Skip to main content
opinion

In 2019, Canadians’ perennial frustration over expensive cellphone bills finally garnered political and regulatory attention.

The Liberals, during the fall election campaign, promised that they would somehow cut prices by 25 per cent within two years. The Canada Radio-television and Telecommunications Commission (CRTC) started a review of the industry, aiming to open it up to more competition. And an assessment from the Competition Bureau found that the Big Three of Bell, Telus and Rogers had for years raked in higher profits than their peers in Australia and the Group of Seven nations.

So when news landed Monday morning that Rogers wants to buy Shaw for $20.4-billion, it looked like a setback for Canada’s wireless market. Shaw is a cable and internet company in Western Canada, but since 2016 it has also built a cellphone business under the Freedom Mobile banner in British Columbia, Alberta and Ontario.

While the Big Three are still very much the Big Three – each has between 10 million and 11 million wireless customers – Shaw has become a solid No. 4, with nearly two million subscribers. And even if Shaw’s relatively small, it’s still big enough to put downward pressure on prices in some parts of Canada.

The Competition Bureau concluded that a fourth competitor needed to reach a market share of only about 5 per cent in a regional market to knock prices down by more than a third. It had happened in Saskatchewan, where SaskTel operates, and in Quebec, which has Videotron.

It may be surprising to hear, but wireless rates are actually falling – that’s not a typo. Ottawa’s tracking of prices shows declines across the country for mid-level plans of six gigabytes, going for $50 a month on the Big Three’s discount brands in late 2020, down 17 per cent from $60 in early 2020. Meanwhile, plans of 30 gigabytes and more can be had for $80 a month. That’s a chunk less than the $100-plus the Competition Bureau found in spring 2019 for data-rich plans in markets where competition was weak.

The prospect of Rogers gobbling up the rising No. 4 wireless player looks like a stinging blow to competition. The deal is subject to three reviews – the Competition Bureau, the federal government and the CRTC – and analysts suggest the cost of getting the deal done would be the sale of Shaw’s wireless business to another company. Potential buyers might include the likes of Cogeco, a cable-internet company that has been interested in the cellphone business.

While the Rogers-Shaw deal plays out – the reviews could take a year – there’s another big regulatory decision scheduled to land, and it has the potential to reshape the wireless business: the findings of the CRTC’s industry review. Hearings took place last year. The CRTC, worried there wasn’t enough competition, proposed opening up established networks to what are called virtual operators. The Competition Bureau supported a version of the idea.

The Big Three and Shaw were, not surprisingly, all opposed. But a similar system has long been in place to help stoke competition in internet services.

When it comes to telecom, there’s a challenging balance to be struck among the virtues of competition, the demand for low prices and the need for operators to invest barrels of money in ever bigger and faster networks, whether internet or wireless.

On that balance, Ottawa’s views have been shifting. While the Liberals of 2019 were all about promising cheaper bills, the government now talks more about the need for investment in networks. The 2019 mandate letter for the industry minister repeatedly mentioned affordability, but last summer, during a continuing fight about internet wholesale rates, the federal cabinet worried that if rates are set too low, there won’t be enough spending on networks. The industry minister’s 2021 mandate letter doesn’t even mention affordability. Rogers crafted its deal with Shaw in this mould, promising more jobs, and spending on 5G wireless and rural internet in Western Canada.

For all that, Ottawa has to be skeptical about one of the Big Three wireless players scooping up a growing No. 4. A country of relatively high wireless prices isn’t exactly crying out for less competition. The way to encourage more of it? The CRTC could start by taking its own advice: Copy the internet model, and allow small players to use the Big Three’s infrastructure to compete directly with them.

Keep your Opinions sharp and informed. Get the Opinion newsletter. Sign up today.