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:
“In 2013, halfway through its mandate, Stephen Harper’s government was looking tired and bereft of captivating political ideas for the next election. It was then that the Conservative MP wrapped himself in his “Captain Consumer” cape and launched an assault upon Canada’s big three wireless phone companies: Rogers, Bell and Telus. He and his government were going to lower monthly wireless bills by cracking the cartel.”
Leaving aside the fact that the Harper government began focusing on wireless competition six years earlier in 2007 with a spectrum set-aside, Lind continues by explaining the government’s effort to convince Verizon to enter the market, which he characterizes as “inviting Goliath in and taking the slingshot away from David. When word of this leaked to Nadir Mohamed [then Rogers CEO], it put Rogers on an immediate war footing. (I’m sure Bell and Telus were, too).”
Lind points to Rogers’ investment in wireless and states:
“But Harper and government decided to put it all in jeopardy, from Canadian jobs to investment and retirement income, by offering Verizon Wireless spectrum – for which Rogers, Bell and Telus weren’t even allowed to bid – and by allowing Verizon to buy smaller Canadian wireless operating we were prohibited from buying. He was changing the rules, and badly. We moved to DEFCON 3, not quite all-out-war but ready for immediate action.”
The description of opening the Canadian wireless to foreign investment is quite something, but when the the initial meetings did not change the government’s mind, the company upped the ante:
“We moved to DEFCON 2. In the summer of 2013, the CEOs at Rogers, Bell and Telus appointed internal teams to coordinate a publicity campaign, called for Fair for Canada, through which we’d inform as many Canadians as possible about the dangers of Harper’s policy. I was the head of the Rogers team, Joe Natale (Rogers’s current CEO) led the Telus team; and Wade Oosterman led Bell’s. Jan Innes, as the fourth member of this tri-party team, coordinated media relations and advertising. Each of the three companies had people reporting to us, and we’d meet weekly, either in person or via conference call, to discuss tactics and overall strategy. We worked extremely well as a team.
The media was the lowest hanging fruit. Executives and high-profile experts like former communications minister Francis Fox penned opinion pieces supporting us and calling on the government to make the rules fair. We also held news conferences in cities and towns across Canada. Heidi [Bonnell] had us out meeting MPs on their own turf in ridings all over the country. Our unions explained the risk to jobs. Investor-relations people talked to telecom analysts about the potential impact. We lobbied the CRTC asking for their support. And we hired an advertising and marketing firm to blast out our messages.”
If this sounds familiar, it is precisely the same playbook used by Bell and Rogers last year in their campaign for site blocking, even using a similar name (Fairplay Canada). The use of the same tactics is unsurprising given that it worked in the Verizon case and the companies, which control the vast majority of media outlets in the country, have enormous leverage in conducting publicity and lobbying campaigns.
While none of this is secret – the lobbying efforts are readily apparent – it is rare to have an an on-the-record discussion of the strategies and combined efforts of companies who view foreign competitors as a bigger risk that domestic competition. For Innovation, Science and Economic Minister Navdeep Bains, it serves as a reminder that significant efforts to inject competition into the Canadian wireless market will likely place the big three incumbents on a war footing with efforts to scuttle any such policy plans.
There are variations among the “Big Three”. TELUS is highly rated for being proactive about privacy by Ann Cavoukian, and issues regular dividends.
Rogers and Shaw seem interchangeable, apart from which one operates Cable in which geographic region. Shaw had to fire one of the family scions as CEO for being drunk and abusive in public. Rogers makes no commitment to paying dividends. Perhaps TELUS is in a better position to be responsive to customers and remain competitive because it does not have the Cable Industry of automatic 10% ROI on new investment in cable plant by filling out the annual fee increase form to submit to the CRTC every year. The CRTC routinely rubber stamped the fee increase applications well into the 1990s, even when the equipment involved seem more about business and government internet service than delivering cable service.
Bell was the only game in town and a huge monopoly for many years. If Verizon is being scorned for being the same, and they will give Canadians far better packages and lower prices, then I say bring on the monopoly and stop subsidizing the existing companies in Canada who play into this continual model of let’s gouge the country for all we can in profit!