Anybody who says Canada’s wireless market is uncompetitive is out to lunch. The country’s big three carriers are competing hard to see which can save the most money building networks.
Last week, Rogers announced it had struck a new agreement with MTS to share an LTE network build-out in Manitoba. The news came just weeks after Rogers announced a similar deal in Quebec with fellow cable company Videotron. In both cases, efficiency and cost savings were cited as the reasons.
“With this agreement we will deliver capital and operating savings to our business allowing us to re-invest in our customers and our network, particularly in Western Canada which is a priority market for us,” said Rogers’ president of communications Rob Bruce in a release.
Canaccord Genuity analyst Dvai Ghose put the regional deals in the proper perspective by pointing out that Rogers will still have to pay more for network upgrades than its two big competitors, Bell and Telus, who share a national network.
“While the deal should lower Rogers’ LTE deployment costs in Manitoba significantly and the LTE sharing deal with Videotron in Quebec may also save capital, Rogers still faces a significant disadvantage when competing with Bell Mobility and Telus Mobility,” he wrote in a note to clients.
In other words, while it’s debatable how much the Big Three are competing for Canadians’ wallets, there’s no doubt they’re fighting over who can spend the least on network upgrades.
That’s certainly smart—shared networks are efficient and cost effective, which benefits everybody. But it sure does drive a stake into the long-held North American ideal of infrastructure-based telecommunications competition, and indeed makes a very strong case for structural or operational separation of those companies’ network units. Shared networks are great in practice, but they can also easily lead to less competition and investment if not carefully overseen and managed by authorities.
Canadian companies have unequivocally seen the benefits and logic of shared networks. How long before governments and regulators do the same?