Falling prices in Canada could impact Rogers-Shaw merger

Prices for mobile and home broadband services in Canada declined last year, according to the latest government statistics.

That’s obviously good news for consumers, but it could also bode well for Rogers and Shaw, whose attempt to merge is still awaiting the green light from the government, which is still weighing up potential competition concerns.

However, ministerial comments accompanying the figures suggest competition remains an issue, so the telcos are probably not reaching for the champagne just yet. That said, one way or another the publication of the figures could well provide a springboard for a government decision on the long-running merger attempt.

Mobile prices declined by an average of 2.6% last year compared with 2021, according to the latest annual Price Comparison Study of Telecom Services. Declines were as steep as 16% for the largest data plans. On the fixed side, home Internet prices were either flat or down on the previous year, the report shows, with mid-range plans coming in 11% lower in 2022.

According to the Minister of Innovation, Science and Industry’s assessment of the data, the report also shows that regional competitors are offering prices up to 39% lower than the major national service providers.

The government also shared that Statistics Canada’s January Consumer Price Index showed that mobile service prices fell by almost 30% between 2019 and 2022.

“Despite this progress, Canadians continue to pay too much for their telecom services. More work must be done and that’s why the government continues to advance policies that prioritise competition, which in turn will drive down prices and make services more affordable for Canadians,” the ministry said. It referenced in particular a new policy directive issued to regulatory body the Canadian Radio-television and Telecommunications Commission (CRTC) on competition and affordability.

François-Philippe Champagne, Minister of Innovation, Science and Industry – who oversees Innovation, Science and Economic Development Canada (ISED) and whose job it is to say yay or nay to the Rogers-Shaw merger – picked up the same theme.

“It’s clear from this study that competition is key to further reducing prices, and our government will continue to pursue the policies necessary to increase consumer choice for telecom services across Canada,” he said.

Read into that what you will, with regard to the upcoming merger decision.

Rogers and Shaw have pushed back their own deadline for the completion of their merger a number of times, pending receipt of the relevant approvals.

They first agreed their C$26 billion deal that should see Rogers swallow up Shaw in March 2021. There were always going to be regulatory difficulties, but neither party expected to be still in limbo two years on. The pair brokered a deal to sell Shaw’s Freedom Mobile unit last summer in a bid to alleviate competition concerns, and that element of the deal still needs signing off by ISED.

They are now working towards a 31 March completion date, their previous mid-February deadline having come and gone, and continue to talk up the – in their opinion – pro-competitive benefits of the tie-up. But all still rests on whether Champagne agrees.

The telcos could do with him making a call soon, given that it’s nearly mid-March. But he has always made it clear that he will not be rushed.

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