Higher Prices, Less Competition: Some Reflections on the Proposed Rogers – Shaw Merger

Having spent a good chunk of Monday talking to reporters about the proposed Rogers merger with Shaw, I thought it might be worth highlighting my initial three takeaways. First – and this is stating the obvious – the deal will result in higher prices and less competition. There is no need to overthink any of this. Removing a company that some have touted as the best chance at a viable national fourth carrier would leave some of Canada’s biggest markets (notably Ontario, Alberta, and B.C.) without a much needed competitor. Canadians already pay some of the highest prices for wireless services in the world and if this merger is approved, the situation will only get worse. Indeed, when Rogers promises that it will not raise prices for Shaw/Freedom Mobile customers for three years, it is effectively committing to raising them as soon as the clock runs out on that timeline.

Second, the fact that the companies think that this merger stands a chance of being approved should stand as Exhibit #1 for the failures of the government and the CRTC on the wireless file. Successive governments have pledged to address high wireless costs, but have instead taken half measures or even backtracked at the slightest opposition from the incumbent providers. The CRTC is little better with the current leadership quickly dispensing with the prioritization of consumers under Jean-Pierre Blais and leaving little doubt that Bell, Rogers, and Telus have a friend at the Commission.

Simply put, this deal would not have happened under a government and CRTC that signalled its commitment to more robust competition and better consumer pricing above all else. Instead, the CRTC stands ready to increase consumer costs for Internet services (it even proposed new levies on ISPs in its Harnessing Change report) and the government seems to think that meeting its illusory 25 percent wireless reduction cost target is good enough, even if prices in other countries are declining at a faster rate.

Third, get ready for talking points that will make your head spin. As Rogers and Shaw seek to convince the government and regulators that their deal should be approved, months of criticizing competition from MVNOs may suddenly be promoted as an effective competitive alternative. Further, the companies will re-up old promises to invest in rural connectivity, 5G or anything else that might garner political support. Of course, there is always a price to be paid for those promises and in this case, it will be wireless customers that foot the bill in the form of even higher costs in what is already one of the most expensive wireless markets in the world.