BCE Inc. is hiking wireless prices in Manitoba before a potential competitor launches, raising questions about the state of competition in the province little over a year after Ottawa approved the purchase of regional provider Manitoba Telecom Services Inc.
Montreal-based BCE acquired MTS in March, 2017, in a $3.1-billion deal that won government and regulatory approvals through a series of concessions meant to protect competition in Manitoba’s wireless market. BCE initially agreed to sell one-third of its new wireless subscribers to rival Telus Corp., but to get the deal done, it had to go even further.
BCE agreed to sell off cellular airwaves to Xplornet Communications and also offer the rural internet provider help in getting a wireless business off the ground, with plans to give the company about 25,000 subscribers and six retail stores, plus access to cell towers and roaming service and help buying handsets.
When the government and Competition Bureau approved the deal on Feb. 15 last year, BCE also pledged not to raise MTS’s wireless prices for at least 12 months after the deal closed.
Manitoba has for years been a golden child in the world of Canadian wireless policy, with lower prices than most other parts of the country attributed to the presence of a strong regional competitor that kept BCE, Telus and Rogers Communications Inc. in check. Ottawa has often flagged places such as Manitoba as a model in its attempts to stoke competition across the country, most recently announcing it will set aside 40 per cent of the airwaves in a forthcoming spectrum auction for regional players, such as Shaw Communications Inc.‘s Freedom Mobile and Quebecor Inc.’s Videotron.
But now, one year and four months after the deal closed, Xplornet still hasn’t launched mobile service and BCE is raising prices for new subscribers by about $5 a month, as reported this week by wireless technology website Mobile Syrup.
BCE spokesman Marc Choma said there will be “no change for current customers unless they later choose to upgrade their device or switch to a new plan” and added that subscribers on flat-rate plans will still have the option of an unlimited data plan when they update their device.
“Note that these are the first wireless pricing changes at MTS since October 2016 – 21 months,” Mr. Choma said, adding that BCE has invested in upgrades to wireless technology and customer service in the province since acquiring MTS.
BCE was also meant to divest subscribers to Xplornet within a year of the deal closing, but the companies got approval from the Competition Bureau in January to delay that agreement.
Xplornet plans to launch its wireless service this fall, spokesman James Maunder said on Wednesday, adding, “We are excited to soon be offering Manitobans a fair, simple and transparent customer experience that will provide real choice in the marketplace.“
Mr. Choma said BCE is “working with Xplornet to transfer customers to them as we have with Telus.”
Government memos obtained through access to information requests show staff at the department of Innovation, Science and Economic Development (ISED) accepted that Xplornet was “well positioned to enter the mobile service market.” One briefing note to Innovation Minister Navdeep Bains, written in late January or early February, 2017, recommended approval of the deal based on the competition Xplornet would offer with that “transitional support” from BCE.
The memo also suggested a plan for how to pitch the decision to the public, suggesting that “messaging” should “focus on the benefits to Manitobans, including increased competition in rural areas.”
Mr. Bains went even further in his public statement on Feb. 15, saying the deal and the expansion of Xplornet into the wireless market “will result in more competition, which means more choice and competitive prices for all Manitobans.”
An annual study on telecom prices published in December again showed that wireless prices were cheaper in Manitoba. In another memo to Mr. Bains, department staff briefed him on the study, pointing out that for “mid-use” wireless plans with 1 GB of data, Winnipeg was the cheapest city in the country and 19-per-cent less expensive than the national average.
This was singled out as one of the “key messages” for the minister to highlight when the study was made public.
“Competition is producing meaningful results for Canadians. In regions with strong competition, wireless prices are up to 31 per cent lower than the national average,” the memo stated.
Mr. Bains declined to comment specifically on the Manitoba situation on Wednesday. “As always, we’ll continue to watch market dynamics and promote more competition so that all Canadians can have better services at competitive prices,” he said in an e-mailed statement.
Meanwhile, Canada’s competition watchdog, which has raised concerns over “market power” in the industry, says the goal is that “competition for mobile wireless service in Manitoba will be strengthened,” when Xplornet does launch in the fall.
“The Competition Bureau continues to keep a close watch on competition in Manitoba and across Canada in the mobile wireless services market,” spokesman Jayme Albert said.