Canada's four largest telecommunications companies ganged up Thursday afternoon to jointly petition the federal Cabinet to overturn a decision by the country's broadcast regulator to control Internet-based communication services.

The companies believe the decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to regulate the marketing and pricing of only those Voice over Internet Protocol (VoIP) services offered by the incumbent telecommunications companies will result in higher prices and less choice for Canadian consumers. Accordingly, the companies have asked the Cabinet, as a matter of urgency, to eliminate the economic regulation of VoIP services regardless of the service provider.

"The CRTC's decision clearly does not recognize the realities of this technology or the market," said Jay Forbes, president and CEO of Aliant. "It makes Canada the only major industrialized country to regulate VoIP. If left unchallenged, it will have significant consequences for consumers in terms of competition, choice, pricing, and the development of innovative new services."

VoIP is changing the way voice services are delivered, allowing new and foreign competitors to enter the market easily and with relatively little investment. However, based on the CRTC's decision, only VoIP services offered by established telecommunications companies are subject to economic regulation. All other competitors, including the large cable companies and foreign re-sellers, are free to offer services and bundles unencumbered by price regulation and marketing restrictions.

"Beyond the obvious consequences for consumers, this decision stands in stark contrast to the government's own policy to encourage the growth of Canada's ICT sector and its contribution to Canadian competitiveness," added Bell Canada CEO Michael Sabia. "It sets back innovation in our sector, hampers productivity and undermines Canada's hard-won leadership in the communications industry by constraining the very companies best positioned to maintain that leadership. It is simply bad public policy."

The companies acknowledge the CRTC's role in regulating all VoIP service providers in areas of important social policy, such as the provision of 911 services, privacy safeguards, and access to services by disabled persons.

"The CRTC has failed to recognize that with VoIP there are no barriers to entry and no one has market power, including the established telecommunications companies," added Telus president and CEO Darren Entwistle. "Vigorous competition already exists leaving no justification for economic regulation of VoIP services, particularly in favour of some competitors – the cable companies – who clearly do not need a leg-up at the expense of consumers and the development of a vibrant, competitive industry."

Immediately following the joint press release and conference, the Canadian Cable Telecommunications Association (CCTA) offered a retort.

That body urges the federal Cabinet to reject the appeals by Aliant, Bell Canada, SaskTel and Telus.

The Canadian cable industry maintains that the CRTC's VoIP decision promotes competition in the local residential telephone market while ensuring consumers benefit from lower prices.

"Local telephone service has been a monopoly for over 100 years and VoIP services could also follow in the same direction," said Michael Hennessy, CCTA president. "The CRTC VoIP decision provides basic safeguards and prevents targeted or below cost pricing. These requirements ensure that the local telephone companies can not use their monopoly position to unfairly drive out emerging competition and undermine investment in broadband networks."

The CCTA added monopoly telephone companies are free to launch VoIP services and offer discount pricing to consumers subject only to safeguards that prevent anti-competitive pricing.

"There is no reason to appeal the CRTC's VoIP decision, when consumers will immediately benefit from lower prices and innovative services," said Mr. Hennessy. "Deregulating the telephone companies' VoIP services would undermine emerging competition as much as deregulating their traditional monopoly services. There are public proceedings already underway that address all the issues under appeal. The CRTC has launched a public process to develop criteria for deregulation of local telephone companies once competition is established."

The federal government has also appointed an independent Telecommunications Panel to recommend a long-term policy and regulatory framework for Canada. CCTA believes it is premature to address the Cabinet appeals by Aliant, Bell Canada, SaskTel and Telus until these other government proceedings have been completed.