Rogers presents experts as Tribunal hearings edge toward end

A retired Queen's University economics professor believes that the CRTC has mandated low cost cellular plans for consumers and that they have been successful. Roger Ware was testifying Wednesday before the Competition Tribunal which is hearing the case of Rogers Communications Inc.’s proposed takeover of Shaw Communications Inc. Ware, who appeared as an expert witness on behalf of Rogers, disputed Competition Bureau lawyer Derek Leschinsky’s assertion that take up of the low cost plans has been minuscule. The attorney stated that low cost subscribers make up less than one per cent of Rogers total customers. “There are competitive offerings, people prefer other plans, and there’s a whole spectrum of prices and quality out there in a differentiated market like this,” Ware, who has testified before the tribunal three times before, stated. The pair also quibbled over whether the CRTC’s decision on low cost service plans was a mandate or an expectation. Ware said he viewed it as a mandate, Leschinsky saw it as an expectation. Ware said he had tried to access information about low costs plans from Rogers’ Fido division and could not find anything. He did not attempt to utilize the main Rogers website. Leschinsky tried to keep the professor to yes or no answers during his cross examination. Ware disputed previous testimony from bureau experts Lars Osberg of Dalhousie University and Nathan Miller of Georgetown. The Queen's professor had issues with how the duo measured price elasticity. The bureau attorney and the witness got into a debate about using Statistics Canada’s definition of the poverty line. Ware, who does not believe wireless service is a necessity, does not include cell phones in his model; Stats Can does. Leschinsky asked if Ware preferred his method of calculating poverty to the government agency’s way. “I think from the point of view of competition analysis, I prefer mine, yes,” the witness responded. Ware was followed in the witness box by Mark Israel, an economist with Compass Lexecon. Miller was also an outside expert for Rogers. “So I approached the economic analysis in the case, in all markets really, the fundamental question is, is the competition better with the transaction or without it,” Israel stated. He concluded the merger should go ahead, as it would lead to increased competition without a decrease in the number of carriers nationally. Quebecor Inc. should be allowed to purchase Shaw’s Freedom Mobile because it would shift from a regional player to a national one, Israel said. By being active in four major provinces, the cost of roaming charges will plummet for Quebecor’s Videotron unit, he added. Freedom will not roam in Quebec any more and Videotron will not roam in Ontario, Alberta and British Columbia. Rogers has a better wireline network than Shaw, Israel continued, and thus would be better able to do battle with BCE Inc. and with Telus Corp. He also discounted Nathan Miller’s analysis of harm caused by the proposed Rogers-Shaw deal. “On the bundled side, Shaw Mobile bundled customers, something I don’t think professor Miller gives any credit to but he should, Shaw Mobile customers will get access to the superior network of Rogers,” Israel asserted. He also criticized Miller for assuming that Rogers would at any time control Freedom, when it would be spun off long before the takeover is completed. He disputed Miller’s contention that Bell and Telus would not have incentive to compete since Shaw would not be in their western markets. All indications are that the two telecoms are gearing up for a battle with an expanded Rogers. On Thursday morning, Competition Bureau lawyer John Tyhurst quoted elements of Israel's report back to him about the importance of competition for investment in wireless networks. Wireless providers "make investments to support their profits, and part of that is to deal with competition," Israel told the tribunal. Tyhurst proposed that if consumers had less choice amongst competing networks, there would be less pressure on companies to invest in their wireless networks. Israel was not as ready to concede. "That depends," he said. "I don't think you can count the number of competitors and determine competitive pressure. It depends on who they are and the nature of the competition." "In some cases, two competitors is very competitive. In other cases, it depends," Israel said. Paul Klippenstein, another of the bureau's lawyers, put a hypothetical scenario to Israel in which the tribunal blocks the merger, and Quebecor's Videotron sells the spectrum it bought in the 3,500 MHz auction to Shaw. Israel has argued in his report submission to the tribunal that the integration of Quebecor's and Shaw's spectrum holdings would have "an immediate positive benefit on Freedom’s costs and quality" in the divested entity. Klippenstein asked whether or not if Quebecor sold the 3,500 MHz spectrum to Shaw, whether or not Shaw would benefit from the same efficiencies Israel envisioned for a Freedom Mobile brand under Quebecor's ownership. "It wouldn't be the same. It strikes me that even under the assumptions, there would be time involved, there would be a weaker competitor involved because it wouldn't have the near-national footprint, and so on," Israel. Much of the last hour of the nearly three-week long tribunal proceeding was devoted to wrangling amongst the lawyers about how long the closing written arguments should be allowed to be. Telecom lawyers argued for longer submissions, while bureau lawyers advocated for a 50 page limit on the arguments. Chief Justice Crampton pushed back against the request for 100-plus page written arguments, saying that if he was to fulfill Rogers' lawyer Jonathan Lisus' request for a decision before the end of the year, written arguments would need to be brief. –Reporting by Paul Park at ppark@thewirereport.ca and Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Michael Lee-Murphy

Rogers presents experts as Tribunal hearings edge toward end

News | December 2, 2022

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Rogers presents experts as Tribunal hearings edge toward end

News | December 2, 2022

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