Competition Bureau witness argues wireline essential for wireless offering, has credibility challenged by Rogers and Quebecor

Respective lawyers representing Rogers Communications Inc. and Quebecor Inc. sought to challenge and call into question the expert testimony of one of the Competition Bureau's telecommunications expert witnesses Thursday, in at-times heated cross examination during the Competition Tribunal's hearings into merging hopefuls Rogers and Shaw Communications Inc. In Thursday morning chief examination from the Competition Bureau's lawyers, Michael Davies sought to illustrate what he said was the "unavoidable interdependency" of a given wireless network on a wireline network. "You can't make a wireless network work, without being interdependent with a whole variety of elements of a wireline network," Davies testified. Davies also argued that in addition to technical architecture, the business structures of wireline businesses and wireless businesses are likewise linked, and said that it is easier to operate a wireless business if a given company also operates a wireline business. While much of Shaw's numbers and data referenced by Davies was redacted due to confidentiality constraints, Davies argued that the value of Shaw's mobile business increased because of these customers' concurrent connection to Shaw's wireline business. Davies said that most of the growth in Shaw's mobile business – across both Freedom and its Shaw Mobile brand – came in the Shaw Mobile brand. "That growth was driven by the bundling of mobile services with fixed services, to existing Shaw fixed customers," Davies said. "This disruptive pricing was enabled because there is the payoff to the wireline business … from having those wireline customers become more loyal. That is, a lower propensity to churn, and that gives them higher lifetime value." "It is easier to upsell Shaw's 1.5 million wireline household customers to a wireless service, that just to find new customers," Davies said. The obvious implication of Davies' testimony is that a Freedom Mobile owned by Quebec-based Videotron would be in a weaker position without wireline assets in western Canada than Shaw was with a fully fledged wireline business. Davies went on to argue that this summer's Rogers outage had large implications for competition in the wireless sector, as "competition on the basis of reliability is also a significant factor in consumer choice." "It makes competition on reliability more salient," and "the specific details about the way in which the arrangements are put together is: this reduces the potential for competition amongst the businesses involved on the basis of reliability," Davies argued. "The proposed remedy would create an entity with less competitive strength than Shaw prior to the initiation of the merger, the benchmark being: what was the situation at the time that happened, when Shaw was both in a position to deploy 5G, and to acquire 3500 MHz spectrum.," Davies said. On cross examination from Quebecor lawyer John Rook, Davies had to defend his understanding and experience in the Canadian market. Through a series of questions, Rook suggested that Davies did not have "detailed knowledge" of Canadian telecommunications infrastructure before he was retained by the Competition Bureau. As evidence, Rook pointed to a meeting that Davies organized with a Videotron engineer to learn about that company's business strategy and network architecture, which Rook argued suggested that Davies did not have detailed knowledge of Canadian infrastructure, nor did have practical knowledge of the wholescale landscape in Canada, quoting an email from Competition Bureau lawyers. Davies retorted that he met with Videotron to better understand the relationship between that company's wireless and wireline businesses. Rogers lawyer Crawford Smith challenged Davies' argument that the Rogers outage was significant for competition, presenting to the tribunal a series of financial analyst reports covering Rogers' quarterly earnings results. Numerous financial analysts argued that the outage was not significant for the company in the long term, to which Davies replied that financial analysts serve a particular perspective and that he did not necessarily agree with their conclusions. -Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca .

Competition Bureau witness argues wireline essential for wireless offering, has credibility challenged by Rogers and Quebecor

News | November 18, 2022

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Competition Bureau witness argues wireline essential for wireless offering, has credibility challenged by Rogers and Quebecor

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