By Moira Warburton and David Ljunggren
OTTAWA (Reuters) –Canada‘s telecommunications regulator on Thursday ordered the dominant operators to take steps to increase competition in a market that has some of the world’s highest billing rates, although the measure fell short of what some analysts had expected.
The move comes more than a year after Prime Minister Justin Trudeau’s Liberal government asked the telecoms companies to cut bills by 25% or face consequences after high mobile bills became a hot button issue in the 2019 elections.
The Canadian Radio-television and Telecommunications Commission (CRTC) said the telecoms firms should offer wholesale wireless access to so-called Mobile Virtual Network Operators (MVNOs), smaller outfits such as Videotron in Quebec that can then resell the capacity at reduced retail prices and pass on the savings to consumers.
The CRTC also said it expects Canada‘s three main wireless providers – Rogers Communications Inc, BCE Inc, and Telus Corp, as well as SaskTel in Saskatchewan, to offer C$35 ($28) plans with set minimum conditions, including unlimited cross-Canada talk and text and 3GB of data.
The three largest companies have 89.2% of telecoms subscribers and 90.7% of the revenue. They argue Ottawa is working with outdated information and insist their prices are competitive.
But in a concession to the majors, the CRTC said only MVNOs with infrastructure or spectrum of their own would be eligible, meaning that interested companies would have to be serious about making investments in physical or network infrastructure. The access agreements will expire after seven years.
Michael Geist, a law professor at the University of Ottawa with expertise in Canadian telecoms, said the CRTC missed “the opportunity to maximize new competitors.”
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The limited MVNO model “could benefit some smaller regional competitors, but falls far short of the open, broad-based mandated MVNO model that many were hoping for,” Geist said in an email to Reuters.
CRTC chair Ian Scott said in a statement Canadians should have access to more affordable options while acknowledging there were encouraging signs that prices were trending downwards.
Scott told Reuters the commission would likely begin a review of the MVNO mechanism in five years to ensure it was working as intended, but left the door open to trying a new tack sooner. “If this model is not working, we’ll need a different one,” he said.
Telus said it was reviewing the ruling. BCE said it was considering options. Rogers did not immediately comment.
The big three complain that the smaller MVNOs do not help build the expensive infrastructure needed to ensure service over Canada‘s vast area.
“It was the regional carriers who were most vulnerable to a wide open MVNO mandate,” Mark Goldberg, an industry consultant, said. “I would think that you’re going to see the regional carriers… as being the most grateful for the outcome today.”
Canada‘s regional operators include Quebecor Inc and Cogeco Communications Inc.
The CRTC’s decision is not final, since it can be overruled by the government and also challenged in court. Canada‘s federal innovation ministry, which has overall responsibility for the telecommunications sector, said it would review the CRTC ruling.
($1 = 1.2545 Canadian dollars)
(Reporting by Moira Warburton in Vancouver and David Ljunggren in Ottawa;Editing by Diane Craft and Rosalba O’Brien)
