Canada’s telecom market: Bell’s way or the highway

Yikes! Bell is looking to take over Manitoba Telecom Services, bringing Manitobans higher prices and less choice. And nobody wants that.

Yesterday, Canada’s largest telecom company, Bell, announced its plan to take over Manitoba’s largest phone, Internet and cell phone company, Manitoba Telecom Services Inc. (MTS).

Bell is looking to acquire MTS in a $3.9 billion deal – a deal which we know which is likely to hurt subscribers in Manitoba, where the telecom provider helped to serve consumers some of the most affordable wireless plans in the country.   

To make matters worse, Bell is hatching a plan with Telus, Canada’s second-largest telecom company, to split the existing MTS customers between the two.

If there’s one thing we know here in Canada, it’s that we already pay way too much for Internet and wireless services. We also know that less choice in the market isn’t going to make this problem better, and will almost certainly make it worse.

And we’re not the only ones raising concerns, telecom expert Michael Geist points out just how damaging this acquisition that eliminates the fourth carrier in Manitoba may actually be for subscribers. Looking at the prices offered by Bell in other provinces where a fourth carrier isn’t available to cell phone and Internet users, the picture becomes crystal clear:

Compare Bell’s wireless pricing for consumers in Manitoba and Ontario. The cost of an unlimited nationwide calling share plan in Manitoba is $50. The same plan in Ontario is $65. The difference in data costs are even larger: Bell offers 6 GB for $20 in Manitoba. The same $20 will get you just 500 MB in Ontario.

The reason why is obvious: more choice lowers prices, as companies must compete with each other for customers. In fact, prices for wireless plans are 30 to 40 per cent lower in Manitoba compared to provinces that only have three major wireless providers.

And the Big Three gobbling up the competition isn’t the only thing that presents a huge hurdle to introducing more choice in the market. Just today the CBC reported on a tragic story about a successful Canadian Mobile Virtual Network Operator (MVNO), TextNow, that hasn’t been able to start operations in Canada despite success in the U.S. market because none of the Big Three will share networks with them.

This comes at a time when the Competition Bureau has found that the Big Three wireless providers (Bell, Telus, Rogers) have undue market power in “the ability of a firm or firms to profitably maintain prices above competitive levels (or similarly restrict non-price dimensions of competition) for a significant period of time.”

The announcement of this proposed takeover comes only days after the CRTC completed a basic services hearing about broadband Internet in Canada, for which OpenMedia prepared a brief and spoke before the Commission (starting at 01:53:36), arguing that broadband Internet should be considered an essential service, affordable for 100 per cent of Canadians.

Bell’s acquisition of MTS still needs to be approved by Competition Bureau, the Canadian Radio-Television and Telecommunications Commission (CRTC) and the ministry of Innovation, Science and Economic Development Canada. We’re hoping that given the mandate the CRTC has to ensure Canadians have affordable access to the services they need, and the government’s desire for more choice offered to Canadians, this deal won’t pass the smell test.