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© Provided by Financial Post If spectrum prices were as low as in Europe, Canadian wireless rates could be 12% cheaper.  

Good Morning!

For years Canada has struggled to make its telecom industry, dominated by three big players, more competitive.

In the latest, long-awaited decision last week, the Canadian Radio-television and Telecommunications Commission ruled that the nation’s major wireless companies give wholesale access to their networks to regional providers that invest in spectrum and infrastructure.

But critics said this shuts out smaller players from networks and does little to increase competition.

Maybe it’s time to look at it from a different angle.

With the rise of the digital economy, one could argue that never before has Canadian wireless policy held so much at stake.

With this in mind the C.D. Howe Institute established a working group to look at improving wireless pricing and quality, investment in infrastructure and inclusive access.

What they found was that high spectrum costs and regulatory impediments are keeping costs for consumers high, slowing the rollout of 5G and undermining Canada’s technological competitiveness.

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Canadian spectrum prices are almost four times higher than the international average, says their report out this morning, citing data covering 27 countries between 2010 and 2020.

Further evidence shows that these prices are key to why Canadian providers face higher costs. The working group cites one report that finds the average costs for capital, labour, materials and spectrum are 83% higher in Canada than other countries and spectrum accounts for more than 50 percentage points of those higher costs. The spectrum costs of European carriers are 75% below Canadian companies.

Ottawa auctions off radio frequency spectrum to telecoms in chunks, but the report suggests that the way these auctions are structured helps drive up prices.

If auction timelines are uncertain, for example, it may cause overbidding for spectrum by creating an artificial shortage.

The federal government’s most recent spectrum outlook was published in 2018, covering up to 2022. More frequent updates would remove this uncertainty and help businesses plan, said the report.

We also lag our global peers in the quantity and timing of available spectrum. By the time Canada’s June 2021 critical 5G auction rolls around, 37 countries will have already assigned this band.

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Higher spectrum prices mean less money for network investment and higher consumer prices. If spectrum prices were as low as in Europe, Canadian wireless rates could be 12% cheaper.

But this is about more than cheaper rates for consumers. With the rise of the digital economy, Canadian telecom policy is at a “critical crossroads,” says the report.

Policy decisions about telecom will affect commercial decisions about investment in the next generation of wireless, impact the pace at which communities are connected and how well they can compete in the digital economy.

It recommends that Ottawa update its process for awarding spectrum with an eye to international best practices, speed up the release of new spectrum and provide more frequent updates on the timing of spectrum releases so that wireless providers and equipment manufactures can plan ahead.

 

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JUSTICE FOR GEORGE FLOYD  A woman demonstrates near the Hennepin County Courthouse this week in Minneapolis, Minnesota during the trial of Derek Chauvin, a former Minneapolis police officer. Chauvin, 45, was convicted on Tuesday of second-degree murder, third-degree murder and manslaughter in the deadly arrest of George Floyd, a milestone in the fraught racial history of the United States and a rebuke of law enforcement’s treatment of Black Americans.

In a confrontation captured on video, Chauvin, who is white, pushed his knee into the neck of Floyd, a 46-year-old Black man in handcuffs, for more than nine minutes on May 25, 2020, as he and three fellow officers arrested Floyd, who was accused of using a fake $20 bill to buy cigarettes at a grocery store — Reuters. Scott Olson/Getty Images

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  • Bank of Canada releases interest rate decision and Monetary Policy Report
  • Prime Minister Justin Trudeau, Deputy Prime Minister Chrystia Freeland and Ahmed Hussen, minister of families, children and social development, join parents for a virtual discussion on child care
  • Associate Chief Justice Heather Holmes to deliver decision on Meng Wanzhou’s application to adjourn extradition proceedings
  • A day before world leaders come together on Earth Day at the Leaders Climate Summit hosted by U.S. President Joe Biden, a coalition of groups is calling on Canada’s federal government to increase the ambition of its actions to combat climate change
  • CP Rail and Rogers hold annual general meetings
  • Today’s Data: Canada CPI
  • Earnings: Rogers Communications, CP Rail, Metro, Baker Hughes, Halliburton, Verizon

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As the dust settles on the heady spending of yesterday’s federal budget, calmer minds turn to debt. In 2019 Ottawa aimed to hold debt/GDP near 30%; now it’s on track to peak at 51% this year, said CIBC economists. But federal debt-service costs, which the economists argue is a better measure of what future taxpayers will have to cover, are low compared to other developed countries, as the CIBC chart below shows — and should remain that way. “Finance’s decision to lock in low long term rates by extending the average term of its debt, and the fall in bond yields since 2019, have kept the outlook for debt service costs contained, and nowhere near where they stood decades ago. If there are major challenges ahead in terms of fiscal sustainability, they lie more at the provincial level,” wrote Avery Shenfeld and Andrew Grantham.

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Today’s Posthaste was written by  Pamela Heaven (@pamheaven), with files from The Canadian Press, Thomson Reuters and Bloomberg.

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