Telecom Policy Should Focus on Innovation, not Competition (The Wire Report)
Posted by The Wire Report in Ottawa on Mar 03, 2016

Shaw Communications Inc.'s acquisition of Wind Mobile has fulfilled the previous federal government's push for four national carriers, which means the new government has the chance to hit the reset button on telecommunications policy, according to a new report by the Macdonald-Laurier Institute.

"Federal telecommunications policy has treated the industry like a public utility for more than 100 years," said the analysis, authored by Paul Beaudry and Sean Speer.

In the report released Thursday, Beaudry and Speer argue that, instead, the country needs a "smart, new telecommunications policy that views the industry as a dynamic enabler."

The mandate letter from Prime Minister Justin Trudeau to Innovation, Science and Economic Development Minister Navdeep Bains calls for his department to increase "high-speed broadband coverage and to work to support competition, choice and availability of services" as well as to "foster a strong investment environment for telecommunications services."

That environment is one that should include necessary incentives for investment, Beaudry said in a phone interview, adding that telecommunications policy and economic development are inextricably linked.

"Considering that broadband nowadays is the motor of many businesses, and will be for many more businesses in the future, we want to make sure that the policies are there to encourage the players in the telecom sector to invest all they can to generate these networks," he said.

Among the recommendations in their report, Beaudry and Speer suggest that the new government look at policies that "promote innovation rather than focusing on static objectives such as increasing the number of competitors."

"Interventionist policies aimed at helping smaller players gain market share can have harmful effects on competition," the report said. Beaudry confirmed his belief that that the federal cabinet should take the opportunity to support the BCE Inc. appeal of a CRTC ruling mandating wholesale access to fibre-to-the-home (FTTH) networks.

"At a certain level, there is an impact on incentives to invest. You don't want to overdramatize it - it doesn't mean the incumbents are going to stop investing altogether," Beaudry said. "I think there are some incentives to invest in big cities and urban areas and there will always be incentives to invest in these areas, but I think at the margin, you do have a negative impact that these policies bring about."

But there has to be a balance when working within a regulatory framework, Stuart Jack, a partner at Nordicity, said.

"I think it points out the need for a regulator that is proactive but also sensitive that there is no one absolute winning argument," Jack said in a phone interview.

Jack disagreed that the new government's focus should be on deregulation, but said instead it should be turning towards modernizing the legislation governing the various industries.

"There's no real distinction now between wireless and wireline and we do have two regulator structures for those," Jack said, adding that there is a "crying need" to dust off the work of the Telecom Policy Review Panel, which issued a report in 2006.

"We, as one of the few OECD countries, don't have an integrated communications act and I think that is a big issue in terms of equity, transparency," Jack said. "How do you treat companies that do want to in invest? Do you treat cablecos differently from telcos? Their network architecture is becoming virtually identical."

Jack and Nordicity economist Tanveer Ahmed also disputed Beaudry and Speer's recommendation that the government relax foreign ownership rules.

"The foreign investment, it could have positive effects or it could have negative effects," Ahmed said, and that varies from country to country. He said if a foreign player such as Verizon Communications Inc. were to cross the border and buy an existing company, then that would leave competition worse off than if it came in and started a new service.

- With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca