Has the Trudeau government finally understood that the oligopoly of the big telecom companies has to be shaken up a bit if we want to reduce prices for consumers?
A month ago, the federal government gave directives to the Canadian Radio-television and Telecommunications Commission (CRTC) to make telecom services more affordable and to have more competition in this sector.
And last week, the CRTC gave its first hint that it will try to stimulate competition in internet access. The regulator wants to change access rules and lower wholesale prices to favor small independent suppliers.
Ottawa has just woken up. Better late than never.
It is indeed late. Very late.
Because in 2021, Ottawa made a catastrophic decision for competition in telecoms.
In 2019, in the hope of promoting competition, the CRTC significantly reduced (up to 90%) the rates that large providers charge small independent providers (e.g.: TekSavvy, Bravo Telecom, Transat Telecom) to use their networks. Independent suppliers, who held 10% of the market, often offer cheaper prices to consumers.
The telecom giants protested to the Trudeau government, and it gave in. He asked the CRTC to redo its calculations. Translation: keep the telecom giants (eg Bell, Telus, Rogers, Videotron) happy. In 2021, the CRTC complied and canceled the price reductions it wanted to grant.
This volte-face has sounded the death warrant for several independent suppliers, or else their takeover by the major telecom companies. Across the country, the number of true independent providers has fallen from 32 to 16 in three years.
In Quebec, almost all of the most threatening independent suppliers have been taken over by large companies. In Quebec, Bell bought Ebox (90,000 customers) and Distributel (200,000 customers), Telus bought Altima (60,000 customers), Cogeco bought oxio. Ebox, Distributel, Altima and oxio will remain separate low-cost brands (fightning brands or flacker brands). For consumers, it’s better than nothing, but it’s not ideal. “The independent third party will be more aggressive [qu’un fighting brand]because it does not need to protect its own main brand,” says Pierre Larouche, professor of competition law at the University of Montreal.
In 2019, independent providers accounted for around 10% of the internet access market. Currently, true self-employed represent only between 4% and 6% of the market, according to estimates. Except perhaps TekSavvy (300,000 customer services in Canada), no independent supplier has more than 30,000 customers in Quebec.
In short, we lost a lot of competition. And less competition equals less price pressure.
Meanwhile, Canadians are still paying dearly for their internet access: for an average speed plan, Canada comes in at 3e or at 1is ranking of the most expensive countries out of eight comparable countries (G7 + Australia)1. We are entitled to excellent quality telecom networks, but we pay dearly for them.
Now that the small suppliers all have one or two knees on the ground, the federal government wants to reverse the trend.
The new chair of the CRTC, Vicky Eatrides, is a lawyer specializing in competition law. We are encouraged that his first decision, rendered last week, goes in the direction of greater competition. However, we will wait before applauding. Consultations will take place over the next few months. The CRTC will then render its final decision. To make a real difference, the regulator must lower wholesale prices significantly, particularly for fiber optic access in homes.
We don’t have a time machine to undo the 2021 decision. Hopefully it’s not too late to increase competition. And that Ottawa does not yield once more in front of the telecom giants.
