Bureau notes past Shaw comments about its influence in the market
By Ahmad Hathout
OTTAWA – The Competition Bureau has asked the Federal Court to compel the disclosure of records from four telecoms related to its inquiry into the proposed purchase of Shaw by Rogers.
The competition watchdog filed the first in a possible series of document requests on July 22, which, if approved, will force Bell, Telus, Quebecor, and Xplornet (respondents) to disclose related information on mobile wireless activity in the shared operating provinces of British Columbia, Alberta, Ontario and Manitoba, and outside.
That information, which falls roughly within the timeframe between 2017 and 2021, includes market strategies, competitive strengths and weaknesses, customers won and lost, pricing policies and strategies, potential wireless expansion in new markets, barriers to entry or expansion and data related to the competitive impact of the Rogers-Shaw deal.
The bureau opened its inquiry last month, about three months after the $26-billion deal was announced in mid-March.
The court documents say the bureau is focusing on mobile wireless competition first, which observers have already suspected would be the focal point in a potential mega deal that would reduce the number of national wireless carriers from four to three.
The disclosure would include “documents pertaining to interactions between the Respondents and Rogers as well as the effectiveness of the Respondents as a competitor for the provision of mobile wireless services following its entry in Manitoba.”
Bell purchased the provincial telecom Manitoba Telecom Services (MTS) in 2017, which resulted in Bell surrendering a portion of MTS’ wireless business to Telus and a portion to Xplornet. (Xplornet’s mobile brand, Xplore Mobile, launched in 2018.)
Being that the fallout of the MTS deal is the most recent wireless market entry, the bureau said the information it seeks will help it assess “at what scale a mobile wireless new entrant is able to spur competition resulting in lower prices, and the barriers to entry for mobile wireless services.”
The watchdog is also examining the likelihood that the respondents will enter wireless markets as a result of the CRTC’s April decision to allow carriers with spectrum and networks to lease wireless network space from the big three telecoms to deliver competing services. The bureau said the assessment would give it a better idea of “effective remaining competition and barriers to expansion.”
On the flip side, the bureau said the CRTC decision could create an opportunity cost where a Rogers-Shaw merger would eliminate the possible entry by Shaw in new wireless markets to beef up competition.
The bureau said it has already reviewed records from sources including ones obtained from the main transacting parties, past bureau reviews, market participants and public sources.
The watchdog notes in its affidavit that the bureau itself examined and found that in areas where Bell, Telus, and Rogers do not face a strong regional competitor, mobile wireless prices in Canada are higher, noting “coordination” among Bell, Telus, and Rogers.
Part of that coordination relates to network sharing agreements between Bell and Telus, and between Rogers and Quebecor, which signed an agreement in 2013 for a 20-year period to build an LTE network in Quebec and Ottawa. Another part of that “coordination” is price “signalling” and “uniform and expensive service offerings,” as Shaw put it in a 2019 CRTC submission. The bureau noted that it also found some coordination when it reviewed the Bell-MTS deal.
The bureau wants to pry into Quebecor’s “significant recent growth” and the launch of its new low-cost Fizz brand in September 2018. It also wants to examine potential expansion and network investments related to the next-generation 5G network.
Quebecor CEO Pierre-Karl Peladeau has made multiple public overtures about his company’s interest in acquiring Freedom Mobile (Shaw also has a more exclusive wireless brand under its name) if that is a regulatory requirement to approve the deal.
The bureau also points to reports sent to the CRTC by Rogers and Shaw, with Rogers crediting Shaw with introducing mobile wireless deals in 2017 after it introduced the iPhone in its roster of phones and increased its network investments, growing its market share. The next year, Shaw introduced a 100 GB top-up for certain plans, called “Big Binge,” during the 2018 holiday season.
During the 2017 holiday season, Shaw’s mobile brand Freedom unveiled the Big Gig plan, which offered a base plan of 10 GB of monthly mobile data for $50. It was an anomaly that forced the big three to respond with similar deals.
“As a direct competitor to both Shaw and Rogers in all three provinces where Shaw operates, the Respondent’s competitive responses to Shaw’s subscriber growth and new plan offerings like “Big Gig” is relevant to both the Bureau’s assessment of effective remaining competition and the impact of Shaw’s removal as a competitor,” the bureau said in the court documents.
The bureau said the significance of the impact of the subsequent flood of “unlimited” wireless data plans in the summer of 2019 will also be examined.
The bureau, which had already communicated about records with the respondents before filing the court request, wants the information disclosed to it within a maximum of 60 days from a court order.
It added that it may broaden its investigation to “seek additional orders relating to other business areas at a later date.”
