Canadian complaints give regulator more ammunition for new telco

The Commission for Complaints for Telecom-television Services (CCTS) has said complaints against the telcos are at an all-time high, just as competition authorities are building evidence.

Usually annual complaints reports do not grab headlines, but this report needs to be placed into context. Earlier this week, the Canadian Competition Bureau has suggested new regulations should be introduced to encourage new entrants in the telco space, breaking the over-arching dominance of the ‘Big Three’; Bell, Telus and Rogers.

Looking at the CCTS report, for the last 12 months the Commission received nearly 19,300 complaints from telecoms customers, an all-time high for the organisation’s history.

The report suggests there is also a 42% increase in the number of service provider violations of the Wireless Code, most notably failure to provide important documentation to customers and to provide proper notice before disconnection of service. Complaints against Rogers increased 26.5% year-on-year, Telus’ jumped 70.6%, while Bell’s increased 24.2%.

Looking at the long-term trends, complaints about wireless services have increased 90.6% over the last five years. The number of complaints about wireless on the whole increased year-on-year 53% for 2018/19, and accounts for 41% of all complaints directed towards telecoms and TV service providers.

Telcos are traditionally very poor when it comes to customer service and delivering on the promised experience, so the poor performance described in the report will come as little surprise. However, those who are pursuing the introduction of new regulations to encourage additional competition will find the results very helpful.

As mentioned previously, the Canadian Competition Bureau has submitted a report to the Canadian Radio-television and Telecommunications Commission (CRTC) questioning whether the industry is in a healthy position. The report requests additional regulation which would encourage the creation of more MVNOs, as well as follow-ups which would assist these MVNOs in deploying their own, independent, scaled-networks. Ultimately, the Competition Bureau wants more competition across the country.

In general, competition authorities only pursue additional competition in markets when the status quo is deemed unsatisfactory. Introducing new dynamics are a means to ensure the consumer gets a fair price and a satisfactory service.

In the report submitted to the CTRC, the Competition Bureau suggests prices are 35-40% lower in regions where there is additional competition to drive the ‘Big Three’, and this competition only have to grab 5-10% of market share. Add the increased number of complaints into the equation, and the case for a competition shake-up in the Canadian market becomes stronger.

These are still the early days, but we suspect after a public consultation, efforts might be made to introduce additional competition into the market. This could mean forcing the existing telcos to lower wholesale costs to encourage the creation of new MVNOs in the short-term, it could also mean financial/regulatory assistance for these MVNOs to free-up capital for the deployment of infrastructure.

Another worrying development for the Canadian telcos is the up-coming 3.5 GHz spectrum auction which will take place next year. This is valuable spectrum for future 5G services, and should authorities want to introduce new competition, said competition would want a slice of the 5G airwaves. Perhaps limits will be introduced to the amount of spectrum the ‘Big Three’ can buy, and maybe it will be offered at discounted rates for new-players who commit to aggressive network deployment plans.

These are all guesses for the moment, though we strongly suspect Canada might be heading towards a situation where it wants to create additional competition. Prices are high in Canada in comparison to the rest of the world, $12.02 per GB a month and ARPU of $37.95, which is always a negative sign. Admittedly, the Canadian landscape makes it difficult to deploy networks cost-effectively, but the regulator wants to ensure the consumer’s wallet does not take too much of a beating.

It is unlikely to happen in the short-term, but the signs are not looking good for the status quo. The evidence is starting to point towards the need to introduce more competition in the Canadian telecoms market.