Rogers, Shaw testify proposed merger will increase competition, advance 5G

Shaw executives stated that the carrier doesn’t have the means to build a competitive 5G network on its own

Rogers and Shaw Communications executives have testified that the proposed merger of their two companies will increase competition and improve networks.

The two telecom companies testified in a virtual hearing in front of the Industry, Science and Technology Committee in Ottawa on March 29th.

Rogers CEO Joe Natale told members of parliament that the proposed acquisition will advance 5G, create jobs and diversify the Canadian economy. He stated that together, the companies would be able to create a nationwide internet provider.

Natale argued that the merger would allow the two companies to compete with Telus head-on in Western Canada. He also stated that the competitive intensity within the Canadian telecom industry would not change.

When asked why the two carriers see the proposed merger as a necessary step within the telecommunications industry, Natale stated that Rogers and Shaw could do more together.

“Together we can go further and faster. This is an opportunity to take the breadth and depth of Shaw’s fibre network in the west, combine it with our wireless capability, and bring that together to create the best of both worlds,” Natale stated.

Shaw Communications CEO Brad Shaw told the committee that competition will intensify under the new deal and that Rogers and Shaw could compete more effectively together than if they stayed apart.

“We can’t look backwards at what might have worked in the past. As we look forward, it is clear that Shaw cannot build what Canada needs on our own,” Brad Shaw stated during the hearing.

He also outlined that Shaw Communications doesn’t have the means to build a competitive 5G network on its own due to the billions of dollars required in investments.

Concerns over fourth player being eliminated

Critics have argued that the proposed acquisition will lead to less competition as it would eliminate a fourth player from the industry.

Conservative MP Pierre Poilievre asked Shaw executives about previous statements where they argued that a fourth competitor has forced the Big Three (Rogers, Bell and Telus) to lower prices and increase competition.

Poilievre stated that Shaw is now downplaying the importance of a fourth competitor in the delivery of lower prices to customers and that the company is now contradicting itself.

“Those comments were made in the context of support for facilities-based carrier builds. I think those comments can coexist,” Shaw president Paul McAleese responded.

McAleese also added that Shaw believes a dynamic competitive environment reduces prices. He stated that although Shaw had a degree of influence over the Big Three in reducing overage fees and offering more data for lower prices, the Big Three have also taken an initiative on their own to do so.

Rogers has argued the acquisition will build on the legacy of two family-founded Canadian companies and that together, they will have the capability to deliver unprecedented wireline and wireless broadband and network investments.

Proposed acquisition subject to approval

The proposed deal requires approval from the Canadian Radio-television and Telecommunications Commission (CRTC), the Competition Bureau and the federal department of Innovation, Science and Economic Development.

Innovation Minister François-Philippe Champagne has said the government is committed to greater affordability, competition and innovation and that “these goals will be front and centre in analyzing the implications” of the proposed merger.

Further, the Competition Bureau issued a statement noting that “should the Bureau determine that the proposed transaction is likely to substantially lessen or prevent competition, we will not hesitate to take appropriate action.”

Rogers has previously stated that companies expect to receive approval by early 2022.