The Canadian Competition Bureau has filed a submission to the CRTC’s wholesale mobile wireless services review in which it reaffirmed its view that the Canadian wireless market is uncompetitive and would benefit from regulation. The Bureau finds that a more competitive market would deliver $1 billion annually in benefits to the Canadian economy:
incumbents appear to have the ability and incentive to profitably raise the rates they charge their retail competitors for wholesale roaming services, and potentially other wholesale arrangements, above competitive levels. The incumbents’ wholesale customers may be passing these price increases on to retail customers. These retail price increases may be harming competition in retail mobile wireless services markets in Canada. In particular, more competitive markets could deliver approximately $1 billion in benefits to the Canadian economy.
The submission, which includes a commissioned study on the Canadian market, also concludes that:
- more customers are either leaving Canadian retail mobile wireless services markets or not entering these markets at all, than would have in a fully competitive marketplace.
- Rogers and TELUS are generally earning above-normal returns on their mobile wireless investments
- the CRTC has an opportunity to significantly increase the economic efficiency of the Canadian economy. Specifically, by taking steps to increase competition in wholesale mobile wireless services markets, the CRTC can improve consumer welfare by enhancing the affordability and variety of retail mobile wireless services in Canada.
In light of these findings, the Bureau recommends:
To achieve these significant gains, the CRTC should adopt measures to address the incentives for the incumbents to raise their retail competitors’ wholesale prices. Appropriate measures may include the introduction of competitive safeguards or mandated wholesale access, or targeted spectrum allocations towards non-incumbent carriers in upcoming auctions, which the Bureau may address further as additional evidence develops in this proceeding.
Last year, some commentators suggested that the Competition Bureau consider whether there is a wireless competition concern in Canada. The views of Canada’s independent agency responsible for ensuring “that Canadian businesses and consumers prosper in a competitive and innovative marketplace” are now on the record and are unequivocal. There is a wireless competition problem in Canada and regulation is needed to address it.