Industry waiting on detail from gov’t on wireless price drop

If Innovation Minister Navdeep Bains wants to see a 25-per-cent reduction in wireless prices starting from December 2019 — as he clarified this week — the best way is to maintain a hands-off approach that has seen a reduction of 28 per cent in wireless prices since 2016, according to the industry’s main lobby. After several months of uncertainty about the starting point of the 25-per-cent drop, Bains told the Canadian Press Tuesday that the rates will be measured from December, around the time he received his mandate letter. “There’s positive momentum in the industry, and from a government perspective, I think that they can achieve their goals around affordability, quality and coverage as long as they maintain support for facilities-based competition in Canada,” Canadian Wireless Telecommunications Association (CWTA) president Robert Ghiz said in a phone interview, in response to Bains’ comments. The issue of timing was a key one, given that prices had fallen consistently, especially over the summer, when the Big Three major providers either introduced or said they will introduce “unlimited” or “no overage” data plans, beginning with Rogers Communications Inc., followed by Telus Corp. and BCE Inc. The prices cited by the Liberals in the election were from 2018. While prices have been dropping in Canada, they have also been falling across the Organization for Economic Development (OECD), leaving Canada amongst the most expensive countries in the world for wireless service, according to an October report from Finnish consulting company Rewheel. The Liberals have said that they will look to introduce mandated access for “qualified” mobile virtual network operators (MVNOs) if prices don’t fall by 25 per cent in two years. Ghiz said that the CWTA was not notified of the policy clarification before hand, and said that they are still waiting on details on how the measurements will be done. Telecom was a particular focus in Bains’ mandate letter, which authorized the minister to “use all available instruments, including the advancement of the 2019 Telecom Policy Directive,” to achieve the 25 per cent reduction. “If within two years this price target is not achieved,” the letter read, “you can expand MVNO qualifying rules and the Canadian Radio-television and Telecommunications Commission mandate on affordable pricing.” A financial analyst covering the telecom sector, who spoke on the condition of anonymity, said that there was continued uncertainty around what exactly the government was seeking. “It looks like the government keeps moving the rules of the playing field a little bit,” the analyst said, adding that there is still confusion about what types of phone plans would need to be reduced. “Is the fixation somehow 25 per cent at least for every price point in the marketplace as you go across the options? Or is it going to be, for example, isolated more toward the lower end of the market?” the analyst said, pointing to the reductions that have occurred in the marketplace recently. “It’s a non-starter to think that after Rogers launched $75 unlimited plans, and Bell went bananas saying that they priced it too low, that these price points are going to come down over the next two years. It’s just: forget about it.” “We didn’t start this, we followed,” Bell chief financial officer Glen LeBlanc told investors at the CIBC Eastern Institutional Investor Conference in Montreal in September, responding to questions from CIBC analyst Robert Bek. “We will always go into the market with competitive offers,” LeBlanc said. “But I thought this one was a bit early.” All of this comes just a month before the start of the CRTC’s mobile wireless review, where the issue of mandated MVNOs will take centre stage. On Wednesday afternoon, after Rogers announced it has begun to roll out its 5G network in Vancouver, Toronto, Ottawa and Montreal, TD Securities analyst Vince Valentini wrote that “we believe it is important to point out that Canadian carriers will likely not be able to accelerate and/or optimize 5G network deployment if regulators do not continue to support facilities-based investment.” “Lower prices for consumers is arguably good public policy, but we believe it needs to be achieved via facilities-based competition and not MVNOs if Canada wants to remain a leader in digital innovation in the future,” Valentini wrote. Desjardins analyst Maher Yaghi also published a note on the Rogers announcement, writing that the “the speed of the roll-out and the eventual expected coverage is highly dependent on continued support from government (CRTC or ISED) by way of a regulatory environment that encourages investments — a path that historically has enabled Canada to benefit from the deployment of new technology.” — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Industry waiting on detail from gov’t on wireless price drop

News | January 15, 2020

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Industry waiting on detail from gov’t on wireless price drop

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