Over the past several weeks Canadians from coast to coast have been treated to a veritable all-you-can-eat buffet of misinformation on the state of the wireless industry. Bell, TELUS and Rogers, Canada’s “Big Three” wireless companies controlling over 90% of the market, have been spending a lot of money to convince Canadians they should be mortally afraid of more competition for their wireless dollars.
Frankly, I think it is a ridiculous campaign and I have been mostly ignoring it and focusing on competing in the wireless market. Imagine that!
But to refresh, since 2008 the federal government has been, to its great credit, working diligently to implement a wireless policy aimed at bringing more competition to the Canadian wireless marketplace. In particular, we should all commend Minister Moore and the Prime Minister for their unflinching commitment to Canadian consumers in the face of this aggressive and dishonest campaign led by Bell and TELUS.
The government’s commitment to competition in wireless began with the 2008 AWS spectrum auction, which blocked the Big Three from bidding on certain wireless spectrum licences. This allowed new entrants like WIND Mobile to enter the market and provide a simple, affordable alternative for consumers.
As a group, the Big Three have fought competition tooth-and-nail these past five years to prevent a fourth national competitor from emerging to challenge them. The Canadian Wireless Telecommunications Association– which we joined being assured it would equally represent all wireless companies in Canada – is a mere puppet of the Big Three. Far from supporting the new entrants like WIND Mobile, CWTA has been advocating against bringing more competition to the marketplace. So much so, WIND Mobile (along with Mobilicity and Public Mobile) had to withdraw from the CWTA a few months ago.
With us not part of the CWTA, they have stripped away any veneer of impartiality in their role in the Big Three’s nationwide scare campaign. I’d like to take a little time here to go through each of the CWTA’s arguments to show how hollow they ring.
The CWTA begins by arguing the government’s current pro-consumer policies are actually anti-consumer. Why do they think this? Well, let’s read on and find out:
“It is inherently unfair: there are four prime blocks of wireless real estate available, the best blocks in the country. There are at least four players licensed in every region of the country. The problem? Under the current rules, a U.S. giant (Verizon) is allowed to buy two of those blocks. If they do, the Canadian firms will have to compete only for the remaining two. So, Canadian firms could be blocked from bidding on 50% of our own country’s assets. At least two would get nothing, leaving their customers at a disadvantage. How can a foreign company get a shot at two precious Canadian blocks, while the majority of the home team has to fight for a maximum of one each? We all instinctively know unfairness when we see it.
A lot of bold claims made here, so let’s look at them one at a time. First, yes, it is true there are at present four players in some – but not all – markets across the country. This is no accident, however. It is a direct result of the federal government’s use of its policy levers to bring about this competition. It was the 2008 AWS spectrum auction, and its set-aside for new entrants, that created the space for consumer options other than the Big Three. Without these so-called “inherently unfair” policies, consumer options would be even more limited than they are today.
The CWTA claims that if Verizon were to enter the Canadian market in the upcoming 700MHz spectrum auction, Canadian firms would be “blocked from bidding on 50% of our own country’s assets.” This assumes that the Big Three are the only “Canadian firms” – they’d like to be but that is precisely what the policy is designed to prevent. Instead, the auction will be an open and competitive process with national and regional carriers bidding fiercely at every stage.
In fact, when the policy first came out, we were very disappointed. In our view, the policy (still) virtually guarantees that the Big Three, who already have almost all the spectrum in this country (most of which was given to them by the government for free), will acquire 75% of the prime spectrum available.
The truth is the auction structure for 700MHz is not unfair to the Big Three at all. Perhaps Bell, TELUS and Rogers have lost some perspective after decades of getting handouts and protections from the Canadian people. It’s understandable, I suppose. After all, in the early days of cellphones and wireless technology the government simply gave them bucketloads of Canadian spectrum for free. If that is their baseline for what’s “fair”, then it’s not hard to understand why the Big Three feel so hard done by when they have to actively compete.
The CWTA did get one thing right, though. As Canadians we do indeed “instinctively know unfairness when we see it.” For many Canadians, they see it every month when they open up a cellular phone bill from one of the Big Three.
Now, let’s look at the next argument the CWTA makes in defence of the Big Three:
“This will cost a Canadian consumer a lot: the current rules will allow companies like Verizon to enter our market on the cheap. The costs they can avoid (because we are not allowed to compete with them for two blocks, and they don’t have to build their own national network) basically constitute an unneeded gift that you are paying for with your tax dollars. Should you pay higher taxes to support a $140 billion U.S. giant? It’s not as if they need the help, and it’s not right.
I’ll be quick on this one. It’s flat out wrong. No tax dollars are being spent to try and bring more competition into the Canadian wireless market. No subsidies are being offered, and no one will be paying more in taxes. Where a new entrant roams on an existing network, they have to pay the Big Three a fair commercial price for that access. Any claim otherwise is nothing more than lies and fear-mongering. The only scenario that will see Canadians parting with more of their hard-earned dollars is if the Big Three get what they want and greater competition is shut out of the market.
Here’s the next big doozy being pushed by the CWTA:
“Small towns and cities in rural Canada will be left behind: experts say Verizon would focus its efforts on major Canadian cities like Toronto and Montreal. The Canadian companies would focus their efforts there as well in order to compete. The result? Smaller cities and towns will not receive the latest and best wireless technology. A Canadian government should unite the country, not divide it.”
This is the strawman argument to end all strawman arguments. Of course any new player in the Canadian wireless market would put initial focus on large population centres – just like Bell, TELUS and Rogers did when they first launched their own wireless services and as they do today when they roll out new services.
It is also ridiculous to suggest that smaller cities like Moncton, Regina or Medicine Hat would go un-served if more competition is brought to the wireless market. The Big Three are not serving these smaller communities out of the goodness of their hearts. They are serving these communities because there are customers there, and money to be made. I am quite confident that, should the Big Three decide in a huff to abandon their cellular service in Moncton, someone else would swoop in to take over.
The argument that smaller cities and towns will be worse off are scare tactics meant to intimidate Canadian consumers. Canadians deserve better than this treatment, and they can have better.
As the bombardment of advertisements from the Big Three continues, it’s important to recognize the noise for what it is: a desperate stand by the Big Three to protect their cozy and highly-profitable wireless market oligopoly. No matter how loudly they protest, the reality is the government’s spirited pursuit of a more competitive market is in the best interest of all Canadians.
- Anthony Lacavera, CEO of Wind Mobile