The National Post has a story today on a research note written by Maher Yaghi, a telecom analyst, warning about the “regulatory risks” of the CRTC’s review of the wireless code. The article focuses on a single analyst, but there is a long tradition in Canada of the industry saying one thing to the regulator and another to the business community (see, for example, Bell’s position on investing in fibre networks) so the comments likely reflect industry concerns. What regulatory risks might arise from changes to the wireless code?
Yaghi cites two concerns that lay plain why the industry has been fighting potential changes. The issue is not, as some would have you believe, increased regulatory costs. Rather, the fear is that changes would create better informed consumers who would seek cheaper pricing and be freer to take advantage of marketplace competition.
Yaghi says the industry is concerned with “mandated bill segmentation”, which would require providers to separate the monthly service cost from the cost of devices. Once two-year contracts expire and the cost of the device is paid off, consumers would likely want to know why their monthly cost remains largely unchanged. Yaghi notes:
“In our view, bill segmentation would make the different charges more transparent to customers and would likely prompt them to look for cheaper (bring your own device) plans, which could pressure (average revenue per user) growth in the Canadian market.”
Yaghi says there is similar concern about the prospect of banning fees for unlocking phones. The reason is that removing the fees – which bear little relation to actual cost or purported concerns about fraud – would make it easier to switch providers and reduce roaming costs:
“We believe the current policy reduces churn and increases customer stickiness, decreasing competition slightly. It also allows wireless operators to generate profits from international roaming for customers who are travelling.”
The acknowledgement that mandated bill segmentation would lead to better informed consumers able to get more competitive pricing and that unlocking fees reduces the benefits of competition provides the CRTC with validation that the reforms would be pro-consumer and should be implemented with the forthcoming changes to the wireless code. Indeed, if the CRTC does not include the changes in the code, provincial governments should consider them as they work to update consumer protection laws for the digital marketplace.