news


Canada preps the industry with hint of regulatory disruption

The Canadian Competition Bureau is suggesting competition is not healthy in the country and new regulation could emerge to encourage the creation of new challengers.

Having submitted initial feedback for a Canadian Radio-television and Telecommunications Commission (CRTC) review, the competition agency is suggesting significant market power for Bell, Telus and Rogers in most regions across the country, which could mean retail connectivity tariffs are 35-40% higher. Regulators are often very sensitive to when the consumer’s wallet takes unnecessary damage, especially when it comes to a concentration of competition.

For the moment, these comments will not mean too much, though the telcos should keep a wary eye on the situation. The Competition Bureau has pointed to the presence of regional challengers, such as Sasktel, Videotron and Freedom Mobile, as having a positive impact on prices for the consumer, perhaps offering ammunition for the CRTC to force through regulatory disruption.

Country Average price per GB ($) Percentage of monthly income
Canada 12.02 0.322%
Australia 2.47 0.056%
New Zealand 9.87 0.288%
UK 6.66 0.193%
USA 12.37 0.236%

Canada’s connectivity prices are by no-means the highest worldwide, but in comparison to the other members of the ‘Five Eyes’ alliance, they are expensive. Only the US telcos charge more per GB on average, though US consumer wallets maybe more tolerant to higher prices thanks to higher incomes.

The feedback from the competition watchdog seems to be suggesting a regulatory framework which would not be welcomed by the Canadian MNOs. Allowances could be made for MVNOs to enter the market, though the regulatory landscape could well be adjusted to aid the same companies in creating their own scaled and independent networks to compete alongside the ‘Big Three’.

“The CRTC should allow wireless disruptors to act as MVNOs as a transitional step to becoming full-fledged facilities-based providers as they continue their expansion,” the Competition Bureau’s submission suggests.

“This would ensure that the progress made by these providers to date will continue to pay dividends to Canadians. An investment-based MVNO policy achieves the goal of spurring additional price competition from wireless disruptors in the short term, while avoiding the risk of declining network quality in the long term.”

The issue which Canada faces here is a simple to understand but very difficult to overcome. Telecommunications is a very CAPEX intensive business at the best of times, but when you throw in Canada’s expansive and often aggressive environment, introducing a new player becomes even more difficult.

Should Canadian authorities want to encourage the growth of scaled competitors for the ‘Big Three’ there will need to be assistance. This might take the form of forcing lower wholesale prices on the current MNOs, as well as more direct regulatory/financial assistance for the challengers. Interestingly enough, next year’s 3.5 GHz spectrum auction could cause some headaches.

As we have seen in other markets, Germany for example, regulators have a tendency to use spectrum auctions to rebalance the distribution of power. With 3.5 GHz being viewed as an incredibly valuable spectrum asset for future connectivity, the slated 2020 auctions could be an opportunity for the Canadian Government to encourage more competition in the country.

For Bell in particular, this is not welcome news. The current market leader decided to sit out the already expensive 600 MHz auction in April, turning attention to next years’ 3.5 GHz sale instead. If the Canadian Government starts placing difficult obligations or limits on purchases, this might prove to be a red-tape maze of nightmares.

Although the pursuit of increased competition to aid consumers is a valiant cause for authorities to champion, the current chaos in India should serve as a warning for the Canadians. India was a market which was perhaps in need of a disruption (like Canada) due to high data prices and the risk of a digital divide emerging (like Canada), though authorities did not strike the correct balance.

With arguably too much assistance offered to Reliance Jio, the market risks heading towards an environment with even less competition. Telenor has already given up on India, Vodafone and Idea merged, with the new company now financially strained, state-owned telcos are being propped up with bailouts and Bharti Airtel looks uncomfortable. This is a perfect example of what happens when regulations to encourage the growth of challengers are implemented in an ineffective manner.

No concrete plans have been made yet, but this is an area certainly worth keeping an eye on. New rules and regulations are likely to be slated over the coming months, though it will be very difficult to strike the right balance and avoid another debacle like we have been watching in India.

  • Telecoms.com LIVE

  • 5G Network & Service Strategies

  • 2020 Vision Executive Summit

  • LTE Advanced Pro and Gigabit LTE: The Path to 5G

  • TechXLR8

  • BIG 5G Event

  • 5G North America

  • 5G World


Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Events

There are no upcoming events.

Polls

Should privacy be treated as a right to protect stringently, or a commodity for users to trade for benefits?

Loading ... Loading ...