Will Big Three cut wireless investment if forced to open access?

Canada’s Big Three wireless carriers say they’ll significantly axe investment if the federal telecom regulator forces them to sell wholesale access to their mobile networks, arguing this could hurt Canada’s position in the race to build next generation 5G networks.

Such warnings are a common refrain from the telecom industry whenever additional telecom regulation is on the table. This time, they come as the Canadian Radio-television and Telecommunications Commission considers opening up the industry to more competition under pressure from the Liberal government to cut cellphone bills by 25 per cent.

The regulator must decide whether to mandate resale access, a move that could usher in a host of new low-cost competitors called mobile virtual network operators. These can provide cheaper services since they don’t bear the costs of building entirely new networks — and they’d love to get a piece of the $27.1 billion Canadians spend on wireless services every year, 90 per cent of which goes to the Big Three providers BCE Inc., Rogers Communications Inc. and Telus Corp.

One week into the CRTC’S two-week public hearing on the state of wireless services in Canada, the battle lines have been drawn between wireless players that have already made big investments and hopeful entrants who argue it’s not feasible for each prospective competitor to start from scratch.

The CRTC’S preliminary view is that the new competition would benefit consumers more than it would hurt existing operators, especially since they’ve already invested extensively in recent years.

But the Big Three vehemently oppose the idea since it would hurt their ability to make money directly from customers after spending billions on infrastructure.

Telus chief executive Darren Entwistle said Telus will cut 5,000 jobs and $1 billion in investment over the next five years, along with a reduction in charitable spending, if the wireless resale is mandated. For those who suspect the cuts are an empty threat, Entwistle said this isn’t “theatre perpetrated by incumbents,” adding Telus’s board of directors signed a resolution instructing management to pursue the spending reduction plan should the CRTC mandate wireless reselling.