Rogers Communications, the owner of one of Canada’s biggest wireless and internet businesses — plans to spend nearly $3 billion on capital investments in 2020, with some strings attached. According to Rogers chief executive Joe Natale, if the government or telecom regulator adopts the wrong policies, that investment could go cold.
“If the regulatory rules change, we will cut our investment. We’ll have no choice,” said Natale.
“If we lose the confidence of shareholders, then by definition, our cost of capital goes up. Then, by definition, we can afford to invest less.”
The North Shore News reported the Trudeau government and the industry’s regulator are working to chart a path through several contentious issues that will affect the country’s telecommunications and media companies. Rogers is most concerned about spending billions of dollars in preparation for 5G, including connecting towers and customers with fiber optics. The company already accumulated $18 billion of debt building infrastructure over the past 35 years.
Natale said, “We need regulation that encourages investment and fuels innovation. Punitive regulation will slow, or worse, stall 5G deployment and expansion of rural connectivity will happen at a snail’s pace if at all.”
At the center of the issue lies the battle between the “big” telecoms versus the mobile virtual network operators (MVNOs) and independent internet service providers (ISPs) that want low wholesale rates for tapping into the bigger infrastructure. According to the North Shore News, supporters of MVNOs and independent ISPs argue they can provide a competitive alternative to Rogers and the like. But, opponents say these small companies haven’t made the capital investments that warrant access to the big networks.
Natale said the environment will hinge on a regulatory review of wholesale wireless rates, yet to be set. That’s in contrast with wholesale landline rates set in August by the Canadian Radio-television and Telecommunications Commission, Canada’s version of the FCC. Rogers has made some adjustments to the way it prices its wireless services, which has significantly reduced what it collects from overage fees.
Rogers announced last week it’s begun rolling out its first 5G networks in downtown Vancouver, Toronto, Ottawa, and Montreal. The telecom is already running 5G pilots, including testing Samsung’s first 5G phones for Canada, slated for public availability in March.
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