The scrutiny begins on a proposed merger of Canada’s number three and four telecom companies, Rogers Communications (Rogers Communications Stock Quote, Chart, News, Analysts, Financials TSX:RCI.B) and Shaw Communications (Shaw Communications Stock Quote, Chart, News, Analysts, Financials TSX:SJR.B). And opinions differ as to how phone, cable and Internet customers across the country will fare under the deal, with the head of the CRTC saying at a Parliamentary committee that cellphone bills could see a reduction over time.
“Prices are going down. I will give you that they should go down further. [It’s] always in the public interest to see the most affordable rates for Canadian consumers,” said Ian Scott, Chairman of the Canadian Radio-television and Telecommunications Commission, speaking to the federal Standing Committee on Industry, Science and Technology on Wednesday, as reported by BNN Bloomberg.
“From 2019, if you look at an offering with five gigabytes of data rates decrease, about 14 per cent to $49 a month so they are not going up, they are going down,” he said. “But I will absolutely agree with you that they can and should go down further.”
One of three regulatory bodies to vet the merger, Scott said in a statement that the CRTC is waiting for more information from Rogers and Shaw on the full details of the proposed transaction, after which it will begin its review and seek comments from the public
“We will examine the proposed transaction taking into consideration our relevant policies for the sector. This includes policies designed to ensure a diversity of voices in the broadcasting system and that Canadians have access to local and community television programming,” Scott said in a statement to the Industry Committee.
Scott said that of the two main angles to the deal — involving Shaw’s wireless and Internet business on one side and its cable, satellite TV and video-on-demand business on the other — the CRTC’s focus is on the latter, as its main concern with maintaining a diversity of broadcasting voices.
“As with all our proceedings, we will render decisions in the public interest based on the evidence on the record of that proceeding,” Scott said.
Beyond the CRTC, the Rogers-Shaw deal will also need to pass muster with the Competition Bureau and Innovation, Science and Economic Development Canada (ISED). With the Competition Bureau, attention will paid to whether or not the agency insists on Shaw selling off its Freedom Mobile wireless so as to maintain four national carriers, while for the ISED, one hot-button issue concerns the doling out of wireless spectrum licenses, with the latest turn being Shaw’s decision to not participate in the upcoming auction of 5G airwaves.
Shaw’s decision should help push the merger through regulations, according to BNN Bloomberg analyst David George-Cosh, who spoke on the deal on Friday.
“There’s an actual regulation barring a company that is involved in a potential merger from taking part in a potential spectrum auction, but Shaw’s absence notably was highlighted, given the fact that some analysts, such as one from Desjardins Securities suggests that this move could help ease the minds of regulators when they’re determining whether or not Shaw should divest Freedom before accepting this particular deal,” George-Cosh said.
The ISED published a list this week of companies planning to take part in the June 15 auction of spectrum airwaves for 3,500 megahertz 5G networks, with established players from Bell, Telus and Rogers to regional operators like Quebecor to smaller companies who may not currently engage in wireless services but may be looking to resell licenses.
Last month, the Globe and Mail reported that Bell and Telus along with at least two other telecom companies had lobbied the federal government to prevent Shaw from bidding at the June auction, citing ISED rules that call for merging corporations to show their intent to keep two separate entities offering services within the one merged company, something that does not appear to be the case in the proposed Rogers-Shaw deal.
So far, Rogers and Shaw, both family-founded businesses, have said that together they would be investing $2.5 billion in 5G networks over the next five years in Western Canada alone, the heart of Shaw’s business. Under the deal the Western head office of the combined company would remain at Shaw Court in Calgary, with CEO Brad Shaw and one other director from Shaw to be joining Rogers’ Board.
On the competition issue, both Rogers and Shaw have said the merger would benefit Canadians by making one stronger company to face off against Telus and BCE.
Speaking to the Industry Committee in late March, Rogers CEO Joe Natale said, “Together, Rogers and Shaw would have strong capability in both residential and wireless businesses. We’d be a far better match to compete head on with Telus in terms of the consumer market.”