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

17th 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.


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? ......................................................9

On condition section 24 .................................................................................................................................................... 10 The true policy direction section 47.......................................................................................................................... 11 Forborne, but not forsaken section 34 ...................................................................................................................... 14

Confusion 2: The Policy Direction is not a Regulatory Contract ......................................................................... 17 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).

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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).

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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 interestwill 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,

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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.

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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.

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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.)

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Consider also how telecommunications customers are finally finding the CCTS online16 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

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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 services19, 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).

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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 CCTS22 and now the Wireless Code23 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).

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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 Act25, 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 providers29 and subsequent industry requests30 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 [1In 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).

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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.

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(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.

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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.

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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 96-1439).

The CRTC found in Telecom Decision 2012-55640 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).

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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.

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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.

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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).

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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, 24th 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.

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The Commission expressed doubt as to the existence of a regulatory bargain in the first Price Caps hearing53, 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

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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 forbearance59 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.

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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).

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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.

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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 Act65, 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 Part of this waking to dormant consumer and public interest concerns was accelerated by the creation of the Broadcasting Participation Fund, which enabled PIAC and other interested public interest intervenors finally to do serious analysis of broadcasting licensing and transfers and to make substantive submissions at these hearings. 65 Radiocommunications Act, R.S.C., 1985, c. R-2. 66 Spectrum Policy Framework, Enabling Guideline (b).

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(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.

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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.

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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).

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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 mark

Lawford and White - The Consumer Interest in Telecommunications and Broadcasting

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