The regulatory debate this week at CNOC’s ISP summit was a jolly good Australian-style punch-up between Michael Geist and Jonathan Daniels of Bell.
My former colleague Len Katz spoke to the audience on the same day. He confirmed my view that the “ladder of investment” and the obsession with size continues. His view was that CNOC will not get the respect it needs until its members consolidate, and he intimated that the end purpose of these small companies is to climb the ladder of investment to become carriers.
My thoughts continue as they have before, that some may wish to be carriers, while others may wish to be the service-delivery ends of carriers. As Elliot Noss of Tucows said during his recent appearance before the CRTC, “some of us want to be Internet service providers”. Tucows owns Ting, an MVNO that uses Sprint as its underlying carrier in the United States, and was seeking the ability to do the same in Canada.
An MVNO – a mobile virtual network operator – is fancy talk for an ISP that front ends a network provider. Noss’ idea is a direct repudiation of the idea that every player can and should wish to become a carrier. If I may put words in his mouth, he has a carrier for that.
Copying shamelessly from that report, the question of whether MVNOs cause a reduction in investments is addressed.
Some financial analysts, telecommunication consultants and mobile operators have contended that a reduction in industry revenues could lead to lower investment. Other analysts state: “Consolidation is an option but there are others too: network sharing is less risky and brings large savings as well.” Across the OECD, investment in public telecommunications networks in fixed and mobile networks, excluding spectrum fees, remained rather stable between 1997 and 2011. The direct implications for investment resulting from the number of MNOs are even more challenging to ascertain. Where data are available they should be carefully assessed but generally describe a positive outcome. For example, in France the introduction of a fourth MNO has brought forward 4G investments.
Network sharing could be considered as an alternative to the concentration that would result from full mergers. The potential savings from network sharing may represent a significant proportion of the savings that are used to justify a full merger. Where there is significant competition among MNOs and new facilities entry is unlikely, the benefits of these savings are more likely to be passed on to consumers. However, regulators will need to remain vigilant because under some conditions network sharing agreements may lead to a decrease in competition similar to that experienced with a merger.
As I observed at the ISP Summit, the idea that everyone should climb the ladder of investment with the idea of being a mini-me carrier, is a dirigiste fantasy.
Somehow what I said was approved of by Chris Tacit of CNOC, Jonathan Daniels of Bell, and Professor Michael Geist, each for their own reasons. Where did I learn how to be so agreeable?