Canadians want Verizon Communications Inc. to come to Canada, a new poll suggests, but don’t believe the U.S. company should be given any advantages over domestic carriers.
A Forum Research poll found that 57 per cent of respondents want foreign wireless companies to expand into Canada, and 68 per cent believe that an American competitor would drive down prices as the Canadian carriers are forced to compete for customers.
But while Canadians may be hoping for a price break, it’s unclear that would happen. Verizon is a premium player in the United States, and could choose to compete based on service rather than cost.
“If Verizon or another company did invest in Canada, we doubt it would start by launching a price war,” Moody Investors Service said in a report last week.
Canada’s three large telecommunications companies have waged a summer-long public relations battle with the federal government, which is pressing ahead with a spectrum auction that the companies feel give a competitive advantage to Verizon.
The companies need spectrum to increase the speeds of their network, and Verizon would be able to bid on two of four available blocks. That could leave the Canadian companies without key spectrum, making their networks less appealing to customers in the coming years.
Sixty five per cent of those asked said they didn’t think any foreign company should be given preferential access to the spectrum when it comes up for auction in January, while 57 per cent said Verizon shouldn’t be allowed to piggyback on existing Canadian networks.
"The number of Canadians concerned about the wireless loopholes is growing," said Mark Langton, a spokesman for BCE. "Everyone supports competition, but there has to be a level playing field."
The poll was conducted in a random telephone survey of 1,189 Canadians on Friday. It is considered accurate within 3 per cent, 19 times out of 20.
The results add to a growing debate over Canada’s telecom policy. In a report to be released Monday, the Fraser Institute argues that Canada should drop foreign ownership restrictions in the wireless industry and let competition regulators deal with the consequences.
The think tank argues the country already has a competitive market, with prices similar to the United States. It says the market should now be opened to companies across the globe, who would spend as much as it takes to build their operations if there is a business case for doing so and put pressure on the Big Three incumbents.
At the moment, foreign companies are barred from acquiring Canadian telecom companies with more than 10 per cent of the market. The Fraser Institute would like to eliminate that restriction, which would open the door to foreign bids for Canada’s three largest telecom players.
“The elimination of all foreign ownership restrictions on facilities-based carriers and reliance upon the Competition Act to deter acquisitions of spectrum that threaten to reduce competition, as well as discourage any abuses of market dominance that raise rivals’ costs or otherwise suppress competition, seem quite adequate competitive safeguards,” the report stated.
Verizon is pondering an expansion into Canada, probably by buying small players such as Wind Mobile, Mobilicity or Public Mobile and then bidding for blocks of spectrum.
Canada’s established players – Rogers Communications Inc., Telus Corp. and BCE Inc. (which owns a 15 per cent stake in The Globe and Mail) – are not allowed to buy the smaller companies.
The report says the government has stacked the upcoming auction of wireless spectrum in favour of new players, which could lead to shoddier service for consumers as the incumbent carriers reduce their investments in the industry.
“There is an obvious danger to having government handicap incumbents in order to ease entry conditions into the sector,” said Stephen Globerman, a professor at Western Washington University who authored the report. “There is a danger of promoting inefficient competition which makes most consumers worse off than better off.”
The incumbents are asking the government to postpone the spectrum auction and review its rules, which the report also suggests. The government has made it clear it has no intention of doing so.
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