These are stories Report on Business is following Thursday, March 7, 2013.
Whither the wireless market?
Depending on who you listen to today, Canada’s wireless market is either dysfunctional or dynamic.
On the one side, a non-profit group released a survey showing the outrage among customers. On the other, a Bank of Nova Scotia analyst issued a report saying the battle has been won, and regulators can declare victory.
First, as The Globe and Mail’s Steve Ladurantaye and Rita Trichur report, the federal government unveiled tougher rules in advance of its next spectrum auction aimed at heightened competition and better roaming service.
“No Canadian should be left stranded simply because he or she is outside the range of the chosen service provider,” Canada’s Industry Minister, Christian Paradis, told reporters.
This came as OpenMedia.ca released a survey of almost 3,000 people who were asked to share their “cellphone horror story.”
It found Canadians upset about poor customer service, restrictive contracts and high prices.
“The findings of our study clearly show that Canada’s dysfunctional cellphone market is a dead weight on our economy, and is in desperate need of an overhaul,” the group’s executive director, Steve Anderson, said in a statement.
“Unless decision makers take action, Canadians will continue to face poor service and punitive high prices, and will continue to fall behind the rest of the industrialized world.”
(Just as an aside here, I called my daughter’s service provider yesterday with a question about roaming fees, and this morning I got an e-mail asking me to take part in a customer satisfaction survey.)
Noting that 94 per cent of the market is controlled by the three big players, Bell Canada, Rogers Communications Inc. and Telus Corp., OpenMedia.ca cited 12 “specific” problems falling in the three main categories.
“One respondent shared the story of her son, who has Asperger’s Disorder and was persuaded by a telecom sales rep to sign a three-year contract he couldn’t possibly afford,” the report says.
“Despite explaining that her son ‘didn’t understand what he was signing and that he wasn’t capable of understanding the consequences of the contract,’ the service provider refused to let him out of his contract, and forwarded the debt to a collection agency,” the report adds.
“Still other citizens reported being treated poorly by sales representatives, often being repeatedly disconnected during a conversation, having to argue to correct billing errors, and in one case even being told to ‘shut up and pay the damn bill.’”
On the other side of the issue is Jeff Fan, a stock analyst at Scotiabank, who released a report citing 10 “common myths” about the industry.
“The facts support the view that Canada has a healthy wireless market with lower smartphone monthly price plans and higher smartphone penetration than the US, which benefits both Canadian consumers and carriers,” he said.
“We think it is time for the regulators to declare victory on the policies they adopted five years ago. We believe a CRTC national code is the appropriate way to address consumer issues. We believe limiting spectrum transfers by new entrants will not sustain competition and could even result in inefficient spectrum utilization in the future.”
- Ottawa moves to toughen up cellphone rules for carriers
- Ottawa set to announce rules for 700 MHz wireless spectrum auction
Top court rules in key case
The Supreme Court of Canada has sided with an Ottawa-area truck-stop owner in his lengthy battle for compensation from Ontario after the province built Highway 417, which forced him to move his business, The Globe and Mail's Jeff Gray reports.
The dispute was seen as an important legal battle by lawyers who specialize in expropriation cases. The ruling could mean that governments will have to pay more in compensation to property owners affected the construction of major infrastructure projects, even to property owners whose land is not actually expropriated.
OECD sees oil spike
High oil and gasoline prices may be taxing household budgets now, but just wait.
The price of Brent could surge to between $150 (U.S.) a barrel and $270 by 2020, the Organization for Economic Co-Operation and Development warns.
That would mark a hefty jump from about $111 today, and the recent peak of just shy of $120. The other benchmark, West Texas Intermediate, is just above $90.
While projecting oil prices is difficult, the OECD says, there is a case to be made for surging demand, notably in emerging economies in regions such as Asia, and its impact on costs, hurting economic growth.
“A return of world growth to slightly below pre-crisis rates would be consistent with an increase in the price of Brent crude far above early-2012 levels,” the organization says in a recent report.
“Based on plausible demand and supply equations, there is a risk that prices could go up to anywhere between $150 and $270 U.S. per barrel in real terms by 2020, depending on the responsiveness of oil demand and supply and on the size of the temporary risk premium embedded in current prices due to fears about future supply shortages,” it adds.
“These projections account for a negative feedback effect of higher oil prices on GDP.”
Over that period, the OECD says, total supply would climb by about 14 million barrels a day, probably from Canada’s oil sands and the shale boom in the United States.
Trade picture improves
Canada’s trade deficit narrowed in January as oil bounced back and autos suffered a setback.
The deficit declined to $237-million from $332-million in December as exports climbed 2.1 per cent, outpacing the 1.9-per-cent increase in imports, Statistics Canada said today.
Export prices rose 1.3 per cent, while volumes increased by 0.9 per cent. Imports, in turn, rose almost entirely on volumes.
Exports to the United States, Canada’s main market, climbed 2.6 per cent, largely on oil, and with the rest of the world by 0.9 per cent.
Of note was a 14-per-cent jump in exports to Europe.
“The improvement in the trade picture, small as it may be, is an important first step for the Canadian economy this year,” said economist Francis Fong of Toronto-Dominion Bank.
“After an undeniably weak 2012, exports are going to be increasingly looked to as a driver of growth given that households and government are expected to moderate spending this year.”
- Canada's trade deficit narrows in January
- Barrie McKenna's Economy Lab: Canada begins to regain its trade swagger
- U.S. trade gap widens more than expected in January
Streetwise (for subscribers)
- Cost overruns, writedowns leave miners in activists' sights
- How Potash lessons fuelled Nexen takeover
ROB Insight (for subscribers)
- Dorel's results are solid (no thanks to U.S. and EU consumers)
- Pension deal shows scorched earth is not the only approach
- Bombardier adds 160-seat option to new C Series plane
- ECB offers no helping hand for Italy, says markets calm
- U.S. jobless claims unexpectedly fall, signal labour market gains
- Canadian Natural Resources hikes dividend by 19 per cent