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Trudeau’s plan to ask telcos to slash cell bills by 25 per cent ‘falls short,’ say experts

Canada's Prime Minister Justin Trudeau speaks during an election campaign stop in Brampton, Ontario, Canada September 22, 2019. REUTERS/Carlos Osorio

Justin Trudeau took aim at a long-standing Canadian financial gripe over the weekend: expensive mobile phone bills.

Speaking at an event in Brampton, Ont. on Sunday, the Liberal leader called pricy cellular bills a “near universal” complaint from Canadians, whom he said pay among the steepest charges of any G7 nation.

Trudeau said his party aims to “see phone bills come down by 25 per cent” within two years, saving a family of four almost $1,000 annually. His plan calls upon telecom providers to meet that goal under threat of increased competition from mobile virtual network operators (MVNOs), smaller rivals to which they will be required to lease wireless capacity.

Improving competition in Canada’s wireless sector and lowering bills for consumers has proven a tall order for regulators and governments alike.

BCE Inc. (BCE.TO)(BCE), Rogers Communications Inc. (RCI-B.TO)(RCI) and Telus Corp. (T.TO)(TU) share a near-monopoly on cell service in Canada, commanding a combined 91 per cent share of revenues in 2016, according to a Canadian Radio-television and Telecommunications Commission (CRTC) report.

New entrants like Mobilicity, Public Mobile and Wind Mobile have been swallowed by the incumbent players Rogers, Telus and Shaw Communications (SJR-B.TO), respectively. U.S. wireless giant Verizon Communications Inc. (VZ) considered entering the Canadian market in 2013, but ultimately passed.

But can it be enforced?

Laura Tribe, executive director of the consumer watchdog organization OpenMedia, does not expect the Big Three (Bell, Telus and Rogers) will agree to a 25 per cent rate reduction.

“Asking the companies to do better is not a policy,” she told Yahoo Finance Canada. “That’s where it really falls short.”

Tribe holds little hope that new competition will materialize in the form of companies building out their own networks, given the head start that Bell, Telus and Rogers have on infrastructure, spectrum acquisition and customer base.

That leaves MVNOs, wholesales customers of the Big Three who will resell wireless capacity they purchase under their own brand to consumers.

The Liberals said major network operators will be required to lease their available capacity to qualified competitors under the plan. If prices do not change to their satisfaction after two years, corrective measures such as lowering access rates and investment thresholds, and expanding the CRTC powers to impact prices, could be considered.

“What we’ve seen in other countries is that those MVNOs do work (at lowering prices),” Tribe said, adding that wholesale network access-based service providers like TekSavvy Solutions Inc. have helped to improve affordability for home internet.

“What we are looking for is guaranteed mandated access for all MVNOs. In the Liberal plan, they talk about qualified competitors being let in. It’s vague as to what that means. But it implies a certain subset of MVNOs might be allowed to enter the market as a starting point. If the incumbents don’t lower their rates 25 per cent, they will allow the rest in.”

Michael Geist, a law professor at the University of Ottawa who holds the Canada Research Chair in internet and e-commerce law, said he is encouraged by the Liberals’ emphasis on competition. Though he expects a “regulated solution” will ultimately be required to help new MVNOs get off the ground.

“The experience to date has been that mobile companies are not willing to really enter into agreements with small providers,” he said. “If you leave it up to the companies, the sense is it is never going to happen.”

He points to the example of Ting Mobile, a Toronto-based MVNO that only provides service in the United States.

“Ting isn’t able to operate effectively in its home country because it can’t manage to reach agreements. The way to move this forward is to do so by regulation.”

Even if regulations are put in place to support small providers, Tribe said it will take time before Canadians are able to feel the impact in their bank accounts.

“If you launched a new provider tomorrow in Canada, it would take a while for a number of customers who wanted to switch to be able to leave their current contracts to do so,” she said.

Note: Yahoo Finance Canada is a division of Verizon Communications Inc. through its Verizon Media division.

Yahoo Finance Canada

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