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James Moore on Wireless Lobbying: Canadians Know Dishonest Attempts to Skew Debates

Industry Minister James Moore came out swinging yesterday against the incumbent’s campaign against Verizon’s entry into the Canadian market and a letter from BCE director Anthony Fell. Moore may have been particularly angered at suggestions that the big three were disrespected after a 30 minute meeting with him when few companies have as much access to government officials as BCE. After defending the government’s policy, Moore states:

I do not believe the public is misinformed.  I think Canadians know very well what is at stake and they know dishonest attempts to skew debates via misleading campaigns when they see them.  Equally, Canadian consumers know instinctively that more competition will serve their families well through better service and lower prices.

The description of the Bell, Telus and Rogers campaign as dishonest and misleading by the Industry Minister comes on the heels of Prime Minister Harper confirming there would be no change in government policy, company employees talking about being pressured to write letters in support, and competitors such as Videotron calling out the big three for running “a shrill propaganda campaign designed to sow fear.” Unless there is some hidden game plan, the scorched-earth lobby tactics employed by Bell, Telus, and Rogers may go down as the most ill-conceived in Canada in recent memory.

29 Comments

  1. ,,,
    “I think Canadians know very well what is at stake and they know dishonest attempts to skew debates via misleading campaigns when they see them.”

    Of course we do James, us “radical extremists” do indeed. Just because you have some correct points in this case does not mean you aren’t projecting here.

  2. Swell informed
    Robellus informs me up the butt each month how fair their pricing is.

  3. I don’t blame the telcos for being fed up with being a political toy for the government to play with whenever the spirit moves them. While Harper still has consumer sentiment on his side on the cell phone issue he has lost a lot of credibility with industry and business leaders in Canada and internationally.

    It hard to overlook his 100% failure rate with all 3 of the “national” new entrants that were created by his current wireless competition policy – they are all going broke and trying to bail out.

  4. RE: Cynic
    I think therefore the proper move in addition to foreign competition to split up the telecoms and their media and other assets unrelated to their core business of “tube” providing. It provides an unfair competitive advantage and clear abusing of a monopoly(ies).

    There are basically 4 main methods to kill or take control of monopoly situations: 1) Let the monopoly naturally expire with time, 2) Nationalize the monopoly, 3) Split up the monopoly, or 4) Invite foreign competition.

    Well frankly, 1) is not a viable option as Bell, et al. have been propped up for years by the gov’t/CRTC (including Harper, sometimes, sometimes no, when it’s convenient). 2) is likely to be too controversial, leaving option 3) and 4). So yes, the current measures are inadequate because they simply don’t go far enough and are half-assed. These monopolies need to be split up, period. They should never have been allowed to acquire assets that can be directly tied as an unfair monopoly weapon (TV stations, Sports Teams, etc.)/are in conflict with other assets (i.e. crippling Internet to promote TV services, etc.).

  5. Good points Eric. Anyone who looks at the situation knows that is it intrinsically a conflict of interest to control both the pipes and the flow. Look up – Net Neutrality. Essentially, consumers and small business are for it, and stock heavy corporations against.

    It is like a company builds a public access toll road and then only lets cars that are insured by their partner insurer use it, or charge them double.

    It is in the interest of all Canadians to have open access to essential infrastructure. Today the data lanes are just as important as the Trans-Canada. If they are not going to break up the delivery and content divisions then at least another deep pocketed competitor will keep them wary.

  6. @Eric

    Unfortunately we aren’t dealing with a monopoly, we are dealing with 10 independent network operators each with widely varying degrees of vertical integration of transmission, content creation and distribution over a somewhat converged network. While Bell, Videotron (Quebecor) and Rogers each own content, other operators such as SaskTel, MTS, TELUS, Wind, Public Mobile and Mobilicity do not.

    The government is using regulation to try to manipulate outcomes (and public opinion) in a complex and hyper-competitive market. There are some people who frequent this blog who would argue that the market isn’t competitive but that is emotion talking, not logic. Monopolies don’t have to advertise their products because they are the only show in town. If Canada’s telecom industry was a monopoly, you would never see a billboard, TV commercial or newspaper ad trying to cell you a cell phone, yet the telecoms are amongst the biggest purchasers of advertising in the country.

    I like your option #4. Foreign companies have always been free to set up telecom companies in Canada but they have been prohibited from taking over the bigger companies. Let the foreign companies buy any company they want including Rogers, Bell or Telus before Harper screws up the industry so bad they aren’t worth anything.

  7. @Eric
    What about a 5th option – regulate the monopoly?
    Want to charge $10/MB for roaming data? OK, justify the charge on the basis of what it costs you.
    Want to charge 30 cents to send a text message? OK, justify the charge on the basis of what it costs you.

    I’m not saying this is the best option, but it is an option, no?

  8. Cynic, we will just have to disagree on whether we have, as you say, a “hyper-competitive market”, or rather we have mutually-beneficial regional oligopolies. I would posit most Canadian’s opinion leans towards the latter.

    Here is a good article in the Post that lays out the ‘perception war’ fairly plainly: http://fullcomment.nationalpost.com/2013/08/14/andrew-coyne-telecos-idea-of-a-level-playing-field-is-protection-from-competition/

    His point that the new spectrum may not be divided evenly between incumbents and new entrants is valid, but taking into account all the other advantages the incumbents hold (including bundling), it does not seem to onerous a burden.

  9. Cynic, I hope you held onto your stock …
    http://www.theglobeandmail.com/report-on-business/verizon-shifts-gears-on-road-to-canada/article13776178/comments/

    Is Verizon out, or just strategically positioning? Perhaps the ‘threat’ was just to lower stock on the big three so it could buy one of them out ūüėČ

    There will be a lot of analysis tomorrow. Be interesting to see what the endgame will be?

  10. @Crockett

    Wow, the past few days have been fascinating to watch. Minister Moore has gone on a public rant that has destroyed what little confidence international telecom investors might have had left in Canada. It’s going to take years for the industry to recover from this mess …

  11. Royal Canadian Airwave Farce
    The reason Wind and Mobilicity failed is because they didn’t offer the iPhone, and that was entirely because they only had AWS spectrum and nobody wanted an Android phone. (If you want to see the proof, look at T-Mobile which had the exact same spectrum, and only stopped the bleeding after offering the iPhone.)

    In a similar line of obviousness, Shaw bought spectrum, and sat on it. Videotron bought spectrum, and sat on it. Rogers and Telus then are making gestures about purchasing that spectrum or buying Wind/Mobilicity. This is a farce. My pessimestic outlook on this is that Verizon buys both Wind and Mobilicity AFTER the 700Mhz spectrum, so they can leverage the double-spectrum allocation. More to the point I think the government should have used a “use it or lose it” clause provision, therefor companies like Shaw and Videotron can’t just flip it to turn a profit by selling it to Rogers when they can.

    I don’t think Verizon is in Canada’s best interests, but if competition was what the government wanted, they should have ordered Fido, Koodoo and Solo brands to be spun off into their own carriers. Why did the government let Rogers buy Fido (Microcell) in the first place?

    Canada’s geography is a joke when it comes to offering “triple/quad play” vertical integration. BC and Alberta have only Telus if they want to have all those services from one company.

    Here’s my (terrible) suggestion to level the playing field.
    Tell all the wireless carriers companies that they must divest the wireless divisions to the government. The government will take back all the spectrum and then re-allocate 25% to each national carrier and 25% to a wholesale carrier which local resellers can use. I doubt this would ever happen.

    But the Canadian media companies need to be broken up so that they are not subsidizing content with the revenue from internet and wireless access.

  12. @Crockett
    “His point that the new spectrum may not be divided evenly between incumbents and new entrants is valid, but taking into account all the other advantages the incumbents hold (including bundling), it does not seem to onerous a burden.”

    You seem to think that it is right to penalize these companies for investing in their infrastructure and making business decisions that best help them get the largest return from their investments.

    What reason would a company innovate, build and invest in Canada if there is the chance that the government will regulate it away if you are to become too successful?

  13. This is basic market dynamics 101.
    @WNF13 “What reason would a company innovate, build and invest in Canada if there is the chance that the government will regulate it away if you are to become too successful?”

    Oh, I’m all for innovation. When the major ISPs (and not just the ones in Canada) have too much control over distribution AND content then the result is less innovation, not more. Competition is what breeds innovation, not greater corporate dominance.

    If we want to have new products and services there needs to be a balance between probability and diversity. Sometimes the free market incubates success, and other times government regulation reigns it in. If that basic premise is going to keep you out of the market then I suspect your company is too timid to succeed regardless.

  14. @Cynic “Minister Moore … destroyed what little confidence international telecom investors might have had left in Canada.”

    Cynic, I wouldn’t count your chickens just yet.

  15. @Crockett
    “When the major ISPs (and not just the ones in Canada) have too much control over distribution AND content then the result is less innovation”

    Sorry, but I don’t see the correlation. but my point is, what would compel Company A to set out on an aggressive growth strategy building a world class infrastructure, incurring billions of dollars of debt along the way, knowing that if they are too successful, they will have there infrastructure taken away?

  16. Be careful what you hope for …
    @WNF13 “What would compel Company A to set out on an aggressive growth strategy building a world class infrastructure, incurring billions of dollars of debt along the way, knowing that if they are too successful, they will have there infrastructure taken away?”

    There is no such thing as an unrestrained free market, there will always be some government oversight of the economy. This is to prevent things such as monopolies, anti-competitiveness etc.

    Now, there are companies that have successfully “set out on an aggressive growth strategy building a world class infrastructure” and prospered. Many continue to do so. The problems occur, and this is the sad part, when it becomes more important to please the stockholders than the customers.

    In a truly open market this would usually take care of itself. In the case of Telecom, there is a limited ‘natural’ resource that is controlled by the government … frequency spectrum. Since you cannot just mine new spectrum, the government’s role is to regulate it and the companies that hold the licence of usage.

    So, we have Telcom companies that has become very successful from the stockholder’s perspective but woefully unsuccessful from the customers. It took government regulation to stop the gouging practice of obscene roaming charges. Now, you may point out that Telus recently did so voluntarily, but this was a late game maneuver not absolving them or the others of years of abuse. There are myriads of other customer service failings past this avarice.

    Bottom line, there is nothing wrong with making profit, but a businesses, licensing a limited resource of national interest, that becomes too unbalanced between earning profit and providing service, actually does deserve to have “there infrastructure taken away”.

    Be happy that all they are getting for the moment is the threat of a little more competition.

  17. @Crockett
    “Bottom line, there is nothing wrong with making profit, but a businesses, licensing a limited resource of national interest, that becomes too unbalanced between earning profit and providing service, actually does deserve to have “there infrastructure taken away”.”

    The strange thing is though, for being “woefully unsuccessful” in pleasing customers, why are the customers not leaving for the new entrants?

    Forget the national picture, but even if only just in the urban areas. Or even just Toronto. It has been five years so every three year contract has rolled over at least once so that is not the issue. So why are the new entrants not gaining market share at a higher rate?

    One could point a finger at the new entrants demanding to know why they have not, in five years provided a suitable alternative, even in just Toronto. In the case of Wind, it is certainly not money that is an issue, so what is the problem?

    You will be quick to blame the incumbents for not playing nice, but what business or customer service incentive are they obligated by to play nice. They have to play by the rules, the lopsided ones that they are up against, but they do not have to play nice.

    So it would actually seem then, that providing service is not an issue in the incumbents case, whereas it is an issue with the new entrants, but you would still punish the incumbents for their success.

    And then of course, there will be the next question. What will the incumbents do in face of a decision to have their infrastructure taken away, or even if forced to share it.

    I believe then by using the logic you present, to preserve profit, but increase service levels, the incumbents best choice would be to abandon expansion and contract resources dedicated to such, and concentrate on providing the best service to the most customers – such as the new entrants chose to do.

  18. WNF13 POINT 1 – “You will be quick to blame the incumbents for not playing nice, but what business or customer service incentive are they obligated by to play nice.”

    Yes, I know, providing good value and customer service sounds like a crazy business pan. What was I thinking?!

    WNF13 POINT 2 – “Why are the customers not leaving for the new entrants?”

    The answer to that is simple, poor coverage and infrastructure. So the solution then is to give new entrants the ability to have good coverage and infrastructure. How do we do that? By inviting a deep pocketed competitor and letting them LEASE (not freeload) on the pre-existing infrastructure.

    Why on earth should we let them do this? … See POINT 1

  19. @Crockett

    Don’t forget SaskStel, Koodo and Telus have the highest JD Power customer service rankings in Canada. In fact, Wind has the highest percentage of complaints/subscriber reported to the CCTS – you can’t blame coverage and infrastructure for that.

    The new entrants have had mandatory tower sharing and roaming with any of the incumbents they choose (subject to commercial carriage agreements)since 2008.

    Incumbent networks are running very close to capacity so there isn’t enough room for them to carry a large volume of traffic for competitors, that is the reason the industry desperately needs the 700 MHz spectrum. Networks don’t perform well when they get close to capacity so everybody’s customer’s would suffer.

    Why should the carriers give Verizon access to their networks at all – it’s a very strange concept. Does Canadian Tire give Walmart access to its shelf space? Should you be ordered to let strangers use your car or live in your house?

  20. @Crockett

    The new entrants are having problems, in Mobilicity’s case likely terminal problems, gaining market share and creating revenue. The first answer out of everyone’s mouth is “blame the incumbents”. Make the incumbents give more. Take from the incumbents. Provide more competition against incumbents.

    No. Take a look at what is wrong with the new entrants. Why are they not gaining market share? Because they give poor service. People want value, not cheap.

    Wind, via Orascom and Vimplcom has deeper pockets than all the Canadian carriers combined. Money is not the issue. Service is the issue.

    Has anyone ever seriously given thought to the notion that perhaps the incumbents are not that bad? Who is actually saying it? Geist, ever the consumers white knight, led a charge after he manipulated the OECD report on Canada’s wireless pricing and it has been bloodlust ever since. But was it before? No.

    The fact is they can compete on customer service and that is the reason the new entrants are not gaining market share. The incumbents charge more, but offer more value, and at the end of the day, that is what is stopping the new entrants.

    Why would every CEO of the incumbents spell out in huge headlines “Open Canada’s wireless up to foreign competition” if they felt they were woefully unsuccessful at providing customer service?

    The fact is, the incumbents do provide good service. It comes at a price, but you get what you pay for. And if anyone actually took the time to look at the OECD report, rather that Geist’s interpretation they may agree that our pricing, for what we are getting, is in line with most countries, (and by most I mean 80%)of the countries in the world.

    Are they perfect? No of course not. Their shareholders have become accustomed to large dividends and the Telcos, have forgotten they are a utility, not Apple or Dell. The need to increase share value has to be weighed with providing their utility at market prices, not shareholder expected prices.

    And if keeping their jobs in Canada means that the shareholder value drops, so be it – again they are a utility first and a dotcom second. Bills need to become perfect. What you sign up for is what you are billed and it needs to presented in a way that anyone can read.

    These are the sorts of things that they need to better, I know it, you know it and they know it, but for a government to place regulations on them because of their competitors failures is not the answer. Enticing megacorps to compete is not the answer. Making them fix what is broken is the answer.

  21. Devil's Advocate says:

    “Statistics” pulled from the ass…
    “…Wind has the highest percentage of complaints/subscriber reported to the CCTS…”

    Considering Bell is already famous, hands down, for an astronomical number of total complaints, any “percentages” being measured here would have to be pointless. I can’t see the sense in phrasing such a stat as a percentage.

    Wind, having far less of a customer base, would need only a handful of complaints against that to earn a high percentage. Means nothing. More complaints have been filed against Bell than Wind has customers.

    It’s not rocket science how the large incumbents are the “forced” choice. They’ve got the coverage, the infrastructure, and lots of money to toss at marketing, advertising, R&D, and expansion (whenever it benefits them).

    And, now that they’ve been given what looks like blanket approval to erect booster towers all over the place, they’re even successfully interfering with some of the limited coverage offered by the smaller competitors. This is another unfair advantage the big players got that seems to have gone unchecked.

    My apartment building recently got topped with several Bell and Rogers relay towers. As soon as these things were powered up, all those not using Bell or Rogers began having all sorts of trouble getting a proper signal.

    This story is going on all over Toronto.

    Lots of people I know really want to get away from using either Bell or Rogers. They’ve certainly got no love for either of them. They just see countless examples of how the little guys are getting battered by the incumbents tactics and resources, and unable to offer them what they know they do need. So, even though it costs them significantly more, they stay with Bell or Rogers.

    I stand by my original statement – it is truly disingenuous for anyone to say, as Cynic continues to insist, that any meaningful competition exists. Bell, Rogers, and Telus are enjoying the current scenario, and are obviously cringing at the thought of a competitor with more clout being allowed to take away any of that bliss.

  22. RE: Jim R
    “What about a 5th option – regulate the monopoly?”

    That is more in line with option number 1 actually. If we actually meaningfully enforced the regulations we have now, it would indeed as you mentioned assist with the issue at hand. However, the gov’t over the years has let the situation manifest to what is is now, which gets back to my original point: the gov’t needs to resort to more than the just the quick one measure it is using now. I would amend my statement with your point however, that in addition to options 3 and 4, we need to also have stronger regulatory standards to establish where option 1 would actually work much better. It is fairly common knowledge that Canada lacks in the area of corporate regulation and law enforcement (see Nortel, Conrad Black, et al.).

  23. @WNF13 ‘Why would every CEO of the incumbents spell out in huge headlines “Open Canada’s wireless up to foreign competition”

    Are we talking about the same newspapers or radio ads? That’s certainly not the spin I get. There is always the little captcha at the end … “just on a level playing field”, it is very easy to argue the field is heavily tilted in the incumbents favor (read Devil’s advocate post) and I’m sure that’s not at all what they meant to portray.

    @WNF13 “Are they perfect? No of course not. Their shareholders have become accustomed to large dividends and the Telcos, have forgotten they are a utility, not Apple or Dell. The need to increase share value has to be weighed with providing their utility at market prices, not shareholder expected prices.”

    This is a great day, we agree 100% on something! Too bad this advice is far too late to make much of a difference. Avarice has it’s price, and for far too long have the incumbents forgotten they are a service company first, not pension & dividends provider. As Telcom services becomes more embedded in our lives there will be a growing awareness of who and how it is provided. There is too much anger and bad blood towards the incumbents to easily mend fences. I posit that many a Canadian would jump ship to another provider, even an American one, that could offer good terms and service without a second thought, there is little loyalty left to rebuild the mess the incumbents have mired themselves in.

    Media companies made this same mistake, putting control and profits over providing the products and services the public wanted. What did that lead to? Increased piracy and a scorched earth litigation policy (I’m looking at you RIAA), that has poisoned public relations for the foreseeable future. I suppose maybe its just human nature to try and wring as much blood out of a stone as possible, but treating your customer base solely as a dividend engine is in the end a short sighted mistake.

    Can the incumbents make sufficient changes quickly enough to satisfy the angst that Canadians feel? Will their stock holders allow it? Anything is possible I suppose, but the whiny ‘It’s not fair’ ad blitz campaign I think has had the exact opposite effect. Which just goes to show how out of touch the Big 3 are with Canadians … not a good omen.

  24. @Devil’s Advocate

    “It’s not rocket science how the large incumbents are the “forced” choice. They’ve got the coverage, the infrastructure, and lots of money to toss at marketing, advertising, R&D, and expansion (whenever it benefits them).

    And, now that they’ve been given what looks like blanket approval to erect booster towers all over the place, they’re even successfully interfering with some of the limited coverage offered by the smaller competitors. This is another unfair advantage the big players got that seems to have gone unchecked.”

    Again, you want to penalize them because they have built this infrastructure. There will be zero will to expand by anyone, Big three, new entrants or Verizon, if on a whim the government feels you have become too successful and are gaining market share beyond your competitors.

    I’m not familiar with “booster towers” or their function, but the option to install them was only given to the Big three? Surely Industry Canada has guidelines on their placement. Looking at the spectrum allocation docs, they manage spectrum down to region measuring 25 square KM.

    @Crockett

    “Are we talking about the same newspapers or radio ads? That’s certainly not the spin I get. There is always the little captcha at the end … “just on a level playing field”, it is very easy to argue the field is heavily tilted in the incumbents favor (read Devil’s advocate post) and I’m sure that’s not at all what they meant to portray.”

    Before the Big 3 launched their misguided media campaign (hopefully someone is already fired over that fiasco)the heads of each company were in all the major papers – notably first with Entwhistle and his press conference.

    It would seem that they deemed the average customer would relate more to a soft sell on jobs and Canadianism rather than the facts of technology and they went with the ads. It’s a bit odd as the papers were reporting on the three loopholes, so I do not know why they decided the “Woe is me” ads were needed.

    But speaking of those, I am confused as to why Moore is hitting the “campaign trail” to sell his policy to Canadians. It is either he honestly feels the telcos are getting their message across (unlikely – this government is to arrogant to believe that any one would listen to anyone but them) or they are seizing on an opportunity to add more smoke to the whole senate debacle (likely).

    In the former case what does he have to gain? They are the government and as one columnist put it “hold all the cards”. Which leaves the second case, and the Canadian public, as well as the telcos are swallowing the bait, hook, line and sinker.

    Where someone(s) should be fired from the telco side, someone has earned a huge raise on the government side.

  25. @Devil’s Advocate

    According to the CCTS, Wind had 7 complaints for every 10,000 customers while Bell had 3.5 complaints for every 10,000 customers. That means that Wind is pissing off their customers at a rate two times greater than Bell.

    There is no such thing as a “forced choice”. If you live in Toronto you have 6 different network operators to choose from. Some of the network operators offer smaller, crappier networks at half the price of some of the other guys who offer better networks at a higher price. You want to drive a Ferrari it’s going to cost you more than a Ford, that’s how market segmentation and product differentiation works. You don’t like Bell or Rogers? Well, you can still choose between Wind, Telus, Public Mobile or Mobilicity.

    I’m surprised you haven’t yet figured out that the different network operators use different frequencies for their networks. So your “theory” that Bell and Rogers are intentioanlly interfering with whichever service provider you are using is extremely unlikely. Industry Canada’s spectrum plan even allows for guard bands between frequency blocks that have the potential to interfere with each other. It is much more likely that your service provider has added another antenna within 3 km of you house and they have had to reallign all their adjacent tantennas to prevent them from overlapping and interfering – it’s routine and every carrier has to do it. Also, the city of Toronto hasn’t given blanket approval to all carriers to put up antennas. Toronto has it’s own antenna siting protocol which is quite thorough.


  26. “There is no such thing as a “forced choice”. If you live in Toronto you have 6 different network operators to choose from. Some of the network operators offer smaller, crappier networks at half the price of some of the other guys who offer better networks at a higher price. You want to drive a Ferrari it’s going to cost you more than a Ford, that’s how market segmentation and product differentiation works. You don’t like Bell or Rogers? Well, you can still choose between Wind, Telus, Public Mobile or Mobilicity.”

    You do realize that we don’t all live in Toronto right? In Toronto, you also get a whole lot of radio stations and HD OTA TV stations from Canada and the US. Toronto is an *exception* to the rule.

  27. Toronto isn’t as unique as you might think. Vancouver, Calgary, Edmonton, all have 6 network operators. Montreal has 7. Winnipeg, Saskatoon, Regina, Halifax, Ottawa, and St Johns all have 4.

    Verizon isn’t the least bit interested in the rest of Canada. Their CFO mentioned they are mostly just interested in the “Province of Toronto”.

  28. You’re partially right
    A few Canadians do know dishonest attempts to skew debates, and that includes those that come from you Michael and those that come from organizations like openmedia. The dishonesty runs deeply on both sides of this debate, unfortunately far too many are willing to swallow the ambiguous wording, the misdirection and the outright lies.

    It will be a poor day for you and those like you when they wake up.

  29. It’s a consperacy!
    You know, with the stock that Telus stock that Verizon sold off Q4 2004, I am not surprised at all. The “chicken little” syndrome the telecom companies are touting is sickening. If Verizon held Telus Stock a decade ago, then left, what does that really say about that big red company actually taking foothold here in the Great White North? http://about.telus.com/community/english/news_centre/news_releases/blog/2004/11/30/verizon-to-sell-its-735-million-telus-shares