Mandated MVNO access could carry risks to the Canadian telecommunications industry, according to a new analysis report from PwC.
The report states that although wireless prices would come down for some Canadians, it would possibly be at the expense of critical wireless and wireline network infrastructure, high-value jobs, retail locations, employee benefits and charitable donations.
This analysis from PwC comes as the Canadian Radio-television and Telecommunications Commission (CRTC) considers whether MVNOs (mobile virtual network operators) should have mandated access to wireless service providers’ networks.
As a refresher, MVNOs are providers that don’t have an established network, and instead rent access to existing networks.
“The regulator is at risk of putting the Canadian telecom industry into unhealthy territory,” the report reads. “Lagging networks, hurting Canadian competitiveness, lost jobs, lower tax revenue and at-risk shareholder returns, all contribute to the pain.”
The firm outlines that mandated wholesale MVNO access could reduce industry ARPU (average revenue per unit) by 30 to 35 percent over the next five years. Further, new MVNOs may gain six to eight percent market share, while existing network operators would see revenue declines of 16 percent across all lines of business.
The report notes that while lower phone bills may have some benefits, they also come at a “significant cost” in terms of 5G and rural access.
“Investments in Fibre and 5G networks would be delayed or cancelled, a wider digital divide could emerge between urban and rural Canadians, and Canadian competitiveness globally could be jeopardized,” the report outlines.
The firm says that by 2025, the short-term impact would see annual cuts of $5 billion and $3 billion in operating and capital expenditures respectively. This would possibly mean 24,000 fewer jobs, the closure of 850 retail stores, significant cuts to investments and $135 million less in charitable donations.
Further, the report outlines that the reduction of network investments that could occur due to mandated MVNO access would hamper the ability of carriers to support crisis response efforts in the future, since they have maintained network stability amid the COVID-19 pandemic despite already facing economic challenges.
The firm notes that the CRTC has consistently promoted facilities-based competition as a way to ensure that Canadians get high-quality affordable services, and that mandating MVNO access would depict a stark departure from this precedent.
“Our analysis shows that mandating wholesale MVNO access in order to reduce consumer wireless prices would lead to an unhealthy Canadian telecom industry and result in negative economic consequences,” the firm concludes.
It’s interesting to note that around 60 percent of Canadians support new regulations that would require the Big Three (Rogers, Telus and Bell) to share their infrastructure with smaller providers to promote wireless competition, according to reports released by the Canadian Internet Registration Authority in February.
Image credit: PwC
Source: PwC
MobileSyrup may earn a commission from purchases made via our links, which helps fund the journalism we provide free on our website. These links do not influence our editorial content. Support us here.
