OTTAWA – Canada should learn from Europe’s “mismanagement of broadband” and discontinue attempts to artificially create competition in the marketplace, says a new report from independent national public policy think tank Macdonald-Laurier Institute.
Winners and Losers in the Global Race for Ultra-Fast Broadband says that European governments’ “state-imposed mandates and top-down regulations have contributed to underinvestment and poor network quality”. It also criticizes recent Canadian federal telecommunications policies such as mandatory network sharing, the so-called “fourth player” policy, and the CRTC’s decision to impose the unbundling of fibre-to-the-premises (FTTP) as examples of “Canada taking a heavy-handed regulatory approach to network infrastructure.”
“From an external observer’s viewpoint the decision to impose access (price) regulation on FTTP seems to be hardly in line with the Canadian market conditions, where extensive facilities-based competition has secured over time sustained investment levels”, reads the report. “It seems to basically ignore that previous policy had created the conditions for massive private investment in Canada’s broadband network and that the lessons from elsewhere such as Europe show that these conditions can be eroded.”
The report maintains that Europe’s policy of mandatory network sharing has “discouraged investment in the continent’s networks and diminished the positive economic benefits that high-quality networks can enable”, noting that FTTP coverage in the U.S. is almost double that in Europe (23% versus 12%), and that overall next generation access coverage reaches 82% in the U.S. compared to just 54% in Europe. As a result, EU nations’ telecommunications revenues fall below the OECD average, behind Australia, U.S., Switzerland, Japan, Canada, Iceland, and Norway.
“Canada could learn from this experience as it currently benefits from a vibrant facilities-based competition despite recent missteps, and thus has no compelling reason to follow the EU approach”, the report continues. “Continuing to follow down the European path could lead to a substantial price to pay in terms of growth and jobs. Nobody washes a rental car and so, if the state is going to mandate network access, the incentives for companies to invest in their own networks or to upgrade networks are diminished. Incentives matter.”
It concludes by encouraging the current federal government to “chart a new path that encourages investment and creates the condition for world-leading digital infrastructure.”
