The telecommunications policy announcement this week by Christian Paradis, the Minister of Industry, is a step in the right direction – of liberalization, that is – but unfortunately, in the short run, it will probably not lead to much more competition.
The Conservative government is slowly but steadily adopting many of the recommendations of the Competition Policy Review Panel, chaired by Lynton (Red) Wilson, which reported in 2008. In particular, it proposed a two-phase liberalization; in the first phase, foreign companies would be allowed to acquire Canadian telecom companies with no more than 10-per-cent market share; these firms could then grow from there. Three years later, Mr. Paradis has said the government will introduce a bill to this effect. (The government has not yet addressed the second phase, which would open up the large firms to foreign investment.)
If this had been done earlier, there would have been no occasion for the tortuous lawsuit about who exercised control of Globalive Communications Corp., in which the engagingly outspoken Egyptian businessman Naguib Sawiris had invested. Mercifully, that issue is now closed.
In 2008, the government set aside some spectrum for those smaller-market-share telecom firms. As a result, consumers were happy about the lower prices caused by greater competition, but the smaller, newer firms did not make much profit.
This time, Mr. Paradis is not proposing such set-asides for the smaller companies in the auctioning of the spectrum freed up by the ending of the rabbit-ears TV era. Instead, the government’s priority has become better service to rural areas.
Consequently, as Ken Engelhart, a vice-president of Rogers Communications Corp., said to Iain Marlow of The Globe, “I don’t think there’s people lined up around the corner to buy the Canadian wireless new entrants.” In other words, there is little prospect of new foreign investment in Canadian telecom companies.
Skeptics might think that the government, having won a majority, is turning more toward its electoral base; perhaps Mr. Engelhart meant this when he said the new auction arrangement is “bad public policy, but probably good politics.”
Nonetheless, the government deserves credit for continuing to establish the principle of greater competition.
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