All Forms of Competition

Well that didn’t take long. The CRTC just launched a review of mobile services, indicating that it was now in favor of allowing MVNOs. This comes just two days after receiving a new policy direction from ISED Minister Bains, and a period of strain in the CRTC’s arm’s length relationship with the federal Cabinet, which had different ideas over competition policy. After sending two displeasing CRTC decisions back for review, ISED Minister Bains pulled the CRTC’s arm on Feb. 26 and gave the Commission a course correction.

Much to the dismay of former Industry Minister Bernier, the CRTC had come to effectively ignore the old 2006 policy direction, apart from the obligation to mention it in telecom decisions. It had applied further regulation to incumbents and accorded more legitimacy to leased access. The Commission extended mandated access to last-mile fibre networks in 2015, and claimed that forcing incumbents to share these facilities would promote facilities-based competition (somewhere else — the middle mile). The fact that the Commission was required to tie arguments into knots to explain itself, or could redefine the scope of facilities-based competition to justify shared facilities was not particularly bothersome. The only body that could hold it accountable generally approved of these moves. Once the CRTC (under the direction of its new Chairman Ian Scott) began to behave in ways that made Cabinet uncomfortable, revisiting the policy direction became a way to instruct the Commission on how it was expected to behave.

The 2019 policy direction is more open-ended than the small government directive of 2006, signaling that the CRTC can intervene to promote “all forms of competition”. In effect, Cabinet is telling the regulator that it has not been regulating enough, and that competition is still valuable even if it isn’t between competing facilities. Certainly, the CRTC could try to flout the policy direction or interpret it narrowly as it had previously done, but this would escalate the conflict with Cabinet. When sovereignty is contested between the two, Cabinet will eventually have its way. In 2019, the rationality of facilities-based competition has been officially demoted.

The move by Bains has the effect of transforming an inconvenient policy failure into a horizon of possibilities. The vague fantasy that competition would lead to overlapping wires running into every home can be abandoned. In its place, consumer interests and competition have been reaffirmed as core values, but competition can be defined differently than before. Facilities-based competition is still an option, and one evidently favored by the CRTC even as it course-corrected after receiving its policy direction. In the Notice of Consultation for the new review, the CRTC is open to a mix of facilities-based and service-based competitors in wireless, but mandated access is still presented as a temporary stepping stone until “market forces take hold”. But according to Cabinet, all forms of competition are on the table, and facilities-based is not the only officially recognized option.

There’s still no reason to believe this is the first step to the ‘nuclear option’ of structural separation. More likely, the goal of competition policy will end up being something closer to the status quo than the elusive dream of a competitive facilities-based market. This would mean that mandated access won’t end up being presented as a temporary detour, but as the final destination.

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