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Montreal Economic Institute State of wireless competition doesn't justify more intervention measures

October 2, 2014   (0 Comments)
Posted by: Alison Hermansen
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As a new round of CRTC hearings begins to determine whether a price ceiling must be imposed on wholesale roaming fees, the MEI is publishing a Viewpoint entitled "Three Myths about Competition in the Canadian Wireless Sector" that calls into question the idea that new interventionist measures must be adopted to encourage competition in this sector.

Although many Canadians have the impression that they are among those who pay the most for their telecommunications services, in fact, prices in Canada are lower than in the United States, Japan, and Australia. Moreover, by comparing different mobile wireless service bundles in 34 countries, the OECD concludes that Canada is about average.

In addition to competitive pricing, the Canadian wireless sector offers better than average service quality when compared to that of other large industrialized countries. Canada is ranked 8th and 9th out of 25 in terms of download and upload speeds.

"The negative perception of the industry that justifies interventionist measures is simply mistaken. Canadian consumers enjoy one of the most advanced telecommunications networks in the world, are among the biggest users, and pay prices that are generally close to the average of what is found in other industrialized countries," explains Martin Masse, co-author of the study.

With three national wireless service providers and several regional competitors, Canada is furthermore far from being a special case among industrialized countries. In spite of this, the federal government has intervened in various ways since 2008 to favour the emergence of a fourth wireless service provider. The CRTC hearings that start today could bring about the adoption of additional interventionist measures.

"Instead of trying to micromanage competition in the telecommunications industry, the government should concentrate on eliminating the obstacles that prevent true, dynamic competition," concludes Paul Beaudry, co-author of the study.

The Viewpoint entitled "Three Myths about Competition in the Canadian Wireless Sector" was prepared by Martin Masse and Paul Beaudry, respectively Senior Writer and Editor and Associate Researcher at the Montreal Economic Institute. This publication is available on our website.