Investment cut threats over MVNOs not ‘just theater’: Telus

GATINEAU, Que. — Toward the tail end of nearly three hours of testimony from Telus Corp.’s leadership team at the CRTC, CEO Darren Entwistle levelled Thursday what is perhaps one of the biggest threats thus far in the fight over mandated MVNO access to incumbent networks: cutting as many as 5,000 jobs. In an at-times combative presentation that sought to portray the Canadian wireless status quo as central to not only consumer happiness but the nation itself, Entwisle told CRTC commissioners that his company was prepared to lay off some 5,000 employees, in addition to cutbacks in network investment and reduced philanthropic spending, should the regulator go ahead and mandate MVNOs. Whether to require incumbents to sell wholesale access to mobile virtual network operators (MVNOs) is the highest-profile question the CRTC is considering as part of its wireless review and the accompanying two-week hearing, which began Tuesday and continues next week. Entwistle told CRTC commissioners that the Telus board of directors had authorized management to cut “in the zip code of” 5,000 jobs over five years, and cut investment by $1 billion. Entwistle said he was giving the commissioners the numbers in the interest of “being more transparent on communications, being more effective on the communications front.” “There’s been a lot of conjecture related to disinvestment or reduced investment,” he told commissioners. “There are some views that this is just theater perpetrated by the incumbents, and that if mandated MVNOs come to fruition, or if there’s an enforced second tier 25-per-cent reduction, we will go on with status quo investing.” Independent of the CRTC review, the federal government has promised to lower wireless prices by 25 per cent. “I would ask that, as we look at holistically on the eve of 5G, what’s the right thing to do for Canada, that we include quantitatively all of these factors and reach a net conclusion as to what is the best way forward?” Entwistle asked rhetorically. A Telus spokesperson declined to specify which type of MVNO option would, if imposed by the CRTC, trigger the job cuts. The resolution signed by the board of directors was confidential, the spokesperson said. Asked by CRTC chair Ian Scott if consumer concern about pricing was simply the result of a “lack of understanding,” Entwistle said that was an “accurate depiction,” and went on to lay the blame for consumer frustration at the feet of politicians. “There’s been a cacophony out there of rhetoric at the political level that I can tell you categorically is untrue. And it has emanated from all the political parties, and it has taken place now over multiple years,” Entwistle said, adding that it had an impact on the psychology of Canadians. Entwistle also went a step further. Referencing data from the human resources consulting firm Morneau Shepell, Entwistle said that the “mental health issues and claims” are two to three-times higher than in other industries. “A part of that’s related to cost pressures that we face related to pricing affordability, some of it’s related to the dynamic nature of technology change, but a lot of it has to do with the abuse that’s been hurled at our industry,” Entwistle said. Conservative MP and Industry critic Michelle Rempel Garner retweeted a quote of the threat of job cuts, and appended the Telus slogan, “the future is friendly.” Thursday was the second day in a row at the CRTC wireless hearings that a CEO from one of the big three has appeared to testify as to what they say are the dangers of mandating MVNO access. On Wednesday, BCE Inc. CEO Mirko Bibic told commissioners that the MVNO discussion had reached a “tipping point.” The layoff threat has raised the stakes, as it marks the first time one of the incumbents has directly said they will cut staff if the CRTC decides mandates reseller access. Incumbent telecoms have been threatening for months to trim investment based on the MVNO conversation. Matt Stein -- CEO of Distributel Communications Ltd., but testifying in his capacity as president of the Canadian Network Operators Consortium (CNOC) -- told commissioners in his opening remarks later in the day that the threats of disinvestment were overblown. “The incumbents have many cash flow management options that would allow them to maintain their current levels of investment, including by deciding how much to pay in dividends to their shareholders and how much to retain in cash and short-term investments,” Stein said, arguing that the incumbents have already accounted for the possibility of mandated MVNO access in their investment plans. “If were going to pull investment because of mandated MVNO, they already would have, they wouldn’t have announced 5G deployments. They wouldn’t be trumpeting their investments at investor conferences and on quarterly conference calls. They would have waited,” Stein said. The only possible solution, Stein said, for the lack of competition in the marketplace is broad MVNO access, saying that even if it meant a large U.S.-based tech company became the largest MVNO in Canada, it was a good policy outcome. Broad access by all MVNOs to all incumbent networks is one of the options open to the CRTC as a result of the hearing; others are more limited or temporary models advocated by the Competition Bureau and Cogeco Inc. CNOC also requested that the CRTC impose a condition on incumbent carriers that would require the incumbents to provide the latest devices to MVNOs. In Thursday evening statement, OpenMedia executive director Laura Tribe said the threats of layoffs are a “brutal bullying tactic, and further evidence of how Big Telecom holds way too much power in our wireless market – and they know it.” “What we saw today at the CRTC was fear. Fear of competition, and fear of Big Telecom losing its stronghold.” — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Investment cut threats over MVNOs not ‘just theater’: Telus

News | February 20, 2020

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Investment cut threats over MVNOs not ‘just theater’: Telus

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