In the months before the coronavirus outbreak, numerous governments around the world enthusiastically jumped on the “regulate tech” train. Digital tax proposals, content regulation requirements, national digital spending mandates, as well as new privacy and data governance rules were viewed by many as essential to respond to the increasing power and influence of digital giants such as Google, Facebook, Netflix, and Amazon.
My Globe and Mail op-ed notes the pandemic has not only sparked a massive shift in economic and health policy priorities, but it is also likely to reorient our views of the tech sector. Companies that only months ago were regarded as a threat are now integral to the delivery of medical equipment, critical to the continuing function of workplaces in a work-from-home world, and the platforms for online education for millions of students. Billions of people rely on the sector for entertainment, communication with friends and family, and as the gateway to health information.
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This week’s report that Canada is an outlier on wireless services with carriers generating more revenue per SIM than carriers in other countries and Canadian consumers on the low end of data usage, represents the latest in a long line of similar independent reports that confirm Canada’s status as a high-cost, low usage wireless market. Indeed, a government-commissioned comparative study, CRTC data, OECD data, and Rewheel Research all tell a similar story. Given that there is little to debate about the state of Canadian wireless pricing, the big question is now what Innovation, Science, and Economic Development Minister Navdeep Bains is prepared to do about it.
A new book from long-time Rogers executive Phil Lind provides insights into the backlash that any significant efforts to inject more competition into the market is likely to face from the incumbent carriers. The book contains several pages recounting the carrier battle in 2013 against Verizon entering the Canadian market with the active support of the then-Harper government. The story pulls back the curtain on lobbying efforts that involve active coordination by top tier executives at each company, active lobbying of MPs, journalists, and market analysts, as well as advertising campaigns designed to fight back against market-opening policy measures. Lind starts the story:
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Bell announced plans this morning to buy MTS, the Manitoba-based wireless carrier that has been critical to creating a more competitive wireless market in the province. The nearly $4 billion deal would include a commitment to divest one-third of MTS wireless customers to Telus. The agreement is still subject to regulatory and shareholder approvals along with figuring out how some customers go to Telus and some stay with Bell. While the government has yet to articulate a clear strategy for wireless competition in Canada, the deal appears to kill the hope of four carriers in each market and will likely mean sharply increased prices for Manitoba consumers.
With the four competitors in Manitoba – Bell, Telus, Rogers, and MTS – the province features some of the lowest wireless prices in Canada. Compare Bell’s wireless pricing for consumers in Manitoba and Ontario. The cost of an unlimited nationwide calling share plan in Manitoba is $50. The same plan in Ontario is $65. The difference in data costs are even larger: Bell offers 6 GB for $20 in Manitoba. The same $20 will get you just 500 MB in Ontario. In fact, 5 GB costs $50 in Ontario, more than double the cost in Manitoba for less data. The other carriers such as Rogers and Telus also offer lower pricing in Manitoba. The reason is obvious: the presence of a fourth carrier creates more competition and lower pricing. With MTS out of the way – and Bell and Telus sharing the same wireless network – prices are bound to increase to levels more commonly found in the rest of the country.
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Among the many Internet success stories of the past two decades, Google stands alone. The undisputed king of search, hundreds of millions rely on it daily, supporting an Internet advertising business model that generates tens of billions of dollars annually.
My weekly technology law column (Toronto Star version, homepage version) notes that kind of success invariably leads to legal and regulatory issues, though most of Google’s legal fights have focused on content, such as the inclusion of controversial websites in its search index, the digitization of millions of books through its book search initiative, and the removal of links that may lead to websites that host infringing content.
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Whereas the 2013 OECD Communications Outlook ranked Canada among the ten most expensive countries for wireless services in virtually every category;
Whereas the Wall Report commissioned by Industry Canada and the CRTC found that Canadian prices are on the high side in nearly every category of wireless service;
Whereas the Canadian Wireless Telecommunications Association has argued that consumers would be willing to pay more for wireless services and Telus has said that given our geography Canada should be the most expensive country for the wireless services in the OECD;
Whereas Canada has long been one of the only developed economy countries with significant restrictions on telecom foreign investment and has been characterized as the most restrictive in the OECD;
Whereas Bell has consistently opposed or sought to delay changes to the foreign investment rules;
Whereas the government announced a telecom policy last year that opened the door to greater foreign investment and rules designed to facilitate new entrants to the marketplace;
Whereas Telus described that policy as “thoughtful and balanced”;
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