On this episode of Hub Dialogues, editor-at-large Sean Speer was joined by Ted Woodhead, a longtime telecommunications executive and former CRTC official. They discuss his DeepDive essay for The Hub on a set of practical policy reforms to liberalize Canada’s telecommunications policy framework and boost market-based competition in the sector.
Below are five takeaways from their discussion.
1. The fourth-player policy’s limitations
Ted Woodhead criticizes Canada’s “fourth-player policy,” which aims to boost competition by introducing a fourth telecom provider. He argues that attempts to sustain this policy have repeatedly failed, as fourth entrants often struggle financially and rely on government support. Woodhead contends that such government-induced competition disrupts natural market dynamics, deters long-term investment from incumbents, and discourages infrastructure upgrades, ultimately leading to inefficiencies. Instead, he calls for a focus on sustainable, market-driven competition that allows organic growth and innovation without undue government interference.
2. Impact of wholesale mandates
The current regulatory framework requires major telecom providers to offer network access to smaller competitors at regulated rates. Woodhead argues this wholesale mandate discourages larger companies from investing in costly network upgrades, especially in underserved areas. The regulation, he believes, creates an imbalance by prioritizing short-term competition over long-term infrastructure development. Woodhead suggests that while some level of regulation is necessary, mandates should be limited to cases of clear market failure, rather than as a blanket approach, to encourage both competition and continuous investment in network improvements.
3. Support for foreign ownership liberalization
Woodhead advocates for lifting restrictions on foreign ownership in Canada’s telecom sector, believing this would attract investment and lower capital costs. He notes that foreign companies could bring not only capital but also valuable technological innovations and competitive pricing. However, he emphasizes that this change should be coupled with reforms in other regulatory areas, such as spectrum and wholesale policies. Liberalizing foreign ownership, he argues, would offer a practical test for market resilience, but for optimal impact, it needs to align with a broader liberalization agenda that reduces unnecessary regulatory burdens.
4. Spectrum policy and market alignment
Woodhead highlights differences between Canadian and U.S. spectrum policies, noting Canada’s slower approach to spectrum allocation. He argues that Canada should adopt a “fast-follower” model, aligning spectrum policy more closely with the U.S. and other markets where spectrum auctions are driven by market needs rather than regulatory caution. Additionally, he critiques the government’s strategy of allocating spectrum to smaller companies at reduced rates, which raises capital costs for larger providers. Woodhead advocates for a balanced policy where all market players compete on equal terms, fostering healthier industry competition.
5. Advocacy for regulatory humility
Woodhead stresses the need for “regulatory humility,” suggesting that interventions should occur only in cases of clear market failure. He argues that Canada’s current regulatory environment is overly interventionist, which stifles natural market dynamics and hampers innovation. According to Woodhead, telecom policy should facilitate market-based competition by providing a conducive environment for companies to innovate and grow, rather than imposing strict regulations that disrupt industry equilibrium. He suggests a restrained approach would result in a healthier telecom sector, benefiting consumers through improved services, lower costs, and technological advancements.
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