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Beefing up CRTC’s Wireless Code will accomplish little

Device fees and unlocking charges are only symptoms of the real competition problem.

bill, wireless bills, wireless code

CRTC’s Wireless Code:

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If telecom industry analysts are to be believed, Canada’s cellphone providers are supposedly facing a crackdown thanks to an imminent beefing up of the Wireless Code.

The Canadian Radio-television and Telecommunications Commission is looking at forcing carriers to separate monthly plan pricing from phone subsidies on customers bills, Desjardins analyst Maher Yaghi wrote in a note to clients. Yaghi also believes the regulator could ban phone unlocking fees.

On the surface of it, both moves – which would be additions to the CRTC’s four-year-old Wireless Code – would be bad for carriers and wins for consumers.

Splitting monthly plan fees from device subsidies could lead to lower charges and therefore less revenue once subscribers finish up their contracts. Banning unlocking fees would also mean customers would be free to switch carriers more easily and save on roaming by using local SIM cards in other countries.

Looking under the surface, it’s clear as mud that adding such clauses to the Wireless Code is likely to backfire on consumers in the form of higher overall prices.

It happened when the code first took effect in 2013. Carriers simply took the losses they suffered from the code’s de facto ban on three-year contracts and roaming fee caps and transformed them into big rate hikes. Since then, prices, bills, average revenue per user and profits have only gone up even further.

As a former U.S. president was fond of saying, read my lips: beefing up the Wireless Code now will only accomplish more of the same. Carriers will simply recoup any losses from bans on extraneous fees by raising overall prices again.

Don’t believe me? Then believe the markets. Shares of the Big Three – Bell, Rogers and Telus – are unchanged over the past week, despite the spectre of further regulation. Investors aren’t worried – and they shouldn’t be.

The CRTC can ban all manner of surcharges and extra fees, but absent a full-court press to address the real problem – lack of competition – skyrocketing wireless bills will continue.

The regulator and federal government have a few other levers they could pull to make a real difference, but neither has shown a willingness to do so.

They could impose a wholesale market on the Big Three with mobile virtual network operators, but the CRTC decided against doing so last year. It’s ironic, given that wholesale wired internet providers are actually in the process of lowering prices. Hmm, could there be a connection?

Policy makers could also look into the wide-scale vertical integration of Canada’s big telecommunications companies, particularly Bell and Rogers, and the potential harm it’s doing.

High prices, content hoarding and even media censorship are likely side effects of allowing a few companies to own multiple layers of their businesses. There’s no doubt such powerful conglomerates have made it difficult for single-service wireless providers to start up and survive, which is why Wind, Mobilicity and Public Mobile no longer exist.

It may be time to examine whether Canadians would be better off if such monoliths were banned and split up. But that would require considerably bigger cajones than it takes to add a few ultimately futile clauses to the Wireless Code.

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