CALGARY – Not only does Canada does not need a fourth national wireless carrier, the data used by the federal government in its assertions to the contrary is flawed, according to a new report from the University of Calgary’s The School of Public Policy.
Wireless Competition In Canada: Damn The Torpedoes! The Triumph Of Politics Over Economics, by economists Jeffrey Church and Andrew Wilkins, maintains that the Canadian wireless sector is “sufficiently competitive” and that the government is out of line to use policy to try to “force” a fourth carrier. The report is a follow up to its Wireless Competition in Canada: An Assessment released in September 2013.
Challenging Competition Bureau submissions that there is market power in the provision of wireless services in Canada and substantial benefits to enhancing competition, the report says "that the expert evidence prepared for the Competition Bureau is simply insufficient to warrant regulation and subsidization of wireless competition”.
“The evidence with respect to market power is inconsistent with substantiality and it is not robust”, reads the report. “The expert evidence does not address whether entry is efficient. Instead it provides only an estimate of the competitive benefits of a fourth national entrant — not its costs — and it does not assess the financial viability of a fourth national competitor.
“The assessment of the competitive benefits of entry are unreliable, attributable to both the methodologies used by the expert and the assumptions required to implement its simulation methodology. Its inaccuracies pre-entry cast considerable doubt on its use to accurately forecast the effect of a fourth national entrant.”
In the report’s news release, author Church questioned the cost to Canadians if the government faces the prospect of ongoing subsidy.
"Given the absence of compelling evidence demonstrating the substantial exercise of inefficient market power, the evidence that having more than three carriers raises concerns regarding financial viability without ongoing subsidization, and the evidence that an additional carrier would be inefficient, one wonders how long the federal government and its agencies will continue the policy of attempting to "enhance competition" in wireless markets? What will be the final cost to Canadians of the federal government's commitment to the proposition that competition is measured by the number of competitors?", he said.
