In a decision that will dramatically change the $10-billion local phone market in Canada, the federal government has decided the VoIP market should be regulation-free. "Barriers to entry in this market are low; there is no reason to regulate it," Industry Minister Maxime Bernier said. "In a competitive sector, there is no reason to regulate some companies while others can offer the services they want at the prices they want."
   So what does this decision mean? For one, incumbent carriers will be able to offer VoIP service at any price they want without having to seek approval regulatory approval. As a result, you can expect Bell Canada to become much more aggressive on pricing while ILECs such as Telus, Manitoba Tel and SaskTel will get into the VoIP market after sitting on the sideline until the regulatory uncertainty was resolved. This could mean bad news for Vonage and the cablecos, which have been able to roll out VoIP service without having to worry about competition from the ILECs.
  Another key development is regulation of the traditional local phone market will likely disappear soon (expect in rural communities where there is little or no competition). After all, how can you deregulate VoIP and not deregulate traditional phone service? Depending on how aggressive the ILECs want to be to keep and win-back customers, it would not be surprising to see price wars for local phone service in many markets, particularly places such as Toronto and Montreal where the ILECs, cablecos and VoIP service providers are already going to head to head.
  One wildcard is how ambitious the ILECs will become about VoIP given they could easily cannibalize their traditional phone businesses, particularly high-end customers who would gravitate to VoIP because of the features. If the ILECs do come out with guns ablazin' it may be bad news for the cablecos, who have been enjoying free ride with cable telephony, and the VoIP players such as Vonage who may find themselves on the outside looking in.
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