There is uncertainty in the Canadian telecommunications sector, and if there’s one thing stock markets and shareholders detest above all else, it’s uncertainty.

This time the uncertainty is driven by political considerations, as a major battle is taking shape between government and powerful telecom CEOs. 

Sometimes uncertainty can be good for consumers, particularly if it is a result of competition driving down prices. However, the big telecoms, which here in the West basically means Telus, Bell, and Rogers, along with upstart Freedom Mobile (née Wind Mobile), are none too keen on seeing a mandated decrease in prices for their mobility services. 

Those three big players account for most of Canada’s mobile market, roughly nine million subscribers each. Freedom, a division of Shaw Communications, has around one million customers, but has shown rapid growth over the past year or so.

Mobility and Internet services have proven to be a gravy train for the majors. And across Canada, most of them are also in control of television distribution services, and not being keen on seeing TV revenues dry up as cord-cutting takes hold, these majors have been raising their Internet delivery fees.

During last year’s federal election campaign, the Liberal Party promised to lower Canadian cell phone bills by 25 per cent. There was no explanation as to how that would be done or what the 25 per cent would apply to.

Canada’s telecommunications regulator, the Canadian Radio-television and Telecommunications Commission, also ordered the majors to cut their wholesale rates for Internet services, but the industry balked and won a temporary stay in the Federal Court of Appeal late last year. 

Smaller providers, such as Teksavvy, have been outspoken about the efforts to which the majors have gone to limit access to their networks. Recently Teksavvy filed a complaint with the CRTC alleging that Bell and Rogers in particular are targeting Teksavvy customers with rates below what they claim their own wholesale rates should be.

Independent providers such as Teksavvy represent a relatively small portion of the overall telecom market, but they are seen as important from a competition perspective. The order to cut wholesale rates was made at the federal cabinet level, and the government is likely none too happy about the stay that was issued by the court. 

On Feb. 20 the CRTC began hearings with the majors over the matter of mobile virtual network operators (MVNOs), essentially smaller telcos that operate networks that piggyback on the networks operated by Telus, Bell, and the other majors.

According to Michael-Lee Murphy of The Wire Report, who was present at the opening day of CRTC hearings into telecom costs, Telus CEO Darren Entwistle told CRTC chairman Ian Scott that politicians exaggerating the problem with wireless affordability have created a mental health problem for telecommunications employees at Telus and elsewhere.

This is certainly an interesting angle – and a bit rich, if you ask me – considering the temerity of hearing this from a company that at its mall kiosks completely denies the existence of the CRTC-mandated basic TV at $25/month plan, and that had a multi-week email service outage last year. By the way, CEO Entwistle was not to be seen during that email outage, one that affected Telus users in B.C. and Alberta.

Entwistle, and presumably his fellow CEOs at the majors, seemed livid that his company should be forced to provide access to its networks to smaller players, particularly at prices set by the regulator.

Essentially Entwistle et al are threatening to withhold further expansion of their networks, even to the point of invoking the “layoff” card, implying that a political decision to lower communications costs will result in employee terminations. Of course what Entwistle is really spooked by is lower profits in a very profitable industry. And perhaps a looming showdown over the Telus-Huawei deployment of a 5G network.

Mostly under Entwistle, Telus has seen its share price climb from around $5 to almost $60. However, in recent weeks the price has pulled back, reflecting uncertainty over how the political moves by the federal government, and the regulatory moves by the CRTC, will play out.

Teksavvy, in a statement released as the CRTC hearings began, noted that “the anti-competitive activities (of the majors) are the reason why Canadians pay among the very highest prices for Internet and Mobile services in the world.”

Furthermore, Teksavvy said that “Cabinet should not only reject the Petitions (to the federal government) immediately but do everything in its power to see its policy goals met: Deliver lower Internet and cell phone bills and protect consumer interests.”

Expect more uncertainty in Canada’s telecom sector for the next while.

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