Contrary to all expectations and despite user fears after the takeover by Bell, the independent provider EBOX has significantly reduced its Internet prices since last February. The strategy could stifle independent competitors, an expert fears.
Posted at 9:00 am
According to a compilation by comparison company PlanHub.ca at the request of The press, EBOX has reduced the price of almost all of its packages from 12% to 37% since the beginning of the year. Most surprisingly, the biggest reductions were in packages using the infrastructure of Bell’s main Quebec competitor, Videotron, owned by Quebecor.
last march, The duty had reported a churn of customers from EBOX following the Bell acquisition, mainly in favor of two other providers known for their lowest prices, Fizz and Oxio. The new EBOX grid makes its services cheaper than Oxio for most packages, practically similar to the prices of Fizz, which belongs to Videotron.
“Our strategy for EBOX has always been to give them the resources and scale to support the growth of the business so they can continue to offer their customers excellent service at competitive prices,” said Caroline Audet, spokeswoman at Bell , by email.
“No Direct Evidence”
On the Canadian Competitive Network Operators (CNO) side, which brings together 24 independent telecom operators, we refuse to conclude that Bell is giving its newly acquired EBOX preferential treatment with internet wholesale rates lower than those offered by the Canadian Radio-TV and Telecommunications Commission (CRTC) in May 2021. This decision, seen as a victory for major companies such as Bell, Rogers, Telus and Videotron, brought wholesale tariffs back to those decided in 2016 and raised a clearer decrease from 2019.
“I have no direct proof [d’un traitement préférentiel d’EBOX par Bell], emphasizes Geoff White, Director General and Legal Services at ORCC. Remember that EBOX still uses Videotron’s infrastructure […]. But it’s worth noting that since EBOX is owned and presumably funded by Bell, it has deeper pockets to allow for pricing tactics that may have nothing to do with wholesale pricing. »
According to University of Montreal law professor and competition law expert Pierre Larouche, we could well be dealing with a practice known as “margin compression” or “tariff squeeze”.
Bell, as a company that controls both the Internet wholesale market and the retail market, was able to afford prices that would be unattainable for smaller competitors.
“Bell, Telus or Rogers are integrated operators, they control the entire process and can take their profit margin at the wholesale level,” explains the professor. This allows Bell to lower retail prices to undermine competition. »
Then how do you explain that EBOX’s biggest discounts are applied to services using Videotron’s infrastructures? It should be noted that Quebecor has not yet changed the tariffs of independent operator VMedia, which it acquired on July 29, according to PlanHub.ca. Bell also announced the takeover of Distributel last Friday. The published press release promises “choice and affordable prices for Canadians from coast to coast” without further details.
Mr. Larouche thinks it is “probable” that EBOX will not be profitable in the Videotron part of its business.
If I were Bell, I might agree to losing money on Videotron’s infrastructure. It’s part of a larger company that aims to hunt down ISPs and rebuild its profit margins in the long run.
Pierre Larouche, law professor and competition law expert at the University of Montreal
The upward trend in Internet prices has already begun, argues Geoff White. As evidence, he cites the recent report by Wall Communications on behalf of the federal government, which notably shows increases of up to 13% between 2020 and 2021 for broadband internet in private households between 100 and 249 Mb/s.
“As we wrote to the Minister for Industry […]the private internet market is dysfunctional because competitors have been paying inflated prices for wholesale access to infrastructure for years,” argues the director of ORCC.