The worst of both telecom worlds

14 Dec

A quick follow-up today to my post yesterday on the lack of competition in broadband internet services in North America. Catherine Middleton, the Canada Research Chair in Communications Technology in the Information Society at Ryerson University, added a comment to that post yesterday wherein she linked to a pair of studies she’d done on broadband in Canada. Her studies came to many of the same conclusions - that there is a distinctive lack of broadband competition in Canada, and that will continue to be the case unless something changes with the government’s or regulator’s demeanour.

There was a quote in one of her reports that I found especially poignant, which she herself repeated from another, separate study. The previous 2008 report was titled “Right to Communication” and it stated that, “Canadians continue to face a market oligopoly comprised of a very limited number of powerful incumbents. As a result, they live in the worst of both worlds, enjoying neither the benefits of real competition nor the benefits of an industry regulated to serve the public interest.”

I’ve been saying this for some time: in Canada, we currently live in the worst of both worlds (which is diametrically opposed to that great Van Halen song, The Best of Both Worlds). When the Conservative government came into power in 2006 it directed our regulator, the CRTC, to basically take it easy - to stop proactively regulating and only get involved when a problem had become obvious. And so the process began in earnest of deregulating telecommunications services.

But there’s one very important regulation still up and running: foreign ownership restrictions. In a nutshell, foreign companies need not apply to Canada to set up any sort of internet, phone or wireless businesses because they can’t have any sort of meaningful ownership of them.

As the report succinctly puts it, this has created the worst of all possible scenarios. Our government has created an unregulated market for telecom and cable companies, but with no actual market forces to keep them honest. There is no threat of a large, well-funded foreign rival coming in to compete with them, nor are there any rules domestically to make sure they behave. There certainly isn’t any possibility of a serious competitor starting up domestically because telecom is an expensive business and small companies generally can’t get that kind of money. Especially not to go up against the likes of Bell and Rogers.

It’s an overused cliche, but the inmates really have been given the keys to the asylum.

Hello government: is this enough of a problem for you yet?


Posted by on December 14, 2010 in crtc, government, telecommunications


6 Responses to The worst of both telecom worlds

  1. The Mad Hatter

    December 15, 2010 at 10:51 pm

    It’s rather curious. James Moore kept telling me that if I wasn’t happy, I should go to the competition. He was rather upset when I told him there wasn’t any competition to go to. I think that is when he decided to block me on Twitter :)


  2. Misaow

    December 16, 2010 at 11:42 am

    The main problem with the CRTC and most high-up government people (like James Moore) is that they do not pay there own cellphone or internet bills, most of the time it is included for their job. They might know how much the bill is, heck they have to sign the acceptance of payment each month, but they receive reduced rates which are unavailable to even employees at such telecom brands, even less the general public.

    To say that there is competition is correct, unfortunately. In most places you have the choice of no less than 3 brands, and in some areas (the big cities) as many as 10 brands (7 of those being the big 3). The main issue though is once you step out of the big cities, you have almost no options, you have the big3, and in some areas a 3rd party reseller like sasktell or the provider in Manitoba. The secondary issue is that in the ”big 7” brands, the prices are almost all the same, with only headsets to differentiate between them, and who gets your money.

    At least the new players like Wind and Mobilicity have come out with fantastic plans for the holidays, it is just sad that so many people are still stuck in extended contracts that would cost them an arm and a leg to get out of. things are very slowly improving in the wireless world of Canada… now if we could just do something about the internet…


  3. nate

    December 23, 2010 at 3:11 am

    Q. what is the best Canadian, small start-up ISP model in light of the US-FCC and our new reality?


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