Earlier this week, I wrote “What Canada can learn from T-Mobile / Sprint”, providing highlights relevant to Canadians from the US District Court decision that has paved the way for approval of the merger of the number 3 and 4 US mobile carriers.
It is worth highlighting an opinion piece from Tuesday’s Ottawa Citizen written by Richard Feasey, a panel member at the UK’s Competition and Markets Authority. In “Canada should learn global lessons on wireless regulation”, we are told the CRTC “risks not only being out of step with the rest of the world but moving off in the opposite direction.”
His OpEd is based on a Summary Report [pdf, 200KB] prepared for Rogers as part of the CRTC’s Mobile Review proceeding. The main findings of that report are:
- Regulation of wholesale services for MVNOs of the kind that the CRTC is proposing (to address a ‘market failure’) has been very rare in the past and is done in only one country today, Norway, in which one carrier has almost 60% market share.
- The vast majority of reduction in consumer prices in European wireless markets over the previous decade should be attributed to reductions in costs that have been enabled by investments in new network technologies, not to changes in the degree of retail competition, such as might arise from MVNOs. This has led European regulators to conclude that the risks to investment from regulating for MVNOs outweigh any benefits that might arise.
- Where regulation has been attempted in the past, there is no good evidence that having more MVNOs in a wireless market has led to lower prices, either for consumers in general or for those on low incomes. European competition authorities have stopped relying on MVNOs to preserve competition following wireless mergers as a result.
- Evidence from the rest of the world suggests that regulation of wholesale services for MVNOs would do little to benefit Canadian consumers, including those on low incomes, but would risk the network investment which is responsible for most of the improvements in wireless services that consumers experience. Most regulators in the rest of the world would endorse the CRTC’s efforts to promote competition between facilities-based carriers, since this drives investment and allows MVNOs to obtain wholesale services for themselves on proper commercial terms.
- By proposing to change direction and focus its efforts on regulating to promote entry by MVNOs, the CRTC appears to be both out of step with the rest of the world and willing to disregard the lessons other regulators have learned over the past 20 years.
The oral phase of the CRTC hearing continues through the end of February.