Bell Buying MTS is Bad News, Here’s Why: CMCR Project

“Bell’s bid to buy MTS is a big deal, but it is also bad news”, says the Canadian Media Concentration Research Project in response to the Competition Bureau’s request for input from Canadians regarding the acquisition.

Earlier this month, Bell made a surprise announcement that would reduce the number of wireless players in Manitoba from four to three, prompting discussions as to whether or not the Canadian mobile landscape is undergoing a change that would benefit users.

The CMCR Project has looked into the matter and put together a comprehensive report with factual evidence underpinning their statement about why the merger is bad news for Manitobans and all Canadians.

While Bell says the merger will benefit Manitoba – it would bring it out of the past into the future by investing $1 billion over the next five years – the CMCR Project rejects that view. A closer look at MTS’ overall performance reveals that MTS is more profitable and invests relatively more capital in its networks that Bell.

Also, a pricing comparison among Manitoba, Ontario, B.C., and Alberta demonstrates that wireless prices are lower in Manitoba: “Price increases by the national carriers have been lower in Manitoba than elsewhere . . . due to the disciplining effect that MTS has on their behaviour”, the press release reads.

The report, prepared by Benjamin Klass and Dr. Dwayne Winseck, Ph.D. under the auspices of the CMCR Project, also points to other international markets showing that four or more rivals lead to more competitive pricing. But remaining in Canada, a good example is Québec or the Maritimes, where Videotron and Eastlink both offer affordable alternatives to the national carriers.

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In the light of the above, the CMCR Project recommends three options for the Competition Bureau: (1) block the merger; (2) require divestiture of spectrum licences, towers, retail locations, and subscribers to an independent competitor; and (3) require open-access provisions for the new entity.

You can read the full report put together by the CMCR Project here.