Mark Goldberg

Setting the record straight on Canada’s wireless industry

The following opinion piece by CWTA President & CEO Robert Ghiz appeared in Hill Times on December 3:

During the recent federal election campaign, we heard a lot of talk about cellphone prices. Now that the election is over, it is important to put rhetoric aside and look at the facts. Not just about prices, but also about the future of mobile communications and what is required to connect more Canadians and to reap the economic and societal benefits of the new 5G technologies.

The price of wireless data has actually been declining significantly over the last several years. In fact, the CRTC recently reported that wireless prices declined by an average of almost 30 per cent from 2016 to 2018. That was before unlimited data plans were launched across the country. Today, Canadians can get unlimited data plans that start from $50 to $75 a month, a huge decline in price from 2018 when, according to the government’s own study, $75 was the average price for a 2-GB plan.

Declining prices are only one indication of successful wireless policy. Network performance and coverage are also fundamental components of a healthy wireless industry. Given its size, low population density, and climate, as well as government licence fees that are among the highest in the world, Canada is one of the most challenging countries in which to build wireless networks. Yet despite these challenges, Canada’s wireless providers have, so far, invested over $70-billion in building world-class wireless networks throughout the country, according to data gathered by the Canadian Wireless Telecommunications Association, the CRTC, and Nordicity. That’s about twice as much on a per connection basis as in the European Union, according to the industry group GSMA Intelligence.

Thanks to these massive investments, Canada’s LTE wireless networks are ranked the third fastest in the world (and twice as fast as the U.S.) and reach 99 per cent of Canadians. This success is not limited to urban areas. A recent report by OpenSignal shows that network coverage and performance in Canada’s rural areas is also among the best in the world. In fact, if rural Canada were its own country, its average download speeds would rank higher than the average speeds across all of the United States and more than 70 other countries.

These achievements were possible because successive federal governments adopted policies that fostered meaningful competition while also maintaining an environment that encourages investment in wireless infrastructure. These facilities-focused policies also encouraged the introduction of new regional wireless providers, such as Freedom Mobile, Videotron, Eastlink, and Xplore Mobile that are playing an important role in providing sustainable competition, while at the same time making significant investments in Canada’s wireless infrastructure.

Policy proposals that would instead favour companies looking to be “virtual” wireless providers, or mobile virtual network operators—whose business models depend on regulatory arbitrage rather than investing their own capital to build and maintain wireless infrastructure—have been repeatedly rejected by the CRTC. Why? Because any potential benefits are outweighed by the negative impacts on sustainable competition and investment.

MVNOs will not help extend wireless networks to rural communities or invest in 5G infrastructure, and any material impact on prices is unlikely. The fact is Canada’s wireless market is already delivering the same or lower prices than high-profile U.S. MVNOs like Tracfone and Google Fi, at speeds faster even than early 5G implementations in the U.S.

In its submission to the current CRTC proceeding, the Competition Bureau and its expert consultant concluded that a broad-based MVNO policy would not have a significant impact on prices, would harm the regional providers who have brought meaningful competition to the market, and would reduce network operators’ incentive to invest in network infrastructure. In short, “the risks associated with such a policy are too high for it to be warranted.” The bureau recommended the CRTC maintain its facilities focus as “[a]ll else equal, facilities-based competition is the most sustainable and effective form of competition.”

Canada can’t afford to ignore the success that policies supporting facilities-based competition continues to have in delivering performance, coverage, and declining prices. Countries that have turned their backs on facilities-based competition have seen the quality of their wireless networks and services suffer, investment decline, and jobs disappear. We must not let this happen in Canada. The government should focus on policies that encourage investment in Canada’s future and deliver increasing value to Canadians and our economy.

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