It would appear that Innovation, Science and Economic Development Minister Navdeep Bains has had enough. Enough of incumbent telecom giants resisting efforts to increase competition. Enough of Canadian Radio-television and Telecommunications Commission chair Ian Scott making policy decisions that favour big companies. Enough of half-measures that have failed to significantly address some of the world’s highest wireless prices and that have left the government looking weak on an issue that is critically important to its innovation agenda.
This week, Mr. Bains took his most significant policy step to date to address telecommunications concerns by issuing a proposed policy direction to the CRTC based on competition, affordability, consumer interests and innovation. It will take several months to work its way through a defined legal process, but the policy should be operational by the summer.
The proposed direction is notable because it flips the script on Canadian telecom policy. For years, promoting investment in networks, known as “facilities-based competition,” has served as Canada’s policy foundation. When the lack of wireless competition emerged as a significant concern, governments used spectrum set-asides to entice new facilities-based competitors, who often struggled to compete against deep-pocketed incumbents.
Mr. Bains’s policy places investment at the bottom of the priority rung, instead encouraging “all forms of competition.” In doing so, he is sending a clear signal that the government now values the benefits of alternative competitors, including mobile virtual network operators (MVNOs). These operators typically do not own spectrum or network infrastructure. Instead, they purchase network access at wholesale rates from existing operators and offer it to consumers with their own retail pricing.
The government is similarly seeking to flip the role of consumers in Canada’s communications policy framework. The word “consumer” does not appear in the Telecommunications Act and “affordable” is found just once. This is not an accident. Canadian policy has long sidelined consumer interests by assuming that what was good for incumbent telecom companies was good for the public.
The proposed policy direction seeks to prioritize consumer interests by requiring the CRTC to assess the regulatory impact on affordability and lower prices as well as enhancing and protecting the rights of consumers. The requirement to consider affordability could change the equation on many policy issues such as internet access taxes or other measures that if left unchecked could lead to higher consumer costs.
The policy shakeup indicates the government is not buying what the incumbent telecom companies have been selling. Bell, Telus and Rogers have tried to cast doubt on studies that find Canadian consumers pay some of the highest wireless prices in the world, have played down reports of misleading sales tactics, and Bell Canada chief executive George Cope even implausibly argued that more competition would harm consumers in a letter to Mr. Bains released under the Access to Information Act. Mr. Bains isn’t buying it, instead introducing a proposed policy direction that features policies that have been consistently opposed by the incumbents.
While the proposed policy direction will not magically reduce wireless pricing, it will make a difference. The last policy direction to the CRTC, developed by then-industry minister Maxime Bernier in 2006, required the commission to rely on market forces. The direction has been regularly praised and cited by the incumbent telecom companies to support their policy positions. With a proposed policy direction focused on competition, affordability and consumers, those perspectives will become a more prominent part of the regulatory process that cannot be easily dismissed.
The proposed policy direction is aimed at the CRTC, but the independent panel studying broadcast and telecom changes ought to also pay attention. The committee is certainly free to establish its own policy recommendations, but the government has made its priorities abundantly clear and failure to account for greater competition, affordability or consumer interests will be on shaky ground.
With no quick fixes, telecom policy will surely be an election issue in 2019. Mr. Bains has struck first with his proposed policy direction, but in the months ahead all political parties will likely jockey to put forward their own competition-first policies designed to address long-standing consumer and business frustration with the state of the Canadian wireless market.