The wireless decision

The issue is not the creation of a fourth national carrier, however meritorious that idea might be. Nor is three the appropriate number, nor one, nor two, nor six nor any whole integer between one and 10 to the fourth power. The appropriate number of carriers is the wrong question, and I think the CRTC understands this, maybe.

[I have been prevented from commenting earlier on CRTC Telecom Decision 2015-177 because I submitted a response to the completely mistaken viewpoints of the Montreal Economic Institute on the same subject, which appeared in the National Post on Thursday, May 7th. I expect my response will be published in the Financial Post on Tuesday next.]

The right question is “what are the appropriate rules for competitors in the mobile market”. To this the CRTC gets it mostly right, and then chickens out. (In this I agree with my learned friend Professor Geist).

The CRTC determined several things rightly:

  • the big three mobile carriers have market power in the GSM-based wireless market;
  • that the appropriate scale of the market is Canada itself;
  • that wholesale network access to the GSM-based networks of the big three is a required input in the downstream retail market;
  • that the necessary facilities cannot be practically and feasibly duplicated, and therefore that
  • GSM-based wholesale roaming and MVNO access by the big three are essential;


  • declined to make wholesale access mandatory, and left it up to negotiation of potential entrants with the existing carriers.

I find such claims by the large carriers to be incredible. They suffer no loss when MVNOs do the marketing work of filling up their networks for them. Once more the CRTC makes bold steps to get it mostly right, but then legitimizes the opposition of the larger carriers to wholesale access by agreeing with their essential proposition, that their incentives to invest would be reduced.

I am reminded of the performance of General McClellan during the US Civil War, when he could have won a dozen times in 1862 by pressing the fight to the Confederates, but never quite believed himself enough to slug it out. You may prefer your own historical comparisons.

However you parse it, the CRTC seems still to be stuck between a conception of competition as essentially facilities-based, with everyone owning their own facilities, and a newer conception, where competition arises as much from offering  improvements of customer service over the transport facilities of others, as it does by separate infrastructures. Their motives for being stuck between two chairs are open to speculation, but a lack of firm convictions may explain as much as any supposition that they favour a fourth national carrier. Prevarication has many causes.

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