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Sustainable Competition and Investment Certainty

Wireless communications are an integral part of our lives and nearly everyone has a mobile phone. Less obvious or understood however, are the fundamental regulatory policies that anchor the provision of these services in Canada.

Throughout 2019 and into 2020, the telecommunications industry regulator, the CRTC, conducted a proceeding to examine whether wireless companies that own infrastructure, should be mandated to resell (or wholesale) their services to mobile virtual network operators (MVNOs). Pure MVNOs are companies that don’t build their own wireless network infrastructure – that is why they’re called “virtual” operators. Such operators buy services such as voice, text and data from companies like Rogers that have invested heavily in building such infrastructure, and then they (the MVNOs) resell those services to their customers. Rogers has invested $60 billion over the past three decades, with $2.8 Billion in the period between January 2020 and March 2021 alone.

MVNOs enter into commercial agreements with the network builders and pay a fee to access their infrastructure and resell service. Mandating network builders to provide access to MVNOs is analogous to forcing an auto repair shop to lease its garage and equipment to a rival for a minimal fee.

In mid-April 2021, this long-awaited decision by the CRTC was released. The Commission’s decision saw that only those providers who already owned infrastructure, including spectrum would be permitted wholesale access rights. Wholesale access would be granted to support these carriers as they further deployed their own wireless infrastructure.

The underpinning of this decision is sustainable competition.

In such a facilities-based competitive environment, wireless prices in Canada have continued to decline. Based on May 2021’s Cellular Services index, part of Statistics Canada CPI (Consumer Price Index)¹ wireless prices fell again by 2.7% over last the month. They have fallen 17% over the last year and 27% since May 2019. The broader trend in wireless prices declining is in stark contrast to prices increasing for virtually every other retail product or service in Canada today².

What is equally clear but less talked about is that, companies such as Videotron, Eastlink, Xplornet, all who are facilities-based operators, now will find a stable path in their investment plans too as a result of this decision. The intensity of competition between all these facilities-based operators will ensure investment in infrastructure will continue to grow and prices remain competitive.

Shaw, the other regional facilities-based provider, entered a merger process with Rogers before the CRTC decision came out. Besides being investment driven, research and experience shows that the wireless industry is most impactful for Canadians when it is scalable. Together, the combined companies will build further and faster. Shaw CEO, Brad Shaw illustrated the potential succinctly,

5G and our urban and rural networks are critical to our customers, and we can move more quickly together than either of us could on our own.” ³

To start with, the combined companies plan to invest $2.5 billion in 5G networks across Western Canada, which is expected to create up to 3,000 net new jobs. Rogers has also committed to spending $1 Billion towards a Rural and Indigenous Connectivity Fund. This will connect rural, remote and Indigenous communities across Western Canada to fixed broadband high-speed Internet, that will accelerate closing critical connectivity gaps for underserved areas.

The common thread for both the regulator and the industry is sustainable competition and investment. This investment will allow the industry to continue to provide high quality wireless services to Canadians as prices continue to decline over the long term. This investment certainty, borne out of sound regulatory policy, will also ensure we are able to connect the unconnected to high speed broadband in rural Canada, bridge the digital divide in urban Canada and invest in the next generation of wireless 5G technology.

Ted Woodhead, Senior Vice President, Regulatory Affairs, Rogers Communications Inc.

² Canada’s inflation rate rises to highest level in a decade, at 3.6% | CBC News
³ Rogers seeks to buy Shaw for $20.4-billion in deal that would transform Canadian telecom market – The Globe and Mail