Recommendation of the Council on Broadband Connectivity. Prior to the preparation of the Policy Direction, ISED also sought out expertise and advice on international best practices on wholesale rate-setting processes.
This Policy Direction is not expected to have any implications for Canada’s commitments and obligations related to trade agreements.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
The Policy Direction was assessed for gender-based analysis plus (GBA+) implications. The direct impacts are on the CRTC and not on any particular demographics of Canadians. However, the Policy Direction will impact future CRTC decisions which may have indirect impacts on various demographics.
Implementation, compliance and enforcement, and service standards
The Policy Direction comes into force on the day on which it is registered, and binds the CRTC from that day. As per subsection 11(2) of the Act, the Order applies in respect of matters pending before the CRTC on the day on which the Order comes into force, subject to subsection 11(3) of the Act. Subsection 11(3) of the Act states that the Order does not apply to a matter pending before the CRTC if, when the Order comes into force, less than one year has expired since the period for filing final submissions ended.
Compliance and enforcement
The CRTC is bound to exercise its powers and perform its duties under the Act in accordance with the terms of any order made under section 8 of the Act. CRTC decisions can also be reviewed by the GIC on the basis of a petition in writing presented to it or on its own motion, which therefore provides another means to ensure compliance.
Telecommunications and Internet Policy Branch
Innovation, Science and Economic Development
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