CRTC chair asserts personal preference for facilities-based competition

CRTC chair Ian Scott said he believes the commission’s pick of a facilities-based model will result “in more robust and sustained competition,” as it faces criticism from some players over its decision to only mandate access to incumbent mobile networks for a limited number of regional operators. “That’s my personal view,” Scott said while speaking with Android Central reporter Shruti Shekar Thursday during an online talk hosted by the Canadian Club Toronto. Scott prefaced his comments by saying that he could not speak for the commission as a whole, and that “we believe earnestly that that is the best way to ensure robust competition for the provision of wireless services in Canada, otherwise we would’ve decided something different.” “Service-based competition can overcome barriers to entry very quickly, it can result in very quick changes in pricing, but there’s less certainty about whether or not that form of competition will always be sustainable.” “Perhaps this comes from my former background at the Competition Bureau, in part, and some of my experience in the private sector,” said Scott, who once held executive positions with multiple companies, including Telus Corp. and Telesat Holdings Inc. “If we describe it as arbitrage, then as prices come down, the margin available for arbitrage declines or disappears. In a completely competitive market, it would disappear and so might the competitor in that particular case. That doesn’t really give us confidence that there will be sustainable competition in the future,” Scott said. Under the long-awaited policy released by the CRTC last month, incumbent telecom companies will be required to sell access to their mobile networks to some regional service providers, but only those that have some level of spectrum and make a commitment to a certain amount of investment in building out their own networks—and only for a mandate of seven years. “If you think about a party investing in facilities, even if the firm were to disappear, so to speak, the facilities don’t go away, and so it creates an opportunity for someone else to acquire those facilities and perhaps they re-enter the market with a lower unit cost and have a stronger ability to compete,” Scott said. “Obviously there are other considerations: the ability to control your own costs, you have more control in a technical sense and in an economic sense over your costs. So, in general, I would say facilities-based competition results in more robust and sustained competition.” The CRTC’s decision has been met with some backlash, including a petition filed by Data On Tap Inc. (which operates under the name dotmobile) asking the government of Justin Trudeau to review it as it “misinterprets Canada’s wireless policy.” Meanwhile, Telus is seeking permission to appeal two provisions of the decision relating to access to public infrastructure and the requirement for national wireless carriers to provide seamless roaming to regional carriers. When asked about the timing of the commission’s decision -- which was released after the deadline for companies to decide if they would participate in the 3,500 MHz spectrum auction next month -- Scott repeated Thursday the sentiment he shared with The Wire Report last month and said “I make no apologies for it or excuses. We put out the decision as quickly as we could.” “It’s a very important decision, and it was released as soon as we could get it out. There was no strategy about the timing of the decision.” “In a perfect world, would the sequence have been better? Yes. Does that preclude parties from entering in that auction? I’m not sure. Yes, there was a deadline, there were also requests made to the department responsible for spectrum to change the deadline or to modify the rules and it’s up to them to rule on that.” Scott said. “My understanding is they do not plan to change the date of the auction but obviously that was a potential outcome. I’m not shifting blame in any respect, I’m just saying that is how the cards fell.” Shekar asked Scott if a potential review of the MVNO decision would take as long as the original decision did if it is found in the future to not be working, to which he said he did not anticipate it would because the regulator may not have to do the same amount of work on details such as a full analysis of market power. “If the competitive environment is not sufficient, competition is not intensifying and we’re not getting the desired outcomes, then yes we’ll look at the framework and re-examine as required.” One significant regional wireless competitor -- Shaw Communications Inc.‘s Freedom Mobile -- may not be around for much longer as Rogers announced plans to buy the company in March. Most industry analysts expect the Competition Bureau, as part of its review of the merger, will require Shaw to divest its wireless assets. At the end of the talk, Shekar asked Scott to comment on the House of Commons’ Heritage Committee’s deliberations over Bill C-10, the government’s update of the Broadcasting Act, which has become contentious as discussions continue over potential freedom of speech implications of including social media platforms in the bill. Scott said changes to the act are necessary as the CRTC needs clarity about what it has jurisdiction over, as well as the ability to gather data and use enforcement tools and “those things are contained in that proposed legislation. And for that, we are appreciative.” “As to the specifics and the current debate going on, I would leave that to parliamentarians. Ministers and departments propose legislation, parliamentarians make laws, and once it’s all done and dusted we will enforce, enact, and further the objectives of any new act as passed by parliament and any new policy direction as issued to us by the relevant minister.” - Reporting by Hannah Daley at hdaley@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca and Michael Lee-Murphy at mleemurphy@thewirereport.ca

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CRTC chair asserts personal preference for facilities-based competition

News | May 20, 2021

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