{"id":17817,"date":"2023-10-11T05:09:27","date_gmt":"2023-10-11T09:09:27","guid":{"rendered":"http:\/\/mhgoldberg.com\/blog\/?p=17817"},"modified":"2023-10-11T07:00:07","modified_gmt":"2023-10-11T11:00:07","slug":"sustainable-competition-and-continued-investment","status":"publish","type":"post","link":"https:\/\/mhgoldberg.com\/blog\/?p=17817","title":{"rendered":"Sustainable competition and continued investment"},"content":{"rendered":"<p><em>This decision helps to promote access to affordable telecommunications services for Canadians and to foster sustainable competition and continued investment.<\/em><\/p>\n<p>That was how the CRTC summarized <a href=\"https:\/\/crtc.gc.ca\/eng\/archive\/2023\/2023-335.htm\" rel=\"noopener\" target=\"_blank\">its decision last night<\/a> on final offer arbitration between Bell Mobility and Quebecor for wholesale mobile virtual network operator (MVNO) access rates.<\/p>\n<p>The decision was notable for a few reasons:<\/p>\n<ul>\n<li>A focus on creating and maintaining incentives for investment;<\/li>\n<li>Fostering &#8220;sustainable competition&#8221;, which <a href=\"https:\/\/mhgoldberg.com\/blog\/?p=16380\" rel=\"noopener\" target=\"_blank\">has historically<\/a> been CRTC and Competition Bureau language for &#8220;facilities-based competition&#8221;;<\/li>\n<li>Clarifying that the wholesale framework is not intended to guarantee profitability for wholesale-based service providers;<\/li>\n<li>The CRTC explicitly discounted the usefulness of comparisons to European rates;<\/li>\n<li>Recognition that average network costs don&#8217;t support investment in suburban and rural infrastructure.<\/li>\n<\/ul>\n<p>The <a href=\"https:\/\/crtc.gc.ca\/eng\/archive\/2023\/2023-335.htm\" rel=\"noopener\" target=\"_blank\">Bell &#8211; Quebecor decision<\/a> should be read in the context of a similar arbitration between Rogers and Quebecor <a href=\"https:\/\/crtc.gc.ca\/eng\/archive\/2023\/2023-217.htm\" rel=\"noopener\" target=\"_blank\">released by the CRTC<\/a> nearly two months ago. In the earlier instance, the CRTC required Rogers to offer a wholesale service at rates acknowledged to be below Rogers&#8217; costs. The CRTC said Rogers&#8217; shortfall could be made up &#8220;through other telecommunications services&#8221;. The Rogers decision has been appealed to the courts because of the precedent-setting nature of wholesale rates being set below costs.<\/p>\n<p>This week, the CRTC selected Bell Mobility&#8217;s offer.<\/p>\n<p>The Commission clearly accepted the concern that wholesale rates impact the incentives for investment by both parties. <\/p>\n<blockquote>\n<ol start=49>\n<li>Nevertheless, the Commission considers that Bell Mobility has raised a valid concern regarding the long-term impact of artificially low wholesale rates on the policy objective of fostering network investments, which is particularly relevant in suburban and rural areas. While lower retail prices backed by lower wholesale rates are desirable, as discussed earlier, these different interests must be balanced with the wholesale MVNO access provider\u2019s incentives for continued network investment. Accordingly, the Commission is of the view that Bell Mobility\u2019s offer best strikes the balance of maintaining both parties\u2019 incentives to invest.<\/li>\n<\/ol>\n<\/blockquote>\n<p>The CRTC said &#8220;the MVNO access framework is not intended to guarantee a risk-free profit margin for [Quebecor&#8217;s] MVNO operations, and QMI\u2019s ability to compete should not be assessed by looking at only the profitability of specific plans, but rather by looking at all of the wireless plans it offers.&#8221; While the CRTC wants to see lower-priced plans, it also needed to consider the potential negative consequences of lower rates on sustainable competition, and incentives for investment.<\/p>\n<p>The Commission referred to the controversial <a href=\"https:\/\/mhgoldberg.com\/blog\/?p=17639\" rel=\"noopener\" target=\"_blank\">cross subsidization<\/a> aspect of the <a href=\"https:\/\/crtc.gc.ca\/eng\/archive\/2023\/2023-217.htm\" rel=\"noopener\" target=\"_blank\">Rogers &#8211; Quebecor arbitration decision<\/a> in this <a href=\"https:\/\/crtc.gc.ca\/eng\/archive\/2023\/2023-335.htm\" rel=\"noopener\" target=\"_blank\">Bell &#8211; Quebecor determination<\/a>, saying &#8220;that it does not necessarily have to ensure that costs are recouped over the short term for a rate to be considered just and reasonable, fair compensation for the wholesale MVNO access provider is still an important consideration in evaluating offers&#8221;.<\/p>\n<p>Quebecor had asked the CRTC to compare Canadian wholesale rates to those found in Europe. The CRTC clearly stated European wholesale roaming rate structures &#8220;have very limited comparative value given the different contexts in which European and Canadian carriers operate, resulting in different cost structures.&#8221; Many Canadians have fixated on international comparisons that have such &#8220;limited comparative value&#8221; precisely because of the &#8220;different contexts in which European and Canadian carriers operate&#8221;. It was somewhat encouraging to see the CRTC explicitly discount such comparisons.<\/p>\n<p>Finally, the CRTC seems to have given weight to the argument that wholesale-based service providers have uneconomic arbitrage opportunities when average rates are applied for urban, rural and suburban traffic. Such rate structures create incentives to build urban facilities but create a disincentive for investment in suburban and rural areas. &#8220;Bell Mobility submitted that, on average, a rural cell site costs more to build, while serving less data volume, than an urban one, resulting in higher costs per GB.&#8221; As Scotiabank observed in a research note this morning, Quebecor&#8217;s favourable MVNO deal with Rogers will result in Bell&#8217;s network being used only in areas where Rogers isn&#8217;t as strong. This would result in a disproportionate level of wholesale traffic running on rural and suburban while leading to disincentives for either party to invest.<\/p>\n<p>Fostering sustainable competition and continued incentives for investment are clear themes of this wholesale wireless rate decision. To what extent does it provide clues for the way the CRTC will approach revisions to the wireline wholesale framework?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This decision helps to promote access to affordable telecommunications services for Canadians and to foster sustainable competition and continued investment. That was how the CRTC summarized its decision last night on final offer arbitration between Bell Mobility and Quebecor for wholesale mobile virtual network operator (MVNO) access rates. The decision was notable for a few &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/mhgoldberg.com\/blog\/?p=17817\"> <span class=\"screen-reader-text\">Sustainable competition and continued investment<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","two_page_speed":[],"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17817","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Sustainable competition and continued investment &#8226; Telecom Trends<\/title>\n<meta name=\"description\" content=\"This decision helps to promote access to affordable telecommunications services for Canadians and to foster sustainable competition and continued &#8226; October 11, 2023\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mhgoldberg.com\/blog\/?p=17817\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sustainable competition and continued investment &#8226; Telecom Trends\" \/>\n<meta property=\"og:description\" content=\"This decision helps to promote access to affordable telecommunications services for Canadians and to foster sustainable competition and continued &#8226; October 11, 2023\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mhgoldberg.com\/blog\/?p=17817\" \/>\n<meta property=\"og:site_name\" content=\"Telecom Trends\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-11T09:09:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-11T11:00:07+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/mhgoldberg.com\/blog\/wp-content\/uploads\/2021\/02\/mark_logo_png.png\" \/>\n\t<meta property=\"og:image:width\" content=\"3484\" \/>\n\t<meta property=\"og:image:height\" content=\"1444\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@mark_goldberg\" \/>\n<meta name=\"twitter:site\" content=\"@mark_goldberg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817\"},\"author\":{\"name\":\"Mark\",\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/#\\\/schema\\\/person\\\/7a2b80bac06ee3d5cacca8c7708bfe8f\"},\"headline\":\"Sustainable competition and continued investment\",\"datePublished\":\"2023-10-11T09:09:27+00:00\",\"dateModified\":\"2023-10-11T11:00:07+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817\"},\"wordCount\":719,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/#organization\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817\",\"url\":\"https:\\\/\\\/mhgoldberg.com\\\/blog\\\/?p=17817\",\"name\":\"Sustainable competition and continued investment &#8226; 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That was how the CRTC summarized its decision last night on final offer arbitration between Bell Mobility and Quebecor for wholesale mobile virtual network operator (MVNO) access rates. The decision was notable for a few&hellip;","_links":{"self":[{"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/17817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17817"}],"version-history":[{"count":8,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/17817\/revisions"}],"predecessor-version":[{"id":17825,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/17817\/revisions\/17825"}],"wp:attachment":[{"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mhgoldberg.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}