NDP MP Dan Harris (Scarborough Southwest, Ont.), his party’s deputy industry critic, described the government’s attempts to promote the entry of a fourth nationwide service provider into the Canadian wireless market “a categorical failure.”
“If you look across the wireless spectrum in Canada, nobody’s happy. It’s impossible to please everybody, but when you can’t please anybody you’re really not doing a good job,” Mr. Harris told The Hill Times.
Canada’s so-called “big three” incumbent wireless providers—Rogers, Telus, and BCE—all oppose the current spectrum auction rules as a “sweetheart deal” for American companies such as Verizon Wireless to enter the Canadian market. The Canadian Council of Chief Executives and the Canadian Chamber of Commerce also oppose the current terms; so does the Communications, Energy, and Paperworkers Union which has accused the federal government of trying to “woo” Verizon.
Mr. Harris said that he supports the entry of a fourth national competitor into Canada’s wireless market, but is concerned that a company such as Verizon could acquire a smaller carrier, such as Wind Mobile, and use its financial clout to become the dominant carrier in Canada.
The big three account for nearly 80 per cent of Canada’s wireless market share, yet they’re dwarfed by Verizon, which is the third largest telecommunications company in the OECD. In 2011, Verizon’s revenues were three times the revenue of Rogers, Telus, and BCE combined, at $111-billion. Meanwhile, Canadians continue to pay some of the highest fees for wireless services among developed economies. According to the OECD, Canada ranks 10th out of 34 OECD member countries in terms of the highest cost for a medium usage mobile data plan, and 13th when it comes to high usage plans.
A recent report commissioned by Industry Canada and the CRTC found that the average monthly cost of a medium usage wireless plan in Canada was $44.86, while a high usage plan costs $93.59. Canadian wireless prices for a medium use plan were on par with France and Japan, while Australians paid nearly $10 less per month for a similar plan, and Brits paid $6 per month. However, the report found that U.S. consumers could pay more than $30 per month. The report puts Canada “in the middle of the group” in its international comparison of mobile wireless pricing.
“We have the three dominant players and we have a few dominant regional players, but they’re not really competing with each other at the end of the day. That’s where a new entry could potentially help to break that up, but we have to make sure that it’s the right entrant and the right deal at the right time,” Mr. Harris said.
The rules for the 2008 spectrum auction set a five-year moratorium on the acquisition of new entrants like Mobilicity and Wind Mobile’s spectrum licences by the incumbents. Under the rules for the forthcoming 700 Mhz spectrum auction in 2014, the big three are each limited to bidding on one of the four prime spectrum blocks up for grabs, but smaller companies are able to bid on two of the four prime spectrum blocks. In total, seven blocks of spectrum are available in the Jan. 14, 2014, auction, which is expected to net the federal government billions of dollars in revenue.
In addition to the restrictions on the incumbents’ ability to acquire additional spectrum, the 2012 federal budget amended the Telecommunications Act to allow foreign ownership of companies with less than 10 per cent of market share in Canada. The combination of spectrum auction rules and changes to foreign investment in the telecom sector have set the stage for a company like Verizon to take control of a smaller carrier and make an aggressive push for a bigger share of the Canadian market.
Industry Minister James Moore (Port Moody-Coquitlam, B.C.) recently informed the incumbents that the federal government planned to stay the course with the rules, which were put in place by former Industry ministers Jim Prentice and Christian Paradis (Mégantic-L’Érable, Que.).
“[W]e want greater competition in the wireless sector. We believe that all Canadians should have access to competitive wireless services—whether they live in rural or urban areas—which is why we have taken steps to promote greater competition in every region of the country,” Sébastien Gariépy, Mr. Moore’s press secretary, told The Hill Times in an email.
Liberal MP Geoff Regan (Halifax West, N.S.), his party’s industry and consumer affairs critic, said that the division between Canada’s wireless providers and Industry Canada “demonstrates the failure of the Conservatives’ telecom policy.”
While he agreed that more competition was needed in the wireless market, he said that the current rules were more beneficial to foreign telecommunications companies and fail to guarantee improved service in rural Canada.
“What happens when you have a 100 per cent foreign owned company that suddenly has 20 per cent of the market in Canada? Does that mean the government’s intention all along was to open the door to 100 per cent foreign ownership for all companies? It’s hard to tell, but either way they should come clean with what their intent is,” Mr. Regan said.
Mr. Regan said that the government’s priority should be on increased competition and improved service in rural areas, but he said that the current rules only require companies to improve wireless service in areas that they already serve, but not necessarily expand to less populated areas.
“The government made a big fuss about how this is great for rural Canada, but it’s not,” he said. “They don’t have to expand their existing footprint at all. What does that do to increase service in rural areas?”
While the opposition is critical of the current spectrum auction rules, University of Ottawa law professor Michael Geist, who has been critical of the government’s digital strategy to date, favours the current framework.
“This particular issue has the advantage of being both good politics and good policy. From the politics side, it’s pretty obvious that Canadians are frustrated with the state of the marketplace,” said Prof. Geist. “I think both consumers and businesses recognize how important telecom and wireless is, and they’re looking for a more competitive environment.”
Prof. Geist conceded that the government’s wireless policies have been slow to develop over the past six years, but when it comes to foreign participation in the wireless market “Canadians could care less who owns their wireless companies.”
“They just want competitive pricing and better service,” he told The Hill Times. “If that comes from an American carrier because the Canadian carriers have been too cozy and haven’t been sufficiently competitive, then so be it.”
Original Article
Source: hilltimes.com
Author: CHRIS PLECASH
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