On January 29, 2014, the Competition Bureau made a submission to the Canadian Radio-television and Telecommunications Commission (CRTC) in response to the CRTC’s call for comments on wireless roaming rates.
In its submission, the Bureau opines (based on observations and information collected by the CRTC) that differential treatment is occurring in the contractual terms of wholesale roaming agreements, which constitutes discriminatory or preferential behaviour. The impugned behaviour results from some Canadian wireless service providers charging significantly higher rates in their wholesale roaming arrangements with other Canadian carriers than in their arrangements with U.S. carriers. According to the Bureau, the differential treatment observed by the CRTC is unfair discrimination or undue preference, and the submission encourages the CRTC to intervene to stop this behaviour.
Of particular concern to the Bureau is the fact that the roaming agreements are being used as a strategic tool by the incumbent wireless service providers to protect their market power. The Canadian mobile wireless market is described in the submission as being “characterized by high concentration and very high barriers to entry and expansion.” The Bureau expressed the view that the incumbent wireless service providers have retail market power and are incentivized to take “strategic actions in order to prevent new entrants from becoming fully effective competitors.” The Bureau notes that such strategic actions “have likely resulted in, or will likely result in, entrant service providers charging higher prices at the retail level, or providing less attractive non-price elements of their services in those markets, than they would if their roaming agreements were not affected by the strategic actions of the incumbent service providers.”
In terms of an acceptable remedy, the Bureau calls for a remedy that would allow entrant service providers to obtain competitive roaming access on fair terms. Moreover, the Bureau prefers a remedy that would go farther than strictly necessary to eliminate the unfair discrimination or undue preference, should the CRTC have to decide between such a remedy and one that does not go far enough.
This marks the second intervention in the mobile wireless market by the Bureau’s advocacy group in the past year. The Bureau previously submitted comments on the CRTC’s Wireless Code of Conduct. Perhaps it is not surprising that the mobile wireless market has drawn the attention of the Bureau’s advocacy group. With 27.9 million wireless services subscribers in Canada (in 2012), a high level of public interest is assured. Moreover, the CRTC offers a familiar forum for the Bureau and has the ability to regulate change. In fact, the Bureau has had past success in influencing CRTC decisions (e.g. Telecom Decision CRTC 2008-17, Revised regulatory framework for wholesale services and definition of essential service). These features make the mobile wireless market an inviting target for intervention in light of the Bureau’s stated strategic factors that it considers when assessing potential advocacy projects.
The CRTC expects to publish a decision on this proceeding within four months of the close of record, which is February 10, 2014.