Uh-Oh Canada: You're about to deregulate VoIP

Yesterday, the Canadian federal government announced it would overrule that nation's CRTC (Canadian Radio-Television and Communications Commission) and de-regulate VoIP.Last year, the CRTC regulated VoIP by enacting pricing restrictions on traditional telephone companies and the rates they were able to chare without regulatory approval.

Yesterday, the Canadian federal government announced it would overrule that nation's CRTC (Canadian Radio-Television and Communications Commission) and de-regulate VoIP.

Last year, the CRTC regulated VoIP by enacting pricing restrictions on traditional telephone companies and the rates they were able to chare without regulatory approval. The fear was that in a regulation-free environment, these services would establish pricing that would undercut newer VoIP services such as Vonage.

"Barriers to entry in this market are low; there is no reason to regulate it," Industry Minister Maxime Bernier said. (That's Mr. Bernier at the top of this post). "In a competitive sector, there is no reason to regulate some companies while others can offer the services they want at the prices they want."

I'm of two minds about this. VoIP prices are coming down, and price controls ought to be irrelevant. Yet at the same time, my natural tendencies are to be skeptical of policies that favor big telco. I do have to wonder whether this move is informed in any way by the conservative nature of the new Canada government of Stephen Harper that took over earlier this year.

But since I am not Canadian, that's as far as I want to go with this. Instead, let's turn to Canadian technology blogger and business journalist Mark Evans for a more informed perspective. 

Mark believes this decision that will dramatically change the $10-billion local phone market in Canada.

"So what does this decision mean? For one, incumbent carriers will be able to offer VoIP service at any price they want without having to seek approval regulatory approval," Mark writes. "As a result, you can expect Bell Canada to become much more aggressive on pricing while ILECs such as Telus, Manitoba Tel and SaskTel will get into the VoIP market after sitting on the sideline until the regulatory uncertainty was resolved.

Mark adds his belief that "this could mean bad news for Vonage and the cablecos, which have been able to roll out VoIP service without having to worry about competition from the ILECs."

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