Politics

Looming lawsuits, threats of job losses and other takeaways from the CRTC hearings on cell service

This week saw the end of a nine-day marathon round of public hearings that pitted dominant wireless carriers against affordability advocates and smaller carriers. Here's what we learned from them.

Cellphone companies are threatening job cuts and court action if the CRTC intervenes

A Telus Corp. sign is shown at the telecom company's annual general meeting in Vancouver, B.C., on Thursday May 8, 2014. (Darryl Dyck/Canadian Press)

This week saw the end of a nine-day marathon round of public hearings that pitted dominant cellphone carriers against affordability advocates and smaller carriers.

The hearings, hosted by the Canadian Radio-Television and Telecommunications Commission (CRTC), could lead the CRTC to take the rare step of intervening in the telecommunications market to mandate more competition.

Here are some of the key moments and takeaways from the hearings.

Canadians pay a lot, but prices have fallen

Many presenters relied on various formulas and studies that show Canadians paying some of the highest cellphone rates in the G7, if not the world. But throughout the hearings, cell companies countered by pointing out that prices have significantly dropped over the last few years, and those claiming Canadians pay too much are relying on outdated data.

Some companies, such as Bell, said they'd introduced significant price reductions. One gigabyte of data cost $40 two years ago, Bell told the hearings; today, a similar plan can cost just $25. Telus said it offers plans that meet or exceed the Liberal government's election pledge to reduce rates by 25 per cent.

"Affordability has different ways of looking at it," said Mark Goldberg, a telecommunications consultant who has been watching and commenting on the hearings. "It's a very complex question."

The federal department responsible for wireless communications, Innovation, Science and Industry, acknowledged throughout the hearings that prices have fallen — but a department spokesperson said they could fall further.

"Our government has made affordability a priority. Cellphone and wireless prices are still putting too much pressure on Canadian household budgets," Véronique Simard, a spokesperson for the ministry, said in an email.

Not enough competition?

The Competition Bureau, one of the few interveners without a dog in the race, didn't pull its punches. It warned the CRTC that Canada's wireless market suffers from a lack of competition.

But not everyone agrees that the solution is to open up the regulatory floodgates. Many national and regional players are opposed to the CRTC forcing them to sell network access to what are called mobile virtual network operators, or MVNOs. These MVNOs have been shown, in some cases, to offer cheaper plans, although Canada's large carriers disagree.

"There is no evidence of a competitive need to do so, and there is no evidence that mandated MVNO access will bring the benefits sought," Eastlink's CEO Lee Bragg told the hearings on the fourth day.

WATCH | Why smaller carriers or MVNOs want mandated access into Canada's cellphone market

A CRTC hearing is examining wireless service in Canada and is looking at having the big three providers allow smaller companies to use their networks, opening the market and possibly lowering costs. 1:58

Competition Bureau Commissioner Matthew Boswell agreed that opening up the market too broadly "at this stage is a risky bet." Boswell said it could undermine smaller regional players or firms like Quebec's Videotron or Freedom (formerly Wind Mobile) whose products have been shown to undercut the Big 3 carriers. Too much competition, the bureau said, could stunt the growth of these regional players.

The Competition Bureau suggested the CRTC mandate some access for MVNOs as long as they have invested already in some spectrum or cell towers "with a view to a world where wireless disrupters are no longer reliant on" their competitors' networks.

National carriers warn of deep cuts

At the hearings, executives from the national cell providers — Bell, Rogers and Telus — warned that investment could crater if the CRTC intervenes. Bell Canada said intervention would cut into its $4 billion in annual capital investment, affecting the rollout of 5G service. Bell CEO Mirko Bibic said the company would act to protect shareholder returns.

"If we don't deliver those dividends, and if we don't grow those dividends, then we're not going to get the $4 billion the next year and the year after that," he said on the second day of hearings. "And that's basically how it works."

Mirko Bibic, president and CEO of BCE and Bell Canada, listens during a CRTC hearing in Gatineau, Que., on Wednesday, Feb. 19, 2020. (THE CANADIAN PRESS/Justin Tang)

Telus's CEO, Darren Entwistle, was more blunt, saying these warnings are not "just theatre" and warning that a regulatory change could kill billions of dollars in investment and threaten up to 5,000 jobs over the next five years.

Michael Geist, University of Ottawa law professor and Canada Research Chair on the internet and e-commerce, played down those warnings.

"The idea that the Telus board, of which the CEO is a member, has decided specifically to cut 5,000 jobs and specifically to reduce over five years a billion dollars of investment, when it doesn't even know the potential regulatory plan, strikes me as somewhat implausible," he said.

Videotron also threatened legal action if the CRTC introduces "pro-MVNO" regulation.

"The commission and the federal government would therefore have to bear responsibility for the loss suffered by Videotron if such regulations were introduced, and Videotron would have no alternative but to seek redress through the courts," Quebecor CEO Pierre Karl Péladeau said.

 

About the Author

David Thurton is a national reporter in CBC's Parliamentary Bureau. He's worked for CBC in Fort McMurray, the Maritimes and in Canada's Arctic.

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