Industry experts testify Rogers-Shaw deal will lead to less competition, higher prices

Experts have argued that the the deal will not benefit Canadians

Industry experts have testified to MPs that Rogers’ proposed acquisition of Shaw Communications will have consequences for Canadians.

Witnesses appeared in a virtual hearing in front of the Industry, Science and Technology Committee in Ottawa on April 6th.

Michael Geist, professor and Canada research chair in internet and e-commerce law at the University of Ottawa, told the committee that the proposed merger will have negative consequences for the Canadian telecom industry.

“The deal will result in higher prices and less competition in the Canadian wireless market. The simple reality is that Canadians already pay some of the highest prices for wireless services in the world. If this merger is approved, the situation is likely to get worse,” Geist stated.

Geist also stated that if the merger were to be approved, it should include conditions, such as the full divestiture of assets in order to maintain some form of competition.

“The merger would catapult Rogers even further ahead in the mobile wireless market”

For instance, Geist outlined that wireless assets, including Freedom Mobile, would have to be divested in order to maintain the prospect of a fourth national carrier.

Geist also noted Rogers’ promise that it won’t raise prices for Freedom Mobile customers for three years signals that the carrier will raise them as soon as the three-year time period ends.

Dwayne Winseck, a media industry researcher and professor at Carleton University, told MPs that the proposed acquisition would lead to significantly less competition within the market.

“The proposed mega-merger between Canada’s second and fourth largest comms and media conglomerate would if approved, significantly lessen competition. The merger would catapult Rogers even further ahead in the mobile wireless market and it would become the biggest Cable TV and internet access provider in Canada,” Winseck stated.

Further, Winseck stated that the merger would overturn any progress made towards establishing a fourth national carrier since Freedom Mobile would be eliminated.

He also outlined that the merger is unnecessary and that there are other options, as Rogers and Shaw could instead simply build on existing network sharing agreements.

Proposed merger will only benefit large telecoms, experts say

Ben Klass, a PhD candidate at Carleton University who focuses on the Canadian telecom market, testified that the merger will lead to higher prices for customers.

“This merger will result in higher prices and less innovation. What we need is greater affordability. Regulators and policymakers should do what they can to oppose this merger,” Klass told the committee.

Klass outlined that any progress made within the Canadian telecom market will be lost if the acquisition is approved. He stated that the market needs more competition and not more consolidation.

Regarding Rogers’ promise to not raise prices for Freedom Mobile customers for three years, Klass noted that Bell made similar promises when it acquired MTS (Manitoba Telecom Services) and that prices did eventually go up for customers in the area.

Matt Stein, the president and CEO of the Competitive Network Operators of Canada, told MPs that the merger only benefits the large telecom companies.

“The Rogers-Shaw deal does not benefit Canadians. If it proceeds, it will only benefit the two companies, and Bell and Telus,” Stein stated.

He added that the elimination of Freedom Mobile would be unacceptable, as the carrier has been the competitive instigator in most of Canada’s largest wireless markets. Stein stated that the carrier’s customers, network and spectrum should be divested to a party committed to service-based competition.

Stein also called for a mandated MVNO (mobile virtual network operator) regime to allow for competition to flourish within the market, as the industry awaits the CRTC’s decision regarding the matter.

Last week, Rogers and Shaw testified that the deal would increase competition, advance 5G and create jobs and diversify the Canadian economy.

The proposed deal requires approval from the CRTC, the Competition Bureau and the department of Innovation, Science and Economic Development.