Just how cozy is Canadian wireless?

January 25, 2017

It is easy to point to the national subscriber share of Canada’s major wireless carriers and complain about a cozy oligopoly. After all, if you look at the numbers with a little blurred vision, the big three each have about a third of the market.

Such a simplistic assessment fails to consider substantial regional differences as seen in the table below.

Wireless Subscriber Share (%) by Province (2005)
  Bell Group
 TELUS Rogers Other
Canada 32 27 37 4
Newfoundland and Labrador 86 10 4 0
Prince Edward Island 81 10 10 0
Nova Scotia 63 11 26 0
New Brunswick 73 6 21 0
Quebec 48 20 33 0
Ontario 38 18 44 1
Manitoba 0 12 28 60
Saskatchewan 0 3 17 79
Alberta 12 61 26 0
British Columbia 10 46 44 0
Sources: CRTC and CWTA

Interestingly, when looking at these provincial numbers, US consulting group ETI suggests that this table provides “important evidence of market dominance and concentration”. This is seen as leading to a less competitive wireless market, contributing to higher consumer prices.

What is the proper way to characterize the market? Is it a comfortably balanced market shared by 3 players or do we have genuine rivalry between the carriers, driving battles to improve market position province by province?

People seem to think that US-style price-based advertising is the real evidence of a competitive marketplace. I have a colleague who likes to say that price discounting is a lazy approach to marketing. Canadian carriers have learned from experience that, in a starvation contest, the fat guy usually wins.

So, instead of suicidal price discounting, we have carriers advertising that they are building “Canada’s [insert superlative here: best quality / fastest / most powerful / coolest] networks”. We have video calling from one carrier, another designing their own phones, another re-launching a new brand. Adding enterprise productivity enhancement services, corporate tracking services, turn-by-turn directions, multi-service bundling, and on and on.

All of the carriers looking for an edge to improve their attractiveness to the unserved market. All of the carriers trying to improve their share of subscribers and share of revenues. Province by province and nationwide.

Are these behaviors consist
ent with a cozy comfort with carriers’ current market positions?

Once again, we see how important it is to scratch below a superficial assessment of the numbers.

Force majeure for ILECs

January 25, 2017

A few weeks ago, I mentioned that the CRTC will be launching a proceeding to consider types of exclusions for failure to meet Quality of Service standards.

Public Notice 2007-9 was released last week to look at the appropriateness of a force majeure type of escape clause for carriers in their retail and wholesale rebate plans.

The CRTC has proposed language like:

No penalty shall apply in a month where failure to meet the retail or competitor Q of S standard is caused, in that month, by fire, acts of God, labour difficulties (such as work stoppages, strikes, lock-outs, slow-downs and similar labour disrupting events), default or failure of other carrier, epidemics, war, civil commotions including acts of terrorism, acts of public authorities or other events beyond the reasonable control of the Company.

Should labour difficulties be included? The phone companies will argue that they shouldn’t be accountable for failure to meet their service level commitments during a labour dispute.

Who then should be called to account?

Should customers (retail or wholesale) pay full freight if quality is substandard? If you purchase a product and it is defective, would you allow the manufacturer to escape with an excuse like “sorry, it was raining that day” or “the electricians were on strike”? If your lawn care company provides less than committed service levels, what excuses would you accept and still pay full price?

Should phone service be any different?

Cure the disease

June 2, 2007
I just got around to reading the Competition Bureau’s comments on the AWS auction consultation.

Peter Nowak excerpted a great quote in his story in the National Post:

the Bureau submits that the appropriate way to compensate for any lack of competition attributable to the foreign investment restrictions is to remove them and not to simply accept them as a harmful contributor to a competitive environment in need of fixing.

In other words, rather than simply treating symptoms, the Competition Bureau suggests that we cure the disease.

Competition Bureau chief Sheridan Scott will be one of the keynote speakers on June 13 at The 2007 Canadian Telecom Summit. The National Post will be covering the event, beginning with a preview on the morning of the conference opening on June 11.

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CRTC says no to local rate increase

January 25, 2017

Bell, Bell Aliant and TELUS wanted to get rid of those pesky service charges.

The way the system works right now, if you order phone service from the ILECs, you have to pay a service charge. If you test drive a competitor and want to go back, they have to charge what seems to be a punitive fee. It is in the tariffs, so they can’t waive them. Period.

Last summer, the companies applied to get rid of service charges by raising monthly bills for everyone. Today, the CRTC said no to that idea.

As Vice Chair Richard French said in a statement

We did not feel it was appropriate to approve a rate increase for all residential customers to compensate for the elimination of connection charges. The government’s recent direction on forbearance removed the CRTC’s restrictions over promotions and winbacks. Telephone companies are free to apply at any time to reduce or eliminate their connection charges, and the Commission will deal with their requests expeditiously.

Given the flexibility soon to be enabled by forbearance and from the recent Price Cap decision, the telephone companies have other tools, less intrusive to consumers, to allow them to compete.

Watch for revised tariff filing soon.

Beating 100% in mobile wireless

June 1, 2007
Is it possible to be better than perfect? When a teacher offers bonus marks, is it possible for a student to end up with better than 100% at the end of the year?

A number of recent studies have pointed to mobile penetration rates of “better” than 100% in many countries in Europe and around the world. The presumption is that Canadian mobile penetration is inadequate. How come we aren’t seeing more questions on what drives these supernormal penetration rates and the resultant impact on end user costs?

Do we really believe that there isn’t a single person in Finland without a cell phone? Do we really believe that people are on the phone so much that they need a second mobile phone to avoid having callers go to voice mail when their call waiting is already… well, um… waiting?

Maybe something else is going on? Maybe there are strange distortions in rate structures that create artificial incentives to inventory SIM cards? Cheap on-net calling. Foreigners holding pay-as-you-go SIMs to avoid roaming rates?

Whatever the cause, the corollary of multiple phones per user is that the average user is paying bills for more than one phone.

I have to ask if all these comparative international cost studies are looking at end-user costs. Are the reports actually studying cost per cell phone, not cost per user?

And if the average user has 1.2 or 1.4 handsets, then isn’t the average user is paying 1.2 to 1.4 times the average cost per handset? So, in order to compare average mobile costs for users in various jurisdictions, should we actually be multiplying by the average number of phones per user first?

What would happen if the international rankings were adjusted to account for multiple bills?

Maybe 100% penetration isn’t really a worthwhile objective.

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