Le Financial Post publie ce matin mon article d'opinion sur la déréglementation des anciens monopoles téléphoniques au Canada, suite aux mesures prises par l'ex-ministre de l'Industrie Maxime Bernier (auprès duquel j'ai travaillé comme conseiller sur ces questions).
It is possible
Worst aspects of telcom meddling are disappearing
Martin Masse, Special to the Financial Post
Wednesday, March 12, 2008
Regulatory agencies always find good reasons to regulate. Even when the goal is to maintain "competitive" markets, they tend to define competition so as to give themselves a role in managing these markets.
One of the ways regulators do this is by restraining big players that are deemed to have too much "market power," even though allowing some players to get bigger and better than others is precisely the point of having competition. Microsoft is a sad example of an innovative company that has been persecuted in both the United States and Europe because of its success in serving its customers.
That's also why a decade after local telephone markets were opened to competition in Canada, the Canadian Radio-television and Telecommunications Commission is still involved in regulating various aspects of the services offered by former monopolies such as Bell and Telus.
Although official documents will not put it so candidly, the goal has been to prevent these so-called incumbents from trying too hard to keep their customers with cheap, well-marketed and appropriately bundled telecom products. Too bad for consumers, but according to the interventionist logic, this might have prevented the new guys from getting a foothold in the market. Regulations went so far as to forbid incumbents from calling back the customers that were leaving them to offer them a better deal.
The CRTC has also been actively helping the new players by forcing incumbents to provide them with mandated access to their network at advantageous prices, on the ground that networks are costly and difficult to duplicate.
If you keep doing this for too long, you are not fostering competition. You are simply favouring small players at the expense of the established ones and removing the incentive for these new players to build their own competing infrastructure. Which means that in fact, you are preventing an increase in competition.
Fortunately, Canada has not followed the American and European lead in launching a witch hunt against Microsoft. And in the telecom sector, the worst aspects of regulatory meddling have been fast disappearing over the past year, thanks to two major initiatives by the federal government inspired by recommendations made in March 2006 by the Telecommunications Policy Review Panel.
The first one was a simpler test for when to consider a local telephone market competitive enough to be deregulated. True to their habitual inclinations, the CRTC bureaucrats had proposed a test so stringent that it would have postponed deregulation years into the future. Former Industry Minister Maxime Bernier told them to deregulate markets when, in addition to the former monopoly, a wireless company and a cable company providing telephony services were present. Following this, all major urban markets in Canada, comprising about two thirds of the country's population, were deregulated last August.
Some doomsayers had predicted that the move would lead to higher prices, fewer services and a return to a monopoly situation following the disappearance of competition. Seven months later, none of this has of course happened or is likely to happen.
The second initiative was a Policy Direction issued by Cabinet to the CRTC in December, 2006, which tells it how to interpret the Telecommunications Act. Essentially, it directs the regulator to rely on market forces to the maximum extent feasible and, when relying on regulation, to use measures that are efficient and proportionate to their purpose and that interfere with the operation of market forces to the minimum extent necessary.
Since then, the Commission has issued several rulings which, on the basis of this new interpretation, have all gone in the direction of a gradual removal of regulatory shackles on the former monopolies, even in areas that were not deregulated last summer.
Among other changes, optional services and bundled service rates are no longer subject to pricing constraints. The restriction that required incumbents to offer the same rate to all customers in the same area for the same service, which prevented them to respond to specific situations, has been removed. And proceedings have been initiated to decide if the CRTC should stop regulating short-term promotions and adopt an automatic approval mechanism for retail tariffs.
Finally, earlier this month, again as a direct consequence of the Policy Direction, the CRTC announced that certain wholesale services that incumbents are forced to provide to competitors will be phased out of regulation over the next three to five years. Unfortunately, it decided that unbundled loops will still have to be made available at mandated prices. These are the connections between homes and telephone exchanges that competitors rent from incumbents to avoid having to build their own network.
Although the ruling did not go nearly far enough, it would probably have been worse without the Policy Direction. All in all, there is more competition today in the telecommunications market, which can only benefit Canadian customers.
The lesson in this story is that it's possible to reverse the tendency of regulators to constantly expand their turf. What is needed is a clear stand in favour of the free market on the part of the legislator. Perhaps the principles laid out in the Policy Direction should be copied and applied to all other sectors where the government intervenes.
Martin Masse is a public policy consultant in Montreal. He worked as an advisor to former Industry minister Maxime Bernier.
Reprinted courtesy of the National Post. / Cet article est reproduit avec l'aimable permission du National Post.
@Martin
As a proponent for a "clear stand in favour of the free market", I find it surprising that nowhere in your paper you address the issue of foreign ownership restrictions on the .share capital of Canadian telecom operators. It is suprising since these restrictions are a major paradox underlying the CRTC's and Industry Canada's (IC) ill-advised maneuvers to try and stimulate new competition in the telecom arena.
Because what has been happening for years now, is this: on the one hand, the CRTC and IC are granting free-rides to well-connected would be new-entrants, the latest example being the 40MHz spectrum set-aside (upcoming Advanced Wireless Spectum auction) for the likes of Videotron or MTS; and on the other hand, these two institutions are strangling sources of fresh capital for would-be operators, through foreign-ownership restrictions.
Yet, the most straightforward way to promote more competition in the Canadian telecom market is NOT to regulate forward, backward, or sideways, but to let effective players free to perform, or be absorbed by more profitable ones, Canadian or not This is what will create the most value for consumers and investors altogether.
Granted, this position assumes that foreign control of major Canadian corporations can be considered a non-issue. And I fully understand that this assumption may be unrealistic. But the point is, you cannot have your cake and eat it too: if you wish to keep Canadian telecom operators under the control of Canadian investors, you have to accept that capital rationing WILL limit the number of players that can effectively compete, and whether one likes it or not this WILL induce, directly or indirectly, oligopolistic behaviors that shall mean higher prices and lower service levels for Canadian consumers, because telecom IS capital intensive by nature.
If on the contrary, the objective is to create the most value for consumers and investors (Canadian or not), then the restrictions on foreign ownership of capital for Canadian operators should be lifted. You cannot have it both ways.
So in conclusion, what aggravates me the most in the behavior of the CRTC, is that it's downright inconsistent, the political equivalent of closing the barn once the horse has escaped. And with a major Canadian player going private, henceforth loosing direct access to sources of fresh capital from the financial markets, Canadian consumers should not expect the benefits of free competition any time soon. It is more likely that political crutches will be extended to a cozy club of new entrants to merely prorogate the current oligopolistic situation.
Rédigé par : Pierre-Yves | 12 mars 2008 à 14h51
@ Pierre-Yves,
Comme je l'avais noté dans la discussion sur mon article à l'automne à propos de l'encan de spectre ( http://www.leblogueduql.org/2007/11/encan-de-spectr.html ), l'abolition des restrictions à l'investissement étranger aurait été la solution idéale. Malheureusement, il aurait fallu pour cela changer changer la loi (avec l'approbation de l'opposition), ce qui s'est avéré impossible. C'est la raison pour laquelle je n'en parle pas.
Vous comprendrez facilement que mes critiques libertariennes sur ce blogue et ce que j'ai pu contribuer comme conseiller d'un ministre au sein d'un gouvernement minoritaire découlent de deux rôles distincts.
Rédigé par : Martin Masse | 12 mars 2008 à 15h17
Ce qui est assez ironique dans cette histoire, c'est qu'après l'annonce de MTS et le dévoilement de son co-investisseur Blackstone LP, le CRTC a l'air d'avoir lui même fait un trou dans le grillage pour permettre au renard d'entrer dans le poulailler... interventionisme, quand tu nous tiens!
Rédigé par : Pierre-Yves | 12 mars 2008 à 15h26
"Vous comprendrez facilement que mes critiques libertariennes sur ce blogue et ce que j'ai pu contribuer comme conseiller d'un ministre au sein d'un gouvernement minoritaire découlent de deux rôles distincts."
Bon point monsieur Masse, ça ne doit pas être facile de constater que ce merveilleux apôtre du libre-marché qu'était Maxime Bernier doit faire semblant d'oublier ses convictions lorsqu'ils s'agit des dépenses militaires. Il semble qu'il est peut-être en train de devenir un étatiste comme les autres de la même façon que Stephen Harper, ou à tout le moins temporairement. Mais contrairement à Gilles Duceppe, je n'irai pas jusqu'à affirmer qu'il est "un p'tit con" mais juste qu'il fait preuve d'incohérence politiquement parlant.
Rédigé par : David | 12 mars 2008 à 19h57