Few policy issues have proven as frustrating as the state of Canadian wireless pricing. For the better part of a decade, Conservative and Liberal governments have grappled with overwhelming evidence that Canadian consumers pay some of the highest prices for wireless services in the world. The solution has always seemed obvious: more competition. Yet despite repeated efforts to nudge the market and regulator toward a more competitive environment, the needle has barely moved.
My Globe and Mail op-ed notes that the latest failed effort was sparked by Innovation, Science and Economic Development Minister Navdeep Bains’ June 2017 request to the Canadian Radio-television and Telecommunications Commission to reconsider a decision on how regional and smaller wireless companies access wholesale roaming services from larger providers.
Given the significant capital costs in building new networks from scratch (even giants Bell and Telus joined forces to build a shared network), the government was hoping that it could facilitate more competition through a mandated mobile virtual network operator model (MVNO). MVNOs typically do not own spectrum or network infrastructure. Instead, they purchase network access at wholesale rates from existing operators and offer it to consumers with their own retail pricing.
Last week, the CRTC slammed the door shut on mandated MVNOs for the foreseeable future. While its ruling offered up some affordability measures in the form of new, low-cost, data-only wireless alternatives that it wants carriers to offer, the decision was an unmistakable rejection of the government’s preferred policy measure.
Despite longstanding views that the path to better pricing lies with more competition, CRTC chair Ian Scott sounded like a telecom executive when he tried to spin the low-cost offering as a “superior alternative” to measures designed to foster new competitors through mandated MVNOs. Indeed, the Commission’s track record with low-cost offerings is not good. Its mandated “skinny basic” television service is generally viewed as a failure and this latest approach seems unlikely to have much impact with no enhanced choice of service providers.
Mr. Bains wasn’t buying Mr. Scott’s assessment, noting in a statement that “more must be done: true affordability can only come from true competition.” If the CRTC decision does not foster true competition, what might he have in mind?
At this stage, the government must surely recognize that the answer does not lie with the CRTC. Not only did the Commission sidestep wireless competition concerns with this latest decision, but last month it also rejected a request for a public inquiry into aggressive telecom sales tactics, essentially telling concerned consumers to look elsewhere for relief.
New CRTC chairs often use an early decision to set the tone for their mandate. Jean-Pierre Blais sent the message that the public interest would take priority when he initially rejected a proposed Bell-Astral merger and infamously challenged BCE CEO George Cope to respond to consumer concerns during a public hearing. Mr. Scott may have used this decision to set a different tone, affirming the Commission’s independence from the government and replacing the mantra of putting Canadians at the centre of their communications system with a more cautious, industry-friendly perspective.
New policy measures to enhance Canadian wireless competition will therefore fall to the government. The usual suspects – encouraging foreign investment and setting aside spectrum for new entrants – have to-date had only a limited impact.
Mr. Bains could signal that further marketplace consolidation will face government opposition on competition grounds. Such an approach comes too late to save the competitive landscape in Manitoba, where last year’s merger of Bell and MTS reduced the number of competitors from four to three with consumer pricing set to increase as a result. However, shutting the door on consolidation would help sustain better pricing in more competitively priced markets such as Saskatchewan and Quebec.
For the rest of the country, forging ahead with a mandated MVNO policy may be the best available option. In other markets, the emergence of nimble, low-cost competitors leads to more innovative pricing and services. The CRTC decision delays potential MVNO reform until at least 2020 and uses language that suggests it will face an uphill battle even then. The government need not wait for the CRTC to act and could take matters into its own hands.
In addition to facilitating new market entry, the government can start addressing lingering consumer frustrations such as escalating roaming charges and dubious sales tactics. Committee hearings on the state of the consumer wireless experience would bring the issue into the political arena and – when combined with the government’s strong support for net neutrality – provide some key issues to consider as part of a promised legislative review of Canada’s communications law framework.
Last June, Mr. Bains touted the benefits of a WiFi-based MVNO model, arguing that it “could benefit Canadian consumers, especially those with low incomes who are not well served by existing plans.” The CRTC extinguished those hopes last week, leaving the minister in the same position as many of his predecessors, facing frustrated consumers, an uncooperative regulator, and incumbent providers who appear far more comfortable fighting regulatory battles than bringing competitive pricing to the Canadian market.