The Canadian Radio-television and Telecommunications Commission (CRTC) has approved “interim tariffs” for the wholesale rates the Big Three can charge their competitors. Actually, these tariffs were required by the trio, so they continue to favour them. The CRTC is expected to set final rates in mid-2016, reports the Globe and Mail.
While the interim tariffs are up to 60% lower than what the incumbent players have been charging competitors such as Wind, Videotron, and SaskTel, they still include a 40% markup over the Big Three’s estimated costs, hence they don’t pose any risk to their business models, according to Maher Yaghi, an analyst with Desjardins Securities Inc.
“The fear was that if the CRTC used a scorched-earth method, wireless new entrants could have used this opening to launch national wireless operations,” Mr. Yaghi wrote in a report Tuesday.
“At this point, this does not seem to be a reasonable outcome, as under the … costing methodology that the CRTC requested incumbents to use, the cost estimation and the associated markup still make the final pricing uneconomical for a new entrant to be a price aggressor.”
You may recall that the Conservative government was vocal in its efforts to foster a competitive wireless market in Canada and their goal of seeing a fourth player in all parts of the country. Since 2008 some of these goals have materialized: Canadians have powerful local players in certain areas of the country (see this RootMetrics report), but Wind still has a lot of room for growth, accounting for a big chunk of wireless complaints submitted by customers to the CCTS between 2014 and 2015.
As for Quebecor, the company scrapped its plans (?) to become a fourth national player and is now considering selling its wireless assets (the spectrum licences it acquired during the past auctions) to incumbent players, or some sort of partnership with Wind.
