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September 3, 2020

The buyout will lead to higher prices for consumers since a potential wireless competitor will be eliminated

(Windsor) – Today, Brian Masse M.P. (Windsor West), NDP Innovation, Science, Economic Development Critic wrote to the Commissioner of the Competition Bureau in opposition to the hostile takeover over of Cogeco by American company Altice and Rogers Communications since it eliminates a financially viable new competitor in the wireless telecom sector.

“During this public health crisis due to the COVID 19 pandemic the need for accessible and affordable high-speed broadband and wireless internet has become obvious to all Canadians. With people sheltering at home and with schools and businesses closed, Canadians need a fast and reliable internet connection to communicate for work and school through online applications. It is an essential utility and must be treated as one. Unfortunately, the government has failed to treat this with the urgency it deserves and this hostile takeover will eliminate a potential competitor leading to higher prices for Canadians who already pay amongst the highest prices in the world,” Masse stated.

The Canadian telecom market is one of the least competitive in the world as demonstrated in domestic and international studies. The profit margins of the largest three telecom companies (BCE, Rogers and Telus) have reached an astonishing 46.2 per cent. In fact, Canadian telecom companies make more revenue per gigabyte of data than almost any other company in the world. Canadians pay 23 times more than those in Finland and 70 times more than those in India. Yet this has resulted in lower data use than in almost any other country in the world. This hurts Canada’s economy and consumers.

Furthermore, the take over of Cogeco’s Canadian assets by Rogers Communications would remove an effective potential new competitor from establishing mobile virtual network operators (MVNO). These new entrants would buy network capacity from wholesalers instead of running their own. Cogeco’s long held position expressed to the CRTC for a “hybrid MVNO” model, which would give companies with existing telecom infrastructure access to national wireless networks and the ability to resell the service to their customers.

This hybrid MVNO model depends on the existence of localized wireline companies with the infrastructure and strong balance sheet to enter the wireless market and subsequently invest in their own networks. Cogeco would be a future example of this which could have increased the level of wireless competition in Ontario. It can be argued that if a transaction occurs where Rogers takes over Cogeco’s assets there will not be a financially viable hybrid MVNO wireless competitor in Ontario. Cogeco is landline phone competitor to Bell.

“There has been twenty years of conservative and liberal governments’ neglect of the telecom market which has led to Canadians paying the highest prices in the world and some Canadians having no access at all. Allowing for one of the last viable competitors to be eliminated is the exact opposite of what needs to be done to protect consumers,” Masse stated.

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