Fair for Canada?

cell phone tower

I’m not what you would call political, I rarely have strong opinions on the kinds of things that keep government representatives awake at night. However, recently there have been a glut of radio spots from the Canadian Telecom companies getting their knickers in a knot about the potential of an American company coming in and getting access to the Canadian market. They even set up a website – http://www.fairforcanada.ca/ You’ll notice there is no comment capability on that website, nothing to foster an actual discussion or allow people to point out the gaping holes in their arguments.

Here’s the general gist of their argument. Dear Government, please don’t allow this, because it will be bad for Canada. This ‘giant American corporation’ (they use that phrase a lot, like Rogers and co are tiny little ma and pa shops) is going to come to Canada, pinch all the jobs, ruin the lives of rural Canadians by somehow plunging them back into the dark ages, and also kick puppies (note they don’t actually say this last one, it’s just inferred).

Here’s what they are actually saying. Dear Government, please don’t allow this, because it will be bad for our immense profits. How can we gouge Canadians when other companies are allowed to come into the market, companies that might not respect our oligopoly? How can we fix prices if this ‘giant American corporation’ won’t play along with us? We don’t want to pick a fight with someone our own size.

The truth is, I have lived in multiple countries and spent 3 years working at a cell phone carrier in England (we call them mobile phones) so I’m pretty familiar with this market. I’m far from an expert, but even as a straightforward consumer purchase it’s night and day. When I got my iPhone here in Canada a few years ago I was absolutely horrified by the experience. First of all, the nice saleswoman informed me I had to pay $300 upfront, which seemed steep. I figured this was just the norm here, maybe phones weren’t as heavily subsidized by the carriers. Then she told me I had to sign up for 3 years. I could hardly believe it. It’s been illegal to sell 3 year phone contracts in Europe for a while now, and realistically even before it was illegal I never had a contract longer than 18 months, because none of our carriers would be daft enough to commit market suicide with a 3 year contract. Then she asked if I’d like to pay $12 extra a month for caller display and voicemail. These are basic features included in pretty much every plan in the uk for no additional charge. Then they piled on service access fees, 911 fees and a fee for the processing of all the fees (ok so I made that one up, I’m surprised they didn’t think of it) until the monthly bill was well over $100. Basically the contract was expensive, with low usage limits and a stupidly long term. My sister got an iPhone in the Uk at around the same time and signed an 18 month contract with unlimited voice and data for just over half the price after  currency conversion.

Admittedly that was a few years ago, and at the time Rogers was the only carrier with the iPhone. I watched with interest as the other Canadian telcos finally got them too and I thought “ok, here comes the competition, this will shake things up!” Instead, they all looked at what Rogers was doing and thought “That looks mighty profitable, I think we’ll do that too.” Literally nothing changed, no competition, just 3 carriers offering basically the same price gouging plans.

When the smaller companies were introduced last year I took the opportunity to jump ship (once my 3 years was up) to move to Koodo, and to be honest they were more reasonable, with free VM and caller id and more competitive rates. Things are certainly heading in the right direction. It doesn’t seem to have done much to phase the big 3 though. Now the CRTC has put some restrictions on contract length starting at the end of this year to ensure that these large Canadian telco companies can’t take advantage of their immense market share to effectively hold Canadians hostage. I think that’s a great start, but there’s plenty more to be done and legislation is not going to get us there quickly or effectively.

Serious market pressure will solve both those problems. If a ‘giant American corporation’ enters the market and starts slashing prices, offering more competitive terms and spending serious marketing dollars, the big 3 are going to have to take notice and respond with price cuts of their own. In the long run it will be a much better outcome for all Canadians, because everyone will pay less for their phones. Having cheaper phones will help millions of small canadian businesses to save money, and make sure teenagers have enough pocketmoney left over to buy Xbox games and McDonalds.

Rural communities will be just fine. If this American company chooses not to serve their community they are no worse off than they are right now. The big 3 are just upset because if they could drop the rural communities they would in a heartbeat, it’s just not profitable enough for them. Data wise I understand their argument that your data isn’t ‘safe’ with an American company, but seeing as most of us are buying American phones (iPhones and Androids) and using Apple and Googles services and servers to actually send that data, it’s pretty much a moot point.

There was another Canadian telco company that was happy to rest on their laurels, to stop innovating and assume no competition would come along to knock them off their roost. That strategy didn’t work out so well for RIM…

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