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Canada Telecom Regulator Rules Spark 'Big Three' Bias Furor

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At a time when the Government of Canada is aiming to triple the spectrum availability for faster broadband connectivity, the telecom regulator of the country is getting embroiled in an unwanted controversy of alleged favoritism for the ‘Big Three’ players in the industry. Critics further argue that two recent decisions imposed by the regulator are stifling competition and, in turn, are reportedly proving to be detrimental to the broader customer segment.  

The telecom sector in Canada is largely dominated by three leading carriers, namely BCE Inc. (BCE - Free Report) , TELUS Corporation (TU - Free Report) and Rogers Communications Inc. (RCI - Free Report) , collectively known as the ‘Big Three’. These firms reportedly boast 89.2% of total domestic subscribers, generating 90.7% revenues of Canada’s telecom industry per government figures. In order to encourage fair competition in this oligopolistic market, the Canadian Radio-television and Telecommunications Commission (“CRTC”) — the regulatory authority of the telecom industry —  granted relatively smaller firms an access to the broadband networks of the larger rivals in 2016. The idea was to allow wireless access to Mobile Virtual Network Operators (MVNOs) —smaller outfits that do not own any cellular network of their own and leases them from larger operators — to help them resell the capacity at reduced retail prices and pass on the savings to consumers.

However, the interim rates at which the MVNOs gained access in 2016 were substantially high and consequently, cell phone bills in the country were among the highest in the world. This forced the CRTC to consider plans to reduce the rates in 2019 amid widespread protests and customer complaints, but the move never gained steam as it was legally challenged by the larger players. The lawsuit helped the bigger players to continue charging higher access rates and even avoid making large retroactive payments to smaller companies for overcharging. In 2020, the Liberal government asked the Big Three to lower their service charges by a quarter within the next two years, failing which it would seek to intervene for the broader consumer interests.

In this backdrop, the CRTC recently revealed that it will not significantly reduce the rates at which MVNOs secure wireless access to high-speed Internet and the original 2016 rates will remain in effect with minor adjustments. This seemingly regressive decision was preceded by another April order that stated that the Big Three will offer wholesale facilities-based access to MVNOs but with several stipulations that evidently favored the former. Experts have widely criticized both the decisions and claimed that the moves were counterproductive to competitive forces and would further marginalize the smaller players.

Some of the smaller companies are mulling to petition the federal government against these decisions. As a mark of protest, they also intend to refrain from participating in the upcoming 3500mHz spectrum auction in June for 5G rollout. Notably, the government is opening up the 6 GHz band to allow an additional 1200 MHz of spectrum. This is likely to make broadband more available to the masses and foster greater affordability with lower prices. However, the hands-off approach of the government regarding essential telecom policy matters is likely to make the market more concentrated and harm consumers in the short term.

It remains to be seen how the socio-political saga unfurls in the near future and how the regional telecom carriers respond to the evolving scenario. For the time being, we can safely say that the road for 5G technology in Canada is likely to bumpy with potential rider alerts – Steep Learning Curve Ahead!

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