Mandating MVNOs would have significant negative impacts on Canada’s economy: PwC study
Reduced GDP and tax revenue as Canada looks to recover from massive COVID-19 job losses and shrinking economy
OTTAWA (July 15, 2020) — Canada’s Gross Domestic Product would be reduced by an estimated $10 billion within five years if Canada’s facilities-based wireless carriers are required to grant mobile virtual network operators (MVNOs) access to their networks, according to a new PwC study released today by the Canadian Wireless Telecommunications Association (CWTA). Other negative impacts on the economy would include an estimated $2.5 billion reduction in government tax revenue, approximately 94,000 jobs lost across the supply chain, and a widened digital divide between rural and urban Canada.
The PwC study, Understanding the likely impacts of MVNOs in Canada: Impacts on the Canadian telecom industry and economy, evaluated possible outcomes should wholesale MVNO access be mandated by the Canadian Radio-television and Telecommunications Commission (CRTC). PwC conducted a detailed economic assessment taking into consideration a range of factors including federal government objectives and policy levers at the CRTC’s disposal.
Canada’s world-class wireless networks are critical infrastructure enabling innovation across every industry and fuelling Canada’s economy. The wireless industry contributed more than $48 billion to Canada’s GDP in 2018 alone, and facilities-based operators have invested more than $70 billion in building Canada’s wireless networks that are among the fastest in the world. During the COVID-19 crisis, the country’s digital infrastructure is keeping Canadians connected, allowing people to work, study and stay in touch with family and friends.
“Our country’s networks are playing a critical role in sustaining social and economic activity as Canadians deal with COVID-19 and they will play a critical role as we rebuild and secure Canada’s future prosperity. Now is not the time for regulatory intervention that would slow down investment – it’s time for measures that further encourage network operators to expand connectivity so all Canadians can thrive in the digital economy,” said Robert Ghiz, President and CEO of CWTA.
The CRTC is conducting a review of mobile wireless services in Canada, and is considering mandating national mobile network operators to provide wholesale network access to MVNOs – companies that don’t invest in building their own infrastructure. According to the scenario analysed by PwC, requiring Canada’s wireless carriers to give MVNOs access to their networks at reduced rates would significantly impact investment, including estimated annual cuts of $5 billion in operating expenditures and $3 billion in capital expenditures over the next five years.
Within five years, the study found that this would translate in aggregated impacts to network operators including an estimated 24,000 fewer jobs and 850 retail stores closed. These cuts would also result in the delayed rollout of new services and a widening of the digital divide between Canadians living in urban and rural areas.
“These cumulative impacts on Canada’s network operators would negatively impact Canadians and our national economy,” added Ghiz. “Canada is already dealing with millions of job losses and an economy expected to shrink by 6.8%. We need to stimulate long-term investment and economic growth, not stifle it.”
For the PwC report, please visit here. Click here to view Part 2 of the PwC study focusing on the impact on Canada’s transition to 5G.
The Canadian Wireless Telecommunications Association (CWTA) is the authority on wireless issues, developments and trends in Canada. It represents companies that provide services and products across the wireless sector, and administers a number of initiatives on behalf of its members, including corporate social responsibility programs and the national common short codes program.