The Harper government is still thrashing around in the thickets of its ideology without yet having discovered an exit path to more competition in the mobile telecommunications industry.
The thrashing has been going on since 2008, when the government set aside spectrum for new entrants. Three of the most ambitious – Wind Mobile, Mobilicity and Public Mobile – are failing financially.
So the thrashing continues, this time to roll out the red carpet for the U.S. behemoth, Verizon, to enter Canada with special inducements, to which the Big Three telcos – Rogers, Bell and Telus – naturally take offence. This entreaty to Verizon might yet be rebuffed, dashing the government’s hopes.
As they launch their defensive campaign against the putative U.S. entrant, the big Canadian telcos might ask themselves: How did we become so unpopular to the Canadian public? However they answer, the premise of the question is undeniable: they are unpopular – maybe collectively the most unpopular industrial group in the country.
How did it come to this? They are many reasons, but one stands out: The overwhelming public impression – fair or otherwise – that Canadians pay excessively high mobile phone bills at a time when more and more people are using them.
The Harper government, political and populist to the core, knows that in attacking the Big Three telcos it is pushing on an open door. That the government has no clear idea how to achieve the alluring goal of “more competition” is politically irrelevant. The door is open, and the government wants to be seen walking through it.
Whether Canadian mobile rates are too high is the subject of intense debate framed by international studies that can be interpreted differently. The results usually depend upon which basket of services is being compared. Since there are so many baskets of services, comparisons are difficult.
The telcos and their critics naturally cherry pick the parts of these studies that buttress their respective cases. In particular, they point to studies about whether rates are higher or lower in the U.S. The answer is: it depends on which services, how many and where.
A government that wanted an informed debate and a rational policy response would ask the Canadian Radio-television and Telecommunications Commission and/or the Canadian Competition Bureau to investigate the state of industry competition. (Or the Bureau could take the initiative itself.) These impartial institutions could be asked: Is there enough competition and, if not, how do we foster more in a sensible way?
But, of course, we are not in the realm of informed debate and a rational policy. Instead, we have a government (or to be more precise, a Prime Minister’s Office) that believes in the ideology of “competition,” except of course when it doesn’t, and reckons that this message has widespread political appeal without yet having figured out how to bring this competition about.
The telcos are shielded in Canada by foreign investment restrictions. If these were lifted completely, then Verizon might well come into Canada and, with its overwhelming size, take over the wireless operations of one of the Canadian companies. In which case Canada would still have three big telcos, and be no further ahead competitively.
Or, under current policy, Verizon might win privileged access to new spectrum, buy existing small players with their spectrum, and start targeting wireless packages for businesses, especially those with Canada-U.S. operations, and maybe for consumers in a few large cities. This arrangement wouldn’t produce any improvements for consumers everywhere, just in certain markets.
Verizon, wisely, is taking plenty of time to ponder its options. It might decide the whole idea of entering the small Canadian market too fraught with politics and too uncertain economically.
Verizon could not bundle mobile, cable and land phones as the big telcos do. Verizon certainly wouldn’t make the huge infrastructure investments needed to spread its own service across a vast land, as the big Canadian telcos have done. Verizon doesn’t have a stellar reputation for price and service in the U.S.
Good politics sometimes makes for bad policy, which is the direction in which the government’s telecommunications policy is heading. More competition is theoretically sound; how to accomplish it without wrecking the existing industry is something impartial agencies rather than political ideologues should ponder.