Telecom Trends

Reading this entry reminded me of one of your earlier entries about Bell Mobility’s announcement of a $2.00 increase in their ‘system access fee’. In my mind, if there ever was an example of the abuse of a dominant position in a market, it is increases in system access fees by our friendly cellular/wireless/mobility providers. On the one hand, these fees are not regulated. On the other hand, the carriers justify the increases by claiming their costs for building, maintaining and improving their networks have risen. While I don’t question the fact that there are costs associated with their networks and, like the cost of everything else, they probably are trending upwards, I question whether or not a $2.00 per month increase is appropriate. Because they are de-regulated, there is no way of knowing what their costs are and by how much they have increased since they were last changed. System access fees are an essential part of the service – if you don’t pay you can’t be a customer and yet, we let the carriers arbitrarily set them and increase them at their own discretion. In the old days, when the carriers wanted to increase rates they had to justify the increase. Today, because someone has declared the cellular market to be competitive, we let them increase fees without any sort of review. Company officials and the CRTC will probably argue that the competitive marketplace holds the companies in check when it comes to setting the system access fees. Well, I don’t think a competitive regime of three is enough to achieve that theoretical argument. With only three competitors, the chances of collusion are far greater than if there are 4 or more competitors. We all know that in order to attract customers these companies practically give away the handsets. Somehow or other they have to recover that money and the unregulated system access fee seems to be an all-to-convenient way to do that. The question that someone – the CRTC and/or the Competition Bureau – should be asking is whether or not the system access fee is being used to subsidize the “free” or low-cost handsets. Sure would be interesting to see what a forensic accountant would find if he audited the books of our cellular carriers.