#STAC2021: Competition Law in Canada

The intersection of Competition Law and Canadian Telecommunications has been top of mind for the past month since the news of Rogers and Shaw coming together in a $26B transaction.

Many are getting a crash course in various provisions of Canada’s Competition Act pertaining to mergers, debating the difference between a lessening of the numbers of competitors, and a lessening of competitive intensity. How do non-price factors, like quality, service and innovation figure in the Competition Bureau’s assessment of a merger?

But competition law impacts business behaviours outside of mergers as well. Yesterday, at the annual meeting of STAC, Canada’s Structure, Tower and Antenna Council, STAC 2021, delegates heard from Elad Gafni, an associate at Gowlings Ottawa office with an introduction to Canadian competition law including a discussion on how it interacts with trade associations, in particular, including “do’s and don’ts”.

Within the dual track (Criminal and Civil) system for dealing with anti-competitive conduct in the Competition Act, Section 45 deals with criminal conspiracies, prohibiting agreements or arrangements with competitors to engage in price-fixing, market allocation, and controls/limits on supply. Misleading advertising is also under the criminal track.

The civil track is most often handled through reviews by the Competition Tribunal. These would include performance claims in advertising, competitor agreements that don’t qualify as a criminal conspiracy, tied selling, or abuse of dominance, among others.

As many people in industry attend events, or participate in inter-company consultations, the provisions in the Act designed to prevent anti-competitive behaviour are important to be understood. Trade associations, by their nature, bring together competitors for cooperation and dialogue on certain issues. However, there are risks of breaching competition law in such meetings. Examples of activities that are recognized as acceptable for associations would include codes of conduct; self-regulation; government relations; standards (as long as they don’t unfairly discriminate); market analysis; and, education. Tips included having agendas for meetings; how to deal with something going wrong; or, mention of a sensitive topic. The Competition Bureau has a guide available for trade associations [pdf, 884 KB].

For some industry veterans, this may be second nature; for many, it was an important education on how to properly interact with people who are competitors in the marketplace, but colleagues in industry-wide issues, like safety and technical standards.

The Competition Bureau will feature prominently in the telecom news for the next little while. The session at STAC 2021 was a helpful introduction to Canada’s competition law.

#STAC2021: Partici-STAC-tion

The annual meeting of STAC, Canada’s Structure, Tower and Antenna Council, STAC 2021 continued yesterday, with an opening keynote for Day 2 by Hal Johnson and Joanne McLeod on “Keep Fit and Have Fun”. This was obviously quite a change-of-pace type of session for a telecom event, and I thought it was inspirational enough to make this a change-of-pace posting on my blog.

Their message, that we can all live, work and play together, had been ultimately ignited by their commitment to diversity and inclusion. The session heard Hal and Joanne talk about why this commitment is important to them, and what they do about it. Their first interactions with the Canadian media establishment were not shining examples of the Canadian multicultural ideal.

A bit of history: it started with a chance meeting at a gym over 33 years ago. Bodybreak has grown to be one of the most recognized, iconic brands in Canada known for promoting healthy, active lifestyles to Canadians of all ages. The session gave STAC participants a look behind the scenes at what motivated them to start BodyBreak and how it all came together. It comes down to how they dealt with roadblocks that were put in front of them, with a positive perspective. Instead, the pair figured out a way around the challenges to succeed in bringing their message of inclusiveness to the airwaves.

What we do today impacts what we will be able to do as we get older, as we heard from the Heart and Stroke Foundation. “What will your last 10 years look like? Will you grow old with vitality or get old with disease? It’s time to decide.”

Hal and Joanne identified triggers that set poor habits in motion for many. And for those of us who have spent the past year isolating at home, and especially after what seemed like an especially dreary, lonely, and nearly endless winter, the session provided motivation on how to establish new triggers, new routines and the rewards that can be expected for your efforts, with lots of simple tips to enjoy a healthier lifestyle.

A nice change from the standard approach for an opening keynote at a telecom event!

#STAC2021: Coping with COVID

The annual meeting of STAC, Canada’s Structure, Tower and Antenna Council, STAC2021, opened Monday in a virtual format, another event that has transformed digitally in response to the COVID-19 pandemic.

STAC members represent those essential workers who deploy the physical infrastructure necessary to expand the reach and capacity of Canada’s facilities-based networks.

From the outset of the pandemic, over the past year, these workers have developed protocols to enable their work to continue safely to deliver the digital connectivity upon which all of us have depended as most of us are stuck at home. So, it was fitting that one of the sessions on the opening day of the STAC2021 event was entitled “Coping with COVID”. The session was moderated by Anne-Sophie Tétreault from Cognibox and featured Laura Marciniwe of Teletek Structures, Adam Gale of Vertical Specialties, Jeff Selby from Trylon and Steven Bain from Rogers.

How did businesses establish pandemic protocols? How did the industry look after field technicians in dealing with basic needs: finding safe restrooms and safe places to sleep at night when away from home?

As borders closed and shipping faced delays, how were supply chains maintained?

Misinformation and conspiracy theories stoked fears of 5G towers as a cause of COVID-19. Imagine being an installer of equipment on towers or restoring service after an arsonist burned down a tower.

Protecting technicians who needed to go into private residences and uncontrolled workplaces to restore services? Ensuring sufficient personal protective equipment was available to protect technicians and their families.

How did companies deal with team building, burn-out and mental health issues as the pandemic dragged on?

Over the past year, the telecommunications industry has been recognized for maintaining network quality, enabling so many of us to work from home. The presentations represented people on the front line, some of the heroes who made the past year bearable by keeping our bits flowing and building new sites to extend broadband to previously unserved areas.

STAC2021 promises to be an interesting event. There are more than 400 people participating on-line this week. Most of the sessions focus on safety, for workers and the public, such as:

  • Building a Safety Culture;
  • Rope Safety: Everything You Should Know About Working with Rope (But Probably Don’t);
  • Rope Safety: Rope Access & Controlled Descent;
  • Driving Safety and Awareness;
  • AM Safety;
  • Tower Damping and Vibration Mitigation;
  • RF Monitors and RF Safety;
  • Tower Inspection Trends: Immediate Deficiency Mitigation;
  • Structural Fasteners: Everything You Should Know (But Probably Don’t).

Other panels and keynotes look at business issues, legal matters, industry trends, career development and more.

I’ll be posting highlights from a variety of the sessions all week. And you can follow #STAC2021 on Twitter.

Scotiabank telecom expert session

Last week, I had the pleasure of participating in an hour-long fireside chat with Scotia Capital’s Jeff Fan to discuss Canada’s current regulatory environment and, of course, we talked about the implications for the Rogers-Shaw transaction.

Jeff created a summary of our conversation and issued it as an Equity Research Alert. I have embedded the note below.

The session was recorded. You can watch it here (registration required).

To get regular updates on issues facing Canada’s telecommunications sector, subscribe to this blog and receive regular updates by email:

Scotiabank Telecommunication Services by Mark Goldberg

Mythbusting Canadian telecom

A few years ago (ok, maybe 8 years ago), Scotiabank published a report: “Canadian Wireless Myths and Facts”, that gave rise to my blog post “Top 10 myths on Canadian wireless”.

With so much going on in area of telecom policy I figured this would be a good time to update the list and expand it to include more than just wireless.

Policy decisions should be evidence-based, but unfortunately there are a lot of myths that keep being repeated, so much so that some even show up in the media and elsewhere.

Let’s take a look at some of the most common myths. We’ll start with these five, and follow-up with some more sometime soon.

  1. Myth: Canadians pay more for less
  2. Whether it’s mortgage payments, the gas bill, or internet connectivity, nobody likes paying bills. The feeling is even worse when you think that someone is getting a better deal. So it’s understandable that Canadians get upset when repeatedly told that they pay more than others for the same or worse service. But like most folklore, it’s not true.

    So why do people think this? There are number of international price comparison studies that purport to show that prices in Canada are higher than in most other countries. Unfortunately, most people just read the headlines and do not examine how the study was conducted, what data was used, or critically assess the conclusions. To quote a review of one such study, these price comparisons are often little more than “a careless mish-mash of data points from which no reliable conclusion can be drawn.”

    To be clear, there are differences in prices between carriers and between countries. But in addition to using faulty methodology and outdated data, one-dimensional price comparisons make no effort to understand the differences or determine the underlying value that customers are receiving from country to country.

    To give one hypothetical example, consider a mobile plan that provides 10GB of data per month with an average download speed of 60Mb/s for CA$60 versus a plan that offers 10GB of data with an average download speed of 3Mb/s for CA$40. Which is the better plan? Based on the methodology of some price comparison studies, consumers would be better off with the 3Mb/s plan because it costs less. That may be true for consumers who don’t use data intensive applications, but for those who do, the $60 plan provides better value.

    Another factor to consider is the cost of providing the service. One study found that the cost of building wireless networks in Canada is 83% higher than the average of a group of benchmark countries (Japan, Germany, France, U.K., Italy and Australia) and 34% higher than the U.S.. This makes sense as Canadian network operators, among other challenges, must serve a much lower customer base spread over a wide area, purchase equipment in $U.S., and face much higher spectrum costs.

    The point is, price comparisons are meaningless unless one takes into account the plan attributes, quality of service, country attributes and cost of providing the service. While they don’t generate the same headlines, there are studies which take these factors into consideration. For example, a U.S. industry association commissioned a study to compare the value received by wireless subscribers across 36 countries, including Canada. It concluded that Canadians receive more value for their dollar – or “more bang for their buck” – than all other G7 countries plus Australia.

  3. Myth: Pricing equals Affordability
  4. Similar to the previous myth, the term “affordability” gets thrown around without enough consideration of the facts. A couple of months ago, I wrote that the expression has been getting hijacked and applied to alternate agendas, such as ISPs seeking to bypass wholesale broadband access with taxpayers footing the bill for capital investment.

    We all want lower prices for everything, but that doesn’t mean that current prices aren’t affordable. To look at affordability, we need to look at price relative to the ability to pay. As I wrote recently, Canadian communications pricing actually ranks pretty well using that metric.

    That is certainly not saying that that all Canadians can afford the cost of connectivity, or the devices to connect. Unfortunately, there are Canadians who find it difficult, if not impossible, to purchase mobile devices or computers, and basic internet connectivity. As long time readers know, for nearly 15 years, I have been campaigning and advocating for solutions to this important social challenge.

    When people can’t afford necessities such as housing, electricity, food, and dental care, we do not try to resolve the problem by forcing the repricing of these goods and services for the entire marketplace. Instead, governments provide targeted social assistance.

    In the U.S., the government recently introduced the Emergency Broadband Benefit which provides a monthly subsidy of between $50-75 that can be used to acquire broadband connectivity. There are also efforts to make such programs permanent.

    A similar government program may ultimately be required in Canada, but in the meantime, we applaud the efforts of service providers like Rogers with Connected for Success, TELUS with Internet for Good, and the various carrier partners delivering the Connecting Families initiative.

    Meanwhile, prices are falling. Statistics Canada data shows that prices for wireless services are continuing to fall while the prices of other goods and services are rising.

  5. Myth: MVNOs aren’t allowed in Canada
  6. Yes, Mobile Virtual Network Operators (MVNOs) should be allowed in Canada. And, (surprise!) they already are.

    Indeed, there are a number of MVNOs that have been operating in Canada for years, as well as newer MVNOs like CMlink and CTexel. Just like most countries in the world, MVNOs are permitted in Canada but, just like almost everywhere, MVNOs aren’t mandated by the regulator.

    There are very few countries in the world where the regulator has ordered mobile carriers to make their networks available to MVNOs, and I’m not aware of any regulators that have set wholesale rates. Rather, in the majority of countries with MVNOs, the MVNO must negotiate an arrangement for network access with the mobile network operator. As in all commercial negotiations, there must be a benefit for both parties to the arrangement. This could be through having a well-known brand or reaching a market that the network operator is not targeting. In the end, the MVNO must be able to attract new subscribers to the network operator’s network that the network operator cannot gain by itself.

  7. Myth: Government has set a 50/10 minimum speed target for everyone
  8. Over and over I keep reading people say that the CRTC set a minimum basic internet standard of 50 Mbps (down) and 10 Mbps (up) with unlimited download capabilities. A recent ‘Framing Paper’ for a workshop series from Ryerson’s Leadership Lab on ‘Overcoming Digital Divides’ perpetuates the myth that 50/10 is a minimum basic speed.

    The CRTC did indeed set a target with those characteristics, but the intent was for all Canadians to have the choice to subscribe to such a broadband service, not a statement that 50/10 is a minimum basic speed that all Canadians require.

    There is an important distinction to be made. Some people may choose to subscribe to speeds and capabilities below the infrastructure target; not everyone needs a 50/10 service.

    So if you read a report that says X% of households in a given area do not have broadband connectivity that meets the 50/10 target, look closely to see if the report makes clear whether those households do not have that level of connectivity because it is not available or because, for whatever reason, they have chosen not to subscribe to that level of connectivity.

    It will be difficult to overcome digital divides if we can’t keep the targets straight.

  9. Myth: Other countries have a lot more competitors
  10. Some people say that Canada’s mobile wireless market is too concentrated. But what standard are they applying when making these statements?

    Of 29 European countries (including the UK), as of the beginning of 2019, there were 19 countries with 3 mobile operators and 10 with 4 mobile operators. In the period between 2010 and 2018, there 4 European countries that went from 4 to 3 mobile operators, and 3 countries that went from 3 to 4. [pdf, 889KB]

    In the United States, the number of tier 1 national mobile operators went from 4 to 3 when T-Mobile and Sprint merged in 2020.

    Canada has 3 national operators and a number of regional operators that serve different parts of the country.

    In addition to the number of competitors, a common measure of market concentration is the Herfindahl-Hirschman Index (HHI). The HHI is determined by squaring the market share of each firm competing in the market and then summing the result numbers. The lower the HHI the less concentrated is the market.

    According to data from GSMA Intelligence, as of 2018, the HHI for Canada was 2518. The HHI for the United States, prior to the merger of T-Mobile and Sprint, was 2664, while the weighted average HHI for the EU was 2966.

    Whether looking at the number of mobile wireless operators or the HHI, to say that Canada is an outlier is simply not true.

Which other myths you would like addressed in a follow-up?

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