Skip to Main Content
May 16, 2014
Report by Brattle Economists Examines Canadian Wireless Market Competition and the Impact of an Additional Nationwide Wireless Carrier

Economists at The Brattle Group have evaluated the competitiveness of the Canadian wireless market in a study filed by the Competition Bureau of the Government of Canada to the Canadian Radio-television and Telecommunications Commission (see Telecom Notice of Consultation CRTC 2014-76).

The Brattle study first assesses the likelihood that large Canadian wireless carriers possess market power, based on wireless performance metrics and an analysis of the estimated profitability of wireless carriers in Canada. The authors find that the Canadian wireless sector is underperforming in several respects, and consumers would potentially benefit from increased competition. Their analysis of the profitability of Canadian wireless carriers suggests that these carriers may be earning above-normal returns on their investment, consistent with the exercise of market power.

The authors also analyze the impact of potential new wireless competition in the form of an additional nationwide carrier. Their analysis estimates that entry by an additional competitor would increase consumer surplus in Canada by approximately $1 billion annually, which represents 5% of 2012 industry revenues. The study also suggests that an additional nationwide carrier would expand wireless penetration from 78% to 81% and drive down incumbents’ average prices by about 2%.

The report, “Canadian Wireless Market Performance and the Potential Effect of an Additional Nationwide Carrier,” was prepared by Brattle principals Kevin Hearle, James Reitzes, and Coleman Bazelon, senior associate Jeremy Verlinda, and associate Giulia McHenry. The report is available for download here.