Chapter 9. International Issues

• Pages: 427-504

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CHAPTER IX

INTERNATIONAL ISSUES

A. Overview

This chapter examines the application of competition laws to the

telecommunications industry outside the United States, specifically in

Canada and the European Union. For each jurisdiction, the chapter

provides first a general outline of the relevant laws and then examines

the interface of the telecom specific laws and the antitrust laws.

B. Telecom and Antitrust in Canada

1. Introduction

Canada’s telecommunications and broadcasting industries

(communications industries) have been subject to deregulation,

convergence and increasing competition for the past 10 to 15 years. A

snapshot of the extent of competition in Canadian communications

industries reveals mixed results.1 Generally, there is well-established

competition in the provision of business and residential long-distance

telephone services, with non-incumbent competitors accounting for 30.1

percent of revenues in 2003 in this C$5.9 billion market.2 Competition

1. Canadian Radio-Television & Telecomm. Comm’n, Report to the

Governor in Council: Status of Competition in Canadian

Telecommunications Markets Deployment/Accessibility of Advanced

Telecommunications Infrastructure and Services (2004) [hereinafter 2004

CRTC REPORT], available at www.crtc. gc.ca./eng/publications/reports/

PolicyMonitoring/2004/gic2004.htm.

2. See id. at 25. Canada’s federal communications industries regulator, the

Canadian Radio-television and Telecommunications Commission

(CRTC), issued its landmark decision introducing facilities-based

competition in the provision of public long distance services in 1992.

See Competition In The Provision Of Public Long Distance Voice

Telephone Services And Related Resale And Sharing Issues, Telecom

Decision CRTC 92-12 (June 12, 1992) [hereinafter Decision 92-12]. In

Decision 92-12, the CRTC approved an application by Unitel

Communications Inc. (subsequently known as AT&T Canada, now a

division of MTS Allstream Inc.), B.C. Rail Telecommunications and

Lightel to interconnect their networks with the local and long-distance

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in the local/access services market has been slower to develop.3 The

incumbent, former monopoly carriers4 remain by far the largest suppliers

of local wireline and access services. In contrast, the mobile/wireless

segment continues to be one of, if not the, most competitive arenas in the

Canadian telecommunications industry.5 New entrant

telecommunications service providers (both wireless and wireline) must

deal with the former monopoly carriers – at a minimum for system

access and/or interconnection, and often to lease or resell various

networks of several of the monopoly incumbent carriers, in order to

provide competitive long-distance services. See Allstream Inc. Home

Page, available at www.allstream.com/about/index.html. The decision

paved the way for facilities-based long-distance competition in Canada,

with new entrants, such as Allstream and Sprint Canada, emerging as

competitors to the incumbents’ toll services. See 2004 CRTC REPORT,

supra note 1, at 27. In recent years, with the demise of the incumbents’

alliance (known as Stentor), through which they previously co-ordinated

their long distance and other service offerings, the largest incumbents,

Bell Canada (much of Ontario and Quebec) and Telus (Alberta, British

Columbia and a portion of Quebec), have also entered and begun

competing in each other’s incumbent market territories. See CRTC’s

website, available at www.crtc.gc.ca/eng/public/2004/8180/CRTC/

clecmkt.htm.

3. 2004 CRTC REPORT, supra note 1, at ii. The CRTC opened local

telecommunications markets to competition in Local Competition,

Telecom Decision CRTC 97-8 (May 1, 1997). MTS Allstream and

Sprint Canada are among the Competitive Local Exchange Carriers

(CLECs) which compete against the incumbent local exchange carriers

(ILECs) in certain local markets. See CRTC’s website, available at

www.crtc.gc.ca/ eng/public/2004/8180/CRTC/clecmkt.htm).

4. The principal incumbents throughout the country, following recent

consolidation, are (from East to West): Aliant Telecom Inc. (Aliant)

(serving Newfoundland and Labrador, Prince Edward Island, Nova

Scotia and New Brunswick); Bell Canada (serving much of Ontario and

Quebec); MTS Allstream (serving Manitoba); SaskTel (serving

Saskatchewan); Telus (serving Alberta, British Columbia and a portion

of Quebec); and NorthwesTel (serving Nunavut, Northwest Territories

and Yukon). See CRTC’s website, available at www.crtc.gc.ca/eng/

public/2004/8180/CRTC/clecmkt.htm). Aliant is majority owned by Bell

Canada. See Bell Canada’s 2003 Annual Information Form, at 4,

available at www.sedar.com/Display CompanyDocuments.do?lang=

EN&issuerNo=00001645.

5. 2004 CRTC REPORT, supra note 1, at iii.

International Issues 429

network components and/or services. Competition in the provision of

retail Internet services, particularly high-speed Internet services, occurs

principally between the incumbent telephone companies and the

incumbent cable television service providers.6 Competition between

incumbents and newer entrants is also intense with respect to the

provision of data services (e.g., frame relay, ATM, X.25, IP-VPN,

Ethernet), and the trend is toward consolidation there, too.

Competition in Canada’s telecommunications industry is governed

by two regulators, responsible for administering two federal statutes.

The Telecommunications Act7 is an industry-specific law under which

Canada’s federal communications regulator, the Canadian Radio-

television and Telecommunications Commission (CRTC), exercises

primary regulatory jurisdiction.8 The Competition Bureau (Bureau), a

6. Cable television broadcast distribution services in Canada were also

formerly provided by regulated monopoly facilities-based providers.

Until the late 1990s, the CRTC prohibited the ownership of broadcasting

distribution undertakings (BDUs) (e.g., cable or satellite television

companies) by incumbent telecommunications common carriers (i.e., the

telephone companies). That restriction was lifted effective January 1,

1998. See Applications by Telephone Companies to Carry on

Broadcasting Distribution Undertakings, Public Notice CRTC 1997-49,

available at www.crtc.gc.ca/archive/eng/Notices/1997/PB97-49.htm.

The four largest cable companies in Canada are Rogers, Shaw, Cogeco

and Videotron. They are regulated in respect of their broadcasting

distribution activities by the CRTC pursuant to the Broadcasting Act,

S.C., ch. 11 (1991) (Can.), and in respect of their provision of certain

Internet services by the CRTC pursuant to the Telecommunications Act,

S.C., ch. 38 (1993) (Can.), as described further below.

7. S.C., ch. 38 (1993).

8. The Radiocommunication Act, R.S.C., ch. R-2 (1985), governs the

auctioning, allocation and use of radio frequency spectrum, both by

telecommunications carriers and broadcasters, and the regulation and

standardization of radio equipment. The federal Minister of Industry and

that Minister’s Department, known as the Department of Industry, or

Industry Canada, administer the Radiocommunication Act. Competition-

related concerns can play a limited role in Industry Canada’s

administration of radio frequency spectrum. See, e.g., INDUSTRY

CANADA, GUIDELINES ON THE LICENSING PROCESS AND SPECTRUM

RELEASE PLAN, RP-020 (2001). For example, the general policy is to

assign spectrum on a ‘first come, first served” basis. However, in the

case of frequency bands or circumstances where demand exceeds

frequency supply, a competitive licensing process, including the use of