Chapter VIII. International Issues

• Pages: 391-528

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CHAPTER VIII

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 industry has been subject to

deregulation, convergence and increasing competition since the early

1990’s, which saw the introduction of competition in the provision of

long distance telephony1 and the enactment of the Telecommunications

Act.2 The Telecommunication Act promoted the emergence of

competitors in a market that had until then been dominated by regional

monopolies and subject to regulation. While results were initially uneven

in the telecommunications sector, in recent years, competitors have made

more substantial and wide-ranging advances against established service

providers. Most notably, in the local wireline/access sector, the former

monopoly carriers saw their share of lines shrink from 94 percent in 2004

to 67 percent in 2011.3 This was largely the result of cable companies

1. Competition in the provision of public long distance voice telephone

services and related resale and sharing issues, Telecom Decision CRTC

1992-12 (June 12, 1992), available at http://www.crtc.gc.ca/

eng/archive/1992/dt92-12.htm.

2. Telecommunications Act, S.C., ch. 38 (1993).

3. Canadian Radio-Television & Telecommunications Commission,

Communications Monitoring Report 2011 at 129 (2011) [hereinafter

COMMUNICATIONS MONITORING REPORT], available at

http://www.crtc.gc.ca/eng/publications/reports/policymonitoring/2012/cm

r.htm.

392 Telecom Antitrust Handbook

having evolved their technologies to enter the residential telephone

market.4

The growing mobile/wireless segment remains one of the most

competitive telecommunication sectors in Canada. In 2006, the

mobile/wireless segment became, for the first time, the

telecommunications industry’s leader in revenues–accounting for 32

percent of total revenues in 2006,5 and 45 percent in 2010,6 two years

after three new entrants were licensed to provide mobile/wireless

services in Canada.7

Competition in the provision of business and residential long-

distance telephone services is also well-established, with non-incumbent

competitors, including incumbents operating out of territory, accounting

4. Cable companies in Canada are regulated in respect of their broadcasting

distribution activities by the Canadian Radio-Television &

Telecommunications Commission (CRTC) pursuant to the Broadcasting

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

telecommunications services by the CRTC pursuant to the

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

The four largest cable companies in Canada are Rogers Communications

Inc., Shaw Communications Inc., Cogeco Inc., and Videotron. The

principal incumbent telephone carriers are (from East to West): Bell

Aliant (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

http://support.crtc.gc.ca/tlcmlsts/default.aspx?indx=41&lang=e. Bell

Aliant is a subsidiary of BCE, Inc., Bell Canada’s parent. See BCE Inc.

2011 Annual Report at 24, available at http://www.bce.ca/

assets/Uploads/Documents/archivesAnnualReport/BCE/2011/BCEAR20

11EN.pdf.

5. Canadian Radio-Television & Telecommunication Commission, Report

to the Governor in Council: Status of Competition in Canadian

Telecommunications Markets (2007) at 7, available at www.crtc.gc.ca/

eng/publications/reports/PolicyMonitoring/2007/tmr2007.pdf.

6. COMMUNICATIONS MONITORING REPORT, supra note 3, at 114.

7. Globalive Wireless Management Corp. (operating as Wind), Data &

Audio-Visual Enterprises Wireless Inc. (operating as Mobilicity) and

Public Mobile. See Auction of Spectrum Licences for Advanced Wireless

services and other spectrum in the 2GHz range, available at

www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf08891.html.

International Issues 393

for 28 percent of revenues in what was a C$3 billion market in 2011.8

New entrant telecommunications service providers (both wireless and

wireline) must deal with the former monopoly carriers, at a minimum for

system access and interconnection, and often to lease or resell

variou s network components or services. Internet-based (Voice over

Internet Protocol, or VoIP) services are widespread: in 2011, there were

4.4 million retail VoIP local telephone lines, representing 24 percent of

retail local lines.9

Competition in the provision of retail Internet services now occurs

largely between the incumbent telephone companies and the incumbent

cable television service providers, which—in their rivalry to seize

revenues amidst rapidly-growing subscription rates10—have been

consolidating their positions against alternative suppliers since the early

2000s.11 New entrants have, however, enhanced their position vis-à-vis

incumbents in the provision of new data services (i.e., IP-VPN and

Ethernet), with non-incumbent alternative competitors having increased

their share of that market from 22 percent to 27 percent between 2007

and 2011.12

Competition in Canada’s telecommunications industry is governed

by three regulators, each responsible for administering a separate federal

statute in the sector. The Telecommunications Act13 is an industry-

specific law under which Canada’s federal communications regulator,

the CRTC, exercises primary regulatory jurisdiction. The

Radiocommunication Act14 is another industry-specific statute under

8. COMMUNICATIONS MONITORING REPORT, supra note 3, at 143.

9. Id. at iii.

10. About 40 percent of Canadian households held Internet subscriptions in

2000; in 2011, that number had risen to 78 percent. See Canadian Radio-

Television & Telecommunications Commission Report to the Governor

in Council: Status of Competition in Canadian Telecommunications

Markets (2001), available at www.crtc.gc.ca/ENG/ publications/reports/

Policy Monitoring/2001/gic2001-09.htm#_ toc525923518, § 4.6; see

COMMUNICATIONS MONITORING REPORT, supra note 3, at 147.

11. The five largest Internet access service providers accounted for 76

percent of Internet revenues in 2011; see also COMMUNICATIONS

MONITORING REPORT, supra note 3, at 147.

12. See COMMUNICATIONS MONITORING REPORT, supra note 3, at 162.

13. Telecommunications Act, S.C., ch. 38 (1993).

14. The Radiocommunication Act, R.S.C., ch. R-2 (1985), c. R-2.

Competition-related concerns can sometimes play a role, albeit a limited

one, in Industry Canada’s administration of radio frequency spectrum.

See, e.g., INDUSTRY CANADA, GUIDELINES ON THE LICEN CING PROCESS