Competition and the Stale Telecommunications Industry in Canada

Summary

Canada's telecom giants have been extracting superior rents due to stifled competition and a cartel–like co–opetition, stemming from static inefficient (government) regulation. Current regulations serve to "protect" Canadian interests and content thereby shutting out foreign competitors and artificially inflating prices for end users: individuals, businesses, and governments.

I propose the government phases out all ownership and investment restrictions to allow foreign telecoms to setup shop in Canada. This delay would be arbitrary, say five years, to allow domestic firms to shore up investment capital and invest in infrastructure. After such delay, foreign firms (likely American firms including Verizon, AT&T etc.) could enter the Canadian market and compete on an equal footing with domestic firms. The problem is easy. American firms have a larger pool of customers on which to spread fixed costs, driving prices down, while competition forces firms to differentiate themselves either through cost leadership, superior service or a combination thereof. The exact opposite is true in Canada given domestic firms only "compete" in a market a fraction the size of the U.S.

The "grace period" described serves to shore up domestic capital in anticipation of increased competition. Domestic firms could use this period to transition their business strategies and build better infrastructure to level the playing field with larger foreign firms. As for the rest, competition will take care of it ensuring customers' diverse needs are met including higher & faster broadband usage, ubiquitous coverage regardless of geography (from which roaming charges are levied); and those ridiculous system access fees and ludicrous charges for voicemail and caller ID.

Foreign firms have different privacy & disclosure rules governing them. For instance, U.S. firms are subject to the USA PATIOT ACT and for illustrative purposes, the Canadian government should make sure in legislation or through CRTC regulation, that all information collected from customers by foreign (American firms) be entirely segregated for data collection purposes. This ensures we remain sovereign and that foreign governments cannot tap into Canadians' private conversations without impunity. Foreign telecoms would be obliged to adhere to these regulation prior to having the CRTC issue them a license of operation in Canada with the processes audited prior to licensing and periodically audited thereafter (yearly). A monetary penalty would be extracted in every case of infringement with repeated offenders having their licenses suspended or canceled.

Content regulations should be reviewed although some are still necessary. Encouraging Canadian content and considering linguistic realities, should remain a priority of the CRTC in strengthening Canadian culture and identity. Content restrictions should be placed on known pedophilia sites and information collected and passed on to law enforcement.

These recommendations decrease prices and betters service to end–users. It creates jobs as new firms enter the market. Government levies revenue from licenses & taxes from a bigger pie. The only losers in this are the big three robber barons.

Submission

Lack of competition and obscene regulation have allowed Canada's telecom giants to profit at Canadians' expense under the hypocrisy of "protecting" jobs and Canadian culture & identity.

I propose the government phases out all ownership and investment restrictions to allow foreign telecoms to setup shop in Canada.

The recommendations set forth below followed by a detailed rationale, not only denote we can strengthen Canadian culture and identity, but lower prices for all end–users, create additional jobs and increase government revenue. The only losers in this are the big three robber barons.