The Competition Bureau says consumer wireless costs would come down with more competition to the big three carriers.
Photograph by: CARL COURT. AFP/Getty Images
GATINEAU, Que. - Canada's competition watchdog says consumers would benefit from the introduction of a new national wireless carrier.
But the Competition Bureau says regulators need to do more than simply capping roaming rates to prevent the big three wireless carriers from stifling any new competition.
The bureau was the first to appear at public hearings that began today into the health of Canada's wholesale wireless market.
The CRTC is examining whether more regulation is needed to taper or cap the wholesale rates cellphone carriers charge other wireless companies to allow their customers to roam outside of their home networks.
And while the commission is not examining the roaming rates consumers pay, bureau senior economist Patrick Hughes told the hearings that wholesale and retail markets are inherently linked.
As the hearings got underway, at least one think tank questioned whether the CRTC should do anything at all to affect the wholesale roaming market. The Montreal Economic Institute says, despite the impression of some Canadians that they pay among the highest cellphone roaming rates, consumers in many other countries pay more.
Still, the Competition Bureau told the CRTC there is evidence that the profit margins of the major wireless carriers are higher than they should be.
The Harper government has repeatedly tried — so far unsuccessfully — to entice a fourth national player to set up a wireless service in Canada to compete against Bell, Rogers and Telus.
The government's argument has been that more competition would result in lower consumer prices.
The Competition Bureau agreed, saying a fourth national carrier would increase choice and reduce retail wireless prices by about two per cent.
Quebecor Inc. has suggested the wholesale roaming rates it pays to piggy back on a major carrier's cellphone towers may prevent it from expanding its mobile business.
Other smaller carriers have also said roaming rates are a major factor affecting their ability to compete.
But Rogers Communications Inc. (TSX:RCI. B), BCE Inc. (TSX:BCE) and Telus Corp. (TSX:T) maintain that further regulation would hinder their ability to invest in improvements to their own wireless networks.
Ottawa has already passed legislation capping the rates carriers can charge on a wholesale basis at no more than what they charge their customers at the retail level, pending the outcome of this week's hearings.
Montreal-based Cogeco Cable Inc. (TSX:CCA), which is hoping to offer wireless services without building its own cell tower network, is expected to ask the CRTC to adopt new rules to allow for the creation of what are known as mobile virtual networks, effectively giving smaller carriers access to large players’ spectrum and cell towers.