By Ahmad Hathout
OTTAWA – A lawyer for Shaw Communications argued before the Competition Tribunal today that the competition commissioner “exaggerated” Freedom’s success during testimony, saying Shaw’s wireless subsidiary was over the last five years hobbled by market competition and federal government pricing promises.
The thesis of Kent Thomson’s argument today was that Shaw could not and cannot compete in today’s market, hence why it must combine with Rogers. Thomson noted that Telus, Shaw’s west coast rival, has greatly outspent the Calgary-based company by $7 billion over the last handful of years.
In pushing against suggestions that Shaw and Freedom have successfully competed in the market leading up to the proposed March 2021 merger between Rogers and Shaw, Thomson argued that those successes were limited to a narrow period years ago.
Specifically, Freedom’s introduction of its “Big Gig” 10 Gb of data per month for $50 in the fall of 2017 and its introduction of Apple iPhones were the “high-water mark” of Freedom’s success, Thomson said, adding it has been downhill from there.
Thomson, who was drawing on the testimony of Shaw president Paul McAleese, pointed to the large providers introducing unlimited wireless data plans in the summer of 2019 as squeezing its lower cost strategy and pricing it out of market share. An additional problem emerged when the federal government signaled to the large carriers that it expects certain wireless plan prices to fall by 25%.
Thomson, citing McAleese, said the government’s initiative was a “traumatic moment” for Freedom’s pricing strategy.
Moreover, because the announcement of the proposed merger came before the 3.5 GHz spectrum auction, Shaw became ineligible for the important resource integral to 5G wireless services. That absence effectively nuked Freedom’s and Shaw’s future in the wireless space, as the large national carriers have been aggressively building out the future wireless infrastructure, Thomson said.
Thomson also countered assertions that Shaw – since it only acquired what’s now called Freedom in 2016 – needs more time for its investments to bear fruit. Those assertions include comparisons to Rogers’s own struggles when it was a fledgling provider.
Thomson said Rogers was coming up during a time when networks didn’t cover as much land as it does now, suggesting that Rogers had much more room to grow its market share. With wireless and wireline penetration now covering the vast majority of the country, Thomson said there’s “no untilled ground to exploit…no runway ahead of Freedom or Shaw.”
Thomson urged the tribunal to think about a future with Freedom still under Shaw ownership, without critical 5G spectrum, and with a richer and aggressively-spending neighbor in telco Telus.
The Competition Bureau, whose lawyers appeared on the first day of closing arguments yesterday, has been arguing that the tribunal should block Rogers’s attempt to purchase Shaw for competitive reasons. The competition commissioner has said that the sale of Freedom to Quebecor’s Videotron – with an agreed price of nearly $3 billion – is not enough to allay competition concerns.
But Videotron lawyer John Rook said today that the Montreal-based company is eager to provide competitive services in western Canada and said the company will not be “pushed around” by its larger competitors. The pitch for Videotron’s competitiveness is that it has the pedigree, the finances and the service-bundling ability to compete.
Thomson said it is expected that Videotron will be competitive by bundling its new Freedom mobile wireless services with wireline internet service, which will come from a wholesale access agreement from the other large telecoms with infrastructure in the region.
Today’s hearing concluded over a month worth of testimony that began with evidentiary hearings with company executives and ended with closing arguments from the companies’ counsel.
