May 15, 2014 — OTTAWA, ON — Competition Bureau
The Competition Bureau today provided a submission to the Canadian Radio-television and Telecommunications Commission (CRTC) in response to its consultation on the review of wholesale mobile wireless services. In order to provide service to their customers, mobile wireless companies, particularly new entrants, may need to enter into arrangements with their competitors to obtain certain wholesale mobile wireless services.
The Bureau has submitted to the CRTC that Canada’s largest wireless companies have retail market power, which provides them with the ability to profitably maintain prices above competitive levels for a significant period of time. These companies compete in both wholesale and retail markets for mobile wireless services; furthermore, they may benefit from charging high prices to rivals for the wholesale mobile services their rivals need to serve their customers. High wholesale costs may force rivals to increase their retail prices, resulting in some of their customers either leaving the market or switching to the large mobile wireless companies.
As a result, the higher rates charged by mobile wireless companies for wholesale mobile wireless services may hurt competition in retail markets. The Bureau estimates that increased retail competition from an additional nationwide mobile wireless carrier could result in gains of approximately $1 billion per year to the Canadian economy in the form of better product choices, price reductions and other benefits for consumers.
The Bureau is therefore recommending that the CRTC adopt measures to address the incentives Canada’s largest mobile wireless companies may have to raise their competitors’ wholesale prices as these increases may be passed on to consumers. The Bureau’s submission supports the establishment of regulatory measures if and where they are needed, to ensure that new entrants have access to the wholesale services they need to compete effectively in Canadian mobile wireless markets.
- As part of its mandate, the Bureau participates in a wide range of activities to promote and advocate the benefits of a competitive marketplace, both in Canada and abroad.
- Greater competition generally leads to lower prices for consumers, as well as more consumer choice, a wider range of service options and increased innovation.
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