Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa Faculty of Law.
If the first step toward solving an issue comes from admitting there is a problem, Canada took a big leap forward last week in addressing the weak competitive landscape of wireless services that form the backbone of modern communications and commerce. Navdeep Bains, the Minister of Innovation, Science, and Economic Development, used a keynote speech to the telecom industry to kick-start government action and remove any doubt about its frustration with the competitive state of the sector.
Much like the Conservatives before it, the Liberal government has concluded that the Canadian wireless market suffers from insufficient competition, which leads to high prices, low adoption rates relative to other developed countries and affordability concerns for consumers with low household income.
The government position was clearly articulated in an order-in-council requiring the Canadian Radio-television and Telecommunications Commission to review a recent ruling involving how regional and smaller wireless companies access wholesale roaming services from larger providers. The CRTC is independent, but the government's hope is the review will open the door to new competitors such as WiFi-based providers and mobile virtual network operators.
MVNOs typically do not own spectrum or network infrastructure. Rather, they purchase network access from existing providers at wholesale rates and offer it to consumers with their own retail pricing. Last year, the CRTC decided against mandating MVNO access, arguing that might "discourage continued investment by wireless carriers, because they could rely on this access rather than investing in their own mobile wireless network infrastructure." The government seemingly disagrees, hinting in the order-in-council that investment concerns can be managed with appropriate regulatory conditions. With this move, Ottawa is betting that innovative new services will help foster a more competitive market.
Re-examining the CRTC decision is a good first step, but more is needed. Mr. Bains signalled the government's hope that the commission will block excessive consumer fees that can be a by-product of an uncompetitive marketplace. The first major change could come Thursday, when the CRTC unveils its updated wireless code of conduct, which may include a ban on fees for unlocking consumer smartphones. Unlock fees have been a continuing source of consumer frustration, since they cost little to implement and represent a significant barrier for consumers seeking to reduce roaming costs when they travel outside Canada.
Looking ahead, there are several additional tools remaining in the telecom policy toolkit. First, the term of CRTC chair Jean-Pierre Blais is set to end this week. Mr. Blais has been a divisive figure, but he prioritized Internet services throughout his term, setting ambitious connectivity targets and demonstrating a willingness to challenge the claims of incumbent providers.
While there is pressure from the cultural community for the next CRTC chair to come from a broadcast or cultural industries background, Mr. Blais's comfort with telecom, broadcast and the Internet provides the right model for the future leader of the commission. If the government is serious about addressing the foundational challenges of Canadian communications, the next head of the CRTC must be familiar with the telecom marketplace and ready to tackle digital policy challenges head on.
The government should also revisit some of its cornerstone wireless policies, including spectrum allocation and foreign-investment restrictions. Encouraging a further opening of the telecom and broadcast market to foreign providers offers the possibility of new capital investments and competitive innovation. With the renegotiation of NAFTA scheduled for later this year, granting further access to the communications market would benefit all parties.
As the Conservative government learned, there are no quick fixes for the Canadian wireless market. Until last week, Mr. Bains had been relatively quiet on telecom and digital policy. His speech, and the accompanying order-in-council, send a long-overdue message that the government is paying attention to the wireless market and sees what is obvious to millions of Canadian consumers – namely that prices remain high, a function of a marketplace that has long suffered from inadequate competition and innovation.