Is This Progress? This Is Progress.

What Is Kaputall?

Oxford defines Kaput as "broken and useless; no longer working or effective" - similar to our unbalanced economic system. This is a page dedicated to the intersection of capitalism and social, political, and environmental problems.

Tuesday, 30 July 2013

Telecommunications Breakdown

Last Friday Bell Canada published an open letter to the Canadian Government, printed in numerous national publications. The telecommunications company is appealing to the public following Verizon's attempts to jump into the Canadian mobile phone market. In the wake of this move, I'd like to make a proposition that Canadians agitate to create a more effective market, including potentially forming a co-operative to meet the needs of Canadian consumers.

Canadians have some of the most expensive cellular rates in the world. While many reasons for this are cited, it comes down to the fact that there is minimal competition in the Canadian market. For the past few decades, Canadians have had minimal choices. Bell Canada Enterprises has been the largest player in Canada, and is privileged to hold about 30 per cent of the market share for cell phones. Bell and Rogers have been competing intensely for the last decade or so. Bell being represented in blue and Rogers in red. This is commonplace branding for Canadians who encounter Bell and Rogers countless times daily.

Bell, for example, owns a substantial part of the national telephone infrastructure, the Montréal Canadians, Maple Leaf Sports and Entertainment, and The Source. It also controls Bell Media, which includes CTV, TSN, the Comedy Network, MTV, Discovery, the Globe and Mail, and several radio stations. Not to be outdone, Rogers has similar investments in Canadian media. Shaw, which owns Global, is a third party, and Telus competes in the mobile market.

Collectively, Bell, Rogers, and Telus make up the "big three" in mobile phones. There are subsidiaries of each, but of course they do not really create more competition since they are owned and managed by the parent entities. The only independent national carriers are Wind, Public Mobile, and Mobilicity. Together these companies make up a very small share of the Canadian market (approximately 1.1 million plans or about 4 per cent). It's not by coincidence that these recent entrants to the market are small - there are two significant barriers to entry. Firstly, the CRTC regulations make it very challenging to get a license. Secondly, the capital required to run such an operation is outstandingly high.

Despite these barriers, Wind Mobile has been rather successful, taking about 2.5 per cent of the Canadian market in the past four years. However, due to unfair rules they have struggled to become true competitors. That's where Verizon comes in. An American giant, Verizon has saturated its markets and is looking for a place to expand. Verizon has massive access to capital and therefore only really needs to get past the CRTC in order to become a true competitor in the Canadian market.

If Bell was scared in 2008 with Wind attempting to join the market, this is the nightmare. The fear does not come across explicitly: the tone of the open letter is one of stirring up nationalist sentiments against encroachment from a foreign company. Bell is counting on Canadians being outraged at American money changing hands and that the public will view Bell as the little guy, which is a rather absurd proposition.

I'm not overly excited about another large multinational conglomerate coming to the market in order to increase competition. For that reason, I'd like to see something more democratic and sustainable. My hope is that Canadians could explore the feasibility of arranging a co-operative to meet the needs of wireless consumers. In the past Wireless Nomad was an internet provider arranged as a for-profit co-op and currently the Eastern Ontario co-operative Mornington Communications Ltd offers phone service. These are small companies, but are examples of the drive that Canadians have for more transparency, fairness, and sustainability in wireless communications.

I hope for more competition, but I know that meaningful changes to the market can only occur when Canadians have real options that are affordable and democratic. I support Verizon's ambitions, but I can't help but think that a co-operative is the right way to go.

No comments:

Post a Comment