Proposed Acquisition by TELUS Mobility of Microcell

FAX: (819) 997-0324
Mr. Gaston Jorre
Senior Deputy Commissioner
Competition Bureau
50 Victoria St
Gatineau, QC
K1A 0C9
Dear Mr. Jorre:
RE: Proposed Acquisition by TELUS Mobility of Microcell
I am writing to you with regard to the proposed acquisition by TELUS Corporation of Microcell. The Public Interest Advocacy Centre (PIAC) views this proposed acquisition with some concern.
As you know, competition in telecommunications is intended to be a very important safeguard of consumers= interests. Indeed, the telecommunications regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), has stated many times its intent to rely on competitive forces instead of direct regulation, where possible. PIAC agrees. Competition has the potential not only to keep prices to consumers in check, but also to foster innovation and attention to specific customer needs.
Competition in the local telephony market for residential customers has been very slow to develop. In 1997, the CRTC ordered a number of measures, including interconnection and the availability of co-location and unbundled loops from incumbents, followed by local number portability and a number of other measures. However, the CRTC reports that, by the end of 2002, incumbents still had an aggregate market share of 95.2%, when measured in terms of number of lines. Looking at residential market share in individual large cities, the picture is not much different. Incumbents served 93.9% of residential lines in Toronto, 98.0% in Vancouver and Victoria, 99.1% in Ottawa-Gatineau, and 100% in Victoria, Edmonton, Regina, Winnipeg, and Quebec City. Only in Halifax have competitors had a noticeable effect, and even there, the incumbent has a market share of 87.3%.1
Competitive Local Exchange Carriers (CLECs) have had difficulty penetrating the local market, using either their own facilities or bottleneck facilities leased from the incumbent telephone companies. In consequence, hopes for increased competition have largely been placed upon wireless service providers, who use the radio spectrum as an access medium, and cable operators, who use a mix of coaxial cable and fiber optic rings to reach individual homes.
While Voice Over Internet Protocol (VOIP) has received a great deal of publicity lately, it remains that, to be used for telephony, VOIP must ride over an access medium to customers= homes. Today, that access medium is supplied either by the incumbent telephone company or by the cable operator, leading to a classic duopoly.2 The ability of others to provide VOIP, as an application over high-speed Internet connections, does not change the fundamental fact that the access medium, and hence local telephony as a whole, is still largely a monopoly or duopoly. It merely shifts the locus of monopoly power from the level of the voice service to the level of the high-speed Internet connection.
Wireless service suppliers (WSPs) have the potential to increase the number of competitive alternatives for basic telephone service. Traditionally, the cost per minute of this alternative has been too high for it to constitute a substitute for traditional wire-line telephony. However, costs have been dropping and the potential for meaningful competition is here.
Indeed, Microcell has entered the traditional local telephony markets, first in Vancouver and then in Toronto, positioning its City Fido service as a substitute for traditional telephony. The monthly charge of $45 for unlimited calling, which includes three features (Call Waiting, Call Forwarding, and Conference Call), seems to be attractive to customers. Indeed, some commentators have suggested that this initiative has TELUS Arunning scared@ in Vancouver.3
PIAC also notes that Microcell is the last remaining WSP that is independent of incumbent telephone companies and cable operators. Unlike them, Microcell does not have an existing wire-line business to protect, nor an existing collection of facilities that are at risk of being stranded. Indeed, Microcell has shown itself to be the only WSP that is truly interested in competing in the traditional wire-line telephony market. For example, to date Microcell is the only WSP that has registered as a CLEC, with all the obligations and advantages that entails.4
PIAC is concerned that TELUS= proposed acquisition of Microcell is intended principally to limit competition from products such as City Fido, and not for reasons of increased efficiency or network extension.
After all, TELUS mobility services already cover 92% of the Canadian population, thanks to the acquisition of Clearnet, another WSP.5 Acquisition of Microcell would not significantly increase this coverage. As well, the technologies used by TELUS and Microcell are incompatible. TELUS uses the CDMA standard, while Microcell uses GSM. As a result, there will be few if any efficiency gains in networks and their operation if the proposed acquisition is allowed to take place.
PIAC also notes that the proposed acquisition will lessen competition in the wireless services market. While Microcell=s share of that market is only 10% nationally, it has a significant presence in specific markets. More importantly, it is willing to innovate, in contrast to the other three participants, who seem content to exploit their existing services and customers.6 If competition is to flourish in the wireless and wire-line telephony markets, participants like Microcell are crucial.
In our view, there is a significant danger that the proposed acquisition of Microcell by TELUS is about eliminating a competitor, not about expanding into new markets or benefiting from economies of scale. PIAC urges you to examine carefully the rationale for this acquisition and the impact it likely will have, both on existing and on future competition. The acquisition will eliminate a market participant that has shown itself to be willing to compete vigorously for customers. Will it leave the wireless market in the hands of an oligopoly whose members prefer not to compete too vigorously on price with each other, much less with wire-line service providers?
Yours truly,
Michael Janigan
Executive Director/
General Counsel
1 CRTC, Report to the Governor in Council, Status of Competition in Canadian Telecommunications Markets (November 2003)
2 The possibility of using electric power lines has been explored for some years, but such arrangements are currently negligible, and still face major obstacles.
3 Shane Schick, ABest in Show@, 2004/05/17, at http://www.itbusiness.ca.
4 Obligations include providing customers equal access to long distance provider of their choice
5 George Cope, President and CEO of TELUS Mobility, presentation to RBC Capital Markets Conference, Banff, Alberta, 2004/02/05
6 Microcell has a “churn rate”, or rate of customer turn-over, of 3.1%, compared to 1.4% for Bell Mobility and TELUS Mobility. In PIAC’s view, a high churn rate is indicative of vigorous rivalry, and of “doing things differently”
 

Consumer Issues with Internet Service: Is Industry Self-Regulation Working?

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Consumer Groups' submissions to CRTC on Payphone Access – Executive Summary of Argument

Public Notice CRTC 2002-6: Access to Payphones
Argument of the Consumer Groups
EXECUTIVE SUMMARY

Public Interest Payphones

  • Payphone service is considered an important public service by almost everyone, and is relied upon by a wide spectrum of consumers, not just those without home phone service or wireless service.
  • A significant minority of users is dissatisfied with the availability of payphones, and report frustration as a result of payphone removal or difficulty finding a payphone when they need one. Meanwhile, payphone availability is steadily declining, at a rate of app.3% per year.
  • It is therefore appropriate for the regulator to take action to ensure that payphone service continues to be provided where needed. However, it is not clear whether a subsidy is needed to accomplish this.
  • It is preferable, everything else equal, for location providers and/or payphone service providers to cover the costs of non-compensatory payphones (as is currently the case) rather than to establish a new subsidy regime paid for by subscribers or users.
  • The Consumer Groups therefore propose the following approach, applicable to all pay telephone service providers (PSTPs) unless otherwise stated:
    • a three-year period during which payphone needs (including consumer complaints) are more closely monitored, and during which PTSPs are under regulatory obligations to notify affected communities and interested parties, and to seek location providers (see argument for detailed proposal); and
    • a review after three years, to determine whether this approach is adequate, and if not, to establish a mandatory regime for public interest payphones.
  • All payphones should have the same basic functionality, consumer safeguards, and price.
  • Directory assistance should continue to be free from all payphones.
  • Every payphone location should include a coin-operated payphone, except where specifically approved otherwise by the CRTC.
  • The issue of calling card interoperability should be addressed, possibly via a follow-up to this proceeding. This issue should be given higher priority depending on the extent to which the Commission permits the provision of payphones without a coin payment option.
  • Incoming call capacity should be offered at the discretion of the location provider (as is apparently the case now). When incoming call capacity is removed from a payphone, notice should be posted on the payphone explaining why it has been removed.

Accommodation of Deaf Consumers

  • Deaf consumers have a right to access public payphones.
  • This right should be accommodated in a manner that does not cause undue hardship to others. In particular, the accommodation of deaf consumers should not have the effect of reducing general payphone availability, accessibility, or affordability, or of reducing basic service affordability;
  • The accommodation of deaf consumers should therefore not be funded via an increase in the price of payphone service or general phone service, such that the availability or affordability of either service is compromised;
  • A joint CRTC/Canadian Human Rights Tribunal proceeding should be initiated to develop comprehensive rules for the accommodation of deaf consumers in respect of public payphone service;
  • A pilot project should be initiated to assess the costs and benefits of different approaches to accommodation of deaf consumers;
  • All new payphone banks of four or more payphones (including those that have simply been expanded) should include a TTY unit, unless there is another TTY-equipped payphone within 70 metres;
  • All TTY-equipped payphones be well-signed; and
  • All new payphones be equipped with volume control buttons and an acoustic hearing aid coupler in the handset to accommodate hearing-impaired consumers.

END OF DOCUMENT
 

Payday Lender Responds to PIAC Report

Payday Lender Responds [pdf file:0.17mb] to PIAC Report on Regulating Payday Lending

Privacy Commissioner Response to PIAC Proposal

Mr. John Lawford
Research Counsel
Public interest Advocacy Centre
1 Nicholas Street, Suite 1204
Ottawa, Ontario
K1N7B7
Dear Mr. Lawford:
I am writing in response to your letter received by fax on December 19, 2003. Thank you for your congratulations on my recent appointment and for raising such an important issue with regard to naming names of respondents.
As I have stated publicly, this office will give serious consideration to the question of in what situation the identities should be made public. It must be part of a structured approach with rational, defendable reasons to support it. As you know, the law states that we “may” make public any information but it does not state that we have to. However, there may be compelling reasons to do so.
You have my assurance that I will, in conjunction with the Assistant Commissioners, study this issue in further detail.
Sincerely,
Jennifer Stoddart
Privacy Commissioner of Canada
 

Pragmatic Solutions to Payday Lending: Regulating Fringe Lending and “Alternative Banking"

Full text is available here [pdf file: 0.44mb]

Executive Summary

This report is a follow-up to PIAC’s November 2002 Report: “Fringe Lending and “Alternative” Banking: The Consumer Experience” (“Report 1”). From that report, a much clearer picture emerged of the “alternative financial sector” (AFS). The November 2002 report analyzed survey findings of users of the AFS and made several recommendations for consideration by policy makers. This report builds on those recommendations and undertakes an in-depth consideration of possible regulation of a major aspect of the AFS, the payday loan industry, from a consumer perspective. This report outlines several possible options for regulation of the payday loans industry and highlights the advantages and shortcomings of each possible approach. The report is timely, as provincial and federal regulators are presently meeting to determine the scope and method of regulating the AFS in general and the payday loans industry in particular.
Report 1 concluded that the best course of action to deal with problems in payday lending was fairly complete and specific regulation of the payday loan industry. Also discussed was the possible amendment of s. 347 of the Criminal Code (the criminal interest offence and related interest rate cap of 60% effective annual rate of interest) and the resultant need for effective regulation. In light of the possible amendment of s. 347 to permit small, short-term loans, more partial regulatory schemes such as simple licensing, (with or without industry self-regulation or codes of conduct), was rejected as likely to be inadequate to the task of protecting consumers.
This report continues these conclusions, expands upon the regulatory options and justifies extensive regulation. It also suggests which regulatory policies would be most likely to curb industry excesses while encouraging responsible provision of credit to users of payday loan services.
The Report concludes with a plea to mainstream financial institutions to enter the payday loan market once the necessary changes are made to the Criminal Code usury provision, however, it cautions that such an entry by federally-regulated financial institutions must be in accordance with the relevant provincial regulatory scheme.
The regulatory recommendations include:
Licensing of Operators
Extensive Regulator Powers, including

  • jurisdiction over all payday lenders, licensed or unlicensed;
  • Prosecution powers – fines, licence suspensions
  • consumer complaints mechanism (toll-free 1-800 number);
  • Require transaction data from lenders;
  • Educate borrowers about cost of credit and payday loans in particular;
  • Report on industry each year to provincial legislature with suggested changes to industry regulation

Cost of Credit Disclosure, including

  • All fees and charges must be clearly detailed in writing in contracts and advertising and promotional materials;
  • Provide loan application and loan agreement before completion of application/transaction; allow customer to have copy of completed application/loan transaction
  • Standardized loan documentation should be produced by the regulator with regulatory requirements;
  • Reference to Consumer complaints mechanism on documents
  • Fees and charges may not be excluded from definition or calculation of interest (NSF fees may be excluded);

Annual Percentage Rate (APR) statement

  • APR must be calculated for all loans and displayed on loan documentation.
  • Typical APRs for standard loan increments and standard loan terms should be available in chart form for borrowers.

Interest Rate Cap, including borrowing limits
Limits on Specific Charges and Fees, including

  • Allowable NSF fees should be limited to a modest amount, representing the real cost of administration;
  • Electronic NSF charges must be limited to one attempt to collect;
  • Lender-specific identification card charges must be modest and not become a revenue source.
  • No default or delinquency charges.
  • Interest may not accrue after a default.
  • No “broker” or “agency” fees permitted.

No Rollovers, Extensions, Back-to-Back Loans
Advertising Rules, including

  • Advertising must not be deceptive or misleading;
  • Must detail typical APR of standard loan amount for typical term in clear and conspicuous type;
  • Must detail all applicable fees and charges for loans, as well as other charges such as those for convenience cards.

Education and Awareness Campaigns for Consumers, including

  • campaigns to increase financial literacy of payday borrowers, with specific emphasis on cost of this form of credit and alternative credit sources.
  • education and action programs to encourage consumer savings.
  • Payday lender funding of consumer borrowing education

Other Borrower Rights

  • Right of rescission immediately following a loan (cooling-off period).
  • Right of Prepayment of loan at any time and to pay it down in increments
  • floating or variable rates should be limited to the lowest rate
  • prohibition on secondary marketing purposes borrowers. Lenders should clearly and conspicuously post privacy policies. Clear, express written consent of borrowers should be provided before lenders may use borrowers’ personal information with related entities.

Collection and Litigation Limits, including

  • No assignment of wages
  • No security or contingent security.
  • No personal guarantees from third parties
  • No interest in land
  • No threatening of prosecution for “crime” of bad cheque passing
  • method of cheaply and expeditiously contesting amounts illegally demanded by lenders, with right of set-off against present debts.
  • no private arbitration clauses– disputes to be handled by payday loans dispute tribunal or small claims court
  • Statutory damages should be recoverable to borrowers

Lender Database (Positive Credit Reports)

  • Should not be used as surveillance of borrowers but to create positive credit histories
  • Positive payday lending records should be made portable to mainstream credit reporting agencies to allow borrowers to improve their credit rating while taking payday loans.

“Executive Summary (français) [pdf file: 0.06mb]
 

Identity Theft: The Need for Better Consumer Protection

Public Interest Advocacy Centre
The Full Report in PDF [pdf file: 0.44mb]

EXECUTIVE SUMMARY

Identity theft is a rapidly growing problem in Canada. It represents a grave threat to consumer security and confidence in the modern marketplace. It also represents a serious challenge to business in general and to the financial marketplace in particular.
Identity theft is the unauthorized collection and fraudulent use of someone else’s personal information. Victims of ID theft suffer financial loss, damage to their reputation, and emotional distress, and are left with the complicated and sometimes arduous task of clearing their names.
ID theft is a truly modern crime, being carried on out of the sight of, and often beyond the effective reach of, the victim. It is carried out through compromising electronic data systems, obtaining false primary documents, directing mail to new addresses, obtaining new credit accounts and improperly charging existing ones. It can be carried out by a next-door neighbour or by criminals hunting from thousands of miles away. It relies on the commercial culture of ubiquitous personal information holdings, easy consumer credit and the facility of modern technology. It also relies on lax consumer security. However, ID thieves also exploit business and government information leaks, credit industry excesses and unsafe practices, inadequate consumer control over trade in credit information, and the use of personal information for collateral uses. Government identification weaknesses, government ID “function creep”, a lack of specific ID theft offences, uncoordinated law enforcement and unfocussed privacy laws round out the list. Given these weaknesses, in many cases, there is no action consumers can reasonably take to prevent ID theft.
Biometrics and a national ID card have recently been touted as the answer to ID theft.1 Neither of these ‘magic bullets” will have a serious effect on ID theft. ID theft results from the combination of human and systemic factors listed above and can only be dealt with by addressing the causes individually and collectively.
1 See the remarks of Minister Denis Coderre, Minister of Citizenship and Immigration, at the forum: “Biometrics: Implications and Applications”, Ottawa, October 8, 2003, (http://www.cic.gc.ca/english/press/speech/bio-forum.html) and similar remarks entitled: “Document Integrity And Biometrics: Exploring The Options For Our Furture” at the Kiwanis Club, Ottawa, Ontario, September 19, 2003 (http://www.cic.gc.ca/english/press/speech/biometrics.html).

SOMMAIRE

Le vol d’identité connaît une croissance fulgurante au Canada. Il menace gravement la sécurité et la confiance des consommateurs dans le marché actuel. Il met également en péril le monde des affaires en général et le marché financier en particulier.
Le vol d’identité est caractérisé par la collecte non autorisée et l’utilisation frauduleuse des renseignements personnels d’un individu. La victime d’un vol d’identité subit des pertes financières, des inconvénients et un préjudice à sa réputation, souffre de trouble émotionnel et doit s’efforcer de clamer son innocence, tâche compliquée et parfois ardue.
Le vol d’identité est une infraction des temps modernes qui est commise hors de vue et hors de portée de la victime. Le vol d’identité se produit de différentes façons : en compromettant des systèmes de données électroniques, en obtenant de faux documents principaux, en adressant le courrier à de nouvelles adresses, en obtenant de nouveaux comptes de crédit et en facturant frauduleusement des comptes existants. Il peut être commis par un voisin immédiat ou par des criminels à des milliers de kilomètres. Ce crime repose sur la culture commerciale omniprésente de la collecte des renseignements personnels, le crédit facile au consommateur et les avantages de la technologie moderne. Le manque de sécurité offerte aux consommateurs est également propice au vol d’identité. Cependant, les voleurs d’identité exploitent aussi les fuites constatées dans les entreprises et le gouvernement, les excès et les pratiques douteuses en matière de crédit, le manque de contrôle des consommateurs quant à l’utilisation de leurs informations en matière de crédit, et l’utilisation de renseignements personnels à des fins collatérales. Le laxisme du gouvernement en matière d’identification, « la reptation de fonction » des pièces d’identité gouvernementales, l’absence de délits spécifiques relatifs au vol d’identité, le manque de coordination en matière d’application de la loi et les faiblessesdes lois actuelles sur les renseignements personnels complètent cette liste. Étant donné ces lacunes, il est presque impossible pour les consommateurs de prendre des mesures pour empêcher le vol d’identité.
On avance déjà que la biométrie et la pièce d’identité nationale mettront fin au vol d’identité1. Aucune de ces « solutions miracles » n’aura d’effet sérieux sur le vol d’identité. Le vol d’identité est le résultat de la combinaison des facteurs humains et systémiques mentionnés ci-dessus, et on ne pourra y mettre fin qu’en examinant les causes individuellement et collectivement.
1 Voir les commentaires du ministre Denis Coderre, ministre de la Citoyenneté et de l’Immigration, lors du forum d’automne : « Biométrie : incidences et applications », Ottawa, le 8 octobre 2003, (http://www.cic.gc.ca/francais/nouvelles/discours/bio-forum.html) et la déclaration similaire intitulée : « L’intégrité des documents et la biométrie : explorer des solutions pour l’avenir », Club Kiwanis, Ottawa (Ontario), le 19 septembre 2003 (http://www.cic.gc.ca/francais/nouvelles/discours/biometrie.html).

Presentation to the Standing Committee on Resources Development

Presentation to the Standing Committee on Resources Developmenton Bill 35 – Energy Competition Act, 1998

Speaking Notes of the Public Interest Advocacy Centre(PIAC)

Introduction

First of all, I would like to extend our thanks to the Committee for giving us an opportunity to address the Committee on our concerns associated with Bill 35 – the Energy Competition Act.
The Public Interest Advocacy Centre (PIAC) is a non-profit organization that provides legal and research services on behalf of consumer interests, and, in particular, vulnerable consumer interests concerning the provision of important public services. Since the inception of the Centre in 1976, the regulation of public utilities, such as telecommunications and energy, has been an important focus of the Centre’s work .
PIAC has been a frequent intervenor, generally on behalf of low income customers, in proceedings before the Ontario Energy Board, both with respect to rates and policies for natural gas local distribution companies and in the former periodic reviews of different aspects of the Ontario Hydro operation. We participated fully in the OEB proceedings that produced the report recommending the legislative changes in the gas industry which has provided a policy basis for the portions of this Bill dealing with the natural gas industry. PIAC has also published extensive reports in utility fields and frequently provides policy reports to the federal department of Industry on consumer related concerns. We have appended a partial list of publications to this document.
By way of general comment upon Bill 35, we would state that the Government appears to be proceeding in a prudent fashion, given the relatively large stakes involved in the management of the transition to a more competitve energy industry in Ontario. Getting from where we were, to where we will end up, is by no means a straightforward proposition.The management of the change will play a key role in the economic future of all stakeholders . As we will discuss later in this submission, it is vitally important that the superintending authority possess the ability to fashion effective consumer protection and market failure remedies when the need arises. In energy, we do not have the luxury to wait for long term market correction based on economic theory in the event that serious impairment arises to threaten energy access and affordability.
It should also be recognised that this Bill deals with two industries, gas and electricity, with wholly different historical profiles in terms of meaningful regulation, public accountabilty and effectiveness. The natural gas industry has carried out its monopoly operations pursuant to real scrutiny by an informed and effective regulator, the OEB, with authority to review performance and compliance. Ontario Hydro, on the other hand , has not had a similar experience and its lack of meaningful accountability has given rise to many of the problems that beset it today. Public satisfaction with the historical performance of the natural gas industry is relatively high: there is little clamour for change among natural gas residential consumers. In electricity, on the other hand, there has been a demonstrable need for change that is apparent to all informed stakeholders.
However, little can be gained at this juncture by a recitation of the past sins of Ontario Hydro. When discussing the treatment of utilities, it is always a risky proposition to quote from former British Prime Minister Margaret Thatcher. However, I believe that her statement ” if we spend our present, debating the past, we will find that we have forfeited our future ” has particular resonance with many of the tasks concerning the management of the electricity industry that are before us in this Bill. We cannot make the monkey of stranded costs disappear from the backs of the Ontario Hydro customer. We can only ensure that there is a equitable treatment of these costs so that : (1) the burden of the costs are fairly allocated and (2) no market participant is able to avoid contribution by opting out.
We have organised our comments upon this Bill under the general headings of Benefits, Consumer Protection and Unknowns. The limitations of time prevent a lengthier discussion of many of the points raised in each of the above noted categories, but I trust that other presenters may be addressing them.

Benefits

We see potential benefits accruing to all consumers from the following features or effects of Bill 35:

  1. The separation of the Ontario Hydro’s generation assets and the restructuring of the transmission and distribution system should encourage better accountability of individual system components and reduce cross-subsidies among system components. As well, the elimination of vertical integration should help attenuate market power.
  2. The introduction of competition into the electricity sector, given adequate supervision to maintain service and quality standards, should serve to introduce new efficiencies into the generation and distribution system that should help to reduce operating costs.
  3. In the natural gas sector, the removal of regulatory barriers to gas sales may enable the expansion of competitive delivery of other components of the current system delivered in a monopoly mode. Once again, this increases the possibilities for elimination of cross-subsidies and inefficiencies currently costed to gas delivery.
  4. The provisions requiring licensing of gas marketers, with proper enforcement, should address the ongoing problem of consumer deception or improper conduct in the solicitation and delivery of commodity to customers.
  5. The monopoly components of the Ontario Hydro’s transmission system will finally be subject to cost of service regulation, and ongoing scrutiny will take place to ensure conformance with OEB directives.

Protections

  1. Proper enforcement of the licensing provisions links a code of conduct for marketers and retailers with their ability to stay in business. This provides a powerful incentive to avoid customer abusive behavior.
  2. Contracts entered into with an unlicensed marketer cannot be enforced against the user, diminishing the prospect of hit and run sales by rogue operators with an eventual assignment of contracts to an established player.
  3. The OEB must approve the distribution rates to be charged by the successor corporations to the MEUs. In addition, the distributor has an obligation to supply customers in the distribution area providing security of access for consumers.
  4. Any transfer of over 20% of the assets of a distribution system is subject to OEB approval, presumably to protect customers in the serving area from improvident transactions.
  5. The new distribution corporations set up by the municipal utility must separate monopoly and competitive businesses. This provides some insurance against cross-subsidization..

Unknowns

  1. The successful fostering of competition will result in loss of market share by the Genco. Such market share loss may impact on the payments to be made to the Financial Corporation for the retirement of debt. In turn, this may increase the size of the stream of revenue required from all market participants through the levy to recover for stranded debt. This makes it, of course, difficult to capture competition benefits for consumers achieved in the electricity generation sector.
  2. Will municipal taxpayers be subject to greater risks by the activities of the municipal commodity corporations? There will be differing levels of expertise and buying power in the new commodity acquisition corporations owned by the MEUs. If a new corporation is not able to outbuy the market or even acquire competitively priced electricity, the separation from the local transmission business may buffer customers but not local taxpayers from losses by the municipally owned commodity business that might be incurred. As well, there may have to be a workably competitive market in place for retail, in order for the end-use customers to be protected in this circumstance.
  3. Will there be other competitive sources of power generation to produce a workably competitive market, or are we simply fostering a competitive resale market?
  4. We are creating a retail market for commodities that the ordinary citizen has little experience in buying. The initial experience with door to door natural gas sales has been a cautionary tale . Healthy competition depends on the communication of straightforward unbiased information to establish a market of informed consumers, to mandate transparency in the details of the retail transaction, and to ensure swift and effective enforcement of rules of marketplace conduct. Will there be adequate resources provided for these tasks and how will they be provided? Consumer and competitive concerns militate for strong provisions incorporated into the licensing regime to ensure customer mobility, ease of comparison with rival services, as well as confidence in the ability of the licensed marketers to deliver their product. There must be pro-active oversight with the resources to ensure that the job gets done.
  5. The necessity to put in place transmission rates for January 1999 should not prevent a cost of service review of the monopoly elements of Ontario Hydro , particularly before any performance based regulation is put in place.Will current management be successful again in evading regulatory scrutiny because of time constraints.
  6. There are differences in the licensing regime set up for electricity and that set up for gas. What will be the effect of such differences upon the retailing of the energy commodity, for example ?

Conclusions

In this decade, PIAC has been actively engaged with the regulatory and governmental process that has attempted to establish the framework for competition in telecommunications in Canada. The telecommunications experience with competition to date is, in some ways, instructive to the current task in energy, and, in other respects, not particularly helpful.
In telecommunications, it was necessary to re-price network access to facilitate competitive entry into long distance markets. This meant an two to three fold increase in basic rates (despite the initial CRTC finding that such increases were not inevitable). Similar to the energy market, the revenues from long distance service were disproportionately produced from the high volume users. (One third of all Bell Canada accounts in 1994 produced two thirds of the long distance revenue). The CRTC generally left it to market forces both to establish an informed consumer market as well as police the many resellers that sprung up to sell long distance offerings to compete with the former incumbent monopolist. In the result, the higher volume user was largely the market target for discounts. Consumers were bombarded with a confusing array of advertising and some customers were slammed onto services they had not authorized. By the beginning of 1998, most telephone customers were paying higher total telephone bills.
There also continues to exist indicia of the former monopoly in the market power exercised by the incumbent local telephone companies. Up to this year, for example, Bell Canada was able to retain close to a 90% share in the residential long distance market despite the fact that its RealPlus savings plan had call amount minimums that exceeded the monthly long distance bills of a majority of its residential customers. This meant that most customers were not receiving any benefits from competition.
This year, there are finally discounts for ordinary callers available with Bell and there appears to be an expanded interest in low volume customers by most long distance players. The lion’s share of competition benefits still remain with the high volume user.
However, this pattern should not be repeated in energy. Simply put, energy customers in Ontario will not countenance a doubling or tripling of their energy rates and wait six years for some real benefits no matter what the advertising program that accompanies the changes. As well, there will be much less tolerance for unscrupulous operators in the energy field as the consequences of misconduct in false representations, slamming, and inability to deliver are more serious. As one commentator has stated, ” You can’t have a busy signal when you turn on the light switch”.
The telecommunications industry has been saved from widespread public outcry from market misconduct, in part, by the fact that the players are absorbing the transactional costs of customer transfer themselves to encourage customer mobility. Because of the arbitrage nature of competitive commodity offerings in the energy field, long term locked-in energy contracts with customers are the desirable norm for marketers. This makes it difficult to effect market corrections without regulatory intervention, both to police misconduct and secondly to ensure workable competition in an informed consumer market.
Similar to telecommunications, there will likely be attempts to wring concessions for high volume users with accompanying threats to exit the system, if rates are not designed to recover more costs from smaller users. As well, competition theorists are likely to be frustrated by the maddening tendency on the part of private market participants to maximize the bottom line, in the form of cream skimming , service reductions, and mergers and acquisitions, rather than financing competitive entry as they are supposed to be doing.
In our view, Bill 35 seems to have a framework of remedies in place to address th above noted problems.This returns to the central theme of our presentation. The evolution of a genuinely competitive market for energy will initially require more regulatory vigilance not less. (In the case of Ontario Hydro, we are starting close to regulatory ground zero)The statutory provisions of this Bill creating the licensing regime and establishing effective OEB superintendence over the process are vital to the successful smooth transition to competition as well as the operation of the industry to the benefit of the entire public interest.
 

Energy – Other PIAC Documents

Energy Letters

Energy Presentations and Speeches

 

Other Energy Documents

Identity Theft as a Justification for a National Identity Card

Submission to the House of Commons Standing Committee on Citizenship and Immigration

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Executive Summary
Executive Summary
It has been suggested that a national identity card would help to reduce the incidence of ID theft in Canada. There are many problems with such a conclusion. Such a “universal identifier” would invariably face immense pressure towards function creep – it could become a “super-SIN”. Once in the hands of thieves, this information will aid, not impede, identity theft. There is a strong likelihood that business will not alter creditgranting systems to accommodate it. Yet, even were business and government to do so, their information practices would put National ID card data at risk – possibly increasing the prospect of identity theft. Consumer credit data will continue to be traded, this time with the added “gold” of National ID card information. A National ID card will not bring necessary legal reform, or additional funding to law enforcement agencies. Police will continue to be ineffective in controlling identity theft without increased resources and legal powers. Canadians can also not count on their privacy laws to protect them from identity theft. Finally, biometrics is a highly invasive technology that will not guarantee document integrity. Perversely, excessive trust in the technology could aid ID thieves.
There are instead many practical measures that can be taken now to combat identity theft. None of these requires the introduction of a National ID card.
In conclusion, the case has not persuasively made that a National ID Card would necessarily limit identity theft in a manner that represents an acceptable trade-off between privacy and security, or indeed in any appreciable way at all.
Citizenship and Immigration Minister Denis Coderre has recently introduced the concept of the National ID card into the public debate. Minister Coderre has taken a more or less positive stance towards the need for such a card. Minister Coderre has also linked the issue of biometrics to the debate over the National ID card. Finally, Minister Coderre has, to a large extent, justified the need for a national ID card, with biometrics, due to the problem of identity theft.
The only difficulty with this logic is that it is flawed. Identity theft will not be seriously curtailed by the introduction of a National ID card. Biometrics may barely dent it and indeed has the potential to make some cases of identity theft far worse. Identity theft is a security state’s straw man for introducing invasive measures designed to reduce personal privacy.