The federal Conservative government has served notice that it wants the CRTC to rely more on market forces and less on regulatory fiat when drafting policy for the phone industry.

On Tuesday, Industry Minister Maxime Bernier tabled a proposed policy direction aimed at the broadcast regulator to adopt a hands-off approach when possible.

Direction to CRTC is first ever by government

"Tabling this document signals the government's intention to direct the CRTC to rely on market forces to the maximum extent feasible under the Telecommunications Act and regulate — where there is still a need to do so — in a manner that interferes with market forces to the minimum extent necessary," Bernier said in a statement.

It is the first time Ottawa has issued such a policy direction to the CRTC since the act was adopted.

The market-oriented direction followed the release last March of a federal panel report that urged the government to drastically deregulate the telecom industry.

Established phone companies like Bell Canada and Telus favour telecom deregulation. Rival companies have tended to support more regulation, arguing that the big phone companies could use their dominance of the market to undercut new competitors and drive them out of business.

In a statement Tuesday, Rogers Communications said it was "very important for Canadian consumers and businesses that the CRTC does not deregulate the phone market while Bell and Telus continue to exercise market power and enjoy dominance with market shares above 92 per cent."

Rogers Communications vice-president Phil Lind said: "We do not believe that the government intends this direction to mean a return to monopoly provision of local telephone service."