It has now been over three years since the Policy Direction was issued. It is clear that the Policy Direction has had a significant impact on how regulatory participants have structured their arguments, but has it had an impact on regulation itself and thus on market outcomes? We submit that the CRTC has taken to heart the Policy Direction and removed a significant amount of unnecessary or overly intrusive regulation in the retail market, but unfortunately, this has not been the case with respect to the wholesale market. Our analysis of market data shows that market conditions did not get worse but improved since the Policy Direction was issued: prices have decreased while output, investment and broadband speeds have all increased. While these changes cannot be attributed directly to the Policy Direction, what is clear is that the CRTC’s removal of overly intrusive or unnecessary regulation (accomplished as a result of reviews inspired by the Policy Direction) have not had a detrimental impact on market outcomes. Given the threat recognized by economic theory from unnecessary interventions in the market by regulators, the removal of unnecessary regulation must be viewed as a good thing. As such, we can conclude that the Policy Direction has been a resounding success with respect to the regulation of retail services.
Available at: http://works.bepress.com/david_krause/8/