Canada faces more anti-trust scrutiny over planned merger between two major telecoms

Canadians that believe in a competitive, well-regulated telecommunications market are in danger of losing those protections if a proposed merger between Rogers Communications Inc. and Shaw Communications Inc. is approved, a coalition of independent telecommunications providers told a federal regulatory hearing.

In front of a seven-member hearing panel on Friday, the coalition, called The Independent Networks Consortium, argued that Rogers and Shaw’s proposed proposed $3.4 billion buyout of Manitoba Telecom Services Inc. would create a “shadow” of the country’s big three, BCE Inc., Telus Corp. and Rogers, representing just three of the nation’s 31.7 million residential and business phone lines, as well as 40 percent of mobile phone users.

From a financial perspective, those three companies control about 95 percent of customer service, 59 percent of broadband providers and 59 percent of access to the Internet, CI members said. The companies also could use their new acquisition of both wireless and cable companies to discriminate against competitors in the provision of their services, they said.

“Without viable competing options, it’s difficult to build market-driven pricing and bargaining power, the means to ensure that the nation’s communication giants do not treat competitors’ services as second-class,” said Greig Douglas, executive director of the advocacy group.

“Together, Shaw and Rogers control access to 90 percent of all fixed lines in Canada, 68 percent of wireless lines, 46 percent of wireless and 87 percent of TV. If they are allowed to tie up MTS, they will have even more complete control over the distribution of content and their competitors’ ability to compete with them.”

Rogers and Shaw will argue during the hearing that they are not proposing to combine their services but simply to get better bang for their customers’ buck, and they agree that the country needs more competition.

Both the companies also agreed that the country needs more competition, and are talking about adding broadband competitors into the market and exploring ways to provide discounts and content to potential rivals in rural and remote areas. That is because they share a common goal to connect more rural and remote Canadians with the broadband networks they have in large urban centers, Rogers representatives said.

The deal will be reviewed by the Canadian Radio-television and Telecommunications Commission, and if it receives the regulatory OK, Shaw and Rogers will have to pay a break fee to MTS.

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