Quebecor said it will rethink pricing strategy as a result
By Ahmad Hathout
Quebecor will need to accept Telus’s rate to connect to its wireless network, the CRTC ruled Monday, eliciting a scathing response from the Montreal company that included a promise to reconsider its low-cost pricing and suspend the launch of certain plans in Manitoba.
Telus and Quebecor could not come to an agreement on the price-per-gigabyte component of that access, so they each presented their respective prices and asked the CRTC to make that determination via final offer arbitration.
While it said both offers would allow Quebecor’s mobile virtual network operator (MVNO) to compete in the market, the regulator found Telus’s offer strikes a better balance between allowing the Montreal telecom to compete while still incentivizing Telus to invest in its network.
“We are surprised that the CRTC wants to limit the choices of Canadians who would like to enjoy innovative new wireless plans at better prices,” Quebecor president and CEO Pierre Karl Peladeau said Monday evening in a statement, which added the decision and the regulated domestic roaming rates, which are among the highest in the world, are far from reflecting current industry realities.
“Since this decision will increase our costs considerably, making our operations unprofitable, we will be forced to reconsider our pricing and our expansion into some regions of Canada,” Peladeau continued. “For example, we have no choice but to suspend the launch of data-rich plans in Manitoba, just as we were preparing to offer our services there.
“Unfortunately, this will create two classes of Canadians: those who live in areas covered by Freedom’s network, who will enjoy the fruits of healthy competition, and those who will be denied the benefits of our full presence as Canada’s fourth mobile carrier,” he added.
Telus argued that Quebecor’s offer was below the cost of providing access to the MVNO service, which robbed the Vancouver-based telecom of fair compensation.
Quebecor argued Telus’s 40 per cent markup in its cost study would not incent Quebecor to build its own network before the mandated regime sunsets in seven years.
Telus, however, said its offer provided a better balance of compensation and Quebecor’s ability to compete in the market.
The CRTC agreed, specifically noting that Telus’s offer is within the range of previously-approved arbitration rates involving Quebecor, which still still offering lower-priced plans in the market.
Indeed, Quebecor’s Freedom Mobile brand had still been offering holiday promotions into the new year, which brought its average revenue per user far below competitors.
Peladeau said during its last quarterly conference call that a subscriber-acquisition strategy of the telecom has been to entice customers with comparatively low market rates and then keep them in with compelling offers.
Quebecor is currently in a dispute with Bell over access to the telco’s wireless network after the CRTC selected Bell’s rate through FOA. Quebecor is now accusing the latter of stalling on access, while Bell is accusing the other of not signing a standard commercial agreement.
In a previous FOA process, the CRTC selected Quebecor’s rate over that of Rogers, which prompted the cable giant to go to court over the matter because it claims, in part, the decision runs counter to the “just and reasonable” provision under the Telecommunications Act.
