Internet Telephone Service

CRTC Rules To Regulate VOIP

May 16, 2005

The Canadian-Radio-Television and Communications Commission (CRTC) ruled to regulate Voice over Internet Protocol (VoIP), claiming that it is telephone service rather than an Internet service.

Charles Dalfen, Chairman of the CRTC asks, "Why did we find that VoIP is a telephone service? Because Canadians use it as a telephone service, it's being sold as a telephone service and it functions as a telephone service. "It provides two-way real-time voice communications to and from anyone with a telephone number on the public switched telephone network anywhere in the world. This decision is consistent with the focus in the Telecommunications Act on services rather than technologies."

VoIP services will be regulated as local phone service, currently regulated in Canada including the pricing. Restricting the pricing of phone service allows for an equal competition to occur among the phone companies.

Bell and Telus are planning to appeal the decision made by the CRTC. Lawson Hunter, executive vice-president of regulatory affairs for BCE Inc., which owns Bell Canada, stated that this decision was "a historic mistake for Canada and for our consumers…and is retarding investment and choice." Hunter also stated that the CRTC "doesn't understand where technology is heading."

Janet Yale, executive vice-president of government and regulatory affairs at Telus, said that the ruling was a "missed opportunity…and that Internet applications should not be regulated."

"Our goal is not to regulate. Our goal is to not have to regulate. And once there is sustainable competition in local markets, we will not do so." Dalfen Stated.

The CRTC hopes to increase local phone service competition and announced these efforts:

• Respond more quickly to phone companies' applications for changes to the prices they can charge customers.
• Set new rules in one year that would outline at what point the CRTC won't regulate the local phone services market.
• Allow regulated phone companies to offer promotions to customers in local markets.