GATINEAU – In the continuing saga of the skinny (a.k.a. lower-cost data only) wireless, the CRTC must be wondering if it would not have just been easier to mandate MVNO.
In the latest request for information, Cartt.ca had noted the tone of the letter and the volume of information requested. The three incumbent national wireless players seem to heed the message and proposed to double the amount of data originally offered.
But what we had missed was the questions asked to the three incumbent national wireless players were also asked of the Competition Bureau.
The Questions
- Indicate whether lower-cost data only plans ought to be considered a relevant product market for the purposes of an assessment under section 34. If not, what would the relevant product market be in this context?
- In light of the fact that the Commission has found there to be a gap in the market with respect to lower-cost data-only plans, discuss whether competition in this specific market segment is sufficient to protect the interests of users and whether continued forbearance from price regulation of this segment would be likely to impair unduly the establishment or continuance of a competitive market for such services.
- If the Commission were to find that competition is not sufficient to protect the interests of users in the market for lower-cost data-only plans, discuss whether it would be appropriate for the Commission to establish a price ceiling and capacity floor for lower cost data only plans using its powers under section 24, subsection 27 (1) and subsection 27 (5) of the Act. If so, how should the Commission go about determining an appropriate amount for a price ceiling and capacity floor, and what should those amounts be?
- Discuss whether, instead of establishing a price ceiling and capacity floor under section 24 and subsection 27 (1), it would be more appropriate for the Commission to require the national wireless carriers to file tariffs and cost studies for a mandated lower-cost data only plan pursuant to section 25 of the Act. If so, discuss whether it would be appropriate for the Commission to set interim rates for the national wireless carriers’ mandated lower-cost data only plans and comment on what those amounts should be in terms of price and capacity.
The answers came down on September 10th and the general sense is that the Bureau was giving the CRTC a tutorial in Competition Law.
In answer to the first question the Bureau says: “At this point in time, the Bureau does not have sufficient evidence to determine whether that LCDO Plans ought to be considered a relevant product market. This is based on two facts. First, as discussed below, the Bureau has not segmented relevant markets more narrowly than all postpaid plans in past wireless matters.
“Second, the record in this proceeding is insufficient to determine whether a narrower product market definition would be appropriate. Where sufficient evidence exists, a more narrow market definition can be appropriate, but the Bureau is not in a position today to positively assert one,” it said in its submission. It continues, asserting “it should be explicitly noted that the Bureau has not previously considered product market definition in a marketplace where LCDO Plans, or similar low-priced plans, played a significant role in the marketplace.”
“Ultimately, the CRTC’s task is not to define markets; it is to evaluate whether LCDO Plans should be imposed as a condition of service on Canada’s national wireless providers.” – Competition Bureau
In case the Commission did not get it, “The Bureau cautions that any analysis that relies too heavily on drawing bright lines in market definition can frustrate or camouflage the real objective of this proceeding. Ultimately, the CRTC’s task is not to define markets; it is to evaluate whether LCDO Plans should be imposed as a condition of service on Canada’s national wireless providers.”
It concludes an answer to the first question by saying, “However, market definition is just one part of a competition analysis, and is not required in all cases. The CRTC should focus its inquiry on the (positive) effects on economic welfare that could be associated with the imposition of LCDO Plans, rather than an exhaustive search, in the absence of sufficient real-world evidence, for a precise market definition.”
To the second question, the Bureau adds “recent marketplace actions should be interpreted with caution: The CRTC should cautiously evaluate the weightiness of these developments. On the basis of the record available at this time, it is not clear whether these plans have attracted a large number of subscribers or have otherwise had a significant marketplace effect (e.g., placing downward pressure on pricing at other capacity levels).”
More of the same, “even if recent marketplace developments give the CRTC hope that LCDO Plans may be introduced without regulation, the Bureau re-iterates that what is important is not just the fact that these plans exist in the marketplace, but that they act as a viable option for consumers. Otherwise, it is unlikely that these plans will have the same magnitude of beneficial effects on economic welfare,” reads its submission.
Finally, in answering the last question, the Bureau promotes price ceilings and data floors rather than rate setting this way. “The Bureau’s concern with this proposal, however, is that the process of filing tariffs and cost studies can be lengthy and complicated. Any delay in implementing LCDO Plans also delays the economic benefits that could arise therefrom. As such, it may be worth evaluating whether prior costing studies (such as those filed in the wireless roaming proceedings) could allow the CRTC to move expeditiously, even if only on an interim basis.”
To the untrained eye, such a tone in a public proceeding can surprise since you would think they are both Government agencies – but intrafamily feuds are sometimes the harshest.
