The Competition Bureau of Canada has just released its submission to the CRTC’s consultation on domestic roaming rates and with it left no doubt about its concerns with the state of wireless competition in Canada. Despite repeated efforts of the big three incumbent providers to argue that the Canadian market is competitive, the Competition Bureau has concluded that the big three enjoy “market power.” As the Bureau notes, market power is “the ability of a firm or firms to profitably maintain prices above competitive levels (or similarly restrict non-price dimensions of competition) for a significant period of time.”
Given its market power, the Bureau finds the wireless incumbents can use roaming to shield themselves from competition. It states:
“Incumbents can use the terms and conditions of roaming agreements to raise their rivals’ costs such that incumbents are shielded from the full effect of their the rivals’ (i.e., entrants) entry. Making it more costly for entrants to access incumbent networks through roaming agreements is one way for an incumbent service provider to relax competitive pressure.“
In light of the competition concerns, the Bureau concludes that the CRTC should establish regulatory safeguards on domestic roaming pricing. In fact, it states that given the choice between a remedy that goes further than necessary and one that does not go far enough, it would prefer a remedy that is more than strictly necessary.
The Bureau report notably rejects the wireless companies’ arguments that the market is competitive, particularly the Church and Wilkins report on the issue:
In the Bureau’s view, the C-W Report does not provide adequate support for Bell’s claims that mobile wireless markets in Canada are competitive. Instead, based on the factors described above, the Bureau believes that incumbent service providers do have market power in the provision of retail mobile wireless services, and the CRTC should take this fact into account when considering this matter.
The Competition Bureau submission is a bombshell finding, confirming concerns about the lack of competitiveness in the Canadian wireless market. It opens the door to regulatory action to address the ongoing competition problems and firmly rejects persistent incumbent claims that there is no reason for worry.