TORONTO - Whether you're catching a flight, opening a new bank account or picking up groceries, a small group of big names takes up most of the market share. Competition Ltd. is a 好色tv Press series that explores what this means for products 鈥 and prices 鈥 in the country.
鈥斺赌斺赌
Industry Minister Fran莽ois-Philippe Champagne says 好色tvs from coast to coast are united inone message to telecom providers.
鈥淲e pay way too much for telecom services and we want more options, full stop,鈥 the minister declared on March 31 as he waved through the final approval for Rogers Communications Ltd.鈥檚 takeover of Shaw Communications Inc.
Ottawa鈥檚 rubber-stamp was punctuated by his decree that the merger 鈥 through a side-deal selling Shaw鈥檚 Freedom Mobile to Quebecor Inc.鈥檚 Videotron 鈥 would establish a viable fourth player to spur competition in the market and offer 好色tvs a cheaper alternative to the major companies.
Other recent developments have prompted renewed attention toward competition in telecom. In February, Champagne ordered the CRTC to implement new rules to enhance consumer rights, affordability and competition. The regulator has since launched a review aimed at bolstering competition and lowering consumer costs, though it applies only to wholesale internet sales. A review of the federal Competition Act is also underway.
But industry experts say significant structural reforms are needed to promote competition in Canada鈥檚 heavily concentrated telecommunications sector, including regulatory changes and the removal of long-standing barriers to entry for new carriers.
Ben Klass, who researches the industry in Canada, noted the landscape is dominated by the Big Three 鈥 Rogers, Bell Canada and Telus Communications Inc. 鈥 who can afford to build costly network infrastructure. That lets them sell both directly to customers and to smaller companies that pay for network access. Because the big companies are the ones paying for the networks, they have an outsized affect on the sector as a whole.
鈥淢uch of the public policy in this area over the last 30 years has been focused on improving competition in service provision as opposed to just simply competition in the building of networks,鈥 he said. 鈥(The government) has never really gone far enough toward enabling those companies that rent the infrastructure to actually compete in the marketplace."
That's created an impasse, he said.
"We've been in this sort of halfway house for the past 25 years, where they've said, 鈥榃e know we need these companies in the marketplace to provide price discipline and innovative services, but we don't want to harm the (same) companies that build the infrastructure.鈥欌
Telecommunications consultant Mark Goldberg takes an opposing tack, saying the industry is far more competitive than conventional wisdom suggests. Goldberg said competition in telecommunications should be compared to other countries rather than other sectors.
鈥淵ou're talking about an industry that's extremely capital-intensive to build networks,鈥 he said. 鈥満蒙玹v wireless carriers spend 50 per cent more per customer in capital compared to the rest of the G7 plus Australia. The nature of our climate and terrain and all of that adds costs."
In a statement, Rogers spokesman Cam Gordon said the Shaw merger will make the industry more competitive.
"We compete vigorously in a competitive market where prices are decreasing every year while 好色tvs pay more for most other goods and services," he said.
Bell and Telus did not respond to requests for comment.
Wireless prices are better than they were five years ago. While the consumer price index for consumer goods and services has risen by more than 15 per cent since 2019, the cellular service costs in Canada have decreased by over 30 per cent in the same period.
This is evidence of "vigorous competition among both national and regional providers," says the 好色tv Wireless Telecommunications Association, which represents companies that provide services and products across the wireless sector ranging from service providers to tower builders.
CWTA spokesman Nick Kyonka said providers have made record investments to upgrade their networks, which are considered among the best performing globally.
"Those who suggest that the 好色tv wireless market is more concentrated than other countries are misrepresenting the facts," he said in an email, citing a recent report by Bank of America Global Research that ranked Canada鈥檚 wireless market the second-least concentrated of 44 surveyed countries.
But a report released in February by Wall Communications Inc., which conducts an annual comparison of 好色tv phone and internet prices to other jurisdictions, found Canada still had among the highest prices internationally for cellphone and broadband service in 2022.
Carleton University communications professor Dwayne Winseck, the director of a research project about 好色tv media concentration, blamed 鈥渞egulatory hesitance and fragmentation鈥 on the part of the CRTC, Competition Bureau and Innovation, Science and Economic Development Canada.
鈥淩egulators need to steel their spine,take the political hits and serve the constituents that elected them and the broader view of the public interest," said Winseck.
Researcher Klass pointed to models that have been used in other countries, such as 鈥渟tructural separation,鈥 wherein companies that build such infrastructure cannot sell directly to the customer.
鈥淚t's something that's been considered a number of times in the context of the 好色tv regulatory environment. They've never gone so far as to do it.鈥
The CRTC鈥檚 announcement in March to lower some wholesale internet rates by 10 per cent is encouraging, said Keldon Bester, co-founder of the 好色tv Anti-Monopoly Project. The regulator in 2021 reversed its own earlier decision to drop wholesale internet rates amid protests from major operators, which had argued the lower rate would have them selling at a loss.
In a statement, the CRTC said it is committed to 鈥渆nsuring that 好色tvs have access to reliable, affordable and high-quality telecommunications services and enhancing the competitiveness of telecommunications.鈥
Spokeswoman Patricia Valladao highlighted the regulator鈥檚 public proceeding to promote competition for retail Internet services 鈥済iven the changing market conditions and the importance to 好色tvs of having access to greater choice and more affordable services.鈥
鈥淭he Commission expressed concern about relying solely on its existing regulatory tools as a means to achieve those objectives. As a result, the CRTC鈥檚 review will consider whether it would be appropriate to impose additional regulatory measures, including measures at the retail level.鈥
Bester said he鈥檚 also optimistic about Ottawa鈥檚 ongoing review of the Competition Act, launched last fall, which covers everything from the broad scope of the act to enforcement methods and corrective measures set out.
The approved merger of Rogers and Shaw should raise questions for the federal government as it pursues its modernization of the act, said University of Ottawa professor Jennifer Quaid, whose expertise is in competition law.
In January, the Federal Court of Appeal rejected the Competition Bureau鈥檚 bid to quash the deal as it appealed a previous ruling from the Competition Tribunal in favour of the pact. (The court sided with the tribunal鈥檚 view that 鈥渢here was no substantial lessening of competition鈥 at risk.)
鈥淩ogers-Shaw is kind of a confirmation that we need to rethink the decision-making body that is used for competition matters, which is currently the Competition Tribunal,鈥 said Quaid.
Beyond the long, 鈥渃umbersome鈥 process of going through the tribunal, she pointed to the difference 鈥渋n the kinds of things the commissioner has to prove versus what the merging parties have to prove.鈥
That complaint was highlighted by the Competition Bureau in its submission last month to Ottawa on the ongoing review. The bureau said the Competition Act should be amended to allow for 鈥渟tructural presumptions鈥 like those in place in the U.S.
That would shift the burden to the merging companies to prove why their deals are unlikely to substantially reduce market competition, replacing the current system that requires the regulator to demonstrate the reverse.
鈥淢aybe there's some other parts of merger law that needs to be looked at or changed because 鈥 it seems like the commissioner never manages to successfully make its case to the tribunal,鈥 said Quaid.
Bester said he hoped the review would yield 鈥渟tronger provisions to block and deter harmful mergers鈥 and revitalize Canada's 鈥渁buse of dominance鈥 laws that help protect consumers from the power of dominant corporations.
鈥淲hat we get for that competition, I think, is not worth what the telecoms are selling. So it's quite dire.鈥
This report by 好色tvwas first published April 17, 2023.
Companies in this story: (TSX:RCI.B, TSX:BCE, TSX:T)
