Canada Has A Telecartel
August 1st, 2022 | DS
Canada is a country of abundant freedom in comparison to other nations, but when it comes to markets, freedom is lacking for consumers. Much of Canada's market diversity, or lack thereof, came to light in July when Rogers faced one of its worst and longest lasting outages of the company's history. The disruption shut down businesses and reduced access to emergency services, making Canadians see the harm in allowing monopolies and cartels to control an entire sector. Canada has a lot of cartels, like the dairy cartel, media cartel, supermarket cartel and the green energy cartel, but arguably the worst and most influential cartel is the telcomm cartel, or the Telecartel.
Canada has some of the highest cellphone and data costs in the world. This is the end result of a monopoly by four major companies: Rogers, Bell, Shaw and Telus. These companies are given their reign by the CRTC, which regulates competition and requires smaller carriers and providers to piggy-back on the networks of the four major companies. The infrastructure used to transmit data belongs to those four companies and no other companies are allowed to build their own infrastructure in Canada without the CRTC's permission. When foreign companies like Virgin Mobile enter Canada's market, they must pay to use cell towers that belong to one of the four big companies.
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During the Rogers outage, which lasted more than 24 hours, the CRTC was one of the organizations to lose its services. In a few months, if it is allowed, Rogers will merge with Shaw and reduce the four major companies to three. This will strengthen the Telecartel's grip on the Canadian market and reduce the choices that consumers have by an additional 25%. Unquestionably, this will result in higher costs and future network disruptions on a much larger scale.
Who are the faces behind Canada's Telecartel?
Ian Scott - CRTC Chairman
Ian Scott has been the chairman of the CRTC since 2017, before that he worked for Canada's Competition Bureau.
Mirko Bibic – CEO Of Bell
Bibic has been the CEO of Bell Canada since 2020, but has worked in various head capacities at the company since 2004.
In December of 2019, Bibic had an off-record private meeting with Ian Scott at an Ottawa pub. The meeting came days after the CRTC, under Scott's leadership, backtracked on its position that Canadian cell and internet prices needed to be reduced.
According to Teksavvy, Scott and Bibic have been friends for years. Just six days prior to their private beer, Bell filed an appeal against the CRTC's decision to lower rates. The CRTC later changed its position to conclude that Canadian cell and internet prices were, basically, not too high and were exactly where they needed to be.
The Rogers Family
Edward Rogers Jr. ran Rogers for a good part of his life, but ceded leadership in 2008 after more than forty years. The family currently controls much of the company through the Rogers Control Trust. The trust gives the family ownership and voting rights, which they have undoubtedly exercised often.
The Shaw Family
Bradley Shaw is the current CEO of Shaw Communications and he makes $12,000,000 in annual salary. The company was founded in 1966 as Capital Cable Television Company Ltd. by JR Shaw. Freedom Mobile is a subsidiary of Shaw Communications. Corus Entertainment is separate, but considered one entity and operates Slice, HGTV, Showcase, both History channels and Global Television.
Both Corus Entertainment and Shaw Communications are publicly owned and traded companies, with majority ownership by the Shaw family.
The lesser of the four evils is Telus Communications, a subsidiary of Telus Corporation. Founded only 32 years ago in Calgary to help privatize Alberta's market, the company has come a long way and has a current operating income of $2.8B.
The bigger the company has gotten, the more aggressive it has gotten in squashing its competition through government bureaucracy. Telus has been accused of pressuring the CRTC and past governments to limit access to broadband and infrastructure services among potential competitors and to limit regulation of its abilities to charge fees and overages.
"Canada has some of the highest cellphone and data costs in the world. "
A Toronto Star report in 2021 revealed that there were more than 250 meetings between CRTC officials and big telecom executives leading up to the reversal of a decision to lower internet and cable rates in 2019.
One of the key solutions to Canada's monopolized telecom market is to abolish the CRTC. A lighter option would be to bar the CRTC from controlling which companies can and cannot build infrastructure in Canada. Keeping in place normal licensing procedures would suffice in keeping the market orderly and regulated within a more limited scope. Tying the CRTC's hands when deciding who can build new towers, construct new infrastructure and provide services may be one step shy of abolishing the organization, but effective enough to loosen Canada's market and lower prices.
Loosening licensing requirements for cellular and internet provisions would be another effective step that can be easily achieved through legislation.
When concern arises over foreign companies monopolizing important Canadian infrastructure, simple legislative oversight through committees would work. Legislation could be put in place to limit foreign investments from one country and to protect diversity by capping excessive investments by larger corporations and governments outside of Canada.
As it stands now, the CRTC allows minimal competition into Canada's telecom sector. This is the number one cause of high prices and gouging. When compared to other, more diverse and deregulated markets, Canada's over-regulation stands out as a culprit. Canada's nationalistic, protectionist policies seem out of character for a country that prides itself as “post national” and faithful to the principles of multi-culturalism. On one hand, many Canadians say their country does not have a distinctive culture of its own, but on the other hand, they say the CRTC's main objective should be to protect Canadian culture and content.
For the better part of four decades, Canada has allowed foreign investors to buy up real estate in its major cities without many limits, causing housing inflation and supply shortages. Allowing more foreign investors into the telecom market to ease prices and expand competition, with reasonable limitations not seen in the real estate market, should be a no-brainer.
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