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    The Canadian Wireless Debate is Over: How the Incumbent Carriers Lost the Support of the Government

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    Wednesday June 05, 2013
    For the past few years, there has been a lively debate on the state of the Canadian wireless marketplace. Consumer advocates and others have argued that Canadian market is not sufficiently competitive and that aggressive policy action is needed to foster greater competition and to adequately protect consumers until market forces can be fully relied upon. The incumbent telecom companies and the CWTA present a far different story, contesting multiple international studies and painting Canada as a market leader.

    The events of this week - the introduction of a CRTC consumer wireless code and the Industry Canada decision to uphold its set-aside spectrum policy by killing the Telus - Mobilicity deal - point to the fact that this debate is now over in the minds of the government. Government telecom policy in 2006 was focused on deregulation and a hands-off, industry-led approach. Those days are long gone as the government has now adopted a consumer-focused, populist approach premised on the view that a public fight with the telecom companies is a political winner.  Moreover, the government may have shifted, but the incumbent providers clearly have not, failing to adapt to the new policy terrain.


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    CRTC Releases New Wireless Code That Should Eliminate Three Year Contracts

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    Monday June 03, 2013
    The CRTC released its much-anticipated consumer wireless code this morning. While much of the code remains unchanged from an earlier draft proposal, the headline-grabbing change is that the Commission has effectively brought three-year contracts to an end. The issue of contract length was the top issue raised by consumers, who argued that Canadian wireless contracts were longer than most other countries and that they represented a significant barrier to effective competition.

    While the incumbent wireless carriers argued that consumers like three-year contracts, the CRTC sided with consumers. Effective December 2, 2013, consumers will be allowed to terminate their wireless contracts after two years with no cancellation fees. The ability to cancel with no further costs should result in two years becoming the standard for a long-term wireless contract. It will be interesting to see how quickly the carriers implement this change as smart consumers may decide to delay signing new contracts unless they are protected by the new wireless code if the carriers insist on retaining early cancellation fees in the final year of a three-year contract until the code takes effect.


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    Canadian Wireless Association Breakup Points To Industry Divide on Competitiveness

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    Monday April 22, 2013
    Appeared in the Toronto Star on April 13, 2013 as Deep Divisions Surface in Canada's Wireless Industry

    The Canadian wireless sector was shocked last week by the abrupt departure of the three major new entrants - Wind Mobile, Public Mobile, and Mobilicity - from the Canadian Wireless Telecommunications Association. The new entrants took the CWTA by surprise, issuing a stern release claiming the association has shown consistent bias in favour of Bell, Telus, and Rogers, the three incumbent providers. Moreover, the companies pointed to a blatant disregard for new entrants and alleged that the CWTA had failed to honour repeated promises of fair representation.

    The move is a major blow to the CWTA, which has long promoted itself as the voice of the industry. For example, during the recent CRTC consumer wireless code hearing, it opened by telling the commission that it “represents virtually all of the major companies in Canada's wireless telecommunications ecosystem.”

    No longer.

    While analysts searched for a specific incident that led to the departure, the more likely explanation lies in the ongoing battle over the state of competitiveness of the Canadian wireless sector.  The question is not a mere academic debate since key government policies, including the framework for the forthcoming multi-billion dollar spectrum auction, the creation of an enforceable consumer wireless protection code, and the rules on much-hated three-year wireless contracts, all hang in the balance.

    The CWTA has long argued that the Canadian market is competitive and that no government intervention or additional regulation is needed. Indeed, as far back as 2000, the association told officials “the Canadian wireless market has been competitive from the outset.”

    As study after study pointed to high consumer prices and comparatively low subscriber rates, the government began to entertain the possibility of a set-aside in a spectrum auction to pave the way for new entrants into the market.

    Once again, the CWTA argued against the approach, claiming that the market was already competitive and that no intervention was needed. The government rejected the CWTA’s position, leading to the 2008 set-aside and the eventual entry of Wind Mobile, Public Mobile, and Mobilicity into the market.  

    The new entrants succeeded in providing lower-cost alternatives, yet the incumbents did little to alter their approach, hoping that the new competition would be short-lived. Provincial governments became involved with several proposing new wireless consumer protections.  The CWTA first argued against provincial involvement in the issue and later against immediate implementation of a national code being crafted by the CRTC.

    For the new entrants, an association committed to fighting efforts to enhance competition and consumer protection was an association fighting against their own interests since their long-term viability depends on maintaining policies designed to promote further competition. While the CWTA and the new entrants may have been able to paper over their differences on technical issues, the competitiveness issue was too important for compromise.

    At the recent CRTC hearing on a consumer wireless code, Wind Mobile openly broke with the CWTA, telling the commission that

    “The CWTA has elected to take certain positions over the express objections of WIND Mobile (on the basis that such positions are not "industry positions" but rather those of a BRT-dominated CWTA board). Accordingly, without needing to single out positions taken by the CWTA which align with those of WIND Mobile, WIND Mobile simply states that WIND Mobile does not support the CWTA submission.”

    Moreover, Mobilicity had already publicly differed with the CWTA on consumer issues back in 2011, stating that it was “exceptionally disappointed with the CWTA's lack of foresight in continuing to act only in the interests of the Big Three wireless oligopoly.”

    Viewed in this light, the only surprising thing about the decision to abandon the CWTA is not why, but rather what took so long.  The move sends a strong message to the government and the CRTC that there remain deep divisions within the industry with many legitimate concerns about competitiveness of the Canadian wireless market.

    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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    Spectrum Transfer Policy To Test Government's Resolve on Wireless Competition

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    Wednesday April 17, 2013
    The issue of spectrum transfers has generated considerable attention over the past few weeks as Industry Canada prepares to unveil a transfer policy in response to the proposed sale of spectrum by Shaw to Rogers. Industry Minister Christian Paradis has made it clear that he is uncomfortable with the proposed sale, acknowledging that the intent of the 2008 spectrum auction set aside was not to have the spectrum end up in the hands of incumbents. While the incumbents and their supporters are raising the concerns about market uncertainty and potential lawsuits, the reality is that the government's policy on the Canadian wireless market has been clear since 2007.  Despite the efforts of the CWTA and the incumbents to convince politicians and the public that Canada is a competitive market, the government believes more competition is needed.

    The Conservatives' policy on wireless competition solidified in 2007, when Prime Minister Harper shuffled then-Industry Minister Maxime Bernier (who most believed was opposed to government intervention in the form of a set-aside or other measures) with Jim Prentice. Within months, Prentice unveiled the government's policy with the headline "Government Opts for More Competition in the Wireless Sector."  In case there was any lingering doubt about where the government stood, the release noted:

    Recent studies comparing international pricing of wireless services show Canadian consumers and businesses pay more for many of these services than people in other countries. These services are key to strengthening the competitiveness of Canadian business.


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