The competitiveness and reach of Canadian wireline and wireless services are critical to the economic prosperity and social inclusion of Canadians. It is not surprising therefore that the Canadian Competition Bureau identified telecommunications as a priority area in its 2019-2020 Annual Plan.
True to this plan, in August of this year the Bureau released the results of its study of competition in Canada’s broadband industry – identified by the Bureau as “the engine of the digital economy”. The study examined the role of carrier or facilities-based competitors and reseller competitors in the Canadian broadband industry. Reseller competitors obtain wholesale access to carrier broadband networks at tariffed rates set by the Canadian Radio-television and Telecommunications Commission (CRTC).
The Bureau Broadband Study concluded that:
- broadband resellers have obtained market shares of 15-20% where they focus their marketing efforts;
- carriers make substantial investments in network facilities and engage in dynamic competition; and
- wholesale access rates must be set “at the correct level to ensure that investment incentives are maintained, while at the same time ensuring sufficient scope for wholesale-based competitors to continue to offer competitive discipline in the marketplace”.
Within days of release of the Bureau Broadband Study, the CRTC approved reductions of up to 77% in the wholesale rates Canadian wireline carriers can charge resellers for access to their broadband networks – a decision that is now the subject of appeals to the Federal Court of Appeal, the Federal Cabinet and the CRTC. While the Bureau did not participate in the CRTC proceedings that led to the CRTC’s rate decision, the Bureau’s caution about getting wholesale rates right is a core issue in the Cabinet Petitions.
The Bureau has also been active in the CRTC’s ongoing wireless wholesale proceeding. At issue in this proceeding is whether Canadian carriers should be mandated to grant wireless resellers – also referred to as “mobile virtual network operators” or “MVNOs” – wholesale access to their wireless networks. At the request of the Bureau, the CRTC expanded its interrogatories to carriers to cover information that might be sought by the Bureau in complex merger analysis and other market investigations under the Competition Act. Relying on a 2014 amendment to the Telecommunications Act, the CRTC also disclosed confidential responding information to the Bureau. This information is the basis of lengthy further comments recently filed by the Bureau in the CRTC proceeding.
As with broadband markets more generally, the stakes of regulatory intervention in wireless markets are high as Canada competes for its spot in the 5G world.