Today, Industry Minister François-Philippe Champagne approved the transfer of Freedom Mobile’s spectrum licenses to Vidéotron, pushing the historic Rogers-Shaw merger over the finish line.
But Champagne also bared his fangs, announcing a total of 21 legal conditions that Rogers and Vidéotron have to abide by or face colossal financial penalties.
The goal of these conditions is to improve competition and reduce prices in the telecommunications sector, he said.
But critics flocked to Twitter and other platforms to express their disappointment at a verdict which did not come as a surprise.
NDP MP Brian Masse commented on the decision this morning: “Today was a cave in many respects to the big telco giants, and we’re going to see less competition, higher prices and we’re going to see continued frustrations for Canadians as things go forward.”
According to independent internet service provider (ISP) and one of the most vocal critics of the merger, TekSavvy, “Shaw and Freedom are just the latest dominos to fall in the rapid ongoing collapse of competition in Canada’s telecom sector.”
Meanwhile, Rogers and Vidéotron gloated over their big win and reaffirmed the commitments imposed by Champagne:
Rogers
- Invest C$1 billion to improve connectivity for rural, remote and Indigenous communities, C$2.5 billion and C$3 billion to expand its 5G network, and improve technology and network services, respectively in Western Canada
- Establish a Rogers headquarters and create 3,000 new jobs in Western Canada, to be maintained for 10 years
- Expanding Connected for Success Internet program to eligible Canadians in Western Canada and introduce a wireless version of the same program nation-wide for eligible Canadians
- Honouring a five-year price commitment for Shaw Mobile customers
Vidéotron
- Offer plans comparable to those currently available in Quebec and offer options at least 20 per cent cheaper than those offered by major players
- Cannot transfer Freedom Mobile licenses for a period of ten years
- Expand its 5G network in Freedom Mobile’s operating territory within two years
- Expand mobile service into Manitoba via the use of a signed Mobile Virtual Network Operator (MVNO) agreement
- Increase data allotments of existing Freedom Mobile customers by 10 per cent
Detailing these conditions, Champagne said, “I would not mess with the regulator. It’s never a good thing. Not only do you have a contract with conditions, but on top of that, just think about the penalties.”
Accordingly, Champagne announced that Rogers and Vidéotron will pay financial damages of C$1 billion and C$200 million, respectively, should either of them breach any of the commitments. That, the minister said, is “unprecedented in Canadian history of liquidated damages.”
But for Michael Geist, a University of Ottawa professor of internet law, all the “tough talk” about damages, is “just a meaningless distraction from Canada’s competitive problems”, adding that the verdict is filled with contradictions – Champagne claims that the merger will result in more competition, but requires it in a contract and then threatens to punish and leverage more powers if prices do not go down.
Another such contradiction, according to Geist, is Champagne’s decision to freeze spectrum transfers. He contended in a tweet, “If mergers are so great, why is there a need to freeze license transfers now?”
He added in a blog post that Champagne seeks to close “the barn door after the horses are already out, the market is consolidated and competitors have disappeared.”
As a matter of fact, many small players did get swallowed by telco giants over the past year, including Ebox, Distributel and Primus by Bell, V-Media by Vidéotron, and Start.ca and Altima by Telus, among others.
TekSavvy also argued that Champagne approved the merger despite the CRTC’s ongoing investigation into the preferential wholesale rates granted by Rogers to Vidéotron.
Peter Nowak, TekSavvy’s vice president of insight and engagement, said in a tweet this morning, “The fact that the government approved a merger that would have been the easiest, most popular slam dunk imaginable is very worrisome. Is there anything they won’t do for these companies?”