TORONTO—ISED Minister Navdeep Bains' clarion call Monday for the Canadian telecom industry to slash its wireless and broadband prices re-ignited a heated debate within the industry about the sector's direction.
That debate was on full display on the stage of the Canadian Telecom Summit here Tuesday evening. In a contentious 90-minute session moderated by Cartt.ca editor and publisher Greg O'Brien, senior officials from Bell Canada, Rogers Communications, Telus, TekSavvy Solutions and the Public Interest Advocacy Centre tangled over the industry's current pricing policies and the response needed to the Liberal Government's populist push for lower consumer charges.
As might be expected, executives from the three major network incumbents – Bell, Rogers and Telus – took sharp issue with Bains' contention that wireless prices are unreasonably high in Canada than in most other developed western nations. They questioned the Minister's basic premise and argued that at least some of their no-frills plans are comparable to those found in the U.S., Western Europe, Japan and elsewhere.
David Watt, SVP of regulatory for Rogers, said the 32-nation pricing studies by the Organization for Economic Co-operation and Development (OECD) that are frequently cited by Canadian telecom critics are misleading because they don't take into account all plans, especially the low-end ones. For instance, he noted, OECD doesn't take into account Rogers' low-end Chatr Wireless brand, which offers combined voice and data plans for as little as $40 a month.
"We tried to convince OECD to look at a wider range of plans in Canada," Watt said. "But we have been spectacularly unsuccessful."
Mirko Bibic, chief legal and regulatory officer and EVP of corporate development at Bell Canada, conceded that carriers in such European countries as the U.K., France and Germany offer plans with lower prices than in Canada. However, he stressed those providers don't meet the same broad network coverage, service quality, network speed and capital investment standards that Canadian carriers do.
"Their prices are low but they absolutely stink on the other measures.” – Mirko Bibic, Bell Canada
"Their prices are low but they absolutely stink on the other measures," Bibic said. He noted that only Japanese carriers score highly on all four major measures, as Canadian carriers do. "Nobody else in the world is hitting a grand slam on all four," he said.
Ted Woodhead, SVP of federal government and regulatory affairs at Telus, contended that international studies are faulty because they don't always compare actual pricing plans. Instead, he said, the studies may fabricate imaginary plans for comparison's sake that bear little relation to the real world.
"It's a feeling, not reality," Woodhead said, referring to the popular perception that Canadian wireless prices rank among the highest in the western world. "Politicians will react to that but it's not right."
The other two panelists on stage took issue with the arguments by the Big 3 execs. Instead, they staunchly agreed with Minister Bains that wireless prices are still far too high in Canada and argued that the major carriers should adjust accordingly. John Lawford, executive director and general counsel at PIAC , noted that millions of Canadian consumers complain regularly that they're paying too much for wireless service. He urged the government to fix the problem by clearing the way again for a fourth nationwide wireless provider through spectrum set-asides and other regulatory maneuvers, despite Ottawa's unsuccessful attempts to do so in the past.
"This is the price we pay for not getting a proper fourth player" in the market, Lawford said. "Three big players will guarantee high prices…We need a national fourth player," like Sprint in the U.S.
Bram Abramson, chief legal and regulatory officer for TekSavvy Solutions, joined Lawford in defending the sentiments of Canadians who believe they're overcharged. He asserted that the Big 3 should spend more time giving consumers the price plans they want and less time trying to convince them that their complaints about being gouged are unfounded.
"Consumers aren't stupid. We can tell them they're wrong. But people come back from Europe and say it's better over there." – Bram Abramson, Teksavvy
"Consumers aren't stupid," Abramson said. "We can tell them they're wrong. But people come back from Europe and say it's better over there."
He noted brash upstarts like Republic Wireless and Google Fi in the States have made a big splash by offering plans with rates as low as US$15 a month for unlimited talk, text and Wi-Fi data. In his keynote remarks at the Summit on Monday, Bains cited Republic Wireless as one prime example of what could be done here as well.
"Has it killed the U.S. market? No," Abramson said. "Consumers like having more choice,” even if network quality might be lower.
Woodhead and Bibic both countered this argument, contending that it's not fair to compare Republic Wireless with a Canadian carrier because Republic is merely an MVNO provider that rides over another carrier and only offers Wi-Fi carriage to its subscribers, not full wireless service, as Verizon or AT&T. Plus, they noted, Republic doesn't include handsets into its various pricing packages, making it easier for it to keep its monthly rate plans down. "It'd be nice to have a fact-based debate," Bibic scoffed.
Abramson retorted that there's no reason why MVNOs couldn't work just as well in Canada as they have south of the border and elsewhere around the world. Rather than fight this concept, he urged the large carriers to swing the carriage deals necessary to enable the advent of MVNOs without the need for federal regulatory intervention.
"Let's get MVNOs happening in Canada," he said. "This is not some maverick kill-the-industry model. It can work here. It works in other countries."
Countering the claims of industry critics once again, Bibic and Woodhead questioned whether a fourth national wireless player would really make a big difference in Canada, noting that such prior new market entrants as Public Mobile and Wind Mobile couldn't make a go of it on their own (Telus purchased Public and Wind is now Shaw-owned Freedom Mobile). They noted that Sprint, the number four national wireless player in the States, has not emerged as a strong competitive rival to the three market leaders — AT&T, Verizon and T-Mobile, and questioned whether the emergence of MVNOs would make much of a difference in the Canadian market.
“"We need to do a better job of explaining the investments we already make.” – David Watt, Rogers Communications
"Republic Wireless (which rides over Sprint's network as an MNVO) didn't make Sprint any stronger," Woodhead said. "It still has the weakest network and is the weakest player in the U.S."
Finally, Watt, Bibic and Woodhead all observed that, unlike some of their counterparts in the States and Europe, the three big Canadian carriers meet some of the highest network quality and coverage standards in the western world, as well as offer some of the highest broadband speeds available. While lower prices might be nice, they argued, these other things count, or at least should count, for much more with customers.
"I don't think most Canadians recognize the quality of their networks," said Watt. He noted that while Rogers alone has poured $1 billion a year into its wireless network over the past five years, a survey it undertook show that more than one-third of Canadians believes that the federal government, not the telecom industry, makes the lion's share of investments in the nation's vast mobile infrastructure. "We need to do a better job of explaining the investments we already make," he declared.
Photo by Duarte Antunes. From left are Greg O'Brien, John Lawford, Ted Woodhead, David Watt, Mirko Bibic and Bram Abramson.
