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Verizon Entry to Canada Could Spark Shift Toward Single North American Communications Market

Reports that U.S. telecom giant Verizon may be preparing to enter the Canadian market has sparked considerable speculation on the likely impact of a company with a market cap greater than Bell, Rogers, and Telus combined. While much of the discussion has centered on wireless pricing, my weekly technology column (Toronto Star version, homepage version) argues that the more significant development may be the shift toward a single North American communications market.

Canada and the U.S. share much of the same communications infrastructure – the same North American numbering plan (calling codes), closely aligned spectrum policies, and easy access to broadcast signals along the border – yet for decades the two systems have been separated through regulation. Foreign ownership restrictions, Canadian content requirements, and simultaneous substitution policies (which lead to the annual complaints about missing U.S. commercials during the Super Bowl) have all ensured that the two markets remain distinct.

In recent years, new technologies have slowly chipped away at the communications divide.

For example, there may be modest differences between U.S. and Canadian satellite radio services with several Canadian-specific channels, but the vast majority of available programming and devices are the same.  

Internet-based video services represent another significant blurring of the Canada – U.S. line. With two million Canadian Netflix subscribers, those hoping for a Canadian competitor to Netflix are missing the reality that the Canadian Netflix is Netflix. There are some differences in available content, but that too is diminishing, particularly as Netflix invests in its own original programming.

The prospect of a Verizon entry into Canada would put a single communications market into overdrive. On the telecom side, Verizon could use its Canadian network to change the approach to roaming in North America altogether since it would be uniquely positioned to offer a single U.S. and Canadian network.

The company could move to eliminate roaming fees for U.S. and Canadian customers, while offering cost-competitive U.S. and Canadian roaming together for international providers establishing wholesale roaming agreements. Such a plan would obviously be attractive to the corporate sector as well as regular cross-border travellers, leading to the gradual elimination of roaming and long distance charges for calls throughout North America.

On the broadcasting side, Verizon holds exclusive U.S. rights to both the National Football League and the National Hockey League.  Those rights are currently held by BCE in Canada, but a Verizon entry into Canada could shake things up. Verizon could presumably complicate the BCE rights by offering free access to NFL and NHL games to Canadian customers when they travel to the U.S.  More interestingly, it could make a play for joint U.S. – Canada rights in the future, moving closer to an elimination of the geographic divide on content rights.

Verizon could also pursue changes to broadcast distribution regulations, which are viewed as a major hurdle for foreign entrants since non-Canadian companies are unable to offer competitive bundles that feature wireless and television services.  Given the government’s obvious support for a strong foreign wireless entrant, Verizon would be well positioned to promote the removal of the current restrictions.

Later this year, the Canadian Radio-television and Telecommunications Commission will examine the regulatory framework for television services.  CRTC Chair Jean-Pierre Blais has acknowledged that it is time to ask whether the assumptions that lie behind Canadian regulatory policies still hold true.

With satellite radio and Internet video already close to a single market, regulatory reform to longstanding policies such as simultaneous substitution a possibility, and the geographic lines on telecom, content, and broadcast distribution all increasingly blurred, the big question may be whether Canada is closing in on a common North American communications market.

8 Comments

  1. Optimistic on content
    I am generally in agreement with your overall argument, but I think you are being very optimistic about actual content availability. The difference between online content availability in the States compared to Canada is still significant. All kinds of media that Americans take for granted is blocked for Canadians here, even simple snippets of news items embedded in someone’s blog. For that to change, we really do need to break up the oligopoly of Bell, Rogers, etc.

  2. do we roam that much?
    I don’t see Verizon’s roaming advantages being all that significant – yes, regular travellers and corporate types will love it, but are they so.significant a demographic to trigger all this game-changing?

  3. richmond2000 says:

    I think the ADVERTISING of roaming ALL of USA/Canada will do lots even if few use the feature NOT to mention the possibility of getting USA/Canada “local” calling/TXTing
    and yes I think it will change the landscape

  4. It sure would make surveillance easier.

  5. Paul Renault says:

    So, will the ‘States adopt Canadian privacy models, or..
    ..will ‘Mercans (sorry, “the Marketplace”) force us to get rid of the Privacy Commissioner?

  6. The big three need more competition
    While I read the article that Canada is in the middle for pricing, I cannot help but think that more competition will lead to revised pricing structures whereby the consumer may actually get more.

    I don’t understand why VM, a Bell subsidiary, offers better and cheaper plans than Bell the parent company. The same can be said for Koodo/Telus and Fido/Rogers. Particularly in the Maritimes it is difficult to get a deal as we don’t have the likes of WindMobile, etc. here.

    As more people move away from voice calling and towards SMS/MMS texting and moving their browsing from their pc to their table and their phones, offering data plans < 1GB is ridiculous. Call display, VM and anytime minutes are quickly becoming standard, yet the data plans offered still leave a lot to be desired.

    I am hopeful that Verizon moving in will open the doors to others as well and truly make for some competition for all Canadians; it would also create jobs (don’t forget that added bonus!), and we can certainly use those.

  7. more NSA powers
    looks like this one suits powers that be. We should get free internet and cell in exchange

  8. @jim
    Well, the US has the NSA that monitors (spies) on its Citizens, Canada has CSEC… regardless of where you live, the Government has an agency that monitors its Citizens under the guise of security.

    If you want to use secure transmissions (i.e. encrypted), then you need to take the necessary steps to incorporate it into your digital life ( check out https://prism-break.org as a starting place).