Vidéotron argues mandating MVNO access would be ‘a historic mistake’

Québecor’s Vidéotron argues that mandating wholesale MVNO access would not only be a change in direction but a “regulatory U-turn.”

“Mandating wholesale MVNO access would mean promoting resale-based competition instead of facilities-based competition,” the carrier said during the CRTC’s public hearing.

The Montreal-based carrier says that the CRTC would be making a “historic mistake” with dire consequences. It also argues that the mobile wireless network is already competitive and that facilities-based competition is working due to itself, Freedom, Eastlink and Xplornet.

“The level of competition in wireless services in Canada has improved and continues to improve at a quickening pace,” the carrier said.

Further, the carrier states that pro-MVNO regulation would jeopardize regional carriers because regulation favouring resale-based competition will allow MVNOs to capture a substantial portion of the regional carriers’ market share.

“Secondly, the regional carriers’ loss of market share will lead to a decrease in their revenues, resulting in less investment in network modernization, innovation and service improvements.”

Further, Vidéotron says that the effect of pro-MVNO regulation would be the exact opposite of what it’s allegedly supposed to do. The carrier says that it would not weaken the Big Three’s hold on the Canadian market, and would instead strengthen their dominant position by eliminating the only players that are capable of competing with them.

The carrier says that MVNOs would limit their investments to the bare minimum and be settled into a business plan that is risk-free because it would be protected by the CRTC.

It argued that such a model would not create lasting benefits for consumers in terms of service quality and truly competitive pricing or innovative services.

The carrier says that since 2008, Vidéotron has spent more than $2.5 billion on mobile spectrum and network buildout. Vidéotron says this investment proves that the carrier is committed to facilities-based competition.

Vidéotron challenged the CRTC and questioned whether it, as a regulator, even has the means to implement such regulation. The carrier argued that to implement a regulatory policy based on mandated resale, there must be a delicate balance.

It noted that the rates that the CRTC would set would have to be just high enough to encourage continued investment by network builders and just low enough to create a space in the market for resellers. Vidéotron said that this would have to be pulled off in a fast-moving environment.

“Nowhere in the world has a regulator achieved this feat. And with all due respect, I don’t think you will be the first,” said Pierre Karl Peladeau, the president and CEO of Québecor, to the commission during the hearing.

Interestingly, the carrier rejected the Competition Bureau’s proposal, which the bureau said would benefit companies like Vidéotron. The bureau argued for a facilities-based MVNO model that would benefit carriers with limited networks, but Vidéotron says it’s not interested.

When asked whether the carrier would be interested in expanding its market to other areas, it said that right now its focus is on 5G deployment.