Opening up Canada’s wireless networks must be done carefully to avoid harming the regional competitors that are driving prices down and providing benefits to consumers, the Competition Bureau says.
The bureau on Tuesday kicked off nine days of hearings in Gatineau in front of the Canadian Radio-television and Telecommunications Commission on the state of Canada’s wireless industry. The regulator is mulling whether Canada’s large national carriers should be forced to open up their networks to wireless resellers without their own networks, known in the industry as mobile virtual network operators (MVNOs), in a bid to lower Canadians’ cellphone bills.
Canada’s big three telecommunications companies – BCE Inc., Rogers Communications Inc. and Telus Corp. – are opposed to such a policy, arguing that it would stymie network investments. The CRTC has said its preliminary view is that the national carriers should be required to sell network access to smaller companies that don’t have their own networks, as the benefits of mandating MVNO access would outweigh the risks.
Matthew Boswell, Canada’s commissioner of competition, called such a policy a “risky bet,” arguing that it could harm regional players – which include Shaw Communications Inc.’s Freedom Mobile, Quebecor Inc.’s Videotron and Eastlink in Atlantic Canada – that have been investing in their networks and driving increased price competition. The bureau says prices are 35 per cent to 40 per cent lower in markets where regional competitors have reached a market share above 5.5 per cent.
The MVNOs would have access to the networks of the large national carriers, which are superior to those owned by regional competitors, making it hard for disruptive regional players such as Freedom to compete, Mr. Boswell said in his opening remarks.
“This places at risk the benefits that wireless disruptors are bringing to consumers,” Mr. Boswell said.
The bureau is instead proposing that the national carriers only be forced to sell network access temporarily to regional competitors looking to build out their networks. Such a policy would help the regional competitors to expand into markets where they already own spectrum but don’t offer service, allowing them to generate revenue while building out their infrastructure, the bureau says.
However, CRTC chair and CEO Ian Scott said that the bureau’s proposal – which would give regional competitors five years to build out their own infrastructure – is administratively complicated and could be challenging to enforce.
Shaw, which also addressed the CRTC on Tuesday, said that if a mandatory MVNO regime is introduced, wireless resellers would be targeting the same customer segment that Freedom serves – but without making any network investments.
“How can Freedom acquire customers in competition against a reseller with the advantages of regulated MVNO access?” Peter Johnson, Shaw’s chief legal and regulatory officer, said in his remarks.
“They can enter and exit the market as they please, all while enjoying the extraordinary advantage of regulated access to the more robust, more extensive national networks of the big three. Resellers will use these advantages to target Shaw’s customer base and stifle our growth."
A portion of the revenues reaped by wireless resellers would then flow to the large national carriers in the form of wholesale revenues, said Paul McAleese, Shaw’s president of wireless. “That’s the Catch-22 for us."
Mr. McAleese said he doesn’t believe that a modified MVNO model, such as the one proposed by the Competition Bureau, would pose administrative challenges.
“We have similar deadlines on deployment for spectrum that have been common for 35 years,” Mr. McAleese said. “There’s lots of protocol in place at the commission for how to manage sunsetting rules."
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.