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Telecom

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.

August 8, 2013 — 20 comments — News

Getting Signals Straight in the Great Wireless War of 2013

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 policy. Ben Klass posted an exceptional response to Bell over the weekend that provided some perspective on Canadian spectrum allocation, while Peter Nowak once again took on Telus’ speaking points on the issue. My weekly technology law column (Toronto Star version, homepage version) notes that the incumbents concerns with the policy represent a notable shift, since they described it as “thoughtful and balanced” when it was unveiled by then-Industry Minister Christian Paradis in 2012. The same companies now say the rules will create a “bloodbath” since they fear the potential entry of Verizon Communications, a U.S. telecom giant with the power to shake up the Canadian market.

While the incumbents have framed the issue around fairness and a “level playing field”, the reality is that Canadian policies are strikingly similar to those found in many other countries that have sought to encourage greater competition. Moreover, the arguments around level playing fields conveniently omit the myriad of advantages enjoyed by the incumbents.

August 6, 2013 — 8 comments — Columns

Getting Signals Straight in the Great Wireless War

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 […]

August 6, 2013 — Comments are Disabled — Columns Archive

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”;

August 1, 2013 — 8 comments — News

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.

July 30, 2013 — 11 comments — News