The federal government needs to get its story straight about the state of wireless competition.
Its market assessments of late seem to depend on which way the wind is blowing in Ottawa. And, let’s face it, there’s plenty of hot air gusting through the corridors of power in our capital on any given day.
At the start of this year, for instance, the Trudeau government boasted that wireless prices were falling because it had the gumption to put the Big Three carriers in their place.
Go ahead and snort. It will make you feel better. Because a nanosecond later, Ottawa was telling us too many Canadians are, in fact, still overpaying for wireless services.
Confused? You’re not alone.
One can only conclude that neither our parliamentarians nor our regulators have an accurate read of competition in the wireless market, and that’s troubling because they’re currently mulling a blockbuster deal. Rogers Communications Inc.’s proposed takeover of Shaw Communications Inc., worth a whopping $26-billion including debt, has the potential to transform the industry.
It’s no exaggeration to say this megadeal marks a watershed for competition. So, it doesn’t inspire confidence when the people in charge of scrutinizing it offer mixed messages about the industry’s state of play.
If they can’t accurately gauge competition now, how the heck can they assess the future impact of this deal?
Ottawa began offering Canadians contradictory messages back in January. At the time, the Trudeau government was doing a victory lap, telling Canadians it had fulfilled its promise to reduce the cost of wireless plans offered by Rogers, Bell and Telus by 25 per cent – and ahead of schedule to boot.
To ward off criticism it had only targeted soon-to-be irrelevant mid-tier plans – those that offer two gigabytes, four gigabytes or six gigabytes a month of data – the government pointed out that wireless prices declined across the board from February, 2020, to December, 2021.
But as it turns out, even with those price reductions, “Canadians still pay too much for their internet and cellphones,” according to Industry Minister François-Philippe Champagne.
Well, that’s what happens when Ottawa sets weak targets and lacks a sustainable plan for competition.
Fast forward to February, and the Competition Bureau chimed in to say consumers basically need to fend for themselves in the wireless market – and in banking and insurance.
“It’s Switch Week! Time to stop overpaying and start switching,” our antitrust watchdog declared in a news release on Feb. 21.
Apparently, only one in four surveyed Canadians had renegotiated their contracts or switched providers to take advantage of better deals and services, according to government research.
Sure, Canadians are far too complacent. But if we aren’t inspired to haggle, it’s most certainly because we’re tied down by telecom bundles, and switching providers is still a huge pain.
It’s not as if we’re spoiled for choice – blue couch or red couch, it’s just more of the same.
“Switching service providers or renegotiating your contracts can lower your monthly bills and help you get better products and services. It makes providers compete for your business,” the Competition Bureau added.
How do government media officers write this stuff with a straight face?
Putting the onus on consumers is a cop-out. After all, Ottawa has refrained from regulating retail prices of wireless services for almost 30 years.
The Canadian Radio-television and Telecommunications Commission (CRTC), the federal telecom regulator, originally decided against regulating the wireless sector in 1994, opting instead to allow market forces to steer the industry’s growth.
Those dormant regulatory powers, though, still remain in the Telecommunications Act, meaning the CRTC can still exercise its authority over such matters if it chooses.
Don’t hold your breath for the CRTC to change course. The telecom regulator knows carriers would slash network investments and jobs if it suddenly took a hands-on approach to retail price regulation.
Sure, Mr. Champagne purred about the importance of wireless affordability last week, and stressed that Rogers wouldn’t be allowed to acquire all of Shaw’s wireless licences. That’s fuelled speculation that Shaw’s Freedom Mobile may need to be sold to a third party as a condition for approval of the deal.
But even if Rogers is required to divest Freedom Mobile, would anyone in Ottawa even know if there was insufficient wireless competition in a postmerger world?
The Competition Bureau has already admitted that it has trouble taking stock of market competition, even though that’s ostensibly its job.
Commissioner of Competition Matthew Boswell told a parliamentary committee that studied the Rogers-Shaw deal that his office can’t compel companies to hand over relevant information for in-depth market studies.
What’s more, the Competition Bureau simply lacks “the resources to conduct after-the-fact assessments of our merger remedies,” he said.
So what does this all mean for the future of wireless competition if the deal proceeds?
Don’t look to Ottawa for answers, my fellow Canadians. Looks like we’re on our own.
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