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Competition Bureau Submits Comments on Telecommunications Price Cap Review

OTTAWA, October 26, 2001 — The Competition Bureau submitted its comments this week to the Canadian Radio-television and Telecommunications Commission (CRTC) on its "price cap review" of telecommunication services offered by local telephone companies in Canada. The Bureau's comments are submitted to help ensure competition issues are taken into consideration in the CRTC's formulation of revised pricing regulations for the telecommunications industry, scheduled to take effect on January 1, 2002.

The Bureau's general position is that the current price cap structure should be maintained, with some modifications, in order to foster additional competition in the residential and business telephone services market throughout Canada, while protecting consumers and competitors from the abuse of market power by major local telephone companies. This approach will also ensure that market uncertainty is minimized for consumers, firms and investors.

The Bureau's key recommendations are as follows:

First, the present price "cap" or ceiling should be extended from three to five categories to provide more opportunity for pricing flexibility by the local telephone companies.

Second, competitors should be granted access to all essential facilities owned by the local telephone companies at long-run incremental cost -- the price they would pay in a competitive market.

Third, competitors should be granted the ability to resell the basic local telephone service of the major telephone companies through the introduction of discounted prices for resale.

These proposed modifications are designed to create a price cap structure that replicates the economic incentives of an open and dynamic competitive market, while offering consumer protection and encouraging entry into local telephone service by new firms.

An Executive Summary of the Commissioner's Comments on Telecommunications Price Cap Review - (PDF: 15.7 KB) is accessible on the Bureau Web site, at www.competitionbureau.gc.ca. The complete Comments of the Commissioner of Competition on Price Cap Review are accessible on the CRTC's Web site at http://www.crtc.gc.ca/partvii/eng/2001/8678/c12-11.htm

In addition to enforcing the various provisions of the Competition Act, the Commissioner of Competition has the statutory right to intervene before federal regulatory boards, tribunals and other agencies to make presentations concerning competition.

The Competition Bureau is an independent law enforcement agency which ensures that all Canadians enjoy the benefits of a fair and competitive economy, low prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:

Michel Marquis
Senior Communications Advisor
Communications Branch
819-953-4257

For general public enquiries, please contact:

Competition Bureau's Information Center
1-800-348-5358 or 819-997-4282