Rogers Communications Inc.’s $ 26 billion offer to acquire cable giant Shaw Communications Inc. will be one of the largest deals in the telecommunications sector, if approved. And the first step in that multi-stage approval process begins Monday.
The Canadian Radio, Television and Telecommunications Commission of Canada is conducting a five-day hearing, to be held in Gatineau, Que., That will review Shaw’s transfer to Rogers of the licenses to distribute television signals. It is expected to begin with the appearances of heirs to the cable empire Brad Shaw and Edward Rogers, the latter of whom recently engaged in an uphill battle with his own family for control of his company’s management team.
The CRTC proceeding will not address the biggest red flag of the merger for most consumers: competition and wireless pricing. Instead, it will focus only on the issue of broadcasting and will feature interventions from independent producers like Blue Ant (which operates specialty channels like Cottage Life), as well as rival television distributors, including Bell Canada.
Opponents of the transaction caution that the combination of the two businesses will give Rogers enormous bargaining power when it comes to negotiating the fees it pays to carry the channels it offers to customers.
But the CRTC is just one step in a broader government approval process that is still ongoing. While the merger also raises concerns about the combination of the two companies’ home-based Internet and mobile phone operations, it is the Competition Office and the Federal Department of Innovation that review those elements of the transaction. Neither will hold public hearings.
If the deal goes through as proposed, Rogers would acquire Shaw’s extensive cable operations, based in Calgary, in the West, as well as its wireless business, which offers cellular service in British Columbia, Alberta and Ontario. Consumer advocates have warned that the removal of their discount brand Freedom Mobile and Shaw Mobile (which operates only in BC and Alberta) will lead to less innovation in the market, as the big three operators, Rogers, Bell and Telus , they will feel less pressure.
Rogers says it will still have to compete in all markets for television subscribers and that the deal will strengthen a Canadian broadcaster against foreign competitors. When it comes to wireless and internet technology, Rogers says it will boost its investments in 5G networks and has pledged to spend $ 1 billion on rural broadband.
But critics have said the combination of the two companies would go against the federal government’s desire for more competition and lower prices, with many expecting Rogers to be forced to sell some or all of Shaw’s wireless assets to close the deal. which was first announced in March.
In a speech and interview last week, Quebecor Inc.’s controlling shareholder and CEO Pierre Karl Péladeau said he had made it clear to Rogers that he was interested in acquiring some of those assets.
Even if that doesn’t happen, he said, his Montreal-based company plans to compete with the Big Three in the western provinces of Quebec, arguing that wireless prices are lower in areas with a strong fourth competitor. (Quebecor currently offers Vidéotron wireless and the discount brand Fizz Mobile only in Quebec and the Ottawa region.)
“As soon as possible … we are ready to go,” Péladeau told the Star of his ambitions, though he did not commit to a specific timeline.
It is not the first time that Quebecor has committed to expanding beyond its traditional borders; he made similar promises in 2014. But within a few years he sold valuable spectrum licenses, the radio waves used to build wireless networks, to Rogers and Shaw and retired in Quebec. .
Now, however, Péladeau said, regulatory conditions will support their plans, and the CRTC ruled in April that the Big Three must sell access to their networks to smaller telecoms players (the CRTC is in the process of finalizing tariffs for access).
The CRTC said that smaller players have to build their own infrastructure over time, and Quebecor said it plans to do so after buying new licenses in a recent spectrum auction.
However, consumer advocates have argued that the CRTC ruling did not go far enough because it does not open up the wireless market to players who do not have existing networks. That could have attracted companies with business models that were not based on the high profit margins of traditional telecommunications.
CRTC President Ian Scott said last week that the decision will lead to long-term sustainable competition. But even he said the industry “must do more to address (mobile) affordability.”
In an interview with the Star, Scott noted that the CRTC has required the Big Three to submit proposals for low-cost plans for low-income Canadians and the elderly. He also said that wireless rates in Canada have dropped “significantly” in recent years. (The government says that as of September, prices for certain plans had dropped 10 to 25 percent since early 2020.)
“Do we need to do better? Yes. And by the way, I am not ignoring the fact that in other countries, (rates) are also decreasing, “he added.
Scott said that if the CRTC is not satisfied with the Big Three’s proposals, it could take more “invasive” measures, including direct price regulation.
Regarding the Shaw transaction and its potential impact on the wireless market, Scott said the CRTC “will handle it as it comes.”
Reference-www.thestar.com