Share:

Competition Bureau: Fourth Wireless Player Could Boost Economy by $1 Billion

Share:

The Competition Bureau says greater wireless competition would not only lower prices, but also boost the Canadian economy by roughly $1 billion dollars per year, based on a newly commissioned report, according to details shared by The Financial Post. 

When the threat of Verizon entering Canada last year caused stock prices of Rogers, Telus and Bell to drop, the report says based on these reactions it would result in an average 8% decline in profits for incumbents:

“Using these stock price effects, the [report] predicts that the entry of an additional nationwide carrier would increase consumer surplus in Canada by approximately $1-billion annually, which represents 5% of industry revenues in 2012,”

A new national fourth wireless carrier would possibly result in the wireless penetration rate increasing, while incumbent prices decreasing, at an estimate of 2% in average retail prices.

Ken Engelhart, vice-president of regulatory affairs at Rogers, responded by downplaying the discussion, saying “This might have been an interesting discussion five years ago, but [the government] tried it – we’ve had a fourth carrier come into the market that hasn’t lived up to all of their expectations,” referring to struggling AWS wireless entrants, who have yet to make a dent in Canada. WIND Mobile’s backers are looking to exit Canada; Mobilicity is bleeding money; Public Mobile has sold to Telus.

French Wireless Carrier Orange Still Interested in Canada

Christine Dobby reports French multinational telecom Orange S.A., has again sparked interest to expand its wireless business to Canada, according to a filing this week. The telecom looks to pursue a model where it leases airtime from existing incumbent networks at wholesale.

The CRTC is set to hold a hearing in September related to how much incumbents can charge for wholesale roaming access, which Orange will participate in this fall to lobby for more competitive pricing and regulations on pricing:

“Analysis by Orange shows the business case for building a fourth national wireless infrastructure in addition to that of the three existing wireless incumbents is strongly problematic,”

Rumours of Orange contemplating Canadian wireless expansion was earlier reported last fall by The Globe and Mail. The telecom has 400 employees in Montreal and at the time ranked as the world’s eighth largest carrier with roughly 175 million subscribers.

Rogers’ Engelhart warned against too much regulation though, noting competition in the wireless industry is hurting jobs and affecting investment in high-speed broadband networks (an argument similarly shared by rivals Telus and Bell)

“People should realize that we have really fast networks in Canada, that that’s really good for consumers, and it’s a really important enabler for the digital economy,”

[…]

“And you don’t get that if there’s too much regulation and you discourage investment.”

He acknowledged healthy wireless competition exists in Canada, pointing out how rivals Bell and Telus have gained marketshare at the expense of Rogers.

Share:

Deals