Canada's telecommunications regulator, Canadian Radio-television and Telecommunications Commission (CRTC), ruled yesterday that the country's dominant phone companies will not be able to set their own prices for VoIP services, which is part of their goal to create more competition and lower prices in the VoIP market.

The CRTC rejected arguments by the country's largest telephone companies Bell Canada and Telus Corp who had argued that Voice over Internet protocol (VoIP) should be left unregulated like other Internet applications.

Instead, the CRTC decided that it would regulate the large phone companies' prices in the VoIP market to prevent the large phone companies from deep rate pricing that would prevent VoIP competitors from entering the Canadian VoIP market. The CRTC's decision implied that their decision was at least until there is legitimate competition in VoIP phone services. Thus, the large phone companies' competitors, such as Vonage, Packet8, or the cable companies, will not have their VoIP prices regulated.

CRTC chairman Charles Dalfen said the market could reach an acceptable level of competition within the next two years. “This is precisely the moment when Canada needs a regulatory framework that will provide the quickest road to competition,” Mr. Dalfen said.

Predictably, Bell and Telus reacted harshly to the ruling, and they plan to appeal the decision and may launch legal challenges. Currently, according to VoIP numbers I have read, there are only 25,000 Canadian broadband VoIP users and the large Canadian incumbents still control 97% of the market. I say cry me a river when you drop to under 80%.