Canadian watchdog ponders an MVNO invasion

The Canadian Radio and Telecommunication Commission (CTRC) has completed the first stage of its competition review as the watchdog ponders the competition conundrum in the country.

Between February 18 and 28, the CTRC heard evidence from numerous industry executives as the watchdog aims to improve the connectivity landscape for Canadian consumers. Preserving scale but inspiring competition is an interesting equation to balance, and in Canada, it could result in the encouraged creation of wholesale agreements. The land of Mounties and maple syrup could see an invasion of MVNOs in the near future.

“First, we will examine the state of competition in the mobile wireless market and whether further action is needed to improve choice and affordability,” said Ian Scott, CTRC CEO, during the opening remarks in February.

“Second, we will consider whether mobile virtual network operators, also known as MVNOs, should have mandated access to some or all wireless service providers’ networks and, if yes, subject to what considerations. On this matter, the CRTC’s preliminary view is that the national wireless service providers (Bell Mobility, Rogers and Telus) should be required to provide MVNOs with wholesale access to their networks, subject to certain constraints.”

The issue which remains at the heart of this situation is whether there is a fair deal for the Canadian consumer. As it stands, most Canadians are happy with the service provided, though prices are a worry. Tariffs have been increasing in recent years and it does look like a trend which will continue.

Canadian authorities have generally given the industry the benefit of the doubt, largely allowing an environment of self-regulation, though now it appears it needs to step in. Canada might have excellent network performance, but it is not presenting the consumer with a fair deal.

Stats curtesy of Cable.co.uk

Download speeds in Canada would be deemed perfectly acceptable, even fast to some nations around the world, but the digital economy does have a very high barrier to entry.

What is worth noting is that this is not the first time the Canadian watchdog has had to step in, seemingly admitting the telco industry is not capable or mature enough to look after its own interests in a fair and reasonable manner. The CTRC has to intervene in 2015 to set up a roaming framework between the telcos, change regulations to lower the cost of SIM-only deals and make wireless voice and internet services part of the universal service objective to ensure continued network investment.

What is of course worth noting is that the status quo is firmly set against any change in the market. Telus, Bell and Roger have a comfortable position, with each telco collecting healthy profits; why would these giants want the prospect of increased competition to lower tariffs and potentially erode the profit margin?

The outcome of this review will hopefully be set rates to force the established telcos to offer wholesale services to MVNO entrants. This is a market where competition is stagnant, while the high barrier to entry makes it highly unlikely another MNO will appear in the foreseeable future. MVNOs are probably needed to disrupt the market and provide suitable competition, but it remains to be seen how effective the lobby efforts of the traditional telco interest is.