On January 29, the Commissioner of Competition made submissions to the CRTC in connection with the its ongoing public proceeding examining whether incumbent wireless carriers are unjustly discriminating, or demonstrating undue preference, with respect to wholesale mobile wireless roaming arrangements.
Wholesale roaming arrangements allow the subscribers of one wireless carrier to utilize the wireless network of another carrier in areas in which the former carrier does not operate a network. In this way, roaming agreements allow carriers without fully-developed Canadian networks (for example, U.S. carriers and new wireless entrants) to offer their customers nation-wide coverage by "piggybacking" where necessary on the network of a more developed carrier.
After a fact-finding exercise in mid-2013, the CRTC determined that some Canadian carriers were charging significantly higher rates in wholesale arrangements with other Canadian carriers (i.e., new Canadian entrants such as Wind Mobile and Mobilicity, which compete with the other Canadian carriers) than in their arrangements with U.S. carriers. The CRTC launched a public proceeding on December 12, 2013.
According to the Commissioner's comments, the Competition Bureau believes that incumbent carriers (i.e., Rogers, Bell and TELUS) have market power in the provision of retail wireless services, and "therefore have an incentive to enact strategies to protect their market power by ensuring that entrants are not, and do not become, fully effective competitors." The Commissioner states that imposing "supra-competitive roaming rates" on competitors can result in the elimination of those competitors (either by excluding them from a market entirely, or by raising their costs and preventing them from competing).
The Commissioner also criticizes a report by Jeffrey Church and Andrew Wilkins of the University of Calgary which concludes that no "competition problem" exists in mobile wireless services in Canada; the report also argues that government intervention is not necessary and is likely to be unsuccessful and inefficient. The Commissioner alleges that the report's analysis does not support its conclusions.
Finally, the Commissioner argues that wireless carriers have engaged in "differential treatment" which should be regarded as unfair or undue, and which could result in the elimination of a source of competitive discipline. The Commissioner states, in the abstract, that if the CRTC is faced with a choice of remedies in which one option goes too far and the other not far enough, it should opt for the former remedy. (This statement is supported with a reference to a decision interpreting the merger provisions of the Competition Act, rather than the Telecommunications Act.)
While the conclusions outlined in the Commissioner's submission are far-reaching, the submission does not set out evidence and analysis in support of many of them. More importantly, the Bureau's submission does not go on to consider potential remedies – perhaps leaving this to the CRTC, as the regulator in the area.
The Commissioner's comments were submitted to the CRTC as part of the "public comment" process (which ended on January 29), and also pursuant to section 125 of the Competition Act, which authorizes the Commissioner to make representations to government bodies (including the CRTC) in respect of competition whenever such representations are relevant to a matter before the body. This provision had fallen into disuse since 2009, but has now been used twice by the current Commissioner to make submissions before the CRTC.
In the next stage of the CRTC process, parties will have until February 10, 2014 to submit replies to the public comments. Stay tuned – wirelessly or otherwise – for further developments.
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