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New public safety minister, wireless prices on agenda in Liberal minority

News | 10/22/2019 6:35 pm EDT
Prime Minister Justin Trudeau addresses supporters in attendance at an election day rally after securing a second term minority government, in Montreal on Oct. 21, 2019./ Photo by Andrew Meade.

With the Liberal Party’s victory in the federal election Monday, its innovation, heritage, and rural economic development ministers are all set to return to the House of Commons but there will be changes ahead on the Huawei file, and wireless prices are set for increased scrutiny.

Public Safety Minister Ralph Goodale lost his seat in Regina-Wascana after representing the riding for 26 years. Goodale was heading the government’s review process on whether to ban Chinese telecom giant Huawei Technologies Co. Ltd.’s equipment from the country’s next generation telecom networks, and whether that means there will be further delay on the decision as a new minister is named to the file remains to be seen.

There will be changes in the opposition ranks, too, with the NDP’s public safety critic Matthew Dubé losing Chambly—Borduas to the leader of the resurgent Bloc Québécois, Yves-François Blanchet.

Other critics on the telecom and media files are returning. NDP innovation critic Brian Masse was re-elected in Windsor West, while Conservative innovation critic Dan Albas won in Central Okanagan-Similkameen-Nicola. Conservative Heritage critic Steven Blaney was also re-elected in Bellechasse—Les Etchemins—Lévis, while the NDP’s former heritage critic Pierre Nantel, who jumped to the Green Party in the election campaign, lost his seat in Longueuil—Saint-Hubert on Monday night.

Of course, how many of those MPs, or whether Innovation Minister Navdeep Bains, Heritage Minister Pablo Rodriguez and Rural Economic Development Minister Bernadette Jordan will stay in the same portfolios, is unknown. 

Also to be determined is how, and whether, the telecom and media-related promises made by the Liberals will be implemented in a minority government, where they will need the backing of another party to pass legislation.

Should the Liberals decide to go ahead with some kind of a Huawei ban, they may find support on that from the Conservatives, whose leader Andrew Scheer has in the past said he is in favour of an unspecified form of ban. 

The Huawei issue wasn’t brought up during the campaign, though telecom affordability was, by several parties.

During the campaign, the Liberals promised to lower wireless prices by 25 per cent over four years, while bringing wireless and internet prices down was also a promise of the NDP, who proposed a price cap.

Scotiabank analyst Jeff Fan wrote Tuesday that he doesn’t expect the industry to see any disruption from Monday night’s results. He said in a research note that while the Liberals “promised to lower wireless bills by 25%, we do not see price legislation as a likely path.” 

Fan also said that he thinks the “price reduction examples the Liberals gave have already been achieved due to recent price changes over the summer.”

The question of when that 25 per cent reduction will begin is a key one, since wireless prices have been dropping in recent years, according to CRTC data and a 2018 government-commissioned report completed by Wall Communications. This summer, large telecoms introduced new no-data-overage plans that also pushed prices downward.

The prices cited by the Liberal party in the backgrounder document released during the election were from the 2018 Wall report. However, when asked about the starting point of that 25-per-cent reduction, a Liberal source told the Wire Report that “Canadians are looking at their bills right now and saying they’re too high and we’re looking to lower them… we made the announcement right now.”

National Bank analyst Adam Shine pointed out in his own Tuesday afternoon note that before the election, the NDP outlined six conditions under which they would support a minority government, and those included reductions in wireless bills.

He also said prices have been dropping, noting that the government “can’t say that the industry hasn’t been active over the past 2-3 years introducing more options for consumers and expanding the range of price points at which more cost-conscious consumers can transact.”

Shine argued the government “has no business arbitrarily seeking a 25% reduction in wireless bills” without first taking the time to understand how pricing in the market has changed, including newer plans offered lower price points, as compared to the premium plans some customers choose.

He said wireless companies have been working to improve their offerings, and warned they can “be expected to rightfully fight back hard against any heavy-handed regulation that touches on setting retail pricing.”

Fan also said that while “the Liberals also promised they would support wireless resale/MVNOs, with the election and politics now behind us, we expect they will (and should) let the CRTC’s independent process play out (proceedings already well underway).”

The regulator will hold a hearing in January on the issue of whether to mandate access by mobile virtual network operators to telecoms’ wireless infrastructure.

In his note, Shine pointed out “Liberal and NDP efforts to reduce cell phone bills will likely get debated as part of this process.” 

During the election campaign, there was also a general consensus among all the parties on implementing some form of new taxation on many of the world’s largest digital companies, though neither the Liberal nor Conservative plans for a new three-per-cent tax would apply to Netflix Inc. The Bloc Québécois platform, which proposed a three-percent-tax on the Canadian activities” of web giants, does mention both Netflix and Spotify AB. 

In addition to new regulations for Canadian content on streaming services, the Liberals also promised to implement sales tax on the streaming company once an international consensus is reached by the Organisation for Economic Co-operation and Development (OECD), while the NDP have also long been in favour of applying sales tax to foreign over-the-top services. 

— With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

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