Lawford and White - The Consumer Interest in Telecommunications and Broadcasting

TAB 7
Front and Centre: The Consumer Interest in

Telecommunications and Broadcasting in Canada

John Lawford, Executive Director and General Counsel,
Public Interest Advocacy Centre

Geoffrey White, Counsel,
Public Interest Advocacy Centre

May 2, 2014

17
th
Biennial National Conference
New Developments in Communications
Law and Policy
A National Symposium of The Law Society of Upper Canada and the Entertainment,
Media and Communications Law Section of The Canadian Bar Association

17th Biennial National Conference
New Developments in Communications Law and Policy
Panel: The Consumer agenda:
Paving the Way to a regulatory renaissance in the Communications industry

Front and Centre: The Consumer Interest in
Telecommunications and Broadcasting in Canada
John Lawford
*
and Geoffrey White
**
Abstract: The overriding purpose of Canadian communications law and policy is,
broadly speaking, to serve the interests of Canadians. The consumer interest, so
expressed, is reaching a high point due to the democratization of telecommunications
and broadcasting technologies, consumer anger and the fact that the consumer interest
benefits politically from the plurality of its definition. Even so, there has been a
tendency in some discourses to elevate the role of market forces as being the true goal
of communications law and policy, and to treat any regulatory action aimed at better
serving the needs of Canadians as jurisdictionally inappropriate and part of some
broader, nefarious consumer agenda. This papers central thesis is that the legal basis
for the consumer interest as a policy resides in the Telecommunications Act,
Broadcasting Act, and Radiocommunications Act. However, that law is obscured by
recent confusion due to a lack of discussion of jurisdiction of the CRTC post-
forbearance and deliberate mischaracterization of the 2006 Telecom Policy Direction.
Exploration of these recent challenges allows the authors to note weaknesses in
Canadian communications policy development in general. The authors close with
general recommendations for improvements to that policy development.

*
John Lawford, BA, LLB, Executive Director and General Counsel, The Public Interest Advocacy
Centre (PIAC).
**
Geoffrey White, BA, JD, MBA, BCL(Oxon), Barrister & Solicitor, Counsel to PIAC.
Front and Centre: The Consumer Interest in Telecommunications and Broadcasting in Canada

Table of Contents
Introduction.....................................................................................................................1
The Place of Canadians in Communications Law and Policy....................................2
The Consumer Interest and the Public Interest: What Are They?............................3
Why now? .....................................................................................................................6
Law...................................................................................................................................8
Telecommunications .....................................................................................................9
Confusion 1: What is the CRTCs Basis of Jurisdiction Post-Forbearance? """""""""""""""""""""""""""""""""""""""""""""""""""""" #
On condition section 24"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" $%
The true policy direction section 47"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" $$
Forborne, but not forsaken section 34"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" $&
Confusion 2: The Policy Direction is not a Regulatory Contract """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" $'
Broadcasting ...............................................................................................................20
Radiocommunications.................................................................................................23
Policy.............................................................................................................................24
Telecommunications ...................................................................................................24
Broadcasting ...............................................................................................................30
Radiocommunication...................................................................................................32
Recommendations .......................................................................................................33
Abolish the policy direction power...............................................................................33
Repeal Cabinets power to overturn telecommunications decisions of the CRTC......33
Put spectrum management under the CRTC..............................................................34
Research, debate and publicly state Canadas Communications Policy ....................35
Conclusion....................................................................................................................36

Equity had come not to destroy the law, but to fulfil it. Maitland, Equity and
The Forms of Action, Equity, Lecture II, The Origins of Equity.
In the beginners mind there are many possibilities, in the experts mind there
are few. Shunryu Suzuki
INTRODUCTION
Canadians are the central focus of Canadian communications law and policy.
1

The inspiration for this paper is the intellectual campaign, including at recent iterations
of this conference, that the recent regulatory experience in Canadian communications
law and policy has somehow been improperly dominated by consumer issues and
regulatory creep.
2

Canadians have always have been the central focus of Canadian communications law
and policy, and recent consumer-oriented government and regulatory action
emphasizing the needs of Canadians simply draws on the actual legal basis of the
policies in place.
This paper explores what, why and how the consumer interest has entered more
clearly into recent Canadian communications regulatory discourse; how the lack of clear
expression of the legal basis for considering this interest post-forbearance has confused
and threatened some telecommunications stakeholders; how the 2006 Telecom Policy
Direction
3
is now being inappropriately used to target the proper legal basis for
consumer and public interest in telecommunications and why this sort of direction is
inappropriate in broadcasting. Consideration of these challenges raises the questions of
the structure of policymaking in communications in Canada in general. The paper
closes with general recommendations for more transparent, durable, public and
effective communications policymaking to the benefits of all stakeholder interests not
just the consumer interest.

1
By this we generally mean the Telecommunications Act (S.C. 1993, c. 38), the Broadcasting Act
(S.C. 1991, c. 11), the Radiocommunications Act (R.S.C., 1985, c. R-2), the Canadian Radio-
television Telecommunications Commission Act (R.S.C., 1985, c. C-22), and regulations,
guidelines, decisions and policies made thereunder, as administered by the Canadian Radio-
television and Telecommunications Commission (the CRTC or Commission) and policies of
the Spectrum Management and Telecommunications division of Industry Canada.
2
Please see Conference Agenda.
3
Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy
Objectives, SOR/2006-355 (14 December 2006) (the Policy Direction).
7 - 1

THE PLACE OF CANADIANS IN COMMUNICATIONS LAW AND POLICY
The overriding purpose of Canadian communications law and policy is, broadly
speaking, to serve Canadians.
We note that Jean-Pierre Blais, Chairman of the CRTC, said this in a recent interview
with the Wire Report (see CRTCs Consumer focus not at odds with industry: Blais,
Wire Report (3 April 2014)):
He said the goal for his five-year mandate, which ends in June 2017, is to have a more
trusted institution, which includes putting Canadians back at the centre. That includes a
focus on consumers, but also Canadians as citizens and Canadians as creators.
We note that the Chairman also expressed this sentiment early on in his tenure, in a
speech delivered to PIACs Annual Dinner in 2012, where he said: As you probably
know, since my return to the CRTC, Ive invited staff and colleagues to sharpen the
Commissions focus on the public interestputting Canadians at the centre of their
communication system.
4

To some extent, the theme of the present conference and purpose of this panel is that
there is some nefarious or at least misguided consumer agenda afoot in Ottawa.
Implied in that sentiment is that the consumer interest is not the public interest and that,
in any case, neither should not be the centre of communications policy.
In our view, as explained below, the true public interest is simply the expression of the
continuous focus of telecommunications law, broadcasting law and including spectrum
management, on considering the effect of communications on individuals and collective
groups of consumers and citizens. In short, the public interest has always been
defined by telecommunications and broadcasting law and is inextricable and inerasable
from it.
However, discussion of consumer interests as distinct from the public interest is
indeed a recent development. However, it is not the result of some secret meeting by a
pro-consumer cabal. It is rather the natural outcome of several movements in society at
large and communications in particular.
We agree however with the CRTC Chairmans instincts that it is necessary to calm the
denizens of the Canadian telecommunications and broadcasting worlds given the

4
Speech by Jean-Pierre Blais, Chairman, Canadian Radio-television and Telecommunications
Commission to the Public Interest Advocacy Centres Annual Dinner (Ottawa, Ontario; November
30, 2012). Online: http://www.crtc.gc.ca/eng/com200/2012/s121130.htm (hereafter Blais
Speech).
7 - 2

excitement of recent months. We urge the industry to consider seriously the idea that
where we are now is exactly where we should be: with consumers at the heart of
communications law and policy. However, in order to show that the present direction is
the right one, we must have much more clarity about what the consumer interest
would entail, from a legal, political and policy perspective.
THE CONSUMER INTEREST AND THE PUBLIC INTEREST: WHAT ARE THEY?
To many communications veterans, the CRTC Chairs comments may seem to have
narrowed the public interest to individuals interests. How can the public their
companies customers be somehow three-in-one and one-in-three: consumers,
creators and citizens?
5
Even if they can, does this not narrow the considerations of the
regulator in a way that somehow disenfranchises or at least dilutes the influence of the
industry or other stakeholders?
6

There is also no doubt that consumers and their interests have been highlighted and
underscored by the Industry Canada in the person of Industry Minister James Moore,
7

but more broadly by Stephen Harpers Conservative government, as a political
strategy.
8

5
Further along in the Blais Speech, the Chairman said: Its been said that Canada works in
practice even if it doesnt work in theory. Thats because we have always found a way to
accomplish the public interest through private virtue in search of a shared common good. I am
confident that, if we continue to work collectively, all of our interestsindeed, the public interest
will be well served. We are not sure of the role of private virtue in pursuing the public interest.
The Chairman may be referencing the idea of Lippman, cited below, that disinterested and
benevolent thoughts can produce the public interest. In PIACs experience, the public interest
requires not just decision-makers to have this frame of mind but also an advocate for this
mindset, which is the reason for our existence.
6
The Telecommunications Policy Review Panels 2006 Final Report (at 3-7 - 3-8) took the CRTC
to task for introducing competitors to the balancing of interests in the design of the second
wireline price cap in Telecom Decision 2002-34 and fairness to competitors in other decisions,
to the detriment of competitive markets (on the theory that such consideration would support
inefficient competitors) and ultimately would lead to higher consumer prices. We believe the
opposite has occurred, for example, with wholesale internet access.
7
See, amongst others: James Moore, Statement by the Honourable James Moore on the 700 MHz
Wireless Spectrum Auction, 23 September, 2013, http://news.gc.ca/web/article-
en.do?nid=774019 ; James Moore, Address to the Canadian Club of Ottawa, 18 September
2013, http://news.gc.ca/web/article-en.do?nid=783009 ; Industry Canada, Harper Government
Delivers on Commitment to Protect Canadian Consumers from Spam, News Release 4
December 2013, http://www.ic.gc.ca/eic/site/064.nsf/eng/h_07414.html ;Industry Canada, Harper
Government Announces New Measures to Benefit Canadian Wireless Consumers, News
Release 10 January 2014, http://news.gc.ca/web/article-en.do?nid=808739 ; Industry Canada,
Harper Government Making Changes to Cell Tower Placement Rules, News Release 5 February
2014, http://news.gc.ca/web/article-en.do?nid=813809 ; Industry Canada, More Choice for
Canadian Wireless Consumers, News Release 19 February, 2014, http://news.gc.ca/web/article-
en.do?nid=816849
8
David Johnston, Governor General of Canada, Defending Canadian Consumers, Speech from
the Throne to Open the Second Session of the Forty-First Parliament of Canada, October 16,
7 - 3

Consumer groups such as PIAC have watched these developments with a mixture of
bemusement, surprise and wonder. The public interest and consumer interests in
particular have not really received this much attention since the 1970s when PIAC was
born.
Why then this policy wind of consumer concern? Why now? Where did it come from?
What is it and what does it mean, now and in the future?
Worse than consideration of all of these questions for the participants of this
conference: How can we base our (regulatory) actions on something we cant even
define?
9
Is it not inviting regulatory anarchy or perpetual high-profile political power
struggles (which, incidentally, the industry is not used to having to contend with)?
Let us at least tell you what we define as the public interest and as the consumer
interest. PIAC believes that the public interest is the advancement of the maximum
good to the largest number of members of Canadian society. Except when we dont:
there are times where the public interest is in promoting a narrower interest usually
interests of vulnerable members of society and usually when the public interest
generally is well-served.
10
For example, as it is in our view in the public interest, PIAC
filed a recent Part 1 Application to the CRTC on payments for paper bills:
11
Although it
may cost the majority of telecom customers a bit more to support those that need or

2013, http://speech.gc.ca/sites/sft/files/SFT-EN_2013_c.pdf; Jim M. Flaherty, Minister of Finance,
The Road to Balance: Creating Jobs and Opportunities (Budget Speech), 11 February, 2014,
at 8, http://www.budget.gc.ca/2014/docs/speech-discours/pdf/speech-discours-e.pdf ; Canadian
Food Inspection Agency, Harper Government Continues to put Canadian Consumers First, News
Release 30 October 2013, http://www.inspection.gc.ca/about-the-cfia/newsroom/news-
releases/2013-10-30/eng/1383091579429/1383091587580 ; Department of Finance, Harper
Government to Further Strengthen Protection for Canadian Consumers of Financial Products and
Services, News Release 8 March 2011, http://www.fin.gc.ca/n11/11-022-eng.asp ; Public Safety
Canada, The Harper Government Announced New Measures to Benefit Canadian Consumers,
News Release 1 June 2012, http://www.publicsafety.gc.ca/cnt/nws/nws-rlss/2012/20120601-
eng.aspx
9
In the signed editorial to the inaugural edition of the journal The Public Interest, David Bell and
Irving Kristol employed Walter Lippmanns definition of public interest as what people would
choose if they saw clearly, thought rationally, [and] acted disinterestedly and benevolently.
Although no society has been ruled by this definition, they held that there has never been a
society which was not, in some way, guided by this ideal . To the extent that the notion of
common good should be the objective of actions rather than advancing purely private good,
the public interest can be seen as actions that promote the common good.
10
See also Blais Speech: The Commissions mandate and overarching goal is to make sure all
Canadians, including vulnerable populations, have access to essential communication services.
No debate about that.
11
Public Interest Advocacy Centre and the Consumers Association of Canada, Regarding Certain
Telecommunications Service Provider Billing Practices by Certain TSPs to Charge a Fee for
Paper Bills contrary to the Rules of Practice and Procedure and Sections 24, 25, 27 (1), 27 (2),
55 (c) and 56 of the Telecommunications Act, (Part 1 Application filed with the Canadian Radio-
television and Telecommunications Commission), CRTC File8661-P8-201314012, 22 October
2013.
7 - 4

want paper bills, it would help protect older consumers, those on lower incomes without
computer access and people with disabilities affecting their use of computers. The
public interest is thus to us doing what is right for other people, based on their needs
and circumstances.
12

The consumer interest is perhaps that which is more troublesome for the industry at
present and so its definition is key to this discussion and future legal and policy
outcomes in communications.
13

It is worth noting that consumer appears nowhere in the Telecommunications Act.
14

The interests of users is as close as we come and that is of course in subsection 34(2)
mandatory forbearance where the Commission finds as a fact that there is sufficient
competition to protect the interests of users. Likewise, in section 7, which lists the
telecommunications policy objectives, the wording only refers to Canadians; persons
and users of telecommunications services but not consumers or customers.
PIAC nonetheless has a working definition of the consumer interest: It is the long-term,
rule-based pursuit of high quality, reliable, affordable and accessible communications
services, on fair terms, for all Canadians. Each of these factors may be more or less
important given the situation but the consumer interest does place a certain emphasis
on the affordability of service. The affordability aspect has been protected in the past by
the requirement that rates be just and reasonable (more on this below), but
affordability also implies a consumer interest in services at a rate that some individuals,
who should have access to communications services but cannot due to affordability

12
Hence the public interest also easily includes public safety concerns such as 9-1-1 and public
alerting as well as privacy (see Blais Speech).
13
In the Blais Speech, the Chairman proffers a few thoughts on the consumer interest. First, he
notes that it includes businesses. We disagree. Business interests, even for small business, too
often conflict with individual consumers interests. Second, he includes citizens rights as part of
consumer rights. We disagree. While citizens democratic participation rights are part of the
public interest in communications they are often too far afield from consumer interests to be of
much use in arguing a consumer position on rates or even at times at odds with pure consumer
positions. Third, he said, largely in relation to broadcasting, that [t]his same rule of thumb applies
to the work of content creators meaning they can be considered part of a consumer interest. We
disagree. Canadian content regulations are notoriously expensive and the goal of employment
for Canadian creators is certainly in the public interest but is very often contrary to a pure
consumer interest, which, as noted below, quite legitimately prioritizes price and service as
qualities to achieve.
14
The public interest however, is referenced in the Telecommunications Act. Notably, it is present
in the disclosure sections as a counterbalance to corporate confidentiality claims and also exists
in the curious section 53, which allows the Attorney General of Canada to instruct a Dept. of
Justice lawyer to intervene in proceedings that raise an issue of particular importance affecting
the public interest. To our knowledge it has never been used; it traces back to the National
Telecommunications Powers and Procedures Act and pre-dates Consumers Association of
Canada and PIAC participation as public interest interveners before the CRTC.
7 - 5

issues, could manage.
15
It is rule-based as it is nearly always in the public interest to
work within a legal structure (which levels the power imbalances between industry and
consumers) and to have predictable outcomes and reasoned, evidence-based
decisions.
As we explain below, the answer to the question of how to manage the consumer
interest, now that it is clearly part of the mix in communications regulation and policy
is, we feel, the clear legal definition of consumer interest (and the public interest) and its
place in the several legal frameworks around communications in Canada.
WHY NOW?
The consumer interest has finally risen to prominence in recent years thanks to the very
industry that has often been seen to be wary of it. Quite simply, individual consumers
have been empowered to make their views known directly, rapidly, personally, socially,
electronically and on-the-go via telecommunications networks. Oh the irony! By placing
a communications device in the hands of consumers that has the potential to go
everywhere and work wherever consumers are, they are able to instantly make their
views on communications services known, in great numbers, directly to decision-
makers. The result is a political need to respond to this pressure, which re-sets the
previous chummy balance between industry and the regulator (with occasional
nuisances such as PIAC and other consumer organizations representing consumers at
regulatory hearings).
Doubt this is happening? Recall then Industry Minister Tony Clement referring the
matter of usage-based billing back to the CRTC not via the Cabinet variation process
in section 12 of the Telecommunications Act but by way of 140 characters of less a
tweet. That tweet was both symbolic in form and an acknowledgement of Internet-
driven consumer power, harnessed in this case by Openmedia.ca and its 350,000
strong Stop the Meter campaign (now over 500,000, re-named Mind the Cap).
Thats consumer populism. Brought to you by your ISP.
Consider how the CRTC has been receiving hundreds or even thousands of public
comments in some of its public hearings, where before seeing anyone but lawyers and
lobbyists and one or two unfortunate journalists in the Gatineau dungeon that is the
CRTCs main hearing room was unthinkable. The dry, esoteric realm of communications
law and policy has, no doubt in part to social media, the rising importance of technology,
and the Commissions outreach efforts, been opened up to more and more Canadians.

15
Affordability is an ongoing concern. PIAC expects to release a report on the affordability of
communications service later in 2014. (Public Interest Advocacy Centre, No Consumer Left
Behind: A Canadian Affordability Framework for Communications Services in a Digital Age,
forthcoming 2014.)
7 - 6

Consider also how telecommunications customers are finally finding the CCTS online
16

and inundating it with steadily increasing numbers of complaints, especially on wireless.
Consumer interest and the wider public interest has another wind at its back, however.
That wind is democratic expression of anger due to inequality. The Occupy movement
was born of consumer and citizen anger at the near total collapse of a myopic and
largely unregulated, behemoth banking industry.
17
That Occupy did not achieve its
goals, or even articulate them well (or sustainably) is not the point. The point is that
consumer dissent, like political revolution, comes at the end of oppression. Where the
oppression point is in telecom is exactly unknown, but we would suggest that it was
nearly arrived at when the CRTC, industry and government realized consumer anger
was boiling up and responded with the CCTS, the Wireless Code and government
campaigns against wireless service and pricing. What was the oppression? The
oppression was the inequality caused by overzealous forbearance from regulation
(notably in Internet wholesale service and local telephony and the CRTCs abdication
from the duty to at least consider regulation in the maturing wireless marketplace) and
the resulting high prices and poor service that naturally resulted. That inequality
manifested itself in long-term contracts, surprise fees, penalty charges after termination
of service,
18
locks on phones, extortionate roaming rates and misleading advertising.
Something had to give.
Lastly, the consumer interest benefits politically from the plurality of its definition. Who
is not a consumer? Consumerism in a consumer society reaches all. Provided a
majority of consumers agree with a position (cell phone service is too expensive), it is
a simple matter for a political party or even a regulator with a desire to be popular to
reflect that position back to these consumers. But consumer positions are also safe:
they do not tread on divisive and controversial issues that have become difficult for

16
Please see Commissioner for Complaints for Telecommunications Services, Annual Report 2012-
2013, http://www.ccts-cprst.ca/documents/annual-reports/2012-2013 bemoaning the lack of effort
by service providers to inform customers of the CCTS despite the requirement to do so. Many
customers are referred to the CCTS not through the telecommunications service provider
websites but through PIACs website.
17
Matt Wells and Karen McVeigh, Occupy Wall Street: thousands march in New York, The
Guardian, 5 October 2011, http://www.theguardian.com/world/2011/oct/05/occupy-wall-street-
new-york-march . James P. Hoffa, leader of the Teamsters Union, is quoted as saying the
purpose of the Occupy Movement was: It's clear what this movement is all about. It's about
taking America back from the CEOs and billionaires on Wall Street who have destroyed our
nation's economy. It's about creating good jobs. It's about corporate America treating its workers
and customers with honesty and fairness and paying its fair share to stimulate the economy.
18
Public Interest Advocacy Centre and the Consumers Association of Canada, Regarding Certain
Billing Practices of the Wireless Service Providers which Contravene Section 27(2) of the
Telecommunications Act, Are Inconsistent with the Policy Direction and are Contrary to the
Directives Issued by the Commission (Part 1 Application filed with the Canadian Radio-television
and Telecommunications Commission), CRTC File 8661-P8-201116807, 22 December 2011,
http://www.crtc.gc.ca/part1/eng/2011/8661/p8_201116807.htm
7 - 7

politicians such as language, sovereignty, health care, national defence, etc. Indeed,
most politicians, especially those with families and those who have embraced
technology, can likely readily grasp how monthly bills for communications services add
up.
These developments can only be viewed as positive Canadians, it is known, spend a
monthly average of more than $185 per household per month on communications
services
19
, and data consumption forecasts are continually growing. But the question
remains: On what legal and policy foundation does the consumer interest rest? We
address this question in the next two sections.

LAW
To PIAC, the proposition that the ultimate purpose of communications regulation is to
benefit Canadians, in either an individual or collective sense, is clear from the wording
of the Canadian telecommunications policy objectives listed in section 7 of the
Telecommunications Act, in the broadcasting policy for Canada detailed in section 3 of
the Broadcasting Act, and in the clear policy statements in Industry Canadas Spectrum
Policy Framework; the competition principles in the Framework for Spectrum Auctions
in Canada;
20
and several other spectrum policy documents.
21

To the extent that these policy objectives have been properly invoked and implemented
by the regulator under these respective communications acts there can be no
questioning decisions that reference these policy objectives and produce a result that to
some might appear to show a consumer focus or consumer agenda.
Unfortunately, however, the law underlying the policy objectives in all three areas has
become unclear due to a number of recent factors. We believe that when the rules

19
CRTC, 2013 Communications Monitoring Report.
20
Issue 3 (March 2011) at 4.

In an effort to ensure that social and economic benefits are maximized from the use of the
radio frequency spectrum, it will be important that licensees operate in a competitive
marketplace post-auction. Measures available to the government to promote a competitive
post-auction marketplace include restricting the participation of certain entities in an
auction and/or placing limits on the amount of spectrum that any one entity may hold by
using spectrum set-asides or spectrum aggregation limits.

21
See e.g., Policy and Technical Framework - Mobile Broadband Services (MBS) 700 MHz Band
and Broadband Radio Service (BRS) 2500 MHz Band, SMSE-002-12, (March 2012) (the 700
MHz and 2500 MHz Policy and Technical Framework); Licensing Framework for Mobile
Broadband Services (MBS) 700 MHz Band, DGSA-001-13 (March 2013); and Framework
Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licenses for Commercial
Mobile Spectrum, DGSO-003-13, (June 2013).
7 - 8

underlying the policy are unclear, that poor outcomes are likely to appear. Therefore,
we feel it is imperative to clarify this law, for the benefit of consumers and companies
and the regulators alike.
TELECOMMUNICATIONS
The Telecommunications Act is clearly geared toward serving the needs of Canadians.
This is evident throughout the Act, but nowhere more clearly than in the section 7
telecommunications policy objectives. Of the nine Canadian telecommunications policy
objectives listed, four clearly are devoted to Canadians. The others are all, in less direct
ways, geared toward a telecommunications system in Canada that improves the lot for
all Canadians (individuals and businesses).
However, the Telecommunications Act is rather more complicated legally than the
Broadcasting Act or the Radiocommunications Act, as it is built on the common law
principles of common carriage and public utility service. For this reason, some
confusion and seemingly deliberate obfuscation of the law underpinning the
Telecommunications Act and supporting the telecommunications policy objectives has
recently arisen. In addition, some developments in the courts and some lack of clarity in
reasons of both the courts and the CRTC itself have made the support of the policy
objectives in all cases with telecom law seem more convoluted than they really are.
CONFUSION 1: WHAT IS THE CRTCS BASIS OF JURISDICTION POST-FORBEARANCE?
It is our view that a good measure of the growing unease with which the industry has
greeted first the CCTS
22
and now the Wireless Code
23
stems from a number of knotty
legal and jurisdictional questions under the Telecommunications Act that have been
glossed over or not addressed by the CRTC and to some extent the parties appearing
before it and which the courts have not yet addressed. We describe these below.

22
Cable operators brought review and vary applications against the proto-CCTS before eventually
accepting the new body: Telecom Decision CRTC 2008-46 Applications to review and vary
certain determinations in Telecom Decision 2007-130 regarding the establishment of an
independent telecommunications consumer agency, 30 May 2008.
23
Bell Canada et al. v. Amtelecom Partnership et al., (Court file No. A-337-13); Qubecor
(Videotron), Demande de rvision et de modification de la Politique rglementaire de tlcom
CRTC 2013-271, Le Code sur les services sans fil (Partie 1), Dossier 8622-Q15-201310508 (19
juillet 2013); Rogers, Part I Application by Rogers Communications for Clarification Under
Telecom Regulatory Policy CRTC 2013-271 The Wireless Code, File 8633-R28-201310820 (24
July 2014); Telus, The Wireless Code, Telecom Regulatory Policy 2013-271 (Policy 2013- 271),
Application for Clarification filed by TELUS Communications Company (Part 1), File 8633-T66-
201310812 (24 July 2013); Saskatchewan Telecommunications, Extension Request for
Implementation of Telecom Regulatory Policy CRTC 2013-271 The Wireless Code (Part 1), File
8628-S22-201310515 (19 July 2013); Telus, Application Seeking Interpretation of Telecom
Regulatory Policy 2013-271 The Wireless Code (Part 1), File 8633-T66-201401827 (3 March
2014).
7 - 9

On condition section 24
Section 24 of the Telecommunications Act permits the CRTC to set conditions on the
offering or provision of telecommunications service by Canadian carriers. It is the basis
of much of the Commissions recent consumer protection framework regulatory action,
including its decision to mandate membership in the Commissioner for Complaints for
Telecommunications Services (the CCTS).
24

Section 24 was a new section created when the Telecommunications Act was passed.
It replaced, but significantly expanded, former subsection 341(3) of the Railway Act
25
,
which permitted the Commission to prescribe conditions only for the carriage of
traffic.
26
Arguably, therefore, this new condition of service power is wide-ranging and
bounded only by the overall jurisdictional reach of the entire Telecommunications Act at
least to the extent that the CRTC is setting conditions on the offering and provision of
any telecommunications service by a Canadian carrier.
27
This seems to be the position
of the CRTC about its use. However, such open-ended powers, at least when
encapsulated in subordinate legislation such as a regulation, typically are limited by the
courts to ensure accountability and reviewability under the law.
28

The Commission also relied on section 24 in bringing forth the Wireless Code in
response to a Part 1 application by PIAC about billing for one month after a customer
had switched wireless providers
29
and subsequent industry requests
30
for such a code.

24
Telecom Decision CRTC 2008-46 - Applications to review and vary certain
determinations in Telecom Decision 2007-130 regarding the establishment of an
independent telecommunications consumer agency (30 May 2008) at para. 12 [and
footnote to that para. 12]:

The Commission considers that it has the authority to mandate membership in
the Agency by all qualifying TSPs. The Commission notes that section 24 of the
Act provides the Commission with broad powers to make the provision of
telecommunications services by Canadian carriers subject to conditions.
1
[
1
In the
past the Commission has imposed conditions of service on the provision of
telecommunications services by Canadian carriers, whether or not such services
are forborne.]

25
R.S.C. 1985, c. R-3 (as amended).
26
Hank Intven, Canadian Telecommunications Regulatory Handbook 2012, First Edition (Toronto:
McCarthy Ttrault LLP, 2012) at 241, note to section 24, 3110.
27
The meaning of telecommunications service is widened from the definitions in section 2 by
section 23 to include any service that is incidental to the business of providing
telecommunications services.
28
See for example, Reference re Broadcasting Regulatory Policy CRTC 2010-167 and
Broadcasting Order CRTC 2010-168, (2012), [2012] 3 S.C.R. 489.
29
PIAC, Application regarding certain billing practices of the Wireless Service Providers which
contravene Section 27(2) of the Telecommunications Act (Part 1), Commission File 8661-P8-
201116807 (5 January 2012).
7 - 10

The CRTC obliged, and, after a preliminary proceeding to consider the effect of
previous forbearance decisions,
31
concluded that consumers need additional tools to
better understand their basic rights, as well as their service providers responsibilities
with respect to mobile wireless services, in order to participate in the competitive market
in an informed and effective manner.
32
The Commission noted also that: None of the
parties objected to the application of the Wireless Code as a condition under section 24
of the Telecommunications Act (the Act).
33

This sort of language reflected the reality of the rare virtual consensus of consumer
groups and the industry that a Code would be helpful for consumers.
34
Unfortunately, it
is trite law that parties cannot confer jurisdiction by consent.
The true policy direction section 47
Section 24, and indeed all of the CRTCs powers and duties, are required by the first
part of subsection 47(a) to be called into aid to further the Commissions pursuit of the
telecommunications policy objectives in section 7 of the Act. In this way, section 47 is
the true, legislated, policy direction. Yet, section 47 is a difficult section and has not
yet been fully explored by the CRTC or interpreted by the courts.
The remainder of subsection 47(a) continues on to require the Commission to ensur[e]
that Canadian carriers provide telecommunications services and charge rates in
accordance with section 27. This internal reference to the primary rate-setting and
non-discrimination jurisdiction of the Commission complicates interpretation of the
section.
Section 47 in its entirety reads:
47. The Commission shall exercise its powers and perform its duties under this Act and any special Act

30
Rogers Communications Partnership, Application to implement a National Wireless Consumer
Protection Code (Part 1), Commission File 8620-R28-201202598 (9 March 2012), as supported
by Telus (Letter from Telus to the CRTC, Application by Rogers Communications Partnership
requesting implementation of a national wireless services consumer protection code filed on 8
March 2011, letter signed by Michael Hennessey, (9 March 2012)).
31
See Telecom Notice of Consultation CRTC 2012-206 - Proceeding to consider whether the
conditions in the Canadian wireless market have changed sufficiently to warrant Commission
intervention with respect to retail wireless services (4 April 2012) at paras. 2-3.
32
Telecom Regulatory Policy CRTC 2013-271 - The Wireless Code (03 June 2013), at
para. 1.
33
Telecom Regulatory Policy CRTC 2013-271 - The Wireless Code (03 June 2013), at
para. 17.
34
Sasktel being the notable outlier. More about Sasktels unique position in this debate is found in
the section on Policy below.
7 - 11

(a) with a view to implementing the Canadian telecommunications policy objectives and ensuring that
Canadian carriers provide telecommunications services and charge rates in accordance with section
27; and
(b) in accordance with any orders made by the Governor in Council under section 8 or any standards
prescribed by the Minister under section 15. [Emphasis added.]
The interpretive problem is partly semantic: what does the placement of the
conjunctions and in subsection 47(a) mean? Are they cumulative, in that ALL of the
conditions must be satisfied to claim jurisdiction under subsection 47(a)? Or are they
disjunctive ands so that one might pursue the telecommunications policy objectives
OR the provision of service OR the charging of rates in accordance with section 27 [just
and reasonable rates, without discrimination]?
35

The other part of the problem is jurisprudential: the development of jurisprudence
around section 47 of the Act is still in its infancy.
The Supreme Court of Canada in the Deferral Accounts decision underlined the central
purpose of implementing the policy objectives as the new core of the CRTCs rate-
setting jurisdiction:
74 In my view, the CRTC properly considered the objectives set out in s. 7 when it
ordered expenditures for the expansion of broadband infrastructure and consumer
credits. In doing so, it treated the statutory objectives as guiding principles in the exercise
of its rate-setting authority. Pursuing policy objectives through the exercise of its rate-
setting power is precisely what s. 47 requires the CRTC to do in setting just and
reasonable rates.
36

Thus it is now clear beyond any doubt that in exercising its rate-setting jurisdiction, the
CRTC must pursue the policy objectives enumerated in section 7. It was not at all clear
prior to this decision that the direction of section 47 towards section 7 would trump other
principles of just and reasonable rates, such as setting rates only for one particular
service at a time.
37
However, the primary duty of the CRTC to consider the policy
objectives (section 47) in rate-setting now is crystal clear.
Yet it is still not clear what the CRTC may do, and what principles it may follow, when it
has forborne from regulation of rates under subsection 27(1) of the Telecommunications
Act, that is, where it is no longer setting rates but where it is otherwise regulating the

35
For a spirited scholarly discussion of the logic and niceties of and when used as and and and
when used as or, and other ambiguity, see Adams K. and Kaye, A. Revisiting The Ambiguity Of
And And Or In Legal Drafting. (2007), 80 St. Johns Law Review 1167 at 1172-3. Online:
http://www.adamsdrafting.com/downloads/Ambiguity-And-Or.pdf
36
Bell Canada v. Bell Aliant Regional Communications, [2009] 2 S.C.R. 764, at para. 74.
37
The idea that rates from one service could not be directed to fund a different service with different
ratepayers was the principle upon which PIAC and the CAC based their unsuccessful
arguments in the Deferral Accounts case.
7 - 12

offering and conditions of service to the public (mostly, but not always exclusively, under
section 24 of the Telecommunications Act).
Part of an apparent ongoing legal, policy (and in a way, philosophical) debate about the
proper (read, legally authorized) role of the CRTC results from a limited judicial and
Commission treatment of the CRTCs post-forbearance jurisdiction which makes
sense given that the vested interests have largely benefited from forbearance, and
given the amount of resources needed for a public interest group to challenge
forbearance. In other words, given that forbearance has worked well for the industry, it
is not surprising we do not have judicial guidance on the limits of it, and of the CRTCs
jurisdiction.
The only guidance from the courts on section 47 is the above-noted Deferral Accounts
decision, which is clearly contemplating a situation of rate-making; and TELUS
Communications Inc. v. Canada (CRTC), 2004 FCA 365, where TELUS complained of
a Commission-led review and vary application in relation to the wholesale rates for
conduits, thus again a situation of pure rate-making.
38
Both of those cases clearly
underline the primary duty of the CRTC to, in all decisions affecting rate-making, have
primary consideration for the policy objectives in coming to a conclusion on the rate
issue. However, there is no judicial consideration, yet, of the direction of section 47 to
consider the policy objectives when only section 24 conditions are being set, with no
pretence at rate-making.
Yet if the policy objectives are the new guiding principles for rate-setting, it is our
contention that in application of any other power or duty under the Act, even post-
forbearance, the policy objectives should likewise require the Commission to reach a
conclusion that is beneficial for consumers.
Another part of the legal and policy confusion around the scope of the CRTCs non-rate-
setting jurisdiction has been sown around government intervention in the CRTCs
regulatory sphere and in particular the characterization of the 2006 Policy Direction
issued by Cabinet. This argument relies upon a seemingly deliberate
mischaracterization of the requirements of telecommunications law on carriers (both at
common law and as codified in the Telecommunications Act) by ILEC telcos. We
discuss each of these sources of confusion in the section on telecommunications law
below.
The result of legal and policy confusion is political action or overreaction, depending
upon ones views of the situation, such as was on display over the summer of 2013.

38
Much to the chagrin of PIAC, we are respondents in the appeal of the Wireless Code on
retroactive contracts, where this issue may arise.
7 - 13

Forborne, but not forsaken section 34
To make things more complicated still, what happens when a section 34 forbearance
order removes the just and reasonable rate requirement from consideration? We
simply dont know. Yet this is exactly the legal situation we face in relation to the new
consumer regulation of the CCTS and the Wireless Code. We do note, however, that
section 34 affects only listed powers of the Commission (namely, sections 24, 25, 27,
29 and 31) and not a duty of the Commission such as section 47 (which then refers
the Commission to the policy objectives in section 7). Arguably, therefore, forbearance
cannot touch the Commissions continuing duty to consider the policy objectives, to the
extent possible.
And yet here is another riddle: depending on which basis the Commission has forborne
from regulation: Scenario 1.: under subsection 34(1) forbearance consistent with
policy objectives; or Scenario 2.: under subsection 34(2) competition present sufficient
to protect the interests of users; an argument could be made that any subsequent
attempts to achieve the policy objectives are redundant (if subsection 34(1)); or, if users
interests are protected there is no need for further regulation aimed at consumer
protection (if subsection 34(2)). Forbearance was granted under both subsections in
regard to wireless (see, for example, Telecom Decision 96-14
39
).
The CRTC found in Telecom Decision 2012-556
40
with regard to the Wireless Code at
para. 21: In light of the above, the Commission considers that competition in the mobile
wireless market continues to be sufficient to protect the interests of users with respect to
rates and choice of competitive service provider. However, the Commission stated
there was still a need to address the clarity and content of mobile wireless service
contracts and related issues which were not being resolved by the competitive market.
How did they do this? Did the Commission not say one thing and do the other?
One view is a trimming of forbearance, presumably in accordance with the words in
subs. 34(1) that permit the Commission to refrain, in whole or in part from the listed
regulation or the words in subs. 34(2) that permit the Commission to refrain, to the
extent that it considers appropriate from the listed regulation. However, if this is the
finding, it was not made explicit in the reasons given.

39
Telecom Decision CRTC 96-14 Regulation of mobile wireless telecommunications services (23
December 1996).
40
Telecom Decision CRTC 2012-556 - Decision on whether the conditions in the mobile wireless
market have changed sufficiently to warrant Commission intervention with respect to mobile
wireless services (11 October 2012) (Telecom Decision 2012-556).
7 - 14

Another view and one that suggests a rather non-transparent manner of proceeding
by the Commission is that in Telecom Decision 2012-556, the CRTC completely
removed the first, discretionary ground for forbearance (subs. 34(1)) from the previous
wireless orders. That is, it quietly changed the basis upon which wireless forbearance
was granted from both forbearance grounds to only the protection of the interests of
users under subs. 34(2). When it did this, the CRTC thus opened an unencumbered
path to consider the policy objectives under section 7, allowing no argument that
forbearance (under subs. 34(1)) could remove its jurisdiction to consider the policy
objectives to help create the Wireless Code.
One must be very observant to notice the subtlety of the language in Telecom Decision
2012-556, but it is entirely possible that this is exactly what the Commission has done.
41

It is supported by the pleadings, thus far, in the Federal Court of Appeal regarding the
Wireless Code.
42

Thus, Scenario 1 post-forbearance is that the direction in subs. 47(a) simply proceeds
without subs. 27(1). So the CRTC would be required to pursue the telecommunications
policy objectives in section 7 and in accordance with any directions made under
section 8, such as the 2006 Telecom Policy Direction, while simply ignoring rate-setting.
This leaves a wide scope for regulating how carriers provide telecommunications
service but presumably would be fairly limited when such conditions were tantamount
to rate-making. This interpretation would preserve much of the Wireless Code, but
would question, perhaps, the imposition of monthly rate caps for data use or roaming as
are now in the Code. It is presumably the basis upon which the Commission proceeded
in the Wireless Code.

41
See Telecom Decision 2012-556, ibid., first at para. 16, which cites only subs. 34(2) as the
ground of wireless forbearance and subsequently this discussion at para. 21:

In light of the above, the Commission considers that competition in the mobile wireless
market continues to be sufficient to protect the interests of users with respect to rates and
choice of competitive service provider. The Commission finds that there is no evidence
that the conditions for forbearance have changed sufficiently to warrant Commission
intervention with respect to mobile wireless service rates or competitiveness in the mobile
wireless market. Pursuant to subsection 34(2) of the Act, the Commission must,
therefore, continue to forbear in this regard. The Commission also considers that this
approach is consistent with the Policy Direction, which requires that the Commission rely
on market forces to the maximum extent feasible as the means of achieving the
telecommunications policy objectives set out in the Act. [Emphasis added.]

Thus by implication, the CRTC was no longer forbearing from wireless service regulation on the
basis of subs. 34(1). This explains the subsequent citation of certain policy objectives in para. 27
as supporting a section 24 condition being imposed to create a Wireless Code.
42
See CRTC Memorandum of Fact and Law, A-337-13, filed February 19, 2014, at paras. 28 and
96.
7 - 15

This interpretation is to be preferred, however, to Scenario 2 of a post-forbearance
consideration of subs. 47(a), which is that, as the heart of the subsection, rate-setting,
is no longer required, and all the ANDs are conjunctive, subsection 47(a) and the
obligation to consider the policy objectives is simply no longer operative.
In this case, the CRTC would be making it up as it struggles to define what principles
upon which to base any conditions of service (under section 24 alone or in conjunction
with subsection 27(2)) that might underlie a consumer protection framework regulation
like the CCTS or the Wireless Code. Some companies might even have the temerity to
suggest there are no principles left, so that the CRTC should do nothing.
43

However, as noted above, it is possible that the CRTC has quietly removed subsection
34(1) forbearance and has imposed section 24 conditions based on the section 7 policy
objectives.
Part of the blame for this perhaps regulatory sleight of hand is the Commissions
own high test for re-regulation of a forborne market has to some extent required it to
undertake regulatory measures in the name of consumer protection rather than as rate
regulation.
In Telecom Decision CRTC 2006-15, the Commission described its approach to post-
forbearance reregulation:
In the Commission's view, a decision to forbear from regulating local exchange service
based on the criteria outlined in this Decision should not be reversed easily, based on
temporary swings in a potentially volatile marketplace.
[]
In the Commission's view, it is only where the Commission has received evidence
demonstrating that market forces in a relevant market are no longer sufficiently strong to
discipline the ILEC providing local exchange services in that relevant market that the
Commission should initiate a review of forbearance in a particular relevant market. Such
evidence could include a material reduction in the number of competitors offering service
in a forborne market, a material increase in ILEC market share in that relevant market, a
significant long-term decrease in the ILEC's performance with reference to the competitor
Q of S [quality of service] indicators or a material sustained increase in prices to
customers in the forborne market.
44

43
However, this possibility begs the question of why the Wireless Code was supported by industry
in the first place. In addition, PIAC would counter that the law of common carriage would flow
back in to replace the legal vacuum thus created.
44
Telecom Decision CRTC 2006-15 - Forbearance from the regulation of retail local
exchange services (6 April 2006) (as varied by Order in Council P.C. 2007-532) at para.
478; see also Telecom Decision CRTC 2007-35 - Framework for forbearance from
regulation of high-speed intra-exchange digital network access services (25 May 2007) at
paras. 169-70.
7 - 16

In 2007, the Commission noted that although forbearance should not be easily
reversed, it would take a flexible, fact-based approach to determining whether the
underpinning of a forbearance decision has disappeared:
it should only initiate a forbearance review when it receives credible evidence
demonstrating that the ILEC has market power in the market and that competitive market
forces are not sufficient to protect the interests of consumers. Such evidence could
include a material reduction in the number of competitors offering services in the relevant
market, a material increase in ILEC network presence in the market, or a sustained
material increase in prices to customers in the forborne market.
45

Thus, the bar to reregulation of rates is so high that the Commission may have had to
be extremely crafty in fashioning a remedy for wireless customers (the Wireless
Code).
46

Unfortunately, all this legal confusion surrounding the Commissions post-forbearance
jurisdiction makes parties suspicious of an underlying, unstated policy goal of
advancing consumer interests. It is the writers view that all parties would therefore
benefit from much longer reasons from the CRTC regarding the basis of their post-
forbearance jurisdiction,
47
especially when invoked to produce large, framework-based
decisions that are meant to affect the workings of the entire industry and its effect on all
consumers.
CONFUSION 2: THE POLICY DIRECTION IS NOT A REGULATORY CONTRACT
At the 2012 edition of the Law Societys Biennial Communications Conference, David
Krause and Mirko Bibic of BCE Inc. presented a paper in which the authors introduced
the notion of the regulatory contract applicable to telecommunications regulation in
Canada.
48

In particular, Krause and Bibic claim:

45
Ibid, Telecom Decision 2007-35 at para. 170.
46
See above at footnote 31 for a description of the forbearance order/call for regulation made in
Telecom Decision 2012-556.
47
Unfortunately, the CRTC has been extremely reticent in recent decisions, including the Wireless
Code, to state upon which basis it is exercising its jurisdiction. This is extremely unhelpful for
providing all stakeholders a rationale for the decision and an idea of its outer limits, to say nothing
of its legality. In the Federal Court of Appeal case involving retroactive contracts, this issue of a
lack of detail about the basis of the CRTCs jurisdiction already has become an issue in the
submissions.
48
David Krause and Mirko Bibic. "Regulatory commitment and the Policy Direction: has there been
a breach of contract?", 16th Biennial National Conference of the Law Society of Upper Canada -
New Developments in Communications Law and Policy, (April 2012).
7 - 17

In issuing the Policy Direction, the GiC updated the regulatory contract applicable to
telecommunications regulation in Canada by directing the Commission to take a more
market-based approach in implementing the Telecommunications Act.
49

By issuing the Policy Direction, the Federal Government updated the regulatory contract
by providing greater guidance regarding how the Commission should achieve the
objectives of the Telecommunications Act. The updated terms were: (i) to rely on market
forces to the maximum extent feasible, and (ii) when regulations are imposed they
should be efficient and proportionate to their purpose and interfere with the operation
of competitive market forces to the minimum extent necessary to meet the policy
objectives. Therefore, industry stakeholders had the expectation that the Commission
would rely on market forces, or if regulation were required it would adopt a more light-
handed approach.
50
[footnotes omitted.]
First of all, the notion of a regulatory contract is not supported in Canadian
communications law. It relies upon a mischaracterization of common carriage and utility
regulatory requirements, as codified to a large extent in the Telecommunications Act, as
incidents to monopoly.
51
The CRTC in the Obligation to Serve proceeding rejected the
monopoly theory of obligation to serve.
52

The regulatory contract language employed by Messrs. Krause and Bibic is typically
used when telecommunications service providers, usually ILECs, seek to avoid the
imposition of the requirements of common carriage and public utility law that are in
issue. These requirements are obligation to serve, unjust discrimination, just and
reasonable rates, quality of service and interconnection (and, by extension, wholesale
access regimes based upon interconnection).

49
Ibid., at 1-2.
50
Ibid., at 8 (footnotes omitted).
51
See Cherry, Barbara A., Policymaking for the PSTN-to-IP Transition within Federalism: Lessons
from U.S. v. Canadian Experimentation, 24
th
European Regional Conference of the International
Telecommunications Society, Florence, Italy, 20-23 October 2013. Online:
http://www.econstor.eu/bitstream/10419/88518/1/773124047.pdf See also Legal Opinion of
Barbara A. Cherry, J.D., Ph.D. In CRTC Telecom Notice 2010-43 Obligation to Serve, filed as
attachment to PIAC(TELUS)20May10(3 TNC 2010(43 (Attachment). Online:
http://www.crtc.gc.ca/public/partvii/2010/8663/c12_201000653/1418694.zip
52
See Telecom Notice of Consultation CRTC 2010-43 and the decision in Telecom Regulatory
Policy CRTC 2011-291 (3 May 2011) at para. 46, fn. 33: Certain parties submitted that an
obligation to serve can only be lawfully imposed where there is a monopoly. Because there is no
monopoly, these parties argued that the Commission does not have the legal authority to impose
an obligation to serve in forborne exchanges. The Commission notes its disagreement with this
argument. In the Commissions view, it is unduly narrow, is inconsistent with the broad statutory
powers granted to the Commission, and fails to recognize the broad policy objectives to which the
Commission must have regard.
7 - 18

The Commission expressed doubt as to the existence of a regulatory bargain in the
first Price Caps hearing
53
, during which Stentor and Telus Communications Inc. had
described it as a relationship between customers and the carriers:
The right to recovery of any DRD during the price cap period results from what Stentor
views as being one of the obligations borne from the social contract or "regulatory
bargain" between the Utility customers, represented by the regulator, and the telephone
companies.
Stentor and TCI submitted that the existence of the regulatory bargain is evident under
the form of rate base/rate-of-return regulation practiced by the Commission, under the
statutory mandate of "just and reasonable" rates, and as an incident of the obligation to
serve at common law.
54

The Commission ultimately stated on the issue that: The Commission notes that no
evidence has been presented during this proceeding which would demonstrate that the
telephone companies were "guaranteed" recovery of their investments, nor is any such
guarantee embodied in the regulatory process.
55
The interrogatory answer relied upon
by Stentor as such evidence in that proceeding actually reads: The regulatory bargain
is not referred to as such in Canadian jurisprudence or regulatory decisions.
56

The term regulatory contract has at times been used by the Commission in informal
discussion of the regulatory environment.
In broadcasting, the term regulatory bargain was used in a report on convergence and
as shorthand in speeches by former commissioners,
57
to describe the approach

53
Telecom Decision CRTC 97-9 Price cap regulation and related issues (1 May 1997) at para.
331.
54
Ibid. at para. 334.
55
Ibid. at para. 343.
56
SRCI(CCTA)20ct95-135 LNI, at answer A, at 2.
57
Navigating Convergence II: Charting Canadian Communications Change and Regulatory
Implications, Convergence Policy, Policy Development and Research (August 2011):

The Broadcasting Act requires that the Canadian broadcasting system maintains and
enhances national identity and cultural sovereignty. It should provide local, regional and
national programming; contribute to and make use of content created by Canadians; and
reflect the linguistic duality and multicultural and multiracial nature of Canadian society
and the special place of Aboriginal peoples within society.

Historically, these objectives have been achieved through a regulatory bargain where, for
the privilege of holding a broadcasting licence that limits the number of competitors
entering the market, broadcasters have had to meet required levels of Canadian content
and other obligations.

See also CRTC Forum: Shaping Regulatory Approaches for the future, Message from Konrad
von Finckenstein, Chairman of the Canadian Radio-television and Telecommunications
Commission (24 March 2011):

Traditional approaches to regulation and tools developed under existing legislation will
need to be revisited. For example, will a licensing regime in broadcasting that creates a
7 - 19

whereby broadcasting licences are given in exchange for a commitment to support
Canadian programming.
58

In its discussion paper submitted to the Telecommunications Policy Review Panel, the
Commission did lapse into discussion of the regulatory bargain under the Railway Act
as being a quid pro quo between the government and the telephone company the
provision of high quality service at affordable rates in exchange for the promise of a
reasonable return.
However, no Commission decision explicitly has found such a regulatory bargain in a
price cap or other Commission decision and certainly not within the four corners of the
Policy Direction.
Thus, the framing of the 2006 Telecom Policy Direction as part of any regulatory
contract should be rejected outright. This is clearly an attempt to move the discourse
about appropriate regulation from the realm of public law, where there is a long-
established body of common carriage and public utility law to private contractual
language, where ILECs and others can complain of broken deals and protection of
legitimate expectations. To allow such a construction is an invitation to find that the
Commissions forbearance decisions created commitments to the industry (and
reasonable expectations) that cannot be reversed and can constantly be questioned
as being a breach of this contract. Of course, this is not so: the regulator retains
jurisdiction at all times to re-regulate after forbearance
59
and is in no way constrained by
this fictional regulatory bargain. We make other comments about the place of and
nature of the Policy Direction in the section Policy, below.
BROADCASTING
Like telecommunications, broadcasting has had since the 1990s an act that directs the
CRTC to consider specific policy objectives. However, unlike telecommunications,
broadcasting had a rather longer history of policy development, including long eras of
CBC dominance, cultural adequacy reviews and industry structure changing reports and

regulatory bargain continue to be the most appropriate way to achieve public policy
objectives in that field, or is a reliance on market forces to be preferred?

58
See e.g, Rita Cugini speech: http://www.crtc.gc.ca/eng/com200/2011/s111012.htm; Konrad von
Finckenstein speech http://www.crtc.gc.ca/eng/com200/2010/s100617.htm.
59
See Bohdan S. Romaniuk and Hudson N. Janisch, Competition in Telecommunications: Who
Polices the Transition?,18 Ottawa Law Review 561 at 591:

This is not to suggest that regulatory forbearance implies a permanent loss of regulatory
jurisdiction. As we have argued elsewhere, forbearance is not irreversible. If, in the
opinion of the regulator, the circumstances upon which forbearance was premised have
changed to such an extent as to warrant a return to active regulation, there is nothing to
prevent the Commission from adopting such course of action.
7 - 20

studies. However, legally at least, the situation has been stable since the 1990s. The
Commission has the mandate to regulate and supervise all aspects of the Canadian
broadcasting system with a view to implementing both the broadcasting policy and the
regulatory policy.
60

The broadcasting policy for Canada enshrined in section 3 of the Broadcasting Act
contains an extensive list of policy objectives, most of which are aimed squarely at
serving Canadians. And nowhere is this more clearly expressed than in section 3(1)(b)
which describes the Canadian broadcasting system as providing a public service
essential to the maintenance and enhancement of national identity and cultural
sovereignty.
Section 3(1)(d)(iii) is also clear that Canadian broadcasting policy should through its
programming and the employment opportunities arising out of its operations, serve the
needs and interests, and reflect the circumstances and aspirations, of Canadian men,
women and children
Where broadcasting distribution is implicated, subsections 3(1)(t)(ii) and 3(1)(t)(iii) of the
Act require that BDUs:
should provide efficient delivery of programming at affordable rates, using the
most effective technologies available at reasonable cost [section 3(1)(t)(ii)], and

should, where programming services are supplied to them by broadcasting
undertakings pursuant to contractual arrangements, provide reasonable terms for
the carriage, packaging and retailing of those programming services. [section
3(1)(t)(iii)]
These last two in particular allow the Commission to base its decisions on policy
grounds that very much parallel, and in some ways are even a stronger match with,
consumer interests. This is especially so for the efficient delivery of programming at
affordable rates.
Similar to the Telecommunications Act, section 7 of the Broadcasting Act gives the
Governor in Council the power to issue policy directions to the Commission in respect of
Canadian broadcasting policy and regulatory policy. This the Cabinet has done on
several occasions over the last 20 years.
The Broadcasting Act also contains a series of regulatory objectives, most of which
are also oriented to the needs of Canadians. In the event of conflict between the

60
Broadcasting Act, section 5(1).
7 - 21

broadcasting policy and the regulatory policy, Parliament has given the policy objectives
precedence.
61

Thus, the overriding purpose of Canadian broadcasting law and policy is to serving the
needs of Canadians. Certainly, how best to go about achieving this purpose is open to
some interpretation and much debate, but the purpose is clear.
What has occurred only recently, however, is explicit citations of these policy objectives
and purposes contained in the Act in certain CRTC broadcasting decisions (notably
changes in control), after a long hiatus.
62
Thus post-Bell-Astral 1, BCEs George Cope
railed against the decision as being the wrong decision for Canada. Initially it seemed
Bell would file a Cabinet appeal which did not materialize, at least partly as there is
no mechanism in the Broadcasting Act that parallels section 12 of the
Telecommunications Act. However, Bells legal department subsequently clarified that
the CRTC had not followed its Diversity of Voices policy in the manner which Bell had
interpreted it and therefore Bell threatened to bring a petition to the Government to
issue a policy direction to follow its already in-place policies when reviewing change of
control transactions.
63
Presumably that bargain was that once sufficient tangible
benefits were paid, license transfers were automatically approved. Yet the CRTC went
to some pains in their decision to note that despite the ownership thresholds in the DoV
policy, the decision was still required to be, overall, in the public interest under that
policy and more importantly, under the Act.
Likewise, the CRTC in both the recent mandatory distribution applications and in the
national news services decisions, the Commission clearly referred to policy objectives in
the Act that parallel consumer concerns, such as affordability.
Finally, the CRTC has launched its major review of TV in a manner that clearly engages
consumers and the public in its decision-making, calling it a Broadcasting Notice of
Invitation instead of the customary Notice of Consultation and going to great lengths
to promote and encourage end users in the broadcasting system to speak up in what
otherwise has been an archaic, esoteric regulatory forum. We contend that the CRTC
always should have been this focused on the needs of Canadians. The broadcasting
regime is not so dissimilar from that of telecommunications. The forces that drive

61
Broadcasting Act, section 5(3).
62
See, for example, Broadcasting Decision CRTC 2012-574, Astral broadcasting undertakings
Change of effective control (18 October 2012) at paras. 9, 13-18, 60 and 68.
63
See for example amongst many other stories, LuAnn LaSalle, Bell still plans to petition cabinet
on Astral deal, 19 October 2012. In one of his very few unguarded moments, Mirko Bibic, BCEs
Executive Vice President and Chief Legal & Regulatory Officer, was quoted in this story as saying
of the CRTC decision: I think if government spends even just a bit of time looking at it, it will
become so readily apparent and obvious that yesterdays (Thursday) decision is an absolute
travesty, an absolute farce when it comes to regulatory administration.
7 - 22

consumer engagement now simply have had a more dramatic and quick effect on the
hoary world of broadcasting regulation than they appear to have had in the
telecommunications world.
64
Also, in the converged and vertically-integrated world of
Canadian communications, it should not come as a surprise that those consumers who
have been questioning their wireless bills, for example, may also be questioning their
television service and competitive alternatives.
RADIOCOMMUNICATIONS
Spectrum is different than broadcasting and telecommunications. Spectrum
management resides in a particular government department, Industry Canada, and
therefore its policy decisions do not benefit from the legal grounding in the Act that
purports to regulate the area. It is this wide scope for political and bureaucratic action
that is the concern in this area, not unclear law. There are still, however, incidents of
consumer and public interest policy to which the Minister must have regard.
The Canadian telecommunications policy objectives are, for example, incorporated by
reference into the Radiocommunications Act
65
, though these are discretionary in the
radiocommunications context, not mandatory.
Canadian telecommunications policy
(1.1) In exercising the powers conferred by subsection (1), the Minister may have regard to the
objectives of the Canadian telecommunications policy set out in section 7 of the Telecommunications Act.
[Emphasis added]
The policy objective for the management of Canadas radiofrequency spectrum policy is
found in the Spectrum Policy Framework for Canada, which is the policy foundation for
the Canadian Spectrum Management Program.
Canadas current spectrum policy objective is To maximize the economic and social
benefits that Canadians derive from the use of the radio frequency spectrum resource,
and one of the enabling guidelines for this objective states that spectrum should be
made available for a range of services that are in the public interest.
66

The overarching spectrum policy objective was given expression in Industry Canadas
policy and technical framework for the 700 MHz auction and for the upcoming 2500
MHz auction, where the stated objectives are:

64
)*+, -. ,/01 2*3045 ,- 6-+7*4, 8-4197:+ *46 ;9<=08 04,:+:1, 8-48:+41 2*1 *88:=:+*,:6 <> ,/:
8+:*,0-4 -. ,/: ?+-*68*1,045 )*+,080;*,0-4 @946A 2/08/ :4*<=:6 )BCD *46 -,/:+ 04,:+:1,:6 ;9<=08 04,:+:1,
04,:+E:4-+1 .04*==> ,- 6- 1:+0-91 *4*=>101 -. <+-*68*1,045 =08:41045 *46 ,+*41.:+1 *46 ,- 7*3: 19<1,*4,0E:
19<70110-41 *, ,/:1: /:*+0451"
65
Radiocommunications Act, R.S.C., 1985, c. R-2.
66
Spectrum Policy Framework, Enabling Guideline (b).
7 - 23

(i) sustained competition in the wireless telecommunications services market so that
consumers and businesses benefit from competitive pricing and choice in service
offerings;
(ii) robust investment and innovation by wireless telecommunications carriers so that
Canadians benefit from world-class networks and the latest technologies; and,
(iii) availability of these benefits to Canadians across the country, including those in rural
areas, in a timely fashion.
67

These objectives were expressed all with the intent that the 700 MHz and 2500 MHz
spectrum be deployed by telecommunications service providers in a timely manner for
the benefit of Canadians.
68

However, the undoubtedly political nature of spectrum management leaves these
policies and any others expressed that favour competitors, consumers or
incumbents highly malleable, with the natural suspicion again arising on the part of
any party that feels the policy pendulum has swung the other way from a particular
interest.
POLICY
TELECOMMUNICATIONS
Prior to the passing of the Telecommunications Act in 1993, it is fair to say Canada had
no explicit national telecommunications policy. As the former General Counsel of the
Public Interest Advocacy Centre wrote in 1989 (when the Railway Act applied):
Canada has never had a telecommunications policy. Nor is it likely to be able to develop
one in the foreseeable future. But this is not surprising. Despite the historic importance of
transportation to a country which is so large, and with so much empty space, we have
never had a national transportation policy either.
[]
A meaningful telecommunications policy would have to begin with asking some serious
questions. For example, what kinds of telecommunications should our system provide, to
what parts of the country, to which kind of customers, at what prices? What sort of
industry structure is necessary to achieve this? Can we continue to blend government
ownership and control over the system in the three Prairie provinces with private
ownership and control in the rest of Canada in what the Supreme Court of Canada has
held in the AGT case to be essentially a single integrated network? Who shall decide
what our telecommunications policy should be? The Government of Canada?
Governments of the Provinces? Or the various regulatory tribunals which regulate
telecommunications in a balkanized, federal/provincial structure on a day-today basis?

67
Supra note 20, 700 MHz and 2500 MHz Policy and Technical Framework, at 2.
68
Ibid.
7 - 24

In practise, telecommunications policy has been developed primarily by the regulators,
particularly the CRTC, whose jurisdiction covers more that 70 percent of Canadian
households. Yet there is nothing in any of the legislation governing the CRTC which tells
it how to do this beyond the well-worn phrase "rates must be just and reasonable" in the
Railway Act.
69

It is an unfortunate tendency of the General Counsel at PIAC to be overly sardonic (or,
as the staff and lawyers of PIAC never cease to say, incredibly cynical). Nonetheless,
the point is a good one, namely that the development of policy was, at least until
recently, left largely in the hands of the CRTC (and to some extent Industry Canada in
matters of spectrum). Many of the issues cited from that time have been solved by
circumstance (private versus public) and judicial decision (federal vs. provincial
jurisdiction). But it is well to remember that prior to the 1993 addition of the section 7
policy objectives that the CRTC got by on its law alone.
That is not to say that the government could not set policy. However, it did so in an ad
hoc manner by reversal and revision of individual CRTC decision. Probably the
relatively exaggerated ability of the political to interfere in telecommunications regulation
in Canada (under what is now section 8 and section 12 and even to some extent section
14) actually retarded the development of a comprehensive, coherent government-led
policy.
The next policy development after the policy objectives of 1993 was the
Telecommunications Policy Review Panel in 2006. The TPRP also noted that there was
too much political control of CRTC decisions and recommended that the section 12
Cabinet power to review and overturn those decisions should be repealed. However,
the TPRP fatefully recommended using the until then dormant power in section 8 to
issue policy directions to the CRTC. That recommendation was coupled with a faith that
the telecommunications industry had evolved to the point where market forces could be
relied on to serve the needs of Canadians:
The Panel believes the Canadian telecommunications industry has evolved to the point
where market forces can largely be relied on to achieve economic and social benefits for
Canadians, and where detailed, prescriptive regulation is no longer needed in many
areas.
70

Thus out of these two views was the Policy Direction of 2006 born.
71

69
Andrew J. Roman, The Telecommunications Policy Void in Canada (1989), 15 Can. J. of
Communications 96 at 96-7. See also Romaniuk and Janisch, supra.
70
Telecommunications Policy Review Panels 2006 Final Report at 1-22. Online:
https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/tprp-final-report-2006.pdf/$FILE/tprp-final-report-
2006.pdf.
71
It should be noted that none of the TPRPs reductionist modifications to the policy objectives of
the Telecommunications Act was accepted by the government. See TPRP Report
recommendation 2-2.
7 - 25

Yet much like a child that seems not to resemble either parent, the Policy Direction, in
its actual text, did not require blind faith in market forces to achieve economic and
social benefits for Canadians. This is because it actually reflects a consumer-oriented
view of the policy of using competition to achieve those social benefits.
The 2006 Telecom Policy Direction requires implementation of the telecommunications
policy objectives via reliance on market forces as a primary means to achieve the policy
objectives and then regulation, where necessary, should use measures that are
efficient and proportionate to their purpose and that interfere with the operation of
competitive market forces to the minimum extent necessary to meet the policy
objectives. Social regulation, when undertaken, is dealt with differently than economic
regulation, requiring only symmetrical and competitively neutral application of regulation
and no consideration of competitors.
The primary direction of the Policy Direction is as follows:
DIRECTION
1. In exercising its powers and performing its duties under the Telecommunications Act, the Canadian
Radio-television and Telecommunications Commission (the Commission) shall implement the Canadian
telecommunications policy objectives set out in section 7 of that Act, in accordance with the following:
(a) the Commission should
(i) rely on market forces to the maximum extent feasible as the means of achieving the
telecommunications policy objectives, and
(ii) when relying on regulation, use measures that are efficient and proportionate to their purpose and
that interfere with the operation of competitive market forces to the minimum extent necessary to
meet the policy objectives;
It is important to understand this direction not as an objective in and of itself, but simply
a means to achieving it. The Policy Direction is a set of instructions on how the
Commission should go about fulfilling its mandate which is contained in the policy
objectives. The 2006 Telecom Policy Direction is not the what of Canadian
telecommunications law and policy, but rather the how.
This was reflected in the press release announcing the 2006 Telecom Policy Direction.
It clearly stated that the direction dealt with how the CRTC should exercise its regulatory
mandate.
The Policy Direction requires that the CRTC now take a more market-based approach to
implementing the Telecommunications Act. A policy direction is a tool available to the
government through the Act to provide policy guidance to the CRTC on how it should
exercise its regulatory mandate.
72

72
Press Release, Government Issues Policy Direction to CRTC--Calls For Greater Reliance on
Market Forces (18 December 2006) (emphasis added).
7 - 26

The 2006 Telecom Policy Direction does not say that the CRTC is required to take an
exclusively market-based approach to its mandate, nor that the CRTC was obligated to
pursue, at all costs, unsupervised competition and reliance on market forces. Certainly,
the press release announcing the Policy Direction put the focus of the direction on
certain market-oriented outcomes:
Canada's New Government has again furthered its ambitious policy agenda for the
telecommunications sector by issuing the Policy Direction to the CRTC, said Minister
Bernier. Our plan will increase competition in the marketplace, which ultimately will have
a positive effect on the consumer who will benefit from greater choices and improved
products and services.
73

However, salesmanship aside, the actual text of the 2006 Telecom Policy Direction, with
its emphasis on reliance on market forces and minimally intrusive regulation only where
necessary, was not an order to the Commission to continue to de-regulate blindly, but to
use market forces as much as possible, and regulation as little as possible, where doing
so would result in achieving the policy objectives. These include consumer benefits
through greater choices and improved products and services but also the realization of
the entire gamut of policy objectives in section 7 of the Telecommunications Act.
Krause and Bibic are therefore wrong, we feel, to claim that constant reference to and
re-evaluation of the achievement of those very policy objectives (which they term
updat[ing] regulatory frameworks) is inappropriate or will produce less beneficial
results for consumers:
Moreover, while it is always appropriate for the regulator to review regulations to ensure
that they remain appropriate over time (especially in dynamic industries), stakeholders
also require regulatory predictability. The regulator must resist the urge to constantly
fine-tune market outcomes, under the guise of seeking to update regulatory
frameworks. The constant review of regulations after investment announcements have
been made and committed to results in a significant degree of uncertainty regarding the
regulatory outcome and its effect on the expected returns on investment. In response,
service providers will have to continually update their business and investment plans not
only in response to changing consumer demand but also to changing regulatory
commitments. Rather than improving the markets performance, the regulatory
intervention leads to increased uncertainty and regulatory risk. As a result, there is less
investment in future periods and the subsequent negative consequences such as higher
costs, and lower quality. Thus, either in an attempt to benefit current consumers, or as a
result of the innate impulse to regulate, the regulatory intervention reduces the benefits to
future consumers.
Were this logic followed, the Wireless Code would not have come into existence, as the
Commission would not have been permitted to require basic wireless service rules or
such breadth or that the rules be put in place for consumers now. This wider view of

73
Press Release, Government Issues Policy Direction to CRTC--Calls For Greater Reliance on
Market Forces (18 December 2006) (emphasis added).
7 - 27

telecommunications policy would be prohibited by the Policy Direction on the basis that
present customers should suffer until the competitive forces that would supposedly
produce such a set of baseline standards or at least better treatment for consumers
within a companys own wireless offerings would be cheaper for future consumers.
However, the CRTC rightly placed higher value on present consumer concerns with
wireless service than on the potential for an efficient future consumer wireless market.
This the Commission did by referring to the policy objectives and concluding that
improvement in wireless service for consumers was unlikely and in any case, very far in
the future indeed, while the need was pressing and present.
74

Even before the 2006 Telecom Policy Direction was issued, the Commission had taken
the position that regulation was only in place to further the policy objectives of the Act
and not to interfere with competitive markets. In its submission to the
Telecommunications Policy Review Panel the Commission, noting its statutory duty
under 7(f) to foster increased reliance on market forces for the provision of
telecommunications services and to ensure that regulation, where required, is efficient
and effective, said the following:
The Commission does not believe in regulation for the sake of regulation - but rather
regulation where it is required to protect consumers from the adverse effects of market
power; to ensure that the Government's telecommunications policy objectives are
satisfied when competitive market forces are either inadequate or not designed to
achieve the desired results; and to continue to ensure the orderly development
throughout Canada of a world class telecommunications system.
75

The Commission also cautioned that there are other telecommunications policy
objectives that must be balanced with competition, within section 7:
Moreover, our telecommunications legislation is not unidimensional. As discussed above,
the fostering of competitive markets is an important element of telecommunications policy
in Canada - but not the only one. Other policy objectives tend to get left out of the
equation if one reverts solely to competition law principles.
76

The view from incumbents in the industry, however, continues to be that the 2006
Telecom Policy Direction is exclusively about limiting regulation. The Policy Direction
was never about changing the market. It is rather, like the Oakes test, about limiting
government intervention where regulation is not warranted.
77
This seems a reasonable
assertion, except when the evidence about how Canadians are faring is ignored or

74
Telecom Decision CRTC 2012-556, supra note 39 at paras. 22-27.
75
CRTC, Discussion paper for the Canadian Telecommunications Policy Review, (17 August
2005) at para. 204.
76
Ibid. at para. 118.
77
Jonathan Daniels (Bell) et al., Policy Direction and Telecom Deregulation Three Years Later,
15th Biennial National Conference New Developments in Communications Law and Policy
(April 2010) at para. 96 (emphasis original).
7 - 28

distorted to suggest that all regulation is inherently unnecessary or that Canadians have
been faring better and better under de-regulation.
What is important to note here is that the Policy Direction did not mark a sudden shift
toward de-regulation and unsupervised competition, nor are recent regulatory actions
aimed at serving consumer interests somehow new. The point is that the needs of
Canadians have always been paramount in regulatory and de-regulatory decision-
making.
This trend traces back to a series of decisions beginning in the early nineties. The
Commissions deregulation of long distance service
78
, mobile wireless service,
79
retail
local exchange service,
80
and payphones
81
are all illustrative of a de-regulatory trend
that preceded the 2006 Telecom Policy Direction that nonetheless kept, as its
foundation, a consumer orientation.
For example in the wireless forbearance decision, Telecom Decision 96-14, the
Commission reserved its authority under section 27(2) of the Telecommunications Act
because of concerns over unjust discrimination.
The Commission considers open access to telecommunications networks to be in the
public interest. Consistent with this view, the Commission considers it necessary to
ensure that providers of these services do not unjustly discriminate against other service
providers or subscribers, or confer any undue or unreasonable preference, with respect
to access to their networks.
82
[Emphasis added.]
As another example, in the Local Forbearance decision the Commission was clearly
concerned about consumer interests, even in light of evidence about competition as it

78
Telecom Decision CRTC 92-12 Competition in the provision of public long distance voice
telephone services and related resale and sharing issues (12 June 1992).
79
As described by the Commission:

The forbearance framework was first established in Telecom Decision 94-15, and was
refined in Telecom Decision 96-14. In a number of follow-up company-specific decisions
and orders, such as Telecom Decision 98-19, Telecom Order 99-991, Order 2001-501,
and Telecom Decision 2004-84, the framework was extended to the wireless services
provided by Canadian carriers that were not captured by Telecom Decisions 94-15 [the
Wireless Forbearance decision] and 96-14. The Commission retained its regulatory
powers under section 24 and subsections 27(2) and 27(4) of the Telecommunications Act
for mobile voice services. In Telecom Decision 2010-445, the Commission amended the
forbearance regime for mobile wireless data services to be consistent with the
forbearance regime applicable to mobile voice services.

80
Telecom Decision CRTC 2006-15 - Forbearance from the regulation of retail local exchange
services (6 April 2006) as varied by Order in Council P.C. 2007-532 (the Local Forbearance
decision).
81
Telecom Decision CRTC 98-8, Local Pay Telephone Competition (30 June 1998).
82
Telecom Decision CRTC 96-14, supra note 37. See also: Telecom Decision CRTC 94-15
Regulation of wireless services (12 August 1994) and Telecom Decision CRTC 95-19 -
Forbearance Services provided by non-dominant Canadians carriers (8 September 1995).
7 - 29

accepted that competition sometimes focuses on a certain market segment, and is often
a poor method of serving the most vulnerable. Thus the Commission heard the PIAC
and CAC arguments made in that proceeding that certain low-income and disabled
consumers would not be offered a similar product to standalone residential primary
exchange service and continued a price cap for those users despite the Policy
Direction:
The Commission considers it important to ensure that the affordability of essential basic
residential PES not be compromised in a forborne market. The Commission is concerned
that vulnerable and uncontested residential consumers may not have access to stand-
alone PES at affordable rates in a forborne environment without a pricing safeguard.
83

In the payphones decisions the Commission was also clearly concerned about access
by Canadians to this important service, especially in rural areas.
The Commission notes that the reported survey results suggest general consumer
satisfaction with the availability of pay telephone service. The Commission considers that
the number of complaints or lack thereof is not a good indicator of consumer satisfaction
with regard to the availability of pay telephone service. The Commission considers that
issues of availability are likely of greater concern in small and remote communities and
concludes that there is a strong public interest in ensuring pay telephone availability in
those communities.
84

Indeed, we contend the very impetus for the Telecommunications Policy Review Panels
findings were, at their base, consumer-driven. The panel, although it neglected to
mention that Canadas previous telecommunications success had been predicated on a
carefully regulated industry, was concerned about a lack of wireless and internet
penetration among consumers, and concerned about Canadas slide from its historic
(1996 to 2006) success and leadership in communications.
85
Thus, where the
Commission now views its regulatory authority as being called in aid of furthering these
larger policy goals of increased internet and wireless penetration and usage, it should
not be surprising that it will take measures to advance the policy objectives from the
Telecommunications Act that align with these larger goals.
BROADCASTING
Although there is no mechanism for Cabinet review under Broadcasting Act, there
continues to be the potential for much ad hoc policy-making via Cabinet order under
section 7 of the Act. Although it has been some time since the policy directions
regarding satellite services, those directions show the potential for direct political

83
At para. 451 (emphasis added).
84
Telecom Decision CRTC 2004-47, Access to pay telephone service, at para. 34. (emphasis
added).
85
Telecommunications Policy Review Panel Final Report 2006, ch. 1, The Need for Change.
7 - 30

interference in broadcasting regulation and a possibility for sudden on changes in
broadcasting policy being broadcast from on high.
We note here that based on promises in the federal governments Budget Speech,
following on its Throne Speech, that Canadians will soon be able to pick and pay for
cable TV programs they want, rather than having to settle for bundles. While PIAC is
supportive of the idea, and it appears that, for the time being the government is awaiting
the outcome of the CRTCs Future of TV proceeding, it is inappropriate to have this
policy pronouncement hanging over the proceedings.
The lack of a power such as that in section 12 of the Telecommunications Act to
overturn broadcasting decisions on changes of control has spawned the Krause and
Bibic call in their paper for a broadcasting policy direction. However, that policy
direction would, presumably, be worded to direct the CRTC to follow its own policies
perhaps with a few choice suggestions for what that policy really consisted of in effect,
a call for a direction that only one team ever wins that is, the party looking to make an
acquisition.
Further on in the Roman piece cited above, he notes in regard to a potential policy
direction on the telecom side, although it applies equally in broadcasting, presciently:
Rather than devising a national policy with enough wisdom and judgment to justify
legislation that it might last a couple of decades, politicians have sought the right to give
ad hoc instructions to the regulator which would permit the latter to affect the outcome of
particular cases even before any of the evidence is heard by the Commission. This will
create an open season of lobbying the Cabinet and the Minister to issue a directive which
will fix the outcome before the case even starts. Any other directive would be pointless.
86

Where there is a void in real policy, as there was in broadcasting with regard to
transfers of control for many years a de facto policy of passing all transactions,
provided they made a big enough tangible benefits contribution, was a foreseeable risk.
The Diversity of Voices policy clearly was not intended to be a comprehensive policy
guidance document for media mergers and it has been exposed in the various Bell-
Astral-Corus machinations as manifestly not up to the task, even in concert with the
equally fragmentary and ill-suited (for the purpose of public interest media concentration
review) Vertical Integration policy.
In broadcasting, the unwritten policy of the Competition Bureau to give a passing
grade to all media mergers maybe with a divestiture or two here and there, has not
assisted the public or consumer interest. It was fascinating to watch the CRTC move
quickly to release its decision Bell-Astral 1 before the Competition Bureaus merger
review was made public as it knew of this Competition Bureau tendency. It was

86
A. Roman, The Telecommunications Policy Void in Canada, supra, at 98.
7 - 31

equally fascinating to watch Bell and Astral make very sure the Competition Bureau
decision on BA2 was in the bag prior to the hearings before the CRTC.
It is encouraging to see the CRTC realizing the policy vacuum in this area, at least
regarding tangible benefits as an element in change of control reviews, and we are now
awaiting outcome of the Tangible Benefits policy review which we hope could reverse
weird results in Corus & BA2 such as a statement that a company can at times be
controlled by another, and, at other times, not.
RADIOCOMMUNICATION
The policies issued by Industry Canada on spectrum and related matters under the
Radiocommunications Act arguably have been managed in a consistent way by the
conservative government, first in a minority situation and lately in a majority. However,
whether one views the 700 MHz auction as a clear continuation of the course first set in
the AWS auction, or a retreat from the course, or that it has been all over the place, or it
is all explainable as an effort to ensure four players in each market, the fact remains
that spectrum policy is the single most contentious political issue of the recent past.
This is not good.
Anyone who worked in the field over the summer of 2013 was scarred by the sparring.
Huge sums were spent by industry and the government to make their positions known.
Dark talk of lawsuits and media manipulation filled the air. Certainly this is not a way to
set transparent, durable, thoughtful, public-interest-respecting policy.
Also, a word about the recent amendment to the Telecommunications Act in Bill C-31,
Economic Action Plan 2014 Act, No. 1. Division 16 provides a time-limited wholesale
roaming rate (average retail revenue divided by data, text of voice volume for the
provisioning carrier for the year) that will be repealed when the CRTC arrives a
wholesale rate for roaming in the already announced and ongoing wholesale roaming
proceeding. Whatever we may think of the amendments likely effect on competition in
wireless, this is the wrong way to set policy. The CRTC should have been left alone to
follow its proceeding. The amendment quite clearly prejudices that proceeding and
threatens a whole slew of such peek-a-boo legislative actions when the CRTC is too
slow or not listening.
We do not like the present policy structure for the control that rests in a political sphere
being the Department of Industry Canada, as well as for this newest reason. There
have been many and varied calls for the CRTC to assume control of spectrum
management over the years. If this is to be done, a set of policy objectives, well-
debated before implementation and embedded in legislation, should be added.
7 - 32

RECOMMENDATIONS
Given the swirl of policy directions, announcements, guidelines and ad hoc Cabinet
decisions, we believe the time has come to stand back and assess, in a structural
manner, where the place of policy is in relation to communications law in Canada.
Therefore we are so bold as to make the following recommendations.
ABOLISH THE POLICY DIRECTION POWER
Although the Policy Direction, as written, is largely effectively redundant to section 47,
except to the extent it suggests using competition as a primary means for achieving the
policy objectives and although at heart, we do not feel it threatens consumer gains in
telecommunications policy, we are nonetheless firmly of the view it should be repealed.
The Policy Direction adds essentially nothing to regulation of telecommunications,
however, it provides a vehicle for obfuscation by the industry of telecommunications
law, as outlined above. Yet it also creates much more regulatory legal work of a
pointless nature. This irony is not lost on PIAC as it files costs claims under the telecom
rules. However, it is of no joy to us that those awards come out of consumer rates.
We would go further, however, and recommend the opposite of the
Telecommunications Policy Review Panel and suggest that section 8 of the
Telecommunications Act and indeed section 7 of the Broadcasting Act both should be
repealed.
REPEAL CABINETS POWER TO OVERTURN TELECOMMUNICATIONS DECISIONS OF THE CRTC
The Cabinets power to overturn CRTC decisions is a vestige of the days before
regulation when the Railway Committee of the Cabinet made decisions regarding Bell
Canada before there was even a Board of Railway Commissioners.
There is no modern justification for this power. It undermines CRTC authority. The
CRTC is statutorily mandated to consider the public interest and many other
considerations, has a wide discretion and undoubted expertise in the area. Parliament
remains present to adjust the CRTCs governing legislation if the populace believes the
CRTC must be guided by different law. (Minister Clements twitter rebuke was a low
point of this trend. Although it achieved a result desired by elements of the consumer
movement it was not the proper manner to achieve a durable result and was, to the
former Chair of the CRTC, frankly demeaning and unacceptable treatment.) Cabinet
processes and deliberations are secret and need not consider matters raised before the
Commission. Although reasons for such decisions are sometimes available, they are
7 - 33

not required,
87
so we are no further ahead on understanding policy shifts or the public
interest after such an intervention.
88

There is no reason that parties in telecommunications and in broadcasting (for
licensing) should not have to learn to live with a CRTC decision and think long and hard
about whether they really believe it worthwhile testing the legality of the decision before
the Federal Court of Appeal and the risk of a ringing endorsement of CRTC
jurisdiction.
PUT SPECTRUM MANAGEMENT UNDER THE CRTC
Canada remains the only major economy that does not regulate spectrum from with the
telecommunications regulator. The bifurcation of spectrum management and
telecommunications regulation is inefficient and can lead to such problems as one
regulatory bodys decisions prejudicing the other, or a lack of policy cohesion, and even
a situation of regulatory helplessness.
89

The last five years have shown at least one thing: that keeping spectrum policy
development within a government department generates suspicion, lobbying and now,

87
Cabinet need only set out the details of any matter that the Governor in Council considers to be
material to the reconsideration. See also A. Roman, The Telecommunications Policy Void in
Canada, supra, at 103:

Unless and until some degree of procedural fairness is imposed upon these Cabinet
proceedings, either by the Cabinet itself or by the courts, parties appearing in hearings
before the CRTC will never be safe from political interference at the behest of a
disgruntled party. Indeed, as the NAFQ Case has suggested, it is possible for the Cabinet
to set aside a decision of the CRTC employing criteria which the CRTC itself could not
lawfully have employed, at the behest of a stranger rather than a party to the proceedings,
with the appeal process conducted entirely in secret and without notice to the parties. This
demonstrates that in really controversial issues, the CRTC is not really the principal
authority in telecommunications matters, but merely the slow way to the Cabinet.
Accordingly, those with ready access to the Cabinet are much more likely to be successful
in having telecommunications decision-making go their way than those without.

88
This can be particularly troublesome in situations where the decision reverses a CRTC holding
that considered much evidence and arrived at a balanced view such as forbearance criteria in
local service telephony. The Order Amending Telecom Decision 2006-15 is long on recitals but
low on detail about the law. Thus we have a forbearance test that deems competitive presence
alone can protect the interests of users a difficult result to square with the CRTCs finding
(untouched by the review Order) that residential PES had to continue to be regulated due in part
to customers being uncontested in forborne areas.
89
For example, Industry Canada, in its 2012 consultation, stated that the Commission had the
authority to apply rates and terms related to roaming:

The CRTC has the authority to set rates and conditions for the provision of
telecommunications services within the jurisdiction of the Telecommunications Act.
Therefore, the CRTC may consider applications relating to rates and terms for matters
such as roaming and tower sharing. (Industry Canada, Revised Frameworks for
Mandatory Roaming and Antenna Tower and Site Sharing (March 2013), DGSO-001-13,
at para. 167.)
7 - 34

political fighting of an egregious in a very harmful public manner. In our view, it certainly
does not promote a transparent and durable policy that is in the public interest. Even
when matters go well for consumers, the backlash that is generated erodes gains,
taxes the department and costs taxpayer money. It is also not hard to imagine a day
when spectrum policy is once again firmly within the control of incumbent industry
lobbyists, as it was until this most recent aberration of interest in consumers.
RESEARCH, DEBATE AND PUBLICLY STATE CANADAS COMMUNICATIONS POLICY
Even if communications law were clear, were applied in accordance with policy
objective that were placed in the various acts and even if political ad hockery and
Cabinet interference drummed out of communications policy-making, we contend that
there is a need for a national policy after all: a public, transparent, inclusive,
comprehensive debate about communications policy (telecommunications, broadcasting
and spectrum) that would help explain to the public, to legislators, to provinces (now
that they appear to be trying to re-enter the sphere)
90
and to the CRTC (to help keep it
generally on track but without interfering with its independent adjudication).
Communications in Canada continue to grow in importance but to be increasing
discussed in scattered and uncoordinated fora, with varying degrees of public input and
many Machiavellian twists and turns. This is the true inefficiency in the policy debate.
Canada needs this public debate. It also needs unbiased, in-depth research upon
which to base these communications policy goals of tomorrow. The CRTC should be
tasked from now with compiling all manner of these data in anticipation of the policy
review to come. This will allow all parties to have in-depth, common data to analyze a
notable difference from the 2006 Telecom Policy Review Panel. Likewise, data gaps
such as those identified during the recent Bell-Astral-Corus proceedings can be filled by
more robust data collection by the CRTC with the data being made available for public
analysis.
91

Should such a policy review produce new or changed policy objectives for the
amendment of the Telecommunications Act, the Broadcasting Act or the
Radiocommunications Act or even an eventual amalgamation of the three into a
Communications Act, the exercise would allow all parties now to exorcise the various
policy failure demons that each might have as a result of our present, fragmented
approach to communications policy in Canada.

90
See the recently proclaimed Ontario Wireless Services Agreements Act, 2013, S.O. 2013, c. 8.
91
See Broadcasting Notice of Consultation CRTC 2013-448, Items 2 to 4, Comments of
PIAC/CAC/COSCO/NPSCF/OC, September 27, 2013 at para. 52.
7 - 35

CONCLUSION
As more and more Canadians consume increasingly essential communications services
and more data, but continue to run into accessibility, affordability and fairness issues,
the more the story of competition has become difficult to defend, and thus we have seen
attempts by vested interests to read into the law the notion of a regulatory bargain and
protected expectations, as well as an improper overstatement of the proper place of
market forces in communications law and policy, as ways to prevent Canadas
communications regulators from doing anything to reverse the tide. Of course, we see
now that politicians and regulators have begun to take notice of the realities, and this
can no doubt be in part due to the fact that most of those regulators themselves receive
pay the same bills as their key constituent, Canadians, and because technology has
opened up politicians, regulators, and regulatory processes, to much broader public
participation.
This paper has argued that this is a welcome development, and one that should be
sustained, but that communications regulation and policy should be left to the
Commission, free from political interference. The Commission, for its part as the
steward of Canadian communications law and policy, must in exercising its mandate in
the public interest, more clearly articulate its jurisdiction. On top of this base, we can
then re-examine the true Canadian communications policy goals in a measured and
non-confrontational manner, that is in all our interests.
.

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