OTTAWA – The remedy Rogers Communications and Shaw Communications offered in an attempt to gain the necessary regulatory approvals for their proposed merger is “inadequate”, according to Dr. Nathan Miller, a professor at Georgetown University who was asked to put together a report on the matter for the Competition Bureau.
Miller spoke today about his report at the Competition Tribunal hearing into the bureau’s application to block the merger.
The remedy he referred to is the sale of Shaw’s Freedom Mobile to Quebecor subsidiary Videotron to address concerns about the impact of the merger on wireless competition in Canada.
Miller argued the remedy is inadequate partly because it does not include Shaw Mobile, which he said is “the one responsible for recent growth”.
“The process of pulling Freedom out of the Shaw company creates its own sets of issues,” he continued.
Miller also explained that documents show “Rogers and Shaw do compete head-to-head for customers,” and added this can be illustrated through porting data as well.
Without going into too much detail because of confidentiality, Miller described a redacted chart, which he said shows a plot of port outs from Rogers going to Shaw. He traced data for this chart from 2017 to 2022 with the intent being to show how ports from Rogers to Shaw changed at specific times including when Shaw implemented its Big Gig promotion and when it launched Shaw Mobile.
“It shows that when Shaw Mobile launched initiatives that it impacted Rogers business, and it impacted the choices that consumers made in the market,” he said, later specifying he sees “a large fraction of subscribers that chose Shaw were coming from Rogers.”
Shaw’s wireline presence made it uniquely positioned to enter the market and have an impact, Miller argued. It gave it brand recognition in B.C. and Alberta, the ability to cross sell from wireline into wireless and when you bundle wireline with wireless, wireline churn goes down, which is the reason Miller said he understands Shaw launched Shaw Mobile.
Asked about the relevance of his findings when the divestiture of Freedom is taken into account, Miller expressed concern Freedom would not survive without the rest of Shaw.
He claimed the divestiture would mean there would be “weaker incentives to invest” in Freedom and that Freedom would become “dependent and somewhat entangled with Rogers”.
“I don’t think that sort of thing is really an abstract concern with these divestitures,” he said. “You know, in Canada, there was a merger just a few years ago in Manitoba when Bell bought MTS and as part of the part of that merger, there are divested assets that went to a company called Xplornet. My understanding is that Xplornet just stopped providing service this last summer.” (Miller was likely referring to Xplore Mobile, which announced this summer it was shutting down. Xplornet Communications, which was separated from Xplore Mobile when it was acquired by Stonepeak Infrastructure in 2020, is still operating as the rebranded Xplore.)
The Competition Tribunal hearing continues tomorrow morning at 9:30 a.m. For instructions on how to watch online, please click here.
