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 […]
Post Tagged with: "verizon"
The Verizon Privacy Risk: Are Canadian Carriers A More Privacy-Friendly Choice?
As part of the campaign against Verizon, opponents have begun to focus on the privacy implications of allowing the U.S. giant into Canada. In a blog post on the company site, Telus points to its privacy work (including fighting a key case to the Supreme Court of Canada) and then raises the spectre of a loss of privacy should Verizon enter the market:
The Canadian government needs to take a hard look at this important issue and ensure that Canadians’ privacy expectations continue to be met; especially if a U.S. communications company sets up shop here. Some U.S. laws, such as Patriot Act, can be quite invasive and could have detrimental impacts on the level of privacy experienced by Canadian wireless users.
The Communications, Energy and Paperworkers Union raised similar concerns in an article over the weekend that warned about the danger of NSA spying on Canadians should Verizon enter Canada.
Why Verizon’s Entry to Canada Would Reduce Consumer Wireless Prices
Fresh off predictions that the CRTC would not eliminate three-year contracts and that a Verizon entry into Canada was “highly unlikely“, Scotiabank’s Jeff Fan is apparently back with another report that claims it is a myth that Verizon’s entry would lead to lower costs for consumers (I say apparently because Scotiabank declined my request for a copy of the report). The claim mirrors the talking points of the incumbent carriers, who have argued that Verizon is a high-cost carrier that will not enter the market with lower prices.
While no one knows what Verizon’s business model will be (or even if they will come), the arguments that they will not result in lower prices requires you to believe that a major new competitor will simply enter with high prices that keep the current incumbent-friendly situation largely intact. One does not need a doctorate in economics to recognize this is highly unlikely. Whether Verizon offers North America-wide roaming or other incentives to attract customers, a new entrant such as Verizon will obviously shake things up and consumers will benefit.
Why the Canadian Plan to Encourage Wireless Competition Is Consistent with Many Developed Countries
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.
Was Nigel Wright BCE’s Source on Telecom Policy?
BCE CEO George Cope is claiming that the company approached the government with concerns about the forthcoming spectrum auction (as I note in this post, Bell has been a longstanding opponent of changes to the foreign investment rules and spectrum set-asides). BCE was particularly concerned with the potential for a […]
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