The Canadian Press reported last week that the competition watchdog made the claim in a submission to the federal regulator, the Canadian Radio-television and Telecommunications Commission, which is reviewing whether to increase regulation in the wholesale sector and has public hearings scheduled for September.
The regulations would effect what the large wireless companies — Rogers, Bell and Telus — can charge small players for the use of towers and roaming fees.
In the submission released Thursday, the Competition Bureau said one study into the issue suggests Canadians could benefit from greater competition and that large established wireless operators are realizing above-normal returns on investments because of their market dominance.
The bureau says the three largest wireless companies, which together have about 90 per cent of Canada’s cellphone market, have the power to maintain prices above competitive levels for a significant period of time.
“The bureau estimates that increased retail competition from an additional nationwide mobile wireless carrier could result in gains of approximately $1 billion per year to the Canadian economy in the form of better product choices, price reductions and other benefits to customers,” it said.
This backs up the landmark study released by the CBC using data from the Organization for Economic Cooperation and Development (OECD) that compared the cost of cell phone use in Canada to that of 19 other countries. They found that in Canada a mid-range cell phone package costs an average of $572.86 US per year, which is almost $175 more than the average.
The $1 billion figure comes from a previously-commissioned report from the Brattle Group, which estimated a fourth national carrier would expand mobile wireless usage in Canada and drive down incumbents’ average retail prices by about two per cent.
Rogers’ senior vice-president of regulatory affairs, Ken Engelhart, dismissed the submission as “misguided” and “speculative,” since the report deals with potential savings from added competition.
Is it misguided to pursue a policy that would save Canadians hundreds of dollars a year? If you are one of the Big Three, the answer is an obvious yes. But for the rest of us? Not so much.
All Canadians want is a fair shake, and the solution is simple as it has been done before with telecoms, resulting in companies like Worldline providing Unlimited High Speed Internet at hundreds of dollars a year less than the Big Three are capable of charging.
The Competition Bureau is recommending that the CRTC establish additional regulatory measures “if and when they are needed to ensure that new entrants have access to the wholesale services they need to compete effectively.”
Sounds like a plan.