CRTC Extends Direct Regulation to Resellers of Telecommunications Services

With relatively little fanfare, on January 17, 2017, the Canadian Radio-television and Telecommunications Commission (CRTC) issued a regulatory policy imposing new direct regulatory obligations on Telecommunications Service Providers (TSPs) in Canada.

Historically, the CRTC’s direct regulatory powers have applied to “Canadian carriers”, who are the owners (or operators) of the physical telecommunications infrastructure in Canada.

The CRTC’s authority over non-carrier TSPs, who do not own that infrastructure was, until recently, more tenuous. In the absence of a direct statutory authority to impose conditions on non-carrier TSPs, the CRTC instead required Canadian carriers to impose certain requirements (such as the obligation to register with the CRTC and to comply with various consumer safeguards) on their TSP customers through their Tariffs and service contracts.

In 2014, as part of the federal budget omnibus bill, the Telecommunications Act was amended to give the CRTC express authority to impose conditions directly on TSPs. (See the new section 24.1.)  Contraventions can be subject to substantial Administrative Monetary Penalties.

Obligations on TSPs

Telecom Regulatory Policy CRTC 2017-11 directs all TSPs, as a condition of offering or providing telecommunications services, to:

  • Register with the CRTC (if they have not already done so);
  • Abide by the regulatory obligations listed in an Appendix to the policy (dealing with accessibility, privacy, customer transfers, Internet traffic management practices, compliance with the Wireless Code, service cancellation, and enforcement of compliance with the Unsolicited Telecommunications Rules), as applicable; and
  • Include flow-down obligations in their service contracts, requiring any downstream resellers to register with the CRTC before receiving telecommunications services.

The first two of these bullets are not substantially new obligations. They reflect long-standing regulatory policies, although the change in the means by which they have been imposed could also have consequences for how (and by whom) they are enforced.

However, the shift of responsibility for policing downstream compliance is new. TSPs are now expected both to impose downstream compliance obligations in their service contracts and to “actively monitor and enforce” these obligations. As a consequence, TSPs could, in principle, face regulatory consequences for non-compliant behaviour by their downstream customers.

The Canadian carriers had asked to be entirely relieved of the obligation to police downstream compliance. The CRTC declined to do this, in part because it was concerned that “a large number” of existing non-carrier TSPs are not currently registered and may not understand their obligations. So, for the time-being, this responsibility is shared: Canadian carriers will be required to actively police the registration obligation, but are only required to report other known or suspected non-compliances to the CRTC.

Take-aways

The statutory definition of TSP is broad, and the CRTC has signaled that it expects all TSPs to register and to comply with some basic obligations.

Not all of these obligations will apply to every TSP. Many are functional, and will depend on the scope of the TSP’s business.  Moreover, not every business that involves telecommunication will be classified as a TSP.  However, it is important for each business that provides telecommunications services in Canada to understand whether it will be classified as a TSP and the consequences of that classification.

The CRTC offers guidance about both the registration process and the responsibilities and regulatory obligations of TSPs. However, interpreting and applying that guidance is not always simple.  McCarthy Tetrault’s top-rated communications law group can help.

Visit our Technology page and contact us with any questions or for assistance.

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