In the telecommunications and broadcasting sector, a number of significant developments recently occurred, including several important decisions by the Canadian Radio-television and Telecommunications Commission (CRTC), the announcement of hearings on new media and traffic-shaping, and the introduction of new rules on essential services and telemarketing.

New Regulatory Framework for Wholesale Telecom Services

The CRTC articulated new rules for the regulation and pricing of wholesale telecom services provided by incumbent telecom carriers in Telecom Decision CRTC 2008-17. The rules apply mainly to the services and facilities provided by incumbent local exchange carriers (ILECs), such as Bell Canada and Telus, to competitive service providers including alternative local and long distance carriers, resellers and Internet Service Providers (ISPs).

CRTC Allows Foreign Investors to Acquire Large Stakes in Canadian Broadcasting Companies

The CRTC issued two important decisions involving the transfer of effective control of prominent Canadian broadcasting companies Alliance Atlantis and BCE. In each case, foreign investors acquired sizeable stakes despite the Canadian ownership and control rules.

In Broadcasting Decision CRTC 2007-429, the CRTC approved the transfer of effective control of Alliance Atlantis Broadcasting Inc. and its 13 broadcasting properties to an acquisition company jointly owned by a subsidiary of CanWest Global Communications and investment funds controlled by Goldman Sachs.

In Broadcasting Decision CRTC 2008-69, the CRTC gave conditional approval to the transfer of effective control of BCE Inc. to a group of private equity investors, both Canadian and non-Canadian. The transaction, valued at $51.7 billion, was the largest Canadian corporate acquisition to date, and one of the largest-ever private equity deals globally.

AWS Spectrum Auction

Canada’s Advanced Wireless Services (AWS) Spectrum Auction has concluded, with 15 companies bidding almost $4.3 billion for licences. Ninety MHz of AWS spectrum was auctioned off in six paired frequency blocks (three of 20 MHz; three of 10 MHz). Three of the paired frequency blocks were reserved for new-entrant applicants, while the other three paired blocks were open to all bidders.

New Media Proceeding

The CRTC has announced that it will conduct a hearing in 2009 to examine broadcasting delivered and accessed over the Internet and over mobile devices. A highly controversial issue will be whether ISPs should contribute to the creation and presentation of Canadian programming, just as Canadian cable and satellite distribution undertakings currently do under the broadcasting regime.

Traffic Shaping Debate: CAIP v. Bell Canada

The CRTC has initiated a public process to examine Bell Canada’s traffic-shaping of wholesale Internet access, following a complaint by the Canadian Association of Internet Providers (CAIP), a group of independent ISPs. Bell had recently begun applying traffic management tools to its Gateway Access Service (GAS). GAS is a CRTC-mandated wholesale service, subject to CRTC-approved tariffs, used by ISPs to provide Internet access to customers in areas where the ISP has no facilities.

CAIP sought an interim and final order requiring Bell to cease and desist from shaping its wholesale ADSL services, and asking the CRTC to find that Bell’s traffic-shaping infringes upon CRTC regulations and the Telecommunications Act. While the CRTC denied CAIP’s application for interim relief, it initiated a proceeding to consider the matter more fully. The ensuing decision may provide some policy guidance on issues of network neutrality.

Competition Policy Review Panel Report

The Competition Policy Review Panel recently released Compete to Win, its highly anticipated report on recommended policy changes to enhance Canada’s competitiveness. The report criticizes the current restrictions on foreign ownership in the Canadian telecommunications and broadcasting sector, and makes recommendations for liberalizing these restrictions.

Unsolicited Telecommunications Rules and the National Do Not Call List

Canada will soon have a National Do Not Call List (National DNCL). Back in December 2007, the CRTC awarded a five-year contract to Bell Canada to operate the National DNCL. This contract implements a key aspect of Telecom Decision CRTC 2007-48, which establishes a comprehensive framework for unsolicited telemarketing calls and other unsolicited telecommunications received by consumers. The framework includes rules for a National DNCL registry, as well as rules regarding telemarketing and automatic dialling-answering devices. The CRTC expects the National DNCL to be launched by September 30, 2008.

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