Telecom consumers should greet recent news from the Competition Tribunal with dismay. The merger between Rogers and Shaw has cleared a critical legal hurdle, meaning that the Big Five telcos — Rogers, Bell, Shaw, Telus and Vidéotron — are one step closer to becoming the Big Four.
This decision is a loss for consumers — a loss for affordability. It’s a win for no one but investors.
And that’s because the system is designed this way. Our Big Five are simply too big. They control Canada’s fibre-optic cables and signal towers — the infrastructure on which every telecom provider operates. They wield this market power to their own advantage, shutting out smaller players and protecting their outsized profits.
This is bad enough for our pocketbooks. But as the 2022 Rogers outage demonstrates, it’s also bad for our economy and for public safety. When a single error at a single company can take down emergency response and debit transaction services, something needs to be done to improve service, improve affordability and ensure that there isn’t a single point of failure.
We’ve tried to entice a competitor to the Big Five to Canada for years. We’ve used policy incentives. We’ve failed. That’s why it’s time to create a competitor directly.
It’s time for a nationwide public option.
If there is little competition in the Canadian telecom market, it’s not for lack of trying across the political divide.
In 2008, the Stephen Harper government set aside 40 per cent of the cellphone wireless spectrum for new entrants. But Canada’s telecom oligopoly proved able and willing to defend its turf. Thanks to acquisitions and jointly funded campaigns, Harper’s efforts failed. So have those of Justin Trudeau’s government.
The problem is small companies such as Freedom Mobile (previously Wind Mobile) just can’t compete and so they don’t build networks. The result is a shortage of bandwidth that limits expansion or improvements to wireless service.
This also makes Canadian spectrum the most expensive in the world by a significant margin. Costs that no doubt also contribute to our high telecom bills.
Federal governments’ magical thinking, that a startup might soon come along and end all of our affordability problems, has not saved consumers money. In fact, while prices have been coming down in small measures, Canada is still a high priced outlier compared to the rest of the world. Our approach has likely ultimately cost consumers.
Industry may reply that Vidéotron, which was a new entrant a decade ago, proves that the current approach works. If Vidéotron is able to purchase Freedom Mobile from Shaw, industry argues, it will be a national carrier, and competition will be ensured.
The Competition Tribunal bought this argument. Canadians should not. According an expert who testified to the tribunal, Vidéotron — even after the acquisition — would be less competitive than Shaw was, due to a loss of integration with Shaw’s distribution channels and assets like its digital channel. Though Videotron’s presence in Quebec may have brought data prices below the national average, they are still not the lowest prices in Canada. Shaw’s entrance into the wireless world more recently than Vidéotron did little to stem the rising tide of our cellphone bills.
A merger of Rogers and Shaw, even with Vidéotron as a national operator, is a loss for consumer choice and affordability. It’s a win for no one but rich investors when competition for profits prevails over competition for prices.
There are no guarantees in politics or public policy, save one: if you keep doing the same thing, you’re going to keep getting the same results.
It’s time to think beyond what we have done in the recent past and create a nationwide publicly-owned telecom.
It’s not as far-fetched as it sounds. Most telecom infrastructure was once in public hands: Telus was created out of publicly-owned operators by merging Alberta Government Telephones and BC Tel. Bell, for its part, acquired its maritime holdings by purchasing them from the government.
Public alternatives already exist.
Today, SaskTel — a publicly-owned telecommunications company — enjoys significant market share in Saskatchewan, forcing Rogers, Bell and Telus to lower their prices to compete and providing the province with more affordable rates than the rest of Canada.
In communities underserved by broadband internet, municipally-owned internet Service Providers (ISPs) can be an option to deliver internet services better, faster and cheaper. In both Canada and the United States, this model delivers. South of the border, the city of Chattanooga, Tennessee, decided to use the fibre optic cables in its electric “smart grid” to deliver internet services to residents.
And in Ontario, the residents of Thunder Bay and the surrounding rural region have access to high-quality internet services through the municipally-owned Tbaytel. This not only allows them to roll out high-speed internet for their otherwise underserved community irrespective of the priorities of the Big Five, it pays millions of dollars into the municipal budget.
And Indigenous communities, who, like other rural communities, experience a digital service gap, have taken matters into their own hands with First Nations-owned ISPs. Beaver River Broadband, a partnership between the communities of the Meadow Lake Tribal Council and SaskTel, brings internet service to Indigenous communities in Saskatchewan.
In a year defined by affordability challenges, governments looking to make life more affordable will need to think creatively. We need policymakers and regulators to understand that more of the same is unacceptable. Canadians can’t afford a Rogers-Shaw merger and a broken spectrum sales system. Governments looking for real telecom affordability will need a good look at a public option.