Whose side are they on anyway?

The CRTC pledges to work in the best interest of customers. However, are they punishing the ILECs and coddling the competitors in the process? Lawrence Surtees, a senior IDC analyst, raised this possibility today.

First, we have a series of CRTC decisions to keep the ILEC prices above those of the CLECs. Personally, I find these CLECs often lack technical expertise, customer service, and service breadth. They also often don’t own the networks they are selling, being content reselling the ILEC’s wire wholesale. And thanks for the CRTC, these wholesale prices are often bargains. Regardless, many major competitors went bankrupt last year.

However, thanks to bankruptcy protection, these CLECs have become born-again, and given a clean slate on debt to return with a vengeance – the Company Formerly Known as AT&T Canada, Allstream, Call-Net Enterprises (Sprint Canada), and 360 Networks/Groupe Telecom. Together, they wrote off over 18.8 billion dollars in debt. But this raises a question: if these companies can defy death and just blow off bad credit, why do they need regulations to stay alive?

Second, we have the other fighters hiding in the wings, that the CRTC will be unwilling and unable to regulate, and probably not even aware they exist. As networking equipment becomes more commoditized, the profit margins will come from design, consulting, and support services. System integrators become major competitors in the IT field. Why else would IBM buy PwC Consulting and fold it into its IBM Global Services system integration division? Then you have the Internet ISPs and wireless carriers, eager to gobble up new access markets.

And then you have the threat of newer tech. Hydro companies are determined to provide networking over powerlines with hydro telecoms, and the monopolistic cable companies are busy launching two-way interactive digital cable systems. These two new technologies could be available in five years. And then you have your usual set of suspects such as Bell, Aliant and Telus, ILECs in their own provinces seeking new territories to dominate.

Competition benefits the customer by reducing prices. However, Canada already enjoys some of the lowest telecom prices in the world. Are regulations in place just for competition’s sake alone?