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Why Canada’s wireless services don’t need more competition

Why Canada’s wireless services don’t need more competition
Business
With smartphones playing an increasingly central role in our lives, it’s surprising the degree of misinformation surrounding a service so familiar to so many of us.

As an example, in its recent submission to the Canadian Radio-Television and Telecommunications Commission (CRTC) as part of a review of the wireless sector, the Competition Bureau addressed what it views as competitive problems within the wireless industry.

Unfortunately, the bureau’s position demonstrates a lack of understanding about the true state of wireless networks in Canada, and ignores the lessons learned in other jurisdictions where approaches similar to what they are proposing have failed. Like much commentary about the telecommunications industry, it contained irrelevant arguments based on outdated data.

Let’s start with pricing. The CRTC itself reported recently that wireless prices decreased by as much as 35 per cent between 2016 and 2018. And that report didn’t even factor in that the industry responded to consumer needs and 5G demand by introducing unlimited plans this summer, which further reduced prices.

Several independent financial analysts have also recently stated that the numbers quoted during the recent election campaign were based on outdated prices and tired statistics, and that the Liberals’ 25 per cent price reduction promise has already been met — and exceeded.

The bureau’s submission also conveniently fails to recognize the importance of value brands like Koodo and Public Mobile. It disregards the fact that there are a minimum of 10 providers offering Canadians a myriad of price points and services. We cannot have a rational, fact-based debate about price or competition without including such a significant market segment.

The bureau is correct on one point: we should indeed be skeptical of the CRTC’s perception that Canada should allow mobile virtual network operators (MVNOs) to piggyback on the infrastructure of established companies. There is a well-documented global history of MVNOs artificially lowering prices in the short term, but thwarting long-term investment.

However, we disagree with the bureau’s ill-informed positions that the wireless marketplace is not competitive, and that the CRTC should grant MVNO access to wireless providers — even on a temporary basis — in spite of the risk to investment. The bureau’s proposal is fundamentally at odds with true facilities-based competition, and would harm customers and our economy in the mid- to-long-term.

Erroneously, the bureau also claims that facilities-based carriers like Telus invest a smaller percentage of their revenue into their networks compared to other international carriers. According to the Organisation for Economic Cooperation and Development (OECD), Canada is home to the highest per capita investment in network technology in the world.

The direct result of such significant, sustained investment — $175 billion spent on operational and capital expenditures by Telus alone since 2000 — is the multitude of independent agencies like Ookla that rank Canadian networks among the best in the world.

A recent Opensignal report concluded that if rural Canada was its own country, it would rank 12th in the world in respect of download speeds, with rural Canadian users, on average, seeing faster 4G download speeds than 76 other countries, including the U.S.

This brings us to the crux of the problem around affordability: many of the arguments are not informed by facts, neglect to account for policies that have failed in other countries, and make no reference to the risk of introducing regulatory uncertainty when wireless carriers are preparing to make generational investments to accommodate the transition to 5G.
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