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Convergence vs. regulation: Is Canada being left in the cold?

OTTAWA, ONTARIO -CANADA. Canadian financial markets and the business media have been engrossed with income trust conversion announcements from two of Canada’s largest telecommunications companies (Bell Canada & TELUS). While the announcements are hugely important to investors who seek higher returns and the federal government who is concerned over lower tax revenues, scant public attention has been given to convergence and its effect on the heavily regulated Canadian telecommunication sector.Although Canadian consumers are driving change, they haven’t realized the extent convergence is shifting the competitive landscape for video, voice, data, and mobility services. Companies that were once in separate market places now compete head-to-head. But together these companies are also playing a major part in demanding regulatory reform in Canada. It would appear the current federal government has grasped the situation and is preparing to act.Industry Minister Maxime Bernier, responsible for the telecom sector, has publicly stated he wants to introduce major, market-oriented reform of Canada’s $33B telecommunications sector this fall. He assures that any package would include sweeping legislative changes, massively overhauling the regulatory apparatus, and a gradual opening of the market to increased foreign competition.Speculation over what the reforms could look like has been centred on the 127-recommendation report from the Telecommunications Policy Review Panel tabled this past March. http://www.telecomreview.ca/epic/internet/intprp-gecrt.nsf/en/Home While the report is comprehensive on telecom, its authors came to the conclusion that reforms should also address the future evolution of Canadian broadcasting policy as it is”inextricably related to it [telecom reform]” With the rapid change convergence creates, it makes sense for a combined review of telecom and broadcasting policy. However given the current electoral landscape in Canada, the politics surrounding a simultaneous review could be impractical. Is the Canadian government ready for convergence? No, not by a long shot. Regulators need to realize, that a failure to review current policies will undoubtedly hamper innovation, stunt nation-wide productivity gains, and ultimately make Canadian regulation irrelevant. But despite resistance Bernier is apparently facing from his own department (making a fall introduction of reforms somewhat of a stretch), he has clearly signaled that he gets it.

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