The Canadian government is expected to decide soon if it should have a larger role in fostering competition among wireless providers.
Regulation has been light in the past for the cellular industry, said Michael Hennessy, vice president of government and regulatory affairs for Mobility Canada, a cellular and personal communications services provider. “Now we’re looking at a time when PCS players are coming out, and suddenly you have four or five players. There’s a contemplation of increasing regulation.
The wireless market is subject to conditional forbearance,” added Hennessy, “Prices aren’t regulated, but the government can look at things like resale and equal access under nondiscrimination. This has been an ongoing debate for the last year.”
Mobility Canada recently sponsored a study titled, “Competition and Regulation in Canadian Mobile Telecommunications.” The study advocates a shift from government regulation to a greater reliance on market forces. Written by two authorities in competition policy, Frank Mathewson and Michael Trebilcock, the report examined regulations considered by the government that would require the sharing of assets or access by new personal communications services providers to the assets of existing cellular operators with the goal of creating a level playing field.
Potential regulations could include:
Allocating and protecting property rights to the electromagnetic spectrum,
Establishing telecommunication standards that facilitate the exchange of signals across the network components of different suppliers,
regulated interconnection of wireless communications with the wireline network,
mandatory interconnection of new wireless suppliers, interexchange carriers and resellers with systems of existing cellular suppliers,
mandatory access or sharing of the system assets of existing wireless suppliers,
unbundling, which involves mandating access to individual network elements and functions to competitors,
mandatory resale,
restrictions on service options provided by wireless service suppliers
and restrictions on joint marketing between telephone companies and their wireless service affiliates.
In terms of interconnection, the study concludes that in most cases, delivering traffic through the public switched telephone network is more economically efficient than imposing mandated interconnection on incumbent cellular providers. Each carrier will have an incentive to find the least expensive method of offering service.
The report argues that detailed regulation would be needed to oversee unbundling, and contends that access “to any of the assets of a cellular firm is not essential for another participant to offer a service in this market. As a result, access to the facilities of incumbent suppliers should be subject to market forces and market prices and that regulation should govern access only in those circumstances when the assets at issue are deemed to be essential facilities.”
The Canadian government “is considering mandating access in relation to equal ease of dial access to interexchange carriers,” says the report. “The study contends that market participants have efficiency-driven incentives to offer particular services such as ease of access to long-distance service providing consumers place a high value on such services.”
Industry Canada already has created guidelines in hopes of establishing a level playing field for new PCS entrants. In April, it announced that all PCS licensees must be able to interconnect to the PSTN in a market area, and cellular carriers and their resellers must offer analog cellular resale and analog cellular roaming services throughout a given cellular service area on a nondiscriminatory basis to the other PCS providers.
“The fundamental problem is that there really isn’t such a thing as light-handed regulation,” said Hennessy. “The government lends latitude to intervene. Competitors use levers to gain advantages rather than marketing. There’s always room for people to use rules for their advantage.”
Hennessy said the Canadian government will decide in a few weeks if it wants pursue any further regulations concerning PCS entrants.
