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
Canada Gazette, Part II, Volume 153, Number 13
SOR/2019-227 June 17, 2019
P.C. 2019-803 June 16, 2019
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 telecommunications market and its regulation have changed since 2006 and the Governor in Council is of the opinion that additional directions should be issued to the Commission as a result of those changes;
Whereas one of the purposes of the additional directions is to guide the Commission on how the 2006 Direction is to be implemented;
Whereas, pursuant to subsection 10(1) of the Telecommunications Act footnote b, the Minister of Industry had a copy of the proposed Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation published in the Canada Gazette, Part I, on March 9, 2019, 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, pursuant to 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, pursuant to 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, pursuant to 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, pursuant to section 8 of the Telecommunications Act footnote b, makes the annexed Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation.
Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives to Promote Competition, Affordability, Consumer Interests and Innovation
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 the following:
- (a) the Commission should consider how its decisions can promote competition, affordability, consumer interests and innovation, in particular the extent to which they
- (i) encourage all forms of competition and investment,
- (ii) foster affordability and lower prices, particularly when telecommunications service providers exercise market power,
- (iii) ensure that affordable access to high-quality telecommunications services is available in all regions of Canada, including rural areas,
- (iv) enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility,
- (v) 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,
- (vi) enable innovation in telecommunications services, including new technologies and differentiated service offerings, and
- (vii) stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services; and
- (b) the Commission, in its decisions, should demonstrate its compliance with this Order and should specify how those decisions can, as applicable, promote competition, affordability, consumer interests and innovation.
Effect of Order
2 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.
Coming into Force
3 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.)
Access to and the affordability of high quality telecommunications services are increasingly important for Canadians to participate and thrive in a digital economy and society and are fundamental to sustain and grow Canada’s competitiveness in the global economy.
Canadian consumers of telecommunications services, such as individuals, families and businesses, expect and deserve access to world-class telecommunications services. Further, Canadians deserve a competitive marketplace where consumers have real choice and are treated fairly.
The Government is concerned about consumer outcomes in the telecommunications sector such as competition, affordability, choice, consumer protection, and innovation in service offerings.
The Telecommunications Act (the Act) establishes Canada’s telecommunications policy objectives. The Canadian Radio-television and Telecommunications Commission (CRTC), which operates at arm’s length of government, is charged with the implementation of those objectives.
For more than a decade, the Government and the CRTC have acted to increase competition and affordability, promote the interests of consumers and enable innovation. The various measures used have included relaxing foreign investment restrictions in the Act, reserving wireless spectrum in auctions for smaller regional wireless carriers to support competition, implementing regulatory frameworks that support retail competition through the provision of wholesale services and creating the Commission for Complaints for Telecom-television Services (CCTS) as a body to administer consumer codes of conduct and assist consumers in the resolution of their complaints with service providers. The Government has also invested to expand access to broadband Internet connectivity in underserved areas.
Despite progress in the advancement of consumer outcomes, significant issues remain. Canada’s incumbent carriers possess and have exercised market power. footnote 1 Prices are high relative to those in peer countries for comparable plans. footnote 2 The affordability of telecommunications services challenges Canadians, in particular low-income Canadian families, with financial constraints. footnote 3 The Competition Bureau has concluded that the national mobile wireless incumbents coordinate their behaviour, resulting in higher prices for Canadians. footnote 4 Further, Canadians have expressed substantial concern regarding the sales practices used by large telecommunications carriers, and reports have alleged that those carriers have used misleading and aggressive sales practices and abuse information asymmetries to their benefit and at the cost and harm of Canadian consumers. A decreasing but still significant number of Canadian households remain without access to high-quality services, particularly in areas that are underserved by competition.
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 regard to the telecommunications policy objectives set out in the Act. In 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.
Based on evolution in the market and regulation, which has seen telecommunications services grow in importance as a fundamental pillar of the economy and society in general, additional policy direction to the CRTC is both appropriate and necessary.
The policy direction formally and transparently lays out the Government’s priorities for telecommunications policy, namely that the CRTC should consider promotion of competition, affordability, consumer interests and innovation in its decisions. Providing this general policy direction will 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 policy direction instructs the CRTC to clearly consider how its decisions can promote competition, affordability, consumer interests and innovation in the implementation of the Canadian telecommunications policy objectives, namely the extent to which they
- encourage all forms of competition and investment;
- foster affordability and lower prices, particularly when telecommunications service providers exercise market power;
- ensure that affordable access to high-quality telecommunications services is available in all regions of Canada, including rural areas;
- enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility;
- 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; footnote 5
- enable innovation in telecommunications services, including new technologies and differentiated service offerings; and
- stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services.
The CRTC would also be required to state which policy objective in the Act is advanced by its measures.
In accordance with subsection 10(1) of the Act, the proposed Order was prepublished in the Canada Gazette, Part I, on March 9, 2019, opening a 30-day period for public comment. The comment period closed on April 8, 2019. Over 70 individual submissions were received on the proposed Order. Comments were received from a range of stakeholders with detailed responses from telecommunications service providers, vendors, and consumer advocacy groups. In addition, there was a wide scale public letter writing campaign in favour of the proposed direction. Public comments on the proposed Order are available online to view at the following web addresses:
Comments received generally supported the policy direction’s broad objectives of promoting competition, affordability, consumer interests and innovation in telecommunications. The majority of stakeholders were in favour of the policy direction, which included pro-consumer advocacy groups, private individuals (including a letter-writing campaign to Members of Parliament that sent 64 865 emails in support, and a petition signed by 14 482) and smaller telecommunications service providers. These stakeholders supported the principles of the direction, but many raised comments about its interaction with the 2006 Policy Direction and concerns about when it would be applied. Other stakeholders, mostly facilities-based telecommunications service providers, vendors, and business associations, raised concerns that in their view the policy direction could negatively affect rural infrastructure investment and policies related to facilities-based competition.
All comments received were given due consideration. Amendments to paragraphs 1(a) and (b) respond to concerns with regards to its interaction with the 2006 Policy Direction. In particular, the Government believes that the CRTC should consider these principles in its decisions, including when deciding whether to rely on market forces or regulation. The CRTC will also be required to demonstrate to Canadians how it has done so. These principles will further guide the CRTC in its determinations and in exercising its roles and duties in achieving the telecommunications policy objectives.
In addition, amendments were made to subparagraphs 1(a)(i),(ii), (iii), (iv), and (v) to include language related to “investment,” “rural,” “accessibility” and “regional” issues as these are consistent with the intent of the Order and clarify the instruction for the CRTC and stakeholders.
In accordance with statutory requirements, consultation with the CRTC was carried out both before the proposed Order was initially prepublished in the Canada Gazette, Part I, and tabled in Parliament, and again before it was finalized. The provinces and territories were also consulted as required under the Act.
Modern treaty obligations and Indigenous engagement and consultation
The Order has been 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 Order in relation to modern treaties in effect and did not identify any potential modern treaty impacts.
The Government and the CRTC have over a period of years used a range of measures to increase competition, affordability, consumer protection and innovation in telecommunications.
The Government considers that additional policy direction is the appropriate instrument to address these issues in light of the evolution in the market and regulation since issuance of the 2006 Policy Direction.
While the CRTC will ultimately be responsible for the direct outcomes of the use of this instrument, the Government expects immediate direct outcomes to be the clear consideration of the promotion of competition, affordability, consumers’ interests and innovation in the CRTC’s decision making and its demonstration of compliance with the policy direction, for example, in its published decisions.
Costs and benefits
This policy direction results in no real incremental costs to the Government. For the CRTC, it is expected that compliance with this policy direction can be completed within existing resources.
The policy direction will guide the CRTC in making decisions. Clearer consideration by the CRTC of the promotion of competition, affordability, consumer interests and innovation as a result of the policy direction will benefit the public’s understanding of how the CRTC considers the extent to which its decisions benefit consumer outcomes.
The previous policy direction will continue to direct the CRTC to use streamlined and efficient practices in order to reduce regulatory burden and costs for the Government, the CRTC and the telecommunications industry. The CRTC has made great strides in streamlining its processes and using efficient practices and the Government expects that this will continue. The new policy direction is not expected to have material impacts on regulatory compliance costs borne by the sector, and any impact should be at least balanced by benefits to consumer outcomes.
Small business lens
No specific small business impacts are anticipated.
The Order has no impact on administrative burden costs.
Regulatory cooperation and alignment
The Order is not related to a work plan or commitment under a formal regulatory cooperation forum.
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 Order has been assessed for gender-based analysis plus (GBA+) implications. The Department conducted a GBA+ of the Order and concluded that it is excluded due to low risk. There is no single specific client base/target audience as this Order involves an issuing a direction to the CRTC. However, future decisions made by the CRTC will be impacted by the new direction which may impact various demographics.
Implementation, compliance and enforcement, and service standards
The Order would come into force on the day on which it is registered, and would be binding on the CRTC beginning on the day on which it comes into force. Subject to subsection 11(3) of the Act, the policy direction to the CRTC would apply in respect of matters pending before the CRTC on the day on which the Order comes into force.
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. Paragraph 1(b) of the policy direction requires the CRTC to demonstrate compliance with the direction in its decisions. For clarity, as defined in the Act, a “decision includes a determination made by the Commission in any form.” Finally, CRTC decisions can be reviewed by the GIC on appeal or on its own motion, which therefore provides another means to ensure compliance.
Telecommunications and Internet Policy Branch
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