CRTC Regulates VoIP Services for Large Existing Local Carriers

As expected, the Canadian Radio-Television and Telecommunications Commission (CRTC) issued its decision on May 12, 2005, that it will regulate Voice over Internet Protocol (VoIP) services only when they are provided as local telephone service by large, incumbent telephone companies. VoIP start-ups and communications that take place between computers on the Internet will not be regulated. VoIP allows phone calls to take place over the Internet, potentially leading to cost savings of 25% to 40% on consumers' phone bills. Although the industry estimates that only 25,000 to 100,000 Canadians currently use VoIP, analysts expect those numbers to increase dramatically in the near future. The CRTC rejected arguments by Bell Canada and Telus that VoIP applications should remain unregulated like other Internet applications. The regulatory move will prevent incumbent local exchange carriers like Bell and Telus, which together control 97% of the market, from selling VoIP services below cost to stifle competition. A leading cable company, Shaw Communications, praised the CRTC decision, indicating that it and other smaller players would now have a chance to enter the market. Possible predatory pricing by the incumbent local exchange carriers in an unregulated market would make VoIP economically unviable for Shaw and others like it. Vonage, which already offers VoIP services, also supported the decision, referring to it as "the dawn of real competition". Since its mandate is to foster competition within regulated markets and then remove controls once competition is achieved, the CRTC has said it hopes to achieve this goal for VoIP within two years. For more background from The Globe and Mail and the CBC, visit: http://makeashorterlink.com/?K1302542B; and http://www.cbc.ca/news/background/voip/ The decision of the CRTC in full is available at: http://www.crtc.gc.ca/eng/NEWS/RELEASES/2005/r050512.htm For a critical view of the CRTC decision by Prof Michael Geist, see: http://www.michaelgeist.ca/resc/html_bkup/may162005.html Summary by: Nyall Engfield