By Denis Carmel
JULY 15 WAS THE DEADLINE for intervenors to provide the CRTC with their final submissions in the Wireless Policy Review proceeding.
It has been a long process and it is far from over. Technically, it started with an announcement on February 28, 2019.
However, back in 2015, the CRTC was saying: “When the Commission established the current wholesale mobile wireless service regulatory framework in Telecom Regulatory Policy 2015-177, it determined that the framework would remain in place for a minimum of five years, to allow for the development of sustainable competition and to encourage continued innovation and investment in telecommunications facilities,” the February 2019 notice reminded.
In the 2015 decision, the Commission refrained from mandating Mobile Virtual Network Operator (MVNO) access but that did not put an end to that debate. The government intervened, coming close to ordering the CRTC to mandate MVNO access to the large operator’s network, but the CRTC held on to do its own thing.
This time though the CRTC said right away its preliminary view was “it would be appropriate to mandate that the national wireless carriers provide wholesale MVNO access as an outcome of this proceeding. The Commission considers that, on balance, it is likely that the benefits that a well-developed MVNO market would deliver to Canadians are now more likely to outweigh any negative impacts that a policy of mandated wholesale MVNO access might have on wireless carriers’ network investments, particularly given the extensive investments that have been made in recent years. Further, properly structured rates, terms, and conditions should further mitigate potential negative impacts on future investments.”
In other words, this proceeding was about potential competitors pushing that narrative forward and incumbents doing their level best to reverse it. Unsurprisingly the final submissions have shown no one has wavered.
The Competition Bureau weighed heavily on this process, obtaining from the Commission permission to demand data from the parties to conduct an expert economic study, the Chipty/Matrix Report. “The Competition Bureau’s goal throughout this proceeding has been to present the CRTC with objective, evidence-based recommendations,” its final submission reads.
The Bureau’s document reiterated there is a market power problem in most Canadian markets and the Big Three are able to charge higher rates where competition is low.
“The launch of ‘unlimited plans’ has not yielded the scope or amount of price reductions indicative of a lessening of market power. ‘Unlimited plans’ marked a 25% decrease in plan prices for just a segment of customers. Yet, corresponding reductions in device subsidies meant that a customer’s total monthly bill decreased by far less than 25%. This is well below price reductions realized in markets with strong regional competition, which can be upward of 50% overall,” argues the Bureau.
“Canadians now more than ever rely on their wireless services to work, learn, shop for essential products and services, and connect with friends and family. Our recommendations in this proceeding provide an evidence-based approach to increasing competition. Effective competition is key to delivering lower prices, more choice, and high-quality networks,” said Matthew Boswell, Commissioner of Competition, in a press release last week.
The Bureau played a unique role in this proceeding; for they not only filed a study but they also made detailed recommendations on the outcome. Coming from a government agency without real “skin” in this debate, it gives added weight to their submission and the Big Three, realizing this, made the Bureau the focus of their attacks, trying to convince the CRTC of the invalidity of its analysis.
Also, they condemn the Chipty Report, which actually stopped short of calling for fully-mandated wide-open MVNO regulations. “The cornerstone of its analysis, the Chipty Study, is flawed and is based on market data that is two years out of date. It does not reflect important market developments that have occurred since the end of 2018,” says Rogers in its submission.
Telus, for its part, says one of its experts, Dr. Dippon, maintains his position that Dr. Chipty’s econometric study is deeply flawed and the Bureau misinterprets many of her results which lead to erroneous conclusions. “The Commission should not rely upon such a deficient analysis to underpin any telecommunications policy decision,” says the company’s submission.
“At best, the Bureau’s model is designed to try the ‘same old thing’ in Canada and therefore would fail.” – CCWS
Bell mostly ignores the Chipty/Matrix Report but adds: “For example, in its Further Comments the Competition Bureau compared prices in Canada to the United States, UK, France, Germany, Italy, and Australia. According to data released by ISED after the oral phase of the hearing, since 2018 prices in Canada have fallen substantially faster than in any of those countries (50% faster than the United States and more than twice as fast as everywhere else).”
Even the Coalition for Cheaper Wireless Service piles on: “At best, the Bureau’s model is designed to try the ‘same old thing’ in Canada and therefore would fail. The CCWS frankly was surprised at the Competition Bureau’s MVNO model that is, in effect, a ‘non-MVNO model’.” The CCWS wants to see full-MVNO’s mandated here, not the limited model, where existing operators like Eastlink, Freedom and Videotron would be able to expand nationally as MVNOs in areas where they do not have spectrum.
Of course, the Covid-19 pandemic is used by most as an argument in their favour: “Covid-19 presents a backdrop for this proceeding. It brings into focus the fundamental importance of communications network investment, network performance and network reach. Without high performing networks, the social and economic impact of the pandemic would have been incalculably harsher and the consequential public health response would have been impossible to execute,” Telus argues, for example.
“The Covid-19 pandemic has only increased Canadians’ individual technological dependency. However, as the use of wireless increases, and as the established, large, facilities-based wireless service providers enjoy market scale and efficiencies, consumers have received little in the way of price relief, service quality improvement or network expansion, especially in rural and remote areas,” says CCWS.
“More than a decade of incremental adjustments has not addressed issues of lack of choice, lack of innovation, unaffordability of services, and questionable sales practices in the mobile market. If anything, the Covid-19 pandemic should serve as a wakeup call. Bold steps are required to address the competition issues now, TekSavvy says.”
Because of various extensions to filing deadlines because of the Covid-19 crisis, the final submissions were filed four months after the initial date of March 23, and have delayed the decision itself.
Barring some procedural activities, this should be the last phase before a decision is released.
CRTC staff had likely started its analysis before receiving the final submissions, and Cartt.ca has not seen anything in these submissions which would change views. The decision will probably be released at the end of this year, but it could trigger further processes – to set wholesale rates for example – if the Commission decides to go that way.
One thing is likely sure. No matter that decision, it’ll probably be appealed…
