A call for telecom competition rings for the CRTC’s new boss

It’s a monthly irritant, that big number Canadians see when they open their cellphone and internet bills. Prices in Canada are higher than most other countries. It is no surprise that the new CRTC chair, Vicky Eatrides, wants “lower prices” to be the answer from Canadians to the question of “What has the CRTC done for me?”

But delivering that answer isn’t easy – both the telecom regulator and the federal government have wrestled with it for years.

Since 2006, the CRTC had operated under a telecom directive set by the Stephen Harper government. It was a hands-off approach, to “rely on market forces to the maximum extent feasible.” In 2019, as frustration over high telecom prices came to a boil, the Trudeau Liberals kept the 2006 directive in place, but further told the CRTC to consider competition, affordability and innovation. The result over the past few years was a muddle, caused in part because of seemingly contradictory messages from the federal Liberals.

The CRTC in mid-2019 sought to reduce internet prices by cutting the wholesale rates that small internet providers pay to use the networks of the large incumbents such as Bell, Rogers and Telus. The CRTC in 2019 also said it was planning to mandate the Big Three open up their wireless networks to upstarts known as “mobile virtual network operators.”

The commission wanted to encourage competition, by giving smaller companies network access at a fair price, while at the same time encouraging large companies to continue to invest in building networks. By 2020, the Liberals started to focus more on network spending. The CRTC took the cue and in 2021 reversed its 2019 internet decision and backed down on new wireless rules – going from favouring the small companies to favouring the big players.

Ms. Eatrides begins her five-year term with a new – and specific – to-do list. Last May, the Liberals said they would scrap the 2006 directive and expand their 2019 directive with more detail. Ottawa cited high prices, compared with other countries, as a reason for the shift.

Change starts with Ms. Eatrides revisiting the CRTC’s recent 2021 decisions that boosted the large incumbents at the expense of potential competition.

On internet prices, Ottawa told the CRTC to make “pro-active” adjustments in the wholesale rates small companies pay for access to the large networks in order to foster competition. That’s relatively vague. What’s clear is the CRTC’s 2021 decision, one that Ottawa encouraged, didn’t turn out well. High prices for internet, according to Statistics Canada data, have not moderated. How much the pendulum swings away from the large companies remains to be seen.

In the cellphone market, it is more wait-and-see. The biggest unknown is how Quebecor’s Videotron will fare as the No. 4 rival to the Big Three, replacing Shaw. Videotron has promised prices in British Columbia, Alberta and Ontario that are similar to what it offers in Quebec, where it is credited with helping lower prices.

On the regulatory framework, the largest change would be a full opening to mobile virtual network operators. Such firms don’t own their own networks and buy space – like small internet companies – on the networks of the Big Three to resell to customers.

This has never taken off in Canada, unlike in other countries, because the Big Three have been reluctant to sign deals. The CRTC in 2019 was set to mandate network access but in 2021 decided against. The regulator requires access be granted only for companies, such as Videotron, that are preparing to build their own networks.

Ottawa’s new directive raises the prospect of change but doesn’t order it, saying it would move to full access for virtual operators “if needed” for competition. Unless that actually happens, Ms. Eatrides doesn’t really have much leeway to make a dent in cellphone prices. So, Ottawa and the CRTC will watch Videotron and see if the years-long effort to support a national No. 4 wireless name will succeed this time.

The goal of lower cellphone and internet prices is obvious. Making it happen has proven elusive. A truly big change such as opening up the market to foreign competition, typical in other countries, hasn’t been pursued by either the Conservatives or Liberals.

Instead, there is tinkering, directed by Ottawa and enacted by the CRTC. Interventions that make a real difference are Ms. Eatrides’s first order of business.