Competition watchdog says big telecoms should be required to sell temporary network access to some regional carriers

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Forcing Canada’s large national carriers to sell temporary access to their wireless networks to some of their regional competitors could significantly reduce Canadians’ cellphone bills, the Competition Bureau says.

The Canadian Radio-television and Telecommunications Commission (CRTC) will hold a public hearing next year on the state of the wireless industry. It has said its preliminary view is that the national carriers should be forced to sell network access to wireless resellers, smaller companies without their own networks that are known in the industry as mobile virtual network operators (MVNOs).

However, in its submission to the CRTC on Monday, the Competition Bureau said that Rogers Communications Inc., BCE Inc. and Telus Corp. should only be required to sell temporary access to regional carriers that plan to invest in and expand their own networks, in order to prevent network quality from declining over the long term.

But Matt Stein, chief executive of independent telecommunications provider Distributel and chair of the Canadian Network Operators Consortium, a lobby group for independent internet service providers (ISPs), called it a “half measure.”

“It’s encouraging to see that the Competition Bureau is aware that the incumbents have market power and it needs to be brought into check,” Mr. Stein said. But, he added, opening up the market more broadly would create much more competition.

Desjardins Securities analyst Maher Yaghi said that while mandated access would not be the best outcome for the big national carriers, he believes it would be manageable for them.

“We believe the CRTC should be extremely careful in how it proceeds with changes to wireless regulation as it could have serious consequences on the financial health of the wireless players," Mr. Yaghi said in a note to clients.

"If not fine-tuned, potential regulations could end up opening the market to large foreign players; this could drive prices lower in the short term but risk delaying the roll-out of state-of-the-art wireless networks, which could have negative outcomes for Canadians and the economy.”

The bureau said in its submission that wireless prices are as much as 35 to 40 per cent lower in areas serviced by regional carriers, such as Freedom Mobile, which is owned by Shaw Communications Inc., and Quebecor Inc.'s Videotron.

“While many Canadians are increasingly benefiting from competition driven by wireless disruptors, the full effects of a more competitive wireless industry have not yet been experienced,” the submission reads.

Regional players only need to reach 5.5-per-cent market share to lead to a significant reduction in wireless prices, but the benefits are greater when they attain 20-per-cent market share, the bureau said.

“We recommend that the CRTC introduce a policy that allows regional competitors to expand into new markets to ensure that all Canadians can benefit from lower prices, greater choice and more innovation in wireless services,” Matthew Boswell, the commissioner of competition, said in a statement.

Rogers said in an e-mail that it is reviewing the bureau’s submissions.

“There is intense competition in every market across our vast country as we invest in networks and deliver more value for customers,” a company spokesperson said.

Marc Choma, director of communications at Bell, said in a statement that Canada needs regulations that encourage investments in wireless networks, something that is “especially important now if we want the country to be a 5G leader.” Canada and other countries are planning to implement faster, next-generation 5G technology over the next few years.

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