By Konrad von Finckenstein
FOR MANY YEARS, THE both the federal government and the CRTC have viewed facilities-based competition (FBC) as the only true means of ensuring Canadians receive high-quality, affordable, mobile wireless services provided over leading-edge wireless networks.
FBC basically means that only companies with their own wired or wireless transmission facilities should be allowed access to aggregated wholesale high-speed access services of large carriers, but attempts by both the CRTC and ISED to foster competition at either the national or regional level in wireless using preferential access to spectrum and wholesale wireless policies have proven unsuccessful.
The Competition Bureau supports the concept of FBC. Its latest submission to the CRTC proposes a time-limited facilities-focused approach whereby smaller regional wireless carriers (Shaw, Videotron and Eastlink) would be permitted to act as MVNOs on the networks of the national carriers for five years, but be required to have a sufficient quantity and mix of spectrum in their operating areas and would then be required to invest in facilities and to be able to operate an independent facilities-based business after five years.
FBC is a regulatory construct, it is not a requirement of legislation. It is quite possible to offer telecommunications service using a “facility”, but that telecommunications facility need not necessarily depend on owning a transmission facility. Someone else can be relied upon to get the signal from A to B.
A transmission facility is a “telecommunications facility” but not a necessary part.
Accordingly, the Telecommunications Act provides no support for the position that only facilities-based carriers should be entitled to mandated wholesale access.
FBC assumes the only way to compete is to build alternative transmission systems and operate them more efficiently. This is a wholly outdated concept in the age of the internet where great efficiencies can be generated by superior computer power and algorithms without the need of owning and running hardware transmission facilities.
The mandate letter to the Minister of Innovation Science and Industry directs him to:
- Use all available instruments, including the advancement of the 2019 Telecom Policy Directive, to reduce the average cost of cellular phone bills in Canada by 25%. You will work with telecom companies and expand mobile virtual network operators (MVNO) in the market. If within two years this price target is not achieved, you can expand MVNO qualifying rules and the (CRTC) mandate on affordable pricing.
The minister has since announced that he expects such a 25% reduction in pricing to occur by December 2021.
Experience has shown us the assumption additional facilities-based carriers would increase wireless network competition is erroneous.
His mandate is clear and it is inconceivable that the pricing reductions can be achieved using FBC. It is time for the Minister to direct the CRTC to abandon the concept of FBC. Ownership of facilities should not be a pre-condition to allowing MVNO’s access to wholesale carriage of signals. The MVNO, under market pressure, will decide whether and what kind of facilities to acquire.
Unless the Minister directs the CRTC to abandon FBC and to allow unrestricted MVNO access to wholesale high-speed access, the necessary competition and the desired 25% reduction in cell phone costs will not occur.
Konrad von Finckenstein is a former CRTC chair (2007-2012) and is a member of the board of directors of the Public Interest Advocacy Centre.
