Against all expectations and despite the fears of users after its acquisition by Bell, the independent provider EBOX has considerably lowered its internet prices since last February. The strategy could suffocate independent competitors, an expert fears.
Posted at 9:00 a.m.
According to a compilation made by the comparator PlanHub.ca at the request of The Press, EBOX has lowered the price of almost all of its packages since the beginning of the year, from 12% to 37%. The most surprising thing is that the largest reductions were made on packages using the infrastructure of Bell’s major competitor in Quebec, Videotron, owned by Quebecor.
Last March, The duty had reported an exodus of customers from EBOX after its acquisition by Bell, mainly to the benefit of two other suppliers renowned for their lowest prices, Fizz and Oxio. The new EBOX grid makes its services less expensive than at Oxio for the majority of packages, practically similar to the prices charged by 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 that they can continue to provide excellent services at competitive prices for their customers,” explained by email Caroline Audet, spokesperson at Bell.
“No direct evidence”
On the side of the Canadian Competitive Network Operators (CNO), which brings together 24 independent telecommunications providers, we refuse to conclude that Bell grants preferential treatment to its new acquisition EBOX with wholesale Internet rates lower than what was decreed by the Canadian Radio-television and Telecommunications Commission (CRTC) in May 2021. This decision, seen as a victory for large companies such as Bell, Rogers, Telus and Videotron, brought wholesale rates back to those decided in 2016 and canceled a more substantial decline dating from 2019.
“I have no direct proof [d’un traitement préférentiel d’EBOX par Bell], underlines 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 law professor and expert in competition law at the University of Montreal Pierre Larouche, we could well be dealing here with a practice called “margin compression” or “tariff squeeze”.
Bell, as a company controlling both the wholesale Internet market and the retail market, could thus afford prices inaccessible to its smaller competitors.
“Bell, Telus or Rogers are integrated operators, they control the whole process and can take their profit margin at the wholesale level, explains the professor. This allows Bell to lower retail prices to undermine competition. »
“Dysfunctional” market
How do you explain then that the most significant price reductions of EBOX are applied to services using Videotron’s infrastructures? It should be noted, still according to PlanHub.ca, Quebecor has not yet changed the rates of the independent supplier VMedia, which it acquired on July 29. Bell, moreover, announced last Friday that it had acquired Distributel. The published press release promises “choice and affordable prices for Canadians from coast to coast” without further details.
Mr. Larouche considers it “probable” that EBOX will not be profitable in the Videotron portion of its operations.
If I were Bell, I might agree to lose money with Videotron’s infrastructure. It’s part of a larger operation that aims to hunt internet providers and, in the long term, rebuild its profit margins.
Pierre Larouche, professor of law and expert in competition law at the University of Montreal
The upward trend in internet prices has already begun, argues Geoff White. He cites as evidence the most recent report by the firm Wall Communications, mandated by the federal government, which shows in particular increases of up to 13% between 2020 and 2021 for residential broadband Internet, between 100 and 249 Mb/ s.
“As we wrote to the Minister of Industry […]the residential Internet market is dysfunctional, because for years competitors have had to pay inflated prices for wholesale access to infrastructure,” argues the director of ORCC.