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    Why the Canadian Plan to Encourage Wireless Competition Is Consistent with Many Developed Countries

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    Tuesday July 30, 2013
    As the lobby onslaught from Bell, Telus, and Rogers bears some fruit - editorials from the Globe and Toronto Star calling for the government to reverse its position on a set-aside as well as support from the Canadian Council of Chief Executives and from a leading telecom union - it is worth considering whether the Canadian policy differs significantly from other developed economies. The Canadian policy boils down to the two issues: opening the door to telecom foreign investment after years of restrictions and creating a spectrum set-aside to ensure that new entrants (whether domestic or foreign) have a reasonable shot at winning sufficient spectrum to offer competitive wireless services in Canada.

    While the big three argue for a "level playing field", the reality is that Bell, Telus, and Rogers already enjoy enormous marketplace advantages. As I've previously discussed, these include restrictions on foreign ownership for broadcast distribution, extensive broadcast assets that Verizon could not touch, millions of subscribers locked into long term contracts, far more spectrum than Verizon would own, and shared networks that saves the companies millions of dollars. In the absence of a set-aside, the incentives for the big three would be to pay far above market price for the spectrum in order to keep competitors out of the market. In other words, Bell, Telus and Rogers will massively over-pay for the spectrum to keep out Verizon unless the government establishes a policy that precludes them from doing so.

    The incumbent talking points might lead some to believe that the Canadian policy is dramatically different from other countries (Bell has been talking about how the U.S. would never grant equivalent access, while the Globe speculates  that perhaps the policy is "the result of a drafting error"). Yet a review of recent spectrum auctions in other OECD countries indicates that the twin policy of encouraging foreign investment plus establishing set-asides to facilitate competition is very common. The biggest difference between Canada and many other developed economies is that Canada is late to opening its telecom market and is therefore doing both at roughly the same time. In other countries, foreign investment restrictions in the telecom market were removed years ago.

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    A Closer Look at How Bell "Welcomes any Competitor" to the Canadian Wireless Market

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    Friday July 26, 2013
    Bell was in full lobby mode yesterday with major advertisements and a new website arguing against a spectrum set-aside that could open the door to Verizon entering the Canadian market. CEO George Cope's starting point is that "Bell welcomes any competitor, but they should compete on a level playing field." Both aspects of this statement merit closer scrutiny.

    Of all the incumbent telcos, Bell has been the most persistent in trying to limit or delay the removal of foreign investment restrictions that would open the door to new competitors. For example, Bell Canada's July 2010 submission to the government's consultation on changes to the foreign investment rules for telecommunications argued that no changes were needed since there were no problems in the Canadian market:


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    Rogers Reveals, Part Two: Broadband Internet Prices to Increase, Unlimited Plans "Short-Sighted"

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    Thursday July 25, 2013

    While much of the focus of yesterday's Rogers quarterly call was on the wireless sector (see part one on roaming rates), it should be noted that company executives indicated that consumer broadband Internet prices - which the OECD recently reported were among the ten most expensive in the developed economy world - will continue to increase. Moreover, the company called unlimited bandwidth offers "short-sighted" and recent price increases just one step in the efforts to monetize broadband services.



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    Rogers Reveals, Part One: Threat of Regulation Driving Down Roaming Costs

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    Thursday July 25, 2013
    In 2011, the OECD released a report that found Canadians face some of the highest wireless roaming fees in the world. Some tried to downplay the findings - the National Post's Terence Corcoran claimed that the roaming fees actually looked pretty cheap, while Rogers pointed to several packages that it said "would rank us among the lowest cost of countries surveyed." Yet as regulators in other countries began aggressively targeting high roaming fees - EU costs have dropped 91 percent over the past six years given regulatory initiatives - Canadian companies apparently began to fear that similar regulations could make their way here. Indeed, according to Rogers, it was necessary to get "roaming in line" or face the prospect of regulation.


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