GATINEAU, Que. — Canada’s wireless industry has not fully matured and still needs “careful nourishing” as it invests in fifth-generation networks, Rogers chief executive Joe Natale told a regulatory hearing Wednesday.
Natale said the future of Canada’s wireless network capability is at stake, and said the construction of 5G networks is an act of “nation building” comparable to the arrival of railroads in the 1800s.
Natale was the latest high-ranking representative of Canada’s wireless companies to argue that the Canadian Radio-television and Telecommunications Commission shouldn’t change a policy favouring facilities-based networks.
Facilities-based network operators build and operate their own infrastructure, such as the towers and radios required for wireless service. In contrast, mobile virtual network operators (MVNOs) primarily rent capacity from facilities-based carriers and resell the service to retail customers.
Advocates of MVNOs argue they are needed to put competitive pressure on retail prices and improve services. Detractors argue that facilities-based operators will invest less if the CRTC forces them to work with MVNOs
“I implore you to keep reminding yourselves of the importance of what is at stake here,” Natale said in his opening remarks in Gatineau, Que., as CRTC commissioners prepared to grill him and other Rogers executives through hours of hearings.
He and other Rogers representatives made several attempts Wednesday to dispel a widely held view that Canada’s three national carriers charge high prices by world standards and they have too much market power.
Natale said two facilities-based regional carriers that compete with Rogers — Freedom and Videotron — captured one-third of the Canadian industry’s net new customers last year.
The Competition Bureau warned on the first day of CRTC hearings on Feb. 18 that regional facilities-based carriers such as Videotron, Freedom Mobile and Eastlink would face the greatest risk if the regulator took a pro-MVNO stance to stimulate competition in Canada’s wireless industry.
Natale said Wednesday that there have been dramatic changes in what consumers can find on the market since the CRTC suggested in early 2019 that it was time to mandate MVNOs as a way to push down retail prices for wireless services.
“If pricing is a central issue, then surely we must consider up-to-date data and rely on sound methodology. Some presenters have relied on dated price comparisons,” Natale said.
He said the Infinite data plans introduced June for the Rogers Wireless brand had “dramatically changed the marketplace” by dropping the Rogers price of 10 gigabits per month to $75 per month from $100, and dropping additional overage fees that potentially added to the subscriber’s monthly bills.
Natale said that a comparable Verizon plan in the United States costs slightly more than $90 in Canadian currency.
He also said a consumer advocacy group’s proposal for a basic universal wireless plan, costing $25 to $30 for unlimited talk, text and 4 GB per month of data, could be possible if properly restricted to certain groups of disadvantaged users.
However, Natale said, making that kind of plan generally available at this time would “eradicate” the vast majority of Rogers profit and “would stop investment in totality.”
He said during opening remarks that Rogers has spent $12 billion on network equipment and wireless spectrum auctions since 2014 and its debt has gone up by $6 billion over that period.
“We now sit with more debt than ever in the company’s history — over $18 billion — and we’re not alone. Our Canadian competitors all sit with debt leverage ratios that are at or near their maximum,” Natale said.
— by David Paddon in Toronto.
Companies in this story: (TSX:BCE, TSX:RCI.B, TSX:QBR.B, TSX:T, TSX:SJR.B)
This report by The Canadian Press was first published Feb. 26, 2020.
The Canadian Press