Regulators prevent wireless company from overcharging smaller competitors in the future, but say nothing to address the damage it has done to the market over the past five years.
Last year, Apple was found guilty by a U.S. court of colluding with publishers to raise e-book prices. The company found itself facing up to $840 million in claims with the various state and class-action lawsuits that followed, which is why it opted to settle for just over half of that – $450 million. The settlement amount was approved last week.
Coincidentally, Rogers was found guilty last week by the Canadian Radio-television and Telecommunications Commission of ripping off smaller wireless companies on the roaming rates it charged them, which ultimately led to higher prices for those firms’ customers as well as untold damages in terms of their ability to attract more subscribers.
The difference in outcomes is amazing. While Apple is having to cough up half a billion dollars for causing the price of e-books to go up by a few dollars, Rogers is so far getting away scot-free despite causing significant damage to Canada’s wireless market.
As per the CRTC’s decision, released Thursday:
“There were clear instances of unjust discrimination and undue preference by Rogers Communications Partnership with respect to (i) the imposition of exclusivity clauses in its wholesale mobile wireless roaming agreements with certain new entrants, and (ii) the wholesale mobile wireless roaming rates it charged certain new entrants.”
Smaller wireless carriers such as Wind and Mobilicity ended up overpaying for the right to connect to Rogers’ wireless network as a result, with those higher costs ultimately being passed on to their customers over the past five years.
A Wind customer who roams from the company’s network and onto Rogers, for example, today pays a whopping $1 per megabyte of data used (Warning: loading this website will likely cost you a few dollars). Meanwhile, a Bell or Telus customer who does the same pays nothing.
It’s impossible to measure how much of an impact this had on smaller wireless companies, but the effect is likely serious. Many Big Three subscribers have at some point considered switching to Wind or Mobilicity, but the extraneous roaming fees ended up being the deal breaker.
Many did switch, but then fled back to the Big Three after experiencing the effects of those high wholesale rates first-hand in the form of inflated bills.
How many more customers would these companies have attracted and kept if they had access to reasonable roaming rates from the outset? Would it have been enough to prevent Mobilicity from seeking creditor protection? Would it have allowed either carrier to participate in the key 700 Megahertz spectrum auction earlier this year?
With more customers, these companies would have exerted more influence on the market and the Big Three would have had less comfort to jack up their rates.
With one simple maneuvering, Rogers managed to crippled competition in the so-called “new entrant” era of Canadian wireless. It’s no wonder Canadians still pay the highest bills in the world.
What about restitution? If juking e-book prices is worth half a billion dollars, isn’t the manipulation of a country’s communications backbone worth a few bucks?
The CRTC is banning exclusive wholesale roaming agreements going forward, but that’s about it. “There was no ‘penalty’ per se,” a spokesperson says. “However, exclusivity clauses in Rogers’ current wholesale roaming agreements are rendered inapplicable and the rates they charge for roaming must adhere to [the Telecommunications Act].”
Without the ability to impose big monetary penalties, the CRTC is limited to preventing recurrences. It’s much like the joke about the unarmed British police officer, who is forced to yell, “Stop! Or I’ll yell stop again!”
Industry Canada also declined to comment, as have Wind and Mobilicity, although both companies could conceivably sue. But if they can’t even afford to buy spectrum necessary to do business, do they really have the means with which to fight expensive and protracted lawsuits?
This sounds like a job for the Competition Bureau, but like the CRTC, Canada’s best answer to an antitrust watchdog looks like it’s going to settle for limiting future abuses. A spokesperson said she could not speculate on what actions the organization may take and instead pointed to the Bureau’s suggested action in its earlier submission to the CRTC:
“An effective remedy is one that would allow entrant service providers to obtain roaming access on terms that do not reflect the strategic interaction present in the current situation, such that any discrimination or preference can no longer be considered unfair or undue.”
The differences in the U.S. and Canadian approaches toward anti-trust are notable. In the U.S., an anti-competitive action gets cracked down on hard and heavy, no matter how minor. Here in Canada, violators simply get told not to do it again.
How does this discourage the likes of Rogers from exploiting other loopholes and mechanisms to kill competition in the future? It doesn’t. Again – no wonder those wireless bills are so high.