NERA Economist Testifies before the CRTC Arguing against Mandated MVNO Access

The Situation

The Canadian Radio-television and Telecommunications Commission (CRTC) held public hearing from 20 to 28 February 2020 in Gatineau, Quebec, as part of its review of the state of the mobile wireless market and whether further action is needed to improve choice and affordability for Canadians. TELUS Communications, Inc., presented submissions to the commission that the wireless industry in Canada is robustly competitive and effective in meeting quality and affordability goals.

NERA's Role

NERA Managing Director Dr. Christian Dippon joined the team from TELUS to present testimony to the CRTC and offer reasons the mobile virtual network operator (MVNO) access should not be mandated. Dr. Dippon was retained by TELUS to examine whether there are economic reasons to regulate wholesale access to the nationwide mobile wireless provider networks. 

The Result

Dr. Dippon presented three reasons the CRTC should not mandate MVNO access.

First, it is unnecessary. Independent assessments show that market forces are working properly. Dr. Dippon carefully reviewed the evidence put forth by the Competition Bureau that alleges an uncompetitive marketplace. Unfortunately, the bureau’s study is wrong.

Second, a mandate for MVNO access in Canada will not be effective. The impact of MVNOs has been studied several times. Each time, researchers conclude that MVNOs are niche players that do not want to compete with the incumbents. There is no disagreement on this.

Finally, mandated MVNO access will ultimately harm Canadians. An MVNO policy will create a negative investment incentive for all facilities-based providers in Canada. With no material consumer benefits but clear negative repercussions, an MVNO mandate is net negative for Canadians.

Dr. Dippon concluded by stating that for these reasons, 33 of the 36 OECD regulators have chosen to refrain from intervening in the MNO–MVNO relationship.

Access to the recorded hearings is available here