With an even playing field, Canada’s Telecommunications Industry Can Address More Competition

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Gupta: To allow enormous foreign companies to take advantage of special rules designed to help small, new market players such as Wind Mobile or Mobilicity while entering the Canadian market is unacceptable.

Gupta: To allow enormous foreign companies to take advantage of special rules designed to help small, new market players such as Wind Mobile or Mobilicity while entering the Canadian market is unacceptable.

The Government’s intent to increase competition and have multiple carriers serving the market is a well principled approach. It is also true that small and new entrants may need some support and, in the broad context, special spectrum and ownership rules that favour small, new market players is understandable.

However, to allow enormous foreign companies to take advantage of those same special rules while entering the Canadian market is unacceptable. It would be thoroughly harmful in terms of the Canadian information and communications technology (ICT) eco-system, and, in the longer term, also harmful in terms of competition within the telecom sector and therefore detrimental to ICT adoption across the economy. This is what is behind the current “firestorm”. As the national technology association we are committed to promoting what is good for the industry in Canada, increases ICT adoption across the economy, and helps build an eco-system of globally competitive ICT companies and competencies that is robust, prosperous and creates economic growth in Canada.

There has been significant anxiety about the prices that consumers pay for wireline and wireless telephone and internet services in Canada. As we all know the Canadian government has sought to address this anxiety by implementing regulation aimed at increasing completion within the telecommunications industry. To some extent, companies like Mobilicity and Wind were able to enter the Canadian marketplace thanks to federal communication policy and the entry of more competitors appears to have impacted Canadian prices for wireless phones.

We must remember that Canada encompasses a vast territory with a low population density, where installing and managing a national digital infrastructure more difficult and expensive than in, for example, smaller and more densely populated European countries.

In fact, the newly released 2013 Update of the Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions reveals that the cost of a typical cellphone package in Canada dropped 13% and were driven in large part by lower price service plan (voice, text and data) offers available from both the incumbent carriers and new entrants. This, it said, brought price levels in Canada to the middle of the pack when compared with other developed countries. This study also indicates that while Canada might not be the world-leader in terms of pricing, we do reasonably well across the board in relation to the group of countries studied, including the somewhat smaller and much more densely populated US.

We must remember that Canada encompasses a vast territory with a low population density, where installing and managing a national digital infrastructure more difficult and expensive than in, for example, smaller and more densely populated European countries. Nevertheless, our telecom networks are well developed and among the best in the world by any measure. Canadians consumers are particularly well served in residential markets, with near ubiquitous service for both wireless and broadband services. Basic wireless coverage extends to 99% of the population, and advanced wireless networks used to support smartphones and mobile internet sticks reach 98% of Canadians.

We are at or near the top of the global class in terms of household penetration, in terms of broadband usage, and in terms of web usage. Remarkably, this has been achieved largely by private-sector investment.

Canada also ranks favourably in terms of broadband rankings worldwide, and especially in relation to our key trading partners, as is reflected in the Wall report. Canadians have been enthusiastic users of those networks and adopters of consumer applications online, relying on them to take advantage of e-health, e-commerce, e-government, online banking and online education. In fact, we are at or near the top of the global class in terms of household penetration, in terms of broadband usage, and in terms of web usage. Remarkably, this has been achieved largely by private-sector investment – without the massive government intervention and expenditure that has taken place elsewhere.

Canada’s position will improve even more as competition increases. However, for competition to work over the long term, it has to be real: it has to grow in the context of an increasingly level playing field. This will not be the case if a multi-national player is allowed to enter Canada’s telecom industry as a new entrant and enjoy benefits such as bidding on two blocks of Canadian spectrum set aside only for new entrants to the market in auction later this year, piggybacking on existing networks as it is not required to build its own networks to remote or rural communities, and bidding to acquire small Canadian companies such as Mobilicity or Wind while current Canadian telecommunication companies are excluded from doing so.

It is clear that the availability of telecom networks delivering affordable wireline, wireless and broadband internet services throughout the country has allowed Canadians to take advantage of the benefits of greater connectivity. More real competition on a level playing field in Canada’s telecommunications industry is what is needed to continue expanding these benefits.

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ABOUT THE AUTHOR
karna gupta
Karna Gupta is the President and CEO of ITAC, the Information Technology Association of Canada. He was previously the CEO of the security software company Certicom.

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