The COVID wild card

Final comments for the CRTC’s Review of Wireless Services consultation were submitted last Wednesday evening and the file is now in the hands of the Commission for determinations on whether to mandate MVNOs as well as a host of other issues.

Going into the hearing, the CRTC’s Notice of Consultation set out a preliminary view [at ¶39]:

that it would be appropriate to mandate that the national wireless carriers provide wholesale MVNO access as an outcome of this proceeding. The Commission considers that, on balance, it is likely that the benefits that a well-developed MVNO market would deliver to Canadians are now more likely to outweigh any negative impacts that a policy of mandated wholesale MVNO access might have on wireless carriers’ network investments, particularly given the extensive investments that have been made in recent years. Further, properly structured rates, terms, and conditions should further mitigate potential negative impacts on future investments.

However, 2 months ago, the CRTC re-opened the evidentiary record, asking parties to comment on a new interrogatory:

Does the ongoing situation with respect to the Covid-19 pandemic change the views you have previously put forward on any of the issues being examined in this proceeding? Explain why or why not with supporting rationale and evidence, as necessary.

What significance should we place on the Commission’s May 15 letter? To what extent, does the letter reflect an understanding at the Commission of the significant change in circumstances, that could change its preliminary view on the potential impacts on network investment? Or conversely, was the Commission papering the record, preparing a preemptive defense against a future appeal on the basis that it didn’t consider the change in circumstances?

The importance of maintaining incentives for investment figures prominently in the final comments submitted last week.

The Competition Bureau’s comments open with “This proceeding is more important than ever for consumers, businesses and the Canadian economy. The COVID-19 pandemic reinforces the need for robust competition in the wireless sector, to drive the provision of ubiquitous, high-quality wireless networks that are accessible and affordable for all Canadians.”

TELUS’ comments open with, “COVID-19 demonstrates the fundamental importance of network connectivity.”

Bell worked its way up to the subject, using 4 introductory paragraphs before stating “It [mandated resale] would be particularly destructive now, during a period of unprecedented economic turmoil brought on by the COVID-19 pandemic and at a time when large investments of private capital are required to support rapidly expanding usage, the roll-out of 5G, and the continued extension of access to underserved rural and remote communities.”

For Rogers, the COVID-19 factor was midway through the executive summary:

It is critical that regulatory policy continue to take a long-term view. Canada will require substantial ongoing investments to improve productivity, maintain its competitiveness globally, and to realize the promise of 5G. The importance of ongoing investments in high quality, resilient broadband networks across Canada, and of extending these networks to remaining and underserved areas of Canada, have been dramatically underscored by the current COVID-19 crisis. The ongoing COVID-19 pandemic has heightened awareness of the critical importance of our wireless networks to Canadians and the Canadian economy. Canada’s networks have performed among the best in the world during this unprecedented time. Mandated wholesale access to mobile wireless networks will significantly undermine incentives, and the ability, to invest going forward, jeopardizing Canada’s recovery and future success.

In the second paragraph of its final comments, Shaw warns against “artificial support for resale models that would destroy the economics of competitive investment”:

As this proceeding draws to a close, the world continues to struggle with the COVID-19 pandemic, which has illuminated the power and importance of robust, resilient and competitive telecommunications networks. These networks, and the investment capital that sustains and nourishes them for the future, cannot be taken for granted. New competitors like Shaw have invested many billions of dollars in spectrum and new wireless infrastructure that form our footing in the fight for sustainable competition. We are not done.

Videotron’s introduction to its executive summary is entitled “Introduction – les leçons de la crise COVID-19”, concluding the introduction with “Compte tenu de ce qui prĂ©cède, il nous apparaĂ®t Ă©vident qu’il est dans l’intĂ©rĂŞt national de maintenir une approche de rĂ©glementation privilĂ©giant la concurrence axĂ©e sur les investissements.”

In its comments, CWTA was more reserved, deciding to close its executive summary with the COVID card: “As Canada emerges from the health and financial crisis caused by COVID-19, the wireless industry will play an important role in Canada’s economic recovery. The demand for high-quality, reliable wireless services will continue to grow.”

Even the potential new entrants put COVID front and centre. In the second paragraph of Cogeco’s submission, we read “This need [investments in all types of telecommunication infrastructure] is now even greater, as society has shifted many location-based activities (work, shopping, cultural activities, etc.) online in response to the current COVID-19 pandemic.”

DOT Mobile’s first paragraph opens “The ongoing COVID-19 pandemic has made acute the needs of the underserved Canadians who must rely on communication services more than ever. The underserved are now faced with severe impacts from the pandemic, such as a decrease or complete loss of income, reduction of job opportunities or mental health issues caused by COVID-19 induced stress, social distancing and solitude.”

Teksavvy said “Covid19 has brought an additional urgency to the completion of these proceedings. It has revealed how people rely on general network connectivity, as well as exposing gaps in that connectivity caused by the incumbents’ profit-seeking behaviour.” I’m not sure I understand the implicit pejorative nature of “profit-seeking behaviour”, but I am equally unclear how Teksavvy believes reductions in revenues and profits will help close those connectivity gaps.

The Coalition for Cheaper Wireless Services said in its opening paragraph “The COVID-19 pandemic has only increased Canadians’ individual
technological dependency.”

This is just a small sampling excerpted from the final comments submitted Wednesday night.

It is clear that COVID-19 is the wild card in the CRTC deliberations. What is less clear is whether the CRTC has been swayed from its preliminary view favouring mandated MVNO, despite explicitly recognizing the “negative impacts that a policy of mandated wholesale MVNO access might have on wireless carriers’ network investments.”

We’ll share more in the coming days.

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