Appeared in the Toronto Star on July 20, 2013 as Will Cabinet Shuffle Help Put Canada’s Digital Economy Back on Track One of the headliners behind last week’s federal government cabinet shuffle was the shift of James Moore, formerly the Minister of Canadian Heritage, to Industry Canada. The Minister of […]
Archive for July, 2013
Telus Attacks: The Battle To Keep Verizon Out of Canada
Telecom giant Telus has had an eventful week as it moves from claiming that Canada “really should be the most expensive country for wireless service in the OECD” to increasing its prices in the shift toward two-year contracts to now declaring war on the government’s commitment to injecting greater competition into the Canadian marketplace. While the comments that something less than the highest prices in the developed world are a “great success story we should be celebrating” generated considerable media attention (here, here and here), the bigger long-term issue is the full-court lobbying press to stop the entrance of new competition.
Yesterday, Telus CEO Darren Entwistle was campaigning at the Globe and Mail and National Post, warning of a “bloodbath” if the government sticks with its commitment to allow for a set-aside of spectrum for new entrants such as Verizon. Telus is concerned that a set-aside would allow Verizon to purchase two of the four available blocks, leaving the big three to fight it out over the remaining two blocks. Telus emphasized its prior investments in arguing for a “level playing field” in the auction.
Yet to borrow Telus’ phrase – “scratch the surface of their arguments and get to the facts” – and it becomes clear the fight is not about level playing fields since new entrants have been at a huge disadvantage for years in Canada. Indeed, even with a spectrum set-aside, there would not be a level playing field as companies such as Telus would have big advantages that include restrictions on foreign ownership for broadcast distribution (thereby blocking Verizon from offering similar bundled services), millions of subscribers locked into long term contracts, far more spectrum than Verizon would own, and its shared network with Bell that has saved both companies millions of dollars.
Competition Not Contracts: The Real Reason Canadian Wireless Prices Are on the Rise
This week, Telus and Bell announced new wireless pricing plans based on two-year contracts (Rogers has said their plans will be released shortly). Those plans – particularly those from Telus which seems to be taking its suggestion that Canada should be the most expensive wireless country seriously – feature higher prices, which some claim are the product of the shift from three-year contracts to what is effectively a two-year maximum under the new CRTC wireless code. The narrative behind these cost increases is that consumers are amortizing the cost of their device over a shorter period of time and therefore can expect higher monthly fees. This argument is perfect for the carriers as they get to blame the CRTC (and by extension, the Competition Bureau, consumer groups and consumers themselves) with an “I told you so” for the increased prices. Yet the higher costs are not strictly a function of shorter contracts, but rather a product of Canada’s uncompetitive marketplace.
Many other countries have two-year contracts with cheaper rates and bigger device subsidies. This is because consumer price is not primarily a function of contract length or device cost, but rather marketplace competition. For example, Spain’s wireless pricing has been dropping in recent months as their four major carriers find consumers more aggressively shopping for better prices or cancelling their wireless services altogether. In response, all four Spanish carriers are dropping prices to stop the churn and attract new customers. For example, BGR reports that Yoigo (owned by Telstra) has offered free iPhone 5’s on two-year contracts for as little as 25 euros (C$34) per month (the article emphasizes how competition through innovative pricing has led to profit declines at incumbent carriers). The decline in price is illustrative of why it is competition, not “regulatory costs” or device subsidies, that are the key factor to consider.
[Update 7/27: A commentator below helpfully points out an inaccuracy in the BGR article since the Yoigo price was for phone only and not service. A fuller comparison of the Spanish offer is as follows: Yoigo for 24 months of 25 euro phone + 25 euro service (unlimited voice + 1 GB data) is C$1636.24. Add another 12 months of service for C$409.56. Total three year cost is $2047.80. Bell’s current offer on an iPhone 5 with the same voice and data for three years is $179.95 for the phone, $35 for the activation, and $70 per month of the service for 36 months. Total three year cost (not including taxes) is $2734.95.]
The “Miracle in Marrakesh” Provides a New Path for Digital Access
Negotiators from around the world gathered in Marrekesh, Morocco late last month for a diplomatic conference aimed at concluding a new United Nations treaty to improve access to copyrighted works for people who are blind or have other perceptual disabilities. Despite years of discussions, there was ample reason for pessimism.
My weekly technology law column (Toronto Star version, homepage version) notes the treaty talks had become bogged down in the months leading up to the conference, with large lobby groups such as the Motion Picture Association working feverishly behind the scenes to undermine it through changes to rules on digital locks and fair use.
As the deadline approached however, the majority of the world lined up behind user rights for the blind. With Canada playing an important facilitative role, the negotiators were ultimately able to craft compromise language that resulted in a new landmark treaty. More than 50 countries immediately signed on, suggesting that the treaty is well on its way to establishing new rights for the blind (20 countries must ratify it before the treaty formally takes effect).
The “Miracle in Marrakesh” Provides a New Path for Digital Access
Appeared in the Toronto Star on July 13, 2013 as The “Miracle in Marrakesh” Provides a New Path for Digital Access Negotiators from around the world gathered in Marrekesh, Morocco late last month for a diplomatic conference aimed at concluding a new United Nations treaty to improve access to copyrighted […]
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