Views on whether Mobile Virtual Network Operators (MVNOs) would increase competition in Canada, and lower cellphone prices, remain divided as a decision from the regulator looms.
In late February, the Canadian Radio-television and Telecommunications Commission (CRTC) held regulatory hearings on whether to mandate MVNO (wholesale service providers) access to large wireless networks.
On July 16, the Competition Bureau said in a news release that mandating MVNO access is the “best way for Canadians to get cheaper cell phone plans.”
“The Bureau’s analysis found that prices can be more than 50 per cent lower for all cell phone users in markets where there is strong competition from regional carriers. These savings are far greater than what some customers may have saved as a result of ‘unlimited’ plans,” the bureau said. “This model represents an incremental, time-limited policy to incentivize and accelerate the expansion of regional carriers so that they can quickly deliver lower prices and greater choice to more Canadians.”
In its final submission as part of the hearing, the bureau continued to recommend an MVNO policy where larger carriers like Bell, Rogers, and Telus are obligated to sell temporary access to their wireless networks to regional carriers “who intend to invest and further expand their own networks”
“Canadians now more than ever rely on their wireless services to work, learn, shop for essential products and services, and connect with friends and family,” Matthew Boswell, Commissioner of Competition, said in the release. “Our recommendation in this proceeding [provides] an evidence-based approach to increasing competition. Effective competition is key to delivering lower prices, more choice, and high-quality networks.”
On the other hand, a PwC report, commissioned by some members of the Canadian Wireless Telecommunications Association (CWTA), said mandating MVNO access will have a negative effect and by 2025 would “include an estimated $2.5 billion reduction in government tax revenue, approximately 94,000 jobs lost across the supply chain and a widened digital divide between rural and urban Canada.” CWTA, which released the report, declined to say which members paid for the report by PwC. CWTA is a lobby group that represents companies across the wireless sector, including Bell, Rogers, SaskTel, and Quebecor’s Vidéotron.
The report added that Canada’s GDP would be reduced by an estimated $10 billion within five years if the larger carriers grant access to wholesale providers.
Those larger carriers say that by mandating MVNO access capital and investment are at risk.
“We do not have the right regulation. As we enter the world of 5G, regulatory certainty is critical to investment. We need regulation that encourages investment and fuels innovation. Punitive regulation will slow, or worse, stall 5G deployment,” Rogers’ CEO Joe Natale said during the Q4 2019 earnings call.
Telus’ CEO Darren Entwistle told the CRTC it would cut 5,000 jobs and $1 billion in investment over the next five years if it were forced to grant access to wholesale players, while Bell’s CEO Mirko Bibic said if regulatory conditions change there will be an impact on capital expenditure or expenses (salaries, advertising, retail experience) in order to “deliver to shareholders who provide us with the $4 billion in capital.”
The CWTA said according to the PwC report, released on July 15, if MVNOs were mandated access it would cost the national carriers “estimated annual cuts of $5 billion in operating expenditures and $3 billion in capital expenditures over the next five years.”
"These cumulative impacts on Canada's network operators would negatively impact Canadians and our national economy," said CWTA president and CEO Robert Ghiz, in the news release. "Canada is already dealing with millions of job losses and an economy expected to shrink by 6.8%. We need to stimulate long-term investment and economic growth, not stifle it."
It is unclear when the CRTC may release a final decision on the matter. Furthermore, Ian Scott, chairperson of the CRTC stated in April, "Where we can the CRTC has extended deadlines and postponed or rescheduled public hearings. As well, we are delaying the launch of certain new proceedings. We know the industry’s primary focus, presently, is on the delivery of services to Canadians.”
Clarification: The original article noted that Telus is a member of the CWTA. Telus disputes the information published on the CWTA website and we have removed the reference. We will update with further information as it becomes available.