djcl@uunet.uu.net> (08/23/90)
[The following appeared as a Canadian Department of Communications
notice last year. While somewhat outdated, the discussion on this will
still continue, and provides some ideas for local loop competition
possibilities.]
Department of Communications Act
Notice No. DGTP-09-89 - Local Distribution Telecommunication Networks
Introduction
The conversion from analogue to digital switching and transmission,
the deployment of optical fibre and other technical improvements are
enabling both the telecommunications common carrier and cable
television industries to offer increasingly similar services over two
presently independent networks.
These developments are eroding the existing barriers which previously
prevented each major player from offering the others' services.
Current trends in technology, market environments and service
opportunities involving both the cable television and common carrier
industries, appear to be leading towards a local duopoly offering a
range of common services. The need has been identified to establish
new rules to govern the operation of these two, presently distinct
industries so that each may flourish in a healthy competitive
environment.
The Minister of Communications, under the Department of Communications
Act, has the responsibility to promote the establishment, development
and efficiency of telecommunications services and facilities for
Canada. Similarly the Minister, under the Broadcasting and Radio
Acts, has certain responsibilities with respect to the Canadian
broadcasting industry. Under the Radio Act, for example, the Minister
is authorised to control all technical matters relating to the
planning for and the construction and operation of all broadcasting
facilities, which include cable television systems.
Background
Both the telecommunications common carrier and cable television
industries are now utilising high capacity fibre optic cables in their
distribution systems. Some cable television operators are endeavouring
to enter the common carrier services market by developing
non-programming services. At the international level, on-going
development of technical standards for future broadband (high
capacity) Integrated Services Digital Network (ISDN) services will
accelerate the convergence of narrowband and broadband technology and
service carriage. The Canadian carrier industry is introducing on a
trial basis new narrowband (moderate capacity) ISDN services. All
these activities together make it necessary to consider the need for
new ground rules governing the introduction of new services and to
encourage economical development of network infrastructures.
The telecommunications policy framework, as reflected in the
announcement by the Minister of Communications on July 22, 1987, has
three main objectives:
- universal access to basic telephone service at affordable prices;
- an efficient telecommunications network infrastructure;
- a competitive marketplace in the supply of telecommunications services
and equipment in all regions of Canada.
Last year, the government introduced the Broadcasting Bill C-136 in
the House of Commons for first reading on June 23, 1988. In Section 3
of this Bill a Broadcasting Policy for Canada is enunciated which
obliges cable television companies to provide efficient delivery of
programming at affordable rates, using the most effective technology
avaiable at reasonable cost.
The Department is desirous of encouraging competition both in services
and carriage and with this aim, the Minister of Communications
outlined in his speech to the CCTA Convention in Toronto on May 8,
1989, two possible rules which might be applied. Firstly, cross-
subsidisation between broadcasting services and telecommunications
services would not be permitted, and secondly, cable television
operators should allow telecommunications service suppliers to access
their infrastructure on a non-discriminatory basis (as is the case
presently for federally-regulated telephone companies). This approach
would permit a continuing status quo operation for those cable
companies not wishing to enter the telecommunications service market.
The policy review now underway within the Department of Communications
will be undertaken with a view to fostering the development of local
distribution network(s) to facilitate the efficient delivery of voice,
video and data services. It will seek to determing the legitimate
roles of the major players in the industry, to establish new ground
rules and an appropriate regulatory framework within which the
industry will operate. To this end, public comment is invited on any
or all issues, whether regulatory, technical or socio- economic, which
are considered pertinent.
Issues
To date, public policy initiatives and regulatory control of the cable
television and telecommunications industries have safeguarded the
public interest as these services have expanded. These measures
include, inter alia, the following:
- cable hardware ownership regulations imposed by the CRTC;
- specific prohibitions imposed on some telecommunications carriers
to exclude them from holding a broadcast licence.
The Department is in favour of a competitive environment for locally
distributed services. It thus follows that the Department is
supportive also of local duopolies for this competitive service
provisioning, unless it can be shown that such duopolies would result
in economic hardship for the service providers or service users.
Comments are invited on the economic and regulatory aspects of local
duopoly networks, both for and against.
In addition, the Department solicits from the cable television and
telecommunications industries a forecast of what they foresee as the
major technological and economic forces that in the next 10 years are
likely to affect the growth and type of new services. Based upon these
technological, market and service projections, interested parties are
invited to outline what policy initiatives and regulatory environment
should be introduced in order to ensure the rapid and economical
introduction of these new services while reconciling the requirements
and public service obligations of both the cable television and common
carrier industries.
There is a need in the policy review to investigate the effectiveness
of the hardware ownership rules. Is there a need for any limitations
to be imposed? Industrial concentration both vertically and
horizontally, concentration of cable industry ownership, telephone
company, parent and affiliated companies' ownership of cable
television companies and cable company investment in common carriers
are issues which also need to be addressed in the assessing of the
regulatory status of both industries.
Summary
On the basis of the above issues or any other pertinent issue, the
Department would encourage interested parties to comment on these
important structural and regulatory questions. In addition views are
also solicited on what would be the most appropriate next step for the
Department to take in considering public input in response to this
Notice, to propose policy options and to reach appropriate conclusions
and recommendations.
Public Submissions
All written submissions from interested parties on any aspect of the
issues listed above, or on any other matters deemed pertinent to the
policy review underway on the evolution of broadband network
infrastructures and services should be addressed to Mr Paul Racine,
Director General, Telecommunications Policy, Department of
Communications, 300 Slater St, Ottawa, Ontario, K1A 0C8 and to ensure
consideration must be postmarked on or before January 2, 1990 or
delivered by other means by the same date. All submissions must cite
the publication date [2 Sept. '89] and notice number of the
_Canada_Gazette,_ Part I [DGTP-09-89]. These submissions will be
placed on the public record on or about January 16, 1990. Written
comments on these submissions may be submitted, in the same manner as
described above, on or before February 28, 1990.
All submissions and comments received in response to this Notice will
be made available for public viewing at the Department of
Communications Library, 300 Slater St, Ottawa and at the regional
offices of the Department in Moncton, Montreal, Toronto, Winnipeg and
Vancouver for a period of one year from the closing date for comments.
Approximately 14 days after the close of submissions, copies of all
written submissions may be obtained by phone, mail order or over the
counter from Kwik-Kopy Printing, 300 Slater St, Ottawa, Ontario.
Reasonable costs of duplication and distribution will be charged.