The CRTC needs to get out of the way — its attacks risk gutting our world-class telecom system

Financial Post
Phone Financial Post | James Alexander Michie

A man uses his cell phone in Toronto.Peter J. Thompson/National Post files

Opinion: With 5G on the horizon, this is hardly the time to gut incentives for new infrastructure that can actually bring competition to the industry

A recent CRTC decision would force companies that build telecom infrastructure to rent it out to rivals below cost. No surprise, then, that this decision is getting some pushback, with companies obtaining an order from the Federal Court of Appeal to suspend it while the case is before the court.

As the main issue is affordability it is worth remembering that prices here are relatively high because Canada has a spread-out user base, in part because of official encouragement to extend services to the remote North. Meanwhile, Canadians enjoy and expect world-class performance — Canada ranks sixth in the world according to Ookla in terms of mobile download speeds — that requires billions of dollars in new investment every year. Between 2010 and 2016 Canadian companies invested on average $78 per connection, nearly double the average of $40 in Europe.

The CRTC’s misguided attacks risk gutting this world-class system. Why would companies spend billions of dollars every year building networks only to have to rent them at a loss? Without steady new investment, Canadians might quickly lose their world-class speeds and be stuck with an increasingly outdated network that would come to feel like an old 56k modem would today.

Unfortunately, such ill-advised mandates in telecommunications are nothing new. Over the past 20 years, regulators have restricted competition while failing to benefit Canadian consumers. It was cable providers that finally entered as competitors in telecom services, increasing customer choice — not because of the regulatory landscape but in spite of it. Now the CRTC is stepping in to limit potential competition by once again commandeering profits.

The common thread in our telecoms history is that short-sighted regulators fail to understand how dynamic industries can be when the competition is simply allowed to happen. Regulators tend to see industries as set in stone — which risks actually setting them in stone. Regulations that may have been intended to benefit consumers to become straitjackets to new entrepreneurs. Ironically, it is these potential challengers who hope to disrupt those industries precisely by benefiting consumers. Regulatory guidance thus becomes regulatory stasis.

The advent of mobile phones was itself delayed by decades because regulators wouldn’t approve bandwidth for such a “niche” product. Instead, those same regulators laid endless mandates on monopoly landlines. They bullied the supposed monopolist even while they banned his competition. Consumers suffered on both counts.

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Source: Gaël Campan | Financial Post

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