GATINEAU – The market should anticipate more of the same “me too” wireless plans across all large national carriers without mandated mobile virtual network operators, according to smaller telecoms.
While admitting Shaw’s Freedom has somewhat changed the dynamics of the market with its pursuit of higher data thresholds for customers at lower prices, representatives from the Canadian Network Operators Consortium and Distributel argued in front of the CRTC on Thursday these plans are often very similar to each other – which represents the limits of the current competitive environment.
“When Freedom introduced the Big Gig plan, it did lead to a response from the national wireless carriers,” Distributel’s Chris Hickey said on the third day of the CRTC’s wireless review hearing. “That being said, in our view, you want to see more of these types of responses; we’ve seen one. We’ve seen Big Gig… we would have expected that if the market was operating properly competitively, then we would see this on an ongoing basis. We wouldn’t be talking about one flavour of product that now all are providing.”
Freedom’s Big Gig offered users an introductory plan of 10 gigabytes per month for $50 back in 2017. It ignited a price war later that holiday season, with the Big Three incumbents all responding with very similar offers – at $60 for 10 GB of data. Later, during the CRTC’s proceeding seeking low-cost data plans from the Big Three, Freedom swooped in and offered lower priced data plans than the incumbents, which also elicited a response from the incumbents which were similar to each other.
Distributel and CNOC both said that leads to content competitors who just end up copying one another and then resting on their laurels. That’s why, they argue, a mandated full MVNO model is required to begin a cycle of sustained competitive activity.
“That would be the impact of competition,” Hickey added. “You would want to see rollouts of new, innovative types of services, various forms of services that they’re all responding to and they’re not just rolling out their own me-too product to try to catch up, now that the horse is out of the barn when it came to that one service.”
CNOC looks at the recent competitive moves in the market with some skepticism. “We don’t see the service differentiation that needs to be present in a more competitive market,” Christian Tacit, counsel to CNOC, said Thursday. “We’ve talked about pricing and yes, prices have fallen and we happen to think that some of the precipitous declines in the last few months are due to the regulatory scrutiny and political pressure that’s been brought to bear, so we’re concerned that it might be temporary because that market power is still there.”
“There should be regulation until it’s no longer necessary to regulate.” – Geoff Batstone, Distributel
Distributel has expressed interest in launching a wireless business, via an MVNO, to bundle with its other services, which means the company does not agree with the Competition Bureau’s recommendation to put a limited time on MVNO access to incumbent networks, calling it an “academic” view and suggesting that the regulatory environment should work itself out until sufficient competition is achieved. The Bureau recommended a five-year plan for mandated access, with a focus on regional players, until the MVNO can plow enough revenues into its own facilities and float on its own.
“There should be regulation until it’s no longer necessary to regulate,” said Geoff Batstone, VP and general counsel at Distributel.
Distributel and CNOC are asking for mandated access to the networks of the big three national carriers, not the regional players. CNOC has noted that a full MVNO model should also include the ability of that operation to access the latest devices – as that’s currently hard to come by for smaller players.
“The inability to obtain access to the latest mobile wireless devices represents a very serious barrier to entry and expansion for MVNOs,” CNOC chair Matt Stein (pictured above in a cpac.ca screen cap) said in his opening remarks. Stein is also CEO of Distributel.
Both also used the example of the wired broadband environment to make out what a prospective regulated MVNO environment would be like. CNOC and Distributel anticipate that MVNO players – Stein estimated about 10 to 15 players could sprout in the early stages of a new regulatory regime – can get between 10 to 20 per cent market share. Stein estimated that it could take less than a year for an MVNO to enter the market and another one of two years for there to be a “full complement” of others.
The past year has seen heighted competition since Freedom roiled the market with its data offers and, more recently, caused the introduction of no-overage plans this past summer by other carriers. When asked about whether they viewed the general industry-wide increase in net new subscribers as a positive narrative for competition, Distributel noted that the big players still have a massive grip on the market and that the Regulator must take a more holistic view of the environment to determine competitive intensity.
Both organizations were also unfazed by a question about the possibility of foreign players entering an MVNO market, too, with Distributel’s Hickey suggesting that there isn’t evidence to suggest that that would be an issue and CNOC’s Stein saying he welcomes the competition if it lowers prices – regardless of the impact on their own market share.
