Incumbents “should be comforted”, Rogers could move first on mandated access: analysts

Industry analysts are calling Thursday's decision to mandate access to incumbent wireless networks for a limited number of regional wireless competitors a "moderate net negative" for incumbent telecom companies. In a note published late Thursday, Canaccord Genuity analyst Aravinda Galappatthige wrote that effectively for the incumbents, it could have been worse. Incumbents "should be comforted," he wrote, by two aspects of the decision. First, the seven year sunset on the mandated access, "which should reduce the entrants to the MVNO option." Second, the lack of set rates, and the reliance on parties to negotiate their own rates for network access. Galappatthige added there had been a "rising expectation of late in the market for a more benign outcome." In a Friday afternoon release, Cogeco Inc. said it welcomed the decision. "Cogeco advocated a balanced regulatory approach, one that meets the desire of Canadians for increased competition in wireless services by reducing barriers to entry while ensuring ongoing investment in networks. The decision released by the CRTC yesterday is an important step forward toward that goal," CEO Philippe Jetté said in the release. "The new framework also provides more clarity as we develop our plans to offer mobile wireless services in a financially disciplined way.'' In another note published late Thursday, National Bank analyst Adam Shine wrote that it may be a while before any regional players and BCE Inc. and Telus Corp. actually work out a deal. "The incumbents tend to react to changes in regulatory regimes that foster lower rates and/or added competition with appeals and litigation. These efforts can either lead to potential changes to regulatory decisions or simply serve to delay the inevitable," Shine wrote, adding that the decision was not a "worse-case scenario" and incumbents are not bound by regulated rates. "We’ll see what kind of filings they make on rates by mid-July, but don’t necessarily believe that Bell or Telus will be rushing into access agreements during" the second half of 2021, Shine wrote. Rogers Communications Inc., on the other hand, may want to move quicker, according to Shine. "Rogers is now a wildcard pursuant to its proposed takeout of Shaw and a desire to successfully navigate the coming regulatory review and play as nicely as possible with regulators," he wrote. "This likely means that Rogers is destined to move sooner than its national peers into new MVNO wholesale arrangements to showcase its willingness to support competition in the wireless sector." — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Hannah Daley at hdaley@thewirereport.ca

Incumbents “should be comforted”, Rogers could move first on mandated access: analysts

News | April 16, 2021

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Incumbents “should be comforted”, Rogers could move first on mandated access: analysts

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