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The panel has spoken

Telecom Policy Review members criticized Canada's wireless industry, but treaded carefully with recommendations on how to improve it.


May 1, 2006  


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As I mentioned in this column last summer, Canadian businesses were given a valuable opportunity to help shape the future direction of telecommunications, including wireless, when the Minister of Industry established the Telecommunications Policy Review Panel in April 2005.

On March 22 of this year, the panel’s three members — Gerri Sinclair, Hank Intven and Andr Tremblay — submitted their final report.

To produce it, they digested more than 200 written submissions from interested parties, hosted two public forums and solicited expert opinion from researchers, policy makers and regulators from approximately a dozen other countries.

The result? A 392-page report packed with 127 recommendations or how to make Canada’s telecommunications sector better.

The report addresses issues from creating a vibrant and competitive telecom sector, to regulating technology and using telecom policy to promote the social and economic welfare of Canadians.

Wireless matters

There is good news in this report for those who are big users of wireless. For starters, the panel notes that over the past two decades, wireless services have evolved from niche products with limited appeal to become mainstream communications tools.

In fact, in mid-2001 the world’s mobile wireless subscribers eclipsed those who connect via wireline, and the gap continues to grow.

(While they were published too late to be included in the panel’s report, figures released in April by Statistics Canada shed light on one reason for this. The federal number crunchers report that increasing numbers of Canadian households are using wireless as their only phone: 615,000 households, or 4.8% of the total, in December 2005, compared with just 1.9% in mid-2003.)

Unfortunately, the panel’s report does not include specific information on the increasing importance of wireless tools for businesses. Nonetheless, the minister will get the message: Wireless matters.

Are we in the game?

The panel has also done an excellent job of pointing out what’s wrong with the sector. It poses the question, “Wireless: Are we really in the game?” and many of its findings suggest that the answer is, “No.” Here are a few:

* In 2004, Canada’s wireless penetration rate of 47.2% was second last among 30 OECD countries. Only Mexico had a lower percentage of wireless subscribers.

* Comparing our growth of wireless with that of our most significant economic partner, there is “a persistent and growing gap between the rates” in Canada and the United States.

* Canada’s deployment of new mobile wireless services and features, most notably third-generation wireless data networks, is falling behind that of the U.S., Europe, South Korea and Japan.

It is scheduled to be introduced in 2007, but Canada is years behind other countries in enabling wireless number portability, which would remove a completely artificial barrier to market-based competition for wireless services;

Innovation lacking

Canadians pay significantly higher prices for wireless services than Americans or Europeans.

The panel’s verdict is clear and damning: “The smaller number of mobile providers in Canada — and the fact that all three national wireless service providers are also owned by large telecommunications service providers that also provide wireline services — may mean that there is less competition in the Canadian wireless market than in the U.S. market, which consequently has resulted in higher prices, less innovation, lower uptake and lower rates of usage.”

Tribunal makes sense

So what should we do? The first question the minister should have about wireless upon reading this report is, “What should we do to fix it?”

Here, many of the panel’s recommendations — mandated tower sharing, spectrum caps, increased reliance on market forces to direct telecom policy, and removing the foreign ownership limit — will do little to help new wireless carriers gain a toehold in the Canadian market.

But I do like the panel’s recommendation to create a Telecommunications Competition Tribunal, a joint CRTC-Competition Bureau decision-making mechanism that would remove any question of jurisdiction.

Such a tribunal may have done a better job of raising concerns about the impact that Telus’ acquisition of Clearnet and Rogers’ purchase of Andre Tremblay’s former company, Microcell, would have on competition in Canada.

The Telecommunication Policy Review Panel’s final report may be found online and can be downloaded at: www.telecomreview.ca.

Trevor Marshall is a Toronto-based reporter, writer and observer of the Canadian wireless industry. He can be reached (on his mobile) at 416-878-7730 or trevor@words-tm.com.