Appeared in the Toronto Star on August 3, 2013 as Setting the Record Straight on the Great Wireless Battle The great wireless battle of 2013 continues to unfold with Bell, Rogers, and Telus – the big three incumbents that dominate the Canadian market – calling for “fairness” in Canadian telecom […]
Telecom by yum9me (CC BY-NC-ND 2.0) https://flic.kr/p/53jSy4
Telecom
Industry Minister James Moore’s Commitment to Wireless Competition, Resolution Style
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”;
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 […]
A Closer Look at How Bell “Welcomes any Competitor” to the Canadian Wireless Market
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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