CHICAGO – Efforts to artificially bolster wireless competition in Canada – such as by creating four competitors in each market, are “outdated and likely ineffective” plus may actually harm competition rather than improve or increase it, says a new report from Navigant Economics sponsored by Telus.
The report, Mobile Wireless Market Performance In Canada: LESSONS FROM THE EU AND THE US compares the regulatory differences between the Canadian, U.S. and European wireless industries. It notes that Canada, like the U.S., has been “relatively successful” in promoting competition and encouraging investment, but cautions Canadian policymakers to “resist calls to import EU-style regulation into Canada”.
“…policymakers should recognize the need to promote dynamic competition, to remove barriers to the realization of economies of scale and scope, and to create incentives for innovation and market driven entry over the long run”, the report reads. “Adopting and adhering to such a framework is the best strategy for preserving and enhancing the tremendous benefits of mobile wireless communications for Canadian consumers.”
The report also offers the following policy recommendations for Canadian regulators:
• Given the overwhelming consensus that the explosive growth of mobile broadband services is increasing the demand for spectrum, Canadian regulators should act as rapidly as possible to make additional spectrum available, and avoid the type of serial, self-imposed delays that have characterized recent spectrum auction proceedings in Canada;
• Recognizing that lower concentration is not in and of itself a policy objective, Canadian regulators should design spectrum auctions to create a level playing field for all potential bidders;
• Canadian regulators should also facilitate efficient spectrum reallocation through secondary markets, and work to fulfill stated policy objectives of relying on market forces to the maximum extent possible. Specifically, criteria for evaluating spectrum transfers should be clear and transparent, and should not prevent efficient consolidation and the realization of economies of scale and scope;
• Canada should fully liberalise rules restricting foreign investment in mobile wireless carriers. Doing so would reduce a barrier to efficient entry while increasing the likelihood of capturing cross-border economies of scale and scope;
• Finally, Canada should consider institutional reform of wireless market oversight by transferring authority over areas such as spectrum licensing to an independent regulator in order to insulate important decisions from the appearance or reality of politicization.
Other findings from the report include:
– Canadian consumers use about twice as many voice minutes and twice as much data as those in the EU, resulting in lower unit prices than those paid by Europeans;
– Canadian wireless carriers invest 21% more per connection than carriers in the US, and more than 2.3 times as much as those in the EU;
– LTE uptake in Canada is more than eight times higher than in the EU, as of the third quarter of 2013, and the gap is projected to persist;
– North American mobile connection speeds are now 75% faster than the EU average, and the gap is expected to grow; and
– While North American and European consumers are equally likely to own smartphones, North American consumers are more likely to use their phones for web-related activities including mobile banking, watching video on their phones and browsing the web.
