CAPÍTULO 2: ÁREA DE ESTUDIO
2.2 PROBLEMÁTICA
MTS and Allstream are subject to regulations that materially impact how they can conduct business. The telecommunications and broadcast industries in which we operate are federally regulated, pursuant to both the Telecommunications Act and the Broadcasting Act. We are also subject to other federal and provincial regulations that shape how we conduct our business.
MTS operates as an incumbent local exchange carrier whose telecommunications business is regulated primarily by the CRTC and by Industry Canada in areas such as spectrum or ownership. MTS’s television business is licensed as a broadcasting distribution undertaking (known as a “BDU”), which is subject to a different regulatory regime. Allstream operates as a competitive local exchange carrier, which means it is generally subject to less regulation than MTS. However, as a competitive carrier, Allstream is materially reliant on regulation. This allows Allstream to have mandated access to incumbent carriers’ networks in order to complete its “last mile” connections in those customer locations that are some distance from Allstream’s own network facilities.
This regulatory section describes recent developments relating to regulatory and policy proceedings that could
materially impact both subsidiaries. Several years ago, the regulatory trend was towards more “forbearance” - meaning telecommunications services were subject to less regulation. Recently, we are seeing an accelerated pace of regulation by federal and provincial governments, as well as increasing intervention by the CRTC, Industry Canada and other regulatory bodies. We are facing a more dynamic environment, which is presenting both new risks and opportunities for each subsidiary.
We mitigate our risks and try to maximize opportunities by actively participating in regulatory and policy proceedings. Having both an incumbent and a competitive network provides us with a unique regulatory voice. We leverage this unique position to drive competition for Canadians, while at the same time benefiting our shareholders.
Developments impacting MTS Wireless roaming
In late 2013 and early 2014, the CRTC initiated various proceedings to evaluate the competitiveness of the Canadian wireless industry including wholesale wireless roaming rates and tower sharing. In June 2014 the federal government adopted legislation that caps the domestic roaming rates that Canadian carriers charge one another at the level that these carriers charge their retail customers. Thereafter, the CRTC held hearings on wholesale wireless and is expected to issue direction on roaming and tower sharing early in 2015. MTS’s position supports competition, while asking for recognition of the unique role that regional carriers have in the industry. The upcoming CRTC decision could benefit MTS (by reducing its roaming expenses outside Manitoba) or harm MTS by giving other carriers access to MTS’s extensive
Wireless spectrum auctions
On December 18, 2014 Industry Canada made a series of announcements with respect to several upcoming wireless spectrum auctions as well as spectrum allocation and licensing requirements. In particular, Industry Canada finalized its rules with regards to the AWS-3 auction, now scheduled to begin on March 3, 2015 with results being announced on March 6, 2015. The 2500 MHz spectrum auction will begin on April 14, 2015 and is expected to last four to six weeks. Spectrum is a valuable and scarce resource for MTS. It not only determines the types of wireless services we can make available to our customers, it also provides to possibility for new competitors to enter our market, or for existing competitors to enhance the services they offer to Manitobans. In addition, auctions rules can impose material new conditions on wireless providers, such as requirements to deploy rurally (which is more expensive and generally less profitable). It can also introduce complexities such as compatibility with our existing network/handsets and our other joint network arrangement with Rogers. In addition, “spectrum caps”, in which individual carriers may be limited in the amount of spectrum they can own, or new spectrum they can acquire, may reduce our ability to acquire spectrum and be competitive in future spectrum auctions. Further details on the risks and opportunities associated with spectrum can be found in the section on ‘Risks and uncertainties’.
9-1-1 Action Plan
In mid-2014, the CRTC issued an Action Plan for 9-1-1 services, which included two priorities which could potentially increase or advance investments required by MTS. The CRTC’s first priority is to improve the accuracy of location information determined for wireless 9-1-1 calls. Information gathering has commenced, but any changes to
requirements will not be known for several months. Possible areas of impact include proactively replacing handsets distributed prior to August 2005, which are not capable of using assisted-GPS to determine location, and upgrading processes, systems and databases to provide recorded address information to the 9-1-1 operator. The CRTC’s second priority is to improve the reliability and resiliency of 9-1-1 networks. Again information gathering is underway, but a formal Notice of Consultation is not expected until mid-year. MTS’s 9-1-1 network has some components that lack geographic diversity, so if the CRTC were to mandate geographic diversity, additional investment to provide it would be required, likely in 2016.
Let’s Talk TV
On January 29, 2015, the CRTC issued two separate decisions relating to some of the issues addressed in its Let's Talk TV proceeding. Those decisions specifically addressed free over-the-air television and simultaneous substitution. CRTC rulings on other aspects of the rules applicable to Canadian broadcasting addressed in this proceeding are expected imminently. The major outcome from the CRTC’s Let’s Talk TV proceeding is expected to be the introduction of more packaging flexibility for consumers, allowing them to choose individual programming services on a pick and pay basis. MTS already offers smaller theme groups than is common in the industry and supports a pick and pay model, although the outcome of this proceeding could be positive or negative to MTS.
All channel emergency alert implementation
By March 31, 2015 broadcasting undertakings will be required to fully participate in Canada’s National Public Alerting System and provide all channel emergency alerts that warn Canadians of imminent threats to life, such as tornadoes, floods, forest fires, industrial disasters and tsunamis. MTS is on track to meet this deadline for our Ultimate TV
®
service, but we have been unable to find or develop a solution that will allow us to provide emergency alerts on our older Classic TVplatform. We have requested a one-year extension to the implementation date for customers currently on this platform, to allow us to migrate them to the Ultimate TV®
platform. However, if the extension is not granted, there is a risk that we could lose some of these customers because we do not have the ability to migrate them all by the deadline. There is also a risk that MTS could incur regulatory penalties, for example a shorter licence term for our broadcast distribution licence, which is up for renewal in 2015.Basic telecommunications services
The CRTC has indicated it will initiate a comprehensive review of the Basic Service Objective in 2015. The proceeding, to take place during 2015-16, will determine what services (for example, voice and broadband) are required by all
Canadians to fully participate in the digital economy and whether there should be changes to the subsidy regime and national contribution mechanism. The CRTC’s eventual decision to continue, discontinue or expand the Basic Service Objective will have impacts on the subsidy regime, a regime in which MTS is both a recipient and a contributor. A decision on the basic telecommunications services proceeding is not expected until 2017.
Developments impacting MTS and Allstream Federal Budget Implementation Act (Bill C-43)
On December 16, 2014 the Federal Government’s budget implementation bill, Bill C-43, received royal assent. As a result, the CRTC will have the ability to levy fines, known as administrative monetary penalties (“AMPs”), for contraventions of the Telecommunications Act or any regulation or decision made pursuant to it. Depending on factors, such as the nature and scope of the violation or the benefit obtained from the commission of the violation, the fine for a first violation can be up to $10,000,000 for a corporation. The fine for subsequent violations can be as much as $15,000,000 per violation. Industry Canada was also given the ability to levy AMPs for contraventions of certain provisions of the
The bill also prohibits telecommunications service providers (“TSPs”) and broadcasting undertakings from charging their subscribers to receive a paper bill. Any TSP that does so will be subject to the fines under the new AMP regime, while the Broadcasting Act was amended to include provisions for a fine of up to $250,000 for a first offence and up to $500,000 for each subsequent offence.
Essential facilities
The CRTC has concluded its hearings on “essential facilities”, which pertain to situations in which third parties can access the networks of others. The Company’s view is that residential markets are already very competitive and no further regulation is required where there are less competitive choices in the business market and therefore the government needs to ensure that access remains available. Given the scope of this proceeding, there could be a material changes to the regulatory framework and the terms by which competitors could access MTS’s networks, or, conversely, Allstream can access the networks of its competitors. A decision is expected in early Q2 2015, although there could be one or more follow up proceedings required before all the rulings can be implemented.