One of the most interesting sessions at The 2014 Canadian Telecom Summit was a panel featuring 5 of North America’s top telecommunications economists discussing the state of competition in the industry.
A video replay of the session is available from CPAC on demand.
A month before the panel appeared at The Canadian Telecom Summit, Canada’s Competition Bureau filed comments in the CRTC’s proceeding looking at wholesale mobile services (Telecom Notice of Consultation 2014-76). These comments were press released, highlighting the conclusion:
The Bureau has submitted to the CRTC that Canada’s largest wireless companies have retail market power, which provides them with the ability to profitably maintain prices above competitive levels for a significant period of time. These companies compete in both wholesale and retail markets for mobile wireless services; furthermore, they may benefit from charging high prices to rivals for the wholesale mobile services their rivals need to serve their customers. High wholesale costs may force rivals to increase their retail prices, resulting in some of their customers either leaving the market or switching to the large mobile wireless companies.
As a result, the higher rates charged by mobile wireless companies for wholesale mobile wireless services may hurt competition in retail markets. The Bureau estimates that increased retail competition from an additional nationwide mobile wireless carrier could result in gains of approximately $1 billion per year to the Canadian economy in the form of better product choices, price reductions and other benefits for consumers.
The Bureau is therefore recommending that the CRTC adopt measures to address the incentives Canada’s largest mobile wireless companies may have to raise their competitors’ wholesale prices as these increases may be passed on to consumers.
A couple weeks after The Canadian Telecom Summit, the Competition Bureau filed less publicized comments in the second round of the CRTC’s Review of wholesale services proceeding (Telecom Notice of Consultation 2013-551). On June 27, the Bureau’s filing in the CRTC’s Let’s Talk TV proceeding merited a press release, but no publicity was associated with the Bureau’s comments in the wholesale services proceeding.
The wholesale services comments may be newsworthy.
In reaching its conclusion that mandated access to unbundled local loops should be withdrawn, the Bureau said:
The vast majority of Canadian residences, as well as many businesses, are now served by two facilities-based competitors, and competition between ILECs and cable companies is generally vigorous.
Two competitors are sufficient for internet services, but 3 are considered insufficient for wireless services.
Why?
One could argue the nature of both services is different.
The parallel is not as easy as that to make.