MONTREAL, Oct. 31, 2019 /CNW Telbec/ - The question of the price of cellphone packages in Canada recently resurfaced again, this time during the election campaign. In the context of this debate, we too often forget that Canada has top quality telecommunications infrastructure, despite a regulatory framework that is very restrictive for companies in this sector.
Indeed, Canada is ranked 6th in the world in terms of download speed for mobile connections. Moreover, investments per connection are nearly twice as high as in Europe.
Canada's relatively high prices are explained in part by the country's low population density, by the quality of the infrastructure, and by the substantial investments that are made. "Canada does well despite its regulatory framework, not because of it. The country could do even better!" says Gaël Campan, Senior Associate Researcher at the MEI and author of the publication.
Yet the CRTC seems determined to increase the burden of operating telecommunications infrastructure. "The CRTC's decision aiming to force certain companies to lower the wholesale rate charged to rival internet retailers below cost will slow down investment and reduce the quality of services to which Canadians have access," points out Mr. Campan.
Regulatory bodies like the CRTC unfortunately have the tendency to see the state of the market and of competition as a fixed reality rather than an evolving one. This pushes them to put in place burdensome regulations that are a drag on technological innovation and new business practices. There is notably the ban on offering free data when visiting particular websites or using certain applications.
"The CRTC should be a little more humble. The telecommunications sector is constantly evolving, and the same goes for consumer expectations. It's not because the regulator can't see the benefits of a given commercial offering that consumers won't want it," adds Mr. Campan.
In sum, it is high time for the CRTC to stop overregulating the telecommunications sector and penalizing infrastructure investments. After all, the worst way to encourage companies to invest in new networks is surely to force them to lose money by subsidizing their competitors.
The Research Paper entitled Permissionless Innovation: For an End to the Presumption of Regulation in Telecommunications was prepared by Gaël Campan, Senior Associate Researcher at the MEI, in collaboration with Daniel Dufort, Director of External Affairs at the MEI. This publication is available on our website.
The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.
SOURCE Montreal Economic Institute
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