Will this Quebec company bring lower wireless prices across Canada?
Quebec’s biggest cable company, Videotron, has been presented by the federal government with a rare opportunity to expand its fledgling cellphone services across the country.
Ottawa remains hell bent on placing downward pressure on average wireless prices, and it now sees Videotron, whose Quebec customers pay some of the lowest rates in Canada, as its best bet to achieve that.
But Videotron is dragging its feet. And with good reason.
Despite Ottawa’s special efforts to encourage a leap of faith from Videotron into Ontario and provinces further west, the Montreal company remains very leery of going up against Rogers, Bell and Telus outside its home turf.
On Thursday, Videotron said it wants more federal safeguards that ensure its leap doesn’t fall short and end in failure.
Chief among Videotron’s requirements is the drastic reduction in the rate Videotron pays the Big 3 whenever one of its wireless customers wanders beyond its own smaller network and onto theirs.
Called “roaming,” big carriers like Rogers have heavily billed smaller ones like Videotron and Wind Mobile for the access.
Under current roaming deals, Videotron would be forking over quite a bit of cash to the bigger network owners while it tries to build out its own footprint in places like Ontario, Alberta and British Columbia.
Pierre Dion, the head of Videotron’s parent, Quebecor, linked the flattening of wholesale rates to any plan involving Videotron launching in Toronto, Calgary, Edmonton or Calgary and elsewhere outside Quebec.
Regulators appear ready to act. The telecom industry’s oversight body, the CRTC, said Thursday it found Rogers has charged “discriminatory” rates that have stifled competition, a likely precursor to mandating lower rates between all the big carriers and their smaller competitors.
But the clock is ticking.
Videotron has — again — been granted special access to fresh airwaves at an auction next year, but it must register for the sale by January. The airwaves would let Videotron speed up data transmission to and from phones on its network over the long term, drawing it more level with the robust networks owned by Rogers, Bell and Telus.
But without long-term relief on roaming rates, Videotron may determine the risks of expansion are too high. Other smaller providers, such as Wind and Mobilicity, have struggled to gain national footholds in part because of high wholesale rates paid to Rogers, experts note.
“We know that some have struggled and failed at operating a wireless business on a standalone basis,” Dion added. “Before investing… in such a venture, we will work at ensuring that all conditions are right to minimize our risks.”
The CRTC’s statement on Thursday said it will hold public hearings on Sept. 29.
‘Lower prices’ for consumers
The arrival of Videotron in other provinces (or a joint venture involving Videotron) would likely be a boon to wireless customers.
The average bill for a Videotron wireless subscriber in Quebec is about $40 for plans that include generous amounts of data and voice services. That compares with $61/month at Telus, while Rogers and Bell collect comparable sums from their customers.
Dion suggested Videotron would bring lower wireless rates – in his own words, “prices” — to consumers across Canada. But Ottawa must keep up its end of the bargain, he said.
“We continue to believe the field has to be leveled off if we want a fourth operator to offer consumers lower prices, [but] that has not been accomplished yet.”
© Shaw Media, 2014