Holistic approach is needed to fix Canada’s telecom troubles: 2023 Competition Summit

Sentiment among speakers at the 2023 Canada Competition Summit last Thursday was clear, a whole-of-government approach is needed to address Canada’s struggling competitive environment. Policymakers, lawyers, academics, and other experts descended upon Ottawa’s National Arts Centre for the annual conference. They made it clear that there is no “silver bullet” to address high costs and poor services in sectors like grocery, banking, transportation, and telecommunications, but considering competition at all levels of regulatory and policy development is key. “I've said this before and I'll say it again now, Canada needs more competition,” said Commissioner of Competition Matthew Boswell, in a speech kicking off the summit. New research from the Competition Bureau shows that competition in Canada has been declining in recent decades, said Boswell, citing the initial findings of an extensive study into various sectors across Canada. The report is not public yet, but is expected to be published in the coming weeks. “Overall, we found that Canada's competitive intensity has decreased from 2000 to 2020. Our findings in the report are quite striking, and provide further support for a significant course correction in this country,” he explained. Boswell expressed support for Bill C-56, the Affordable Housing and Groceries Act, and its amendments to the Competition Act, which Innovation Minister François-Philippe Champagne discussed during his opening remarks. Particularly, the competition head said he is encouraged by provisions in the bill that, if passed, will make it easier for the bureau to conduct market studies and compel information from businesses; prevent restrictive and anti-competitive collaborations; and remove the efficiencies defence. The bureau has long been critical of the defence, which played a role in the Rogers-Shaw merger. “Beyond modernizing the Competition Act, now is the time to look at how all of us in the public sector, and all levels of government — municipal, provincial, territorial, and federal — can stimulate our economy by addressing restrictions that harm the competitive process,” said Boswell, emphasizing the theme of the day. Ex-Competition Commissioner Cal Goldman was in attendance and called on the Innovation Minister to consider removing foreign ownership restrictions in the telecom sector. He and other former regulators, including John Pecman, Richard Taylor, and Melanie Aitken, argue that they are anticompetitive and protect domestic companies from facing effective competition. These provisions are part of the Telecommunications Act and limit foreign-owned telcos from growing beyond a 10 per cent market share, except if that growth is organic and not through the acquisition of Canadian-owned telcos or their assets. “You can't see lower prices to any material extent when there are such restrictions on foreign-entering competition,” said Goldman in an interview with The Wire Report, noting that Canadians pay some of the highest prices in the world for their telecom services. “Greater competition leads to, almost inevitably, lower prices and greater product choices, as well as innovation… So, when you restrict the number of competitors, as in Canada, you cannot expect to see the same degree of lower prices as you would have if those restrictions were lifted. Period. Full stop,” he proclaimed. Although it is open to the idea of reducing barriers to foreign competitors, the Canadian Anti-Monopoly Project (CAMP) warns decision makers from thinking it will cure telecom’s troubles. "I'm fine with it,” said co-founder Keldon Bester, “so long as we have a competition law and regulators that are up to the task of tangling with, not only domestic champions, but now international players.” “Some people frame this like, ‘don't worry about competition law, just open it up to foreign competition.’ I think the flip side is that, if you are going to do this, you better be ready with a strong framework to ensure that these giants are playing fair,” he warned. “Don’t expect that other companies don’t like to make monopoly profits.” “There has to be a reconsideration of the regulatory landscape,” acknowledged Goldman, noting the shortcomings of the current framework, particularly if it were applied to foreign players. The former enforcer said it is important to avoid “making assumptions on the regulatory structure” or presuming it is “already well-positioned.” Vass Bednar, a summit panelist and executive director of McMaster University’s master of public policy in digital society program, says the push for lifting restrictions on foreign-ownership is misguided because they are already allowed to compete in Canada, they are just choosing not to. She argues that current regulations only forbid foreign players from majority ownership of major telcos, so they cannot buy Rogers Communications Inc., BCE Inc., or Telus Corp. “We do have space for foreign competition in telecom, the question is why it hasn't happened yet,” said Bednar. She points to structural challenges in Canadian telecom as key reasons, including allowing firms to compete on both building physical facilities and providing services over those facilities, expensive spectrum, and low population density. “To achieve more robust competition, we have no choice but to address the structural realities of the telecommunications environment that have been established by our policy decisions,” wrote Bednar in a Toronto Star opinion piece on the subject. “Forcing foreign-owned firms into the mix will simply reinforce existing access inequities and would miss an opportunity for more meaningful action.” She pointed to the low Earth orbit satellite industry, arguing that Canada has gotten comfortable with foreign players on that front while not having any effective national competitors. Looking at all levels of regulatory policy through the lens of competition was a key focus of the summit and has recently been getting more time in the spotlight, noted CAMP, referring to the CRTC’s Policy Direction earlier this year, but it says there is a power imbalance that needs to be addressed. “I think the chair is off to a good start and has made some important moves already,” said Bester, pointing to the regulator’s current review of the wholesale high-speed access framework and consideration to mandate temporary aggregated access to fibre-to-the-premises facilities. “I think that'll be a watermark, or at least a signal of where things might be headed,” he said, “but the relationship is certainly tilted towards the players at the moment.” In the recent CRTC decision to choose Bell’s mobile virtual network operator (MVNO) access rates over Quebecor Inc.’s, the commission said Bell Mobility declined to provide specific costing data that it had requested. Bester said this is a sign that the relationship between the CRTC and the companies it oversees is broken. The summit’s keynote address was given by Tim Wu, the United States’ former Special Assistant to the President for Technology and Competition Policy. Wu played a central role in the Biden administration’s crackdown on big businesses, which has recently launched a series of antitrust cases against big tech companies including Amazon.com, Inc., Alphabet Inc.’s Google, Meta Platforms, Inc., and Microsoft Corp. “People who are going to do enforcement policy need political backing, because industries are strong, they have a million ways of convincing you not do things,” said Wu, as he shared some advice with Canadians looking to replicate the antitrust revival being witnessed down south. Giving political valence to regulatory bodies is a key part of effective competition enforcement, according to Wu, who saw the creation of the White House Competition Council. Made up of over a dozen federal agencies “whose activities bear greatly on competition,” the council meets every six months to assess their progress towards achieving 72 actionable directives. These include making the “right to repair” mandatory and banning exclusivity agreements between ISPs and landlords. “I think we need the equivalent of a Tim Wu in the Prime Minister’s office,” said Bednar, “you do need someone pounding the pavement, be they a bureaucrat, or a political staffer, to kind of coordinate and facilitate that six month reporting cadence, and have explicit outcomes and foci that are demonstrated to Canadians.” In a report submitted to Ontario’s Ministry of Public and Business Service Delivery, Bednar suggested the province create a similar council modeled off of the White House’s. “It’s not just federal regulations, or not just the Competition Act, that are relevant when it comes to policymaking,” she explained, emphasizing the role that provinces and municipalities play when it comes to competition in the telecom sector. The professor used condominium boards and the power they have to make bulk MDU deals as an example of a municipal process that plays a substantial role in competition. Bednar said that during the summit, she sought to encourage people to look at the groundwork that already exists to address competition, before assuming a start from scratch. Like fleshing out the Digital Regulators Forum to better collaborate on competitive regulation and enforcement; considering the introduction of more public competitors like Saskatchewan Telecommunications Holding Corp. as a way to connect underserved regions and improve affordability; banning bulk MDU agreements; and making competitive assessments like the Competition Bureau’s toolkit a mandatory part of regulation. “We’re so hung up on the problem admiration,” she said. “Describing our deficits. Joking, ‘Oh, we're three telecoms in a trench coat, we lack competition, we need more competition.’ Fine, but what are we good at? And where are the opportunities?” – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Holistic approach is needed to fix Canada’s telecom troubles: 2023 Competition Summit

News | October 13, 2023

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Holistic approach is needed to fix Canada’s telecom troubles: 2023 Competition Summit

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