Mediacheck

Tories' Cellphone Misdial

Canadians deserve a wide open wireless market.

By Michael Geist, 4 Dec 2007, TheTyee.ca

Cellphone (stock image)

Competitive future unfolding?

Following months of intense telecom lobbying, Industry Minister Jim Prentice took to the podium last week at a Toronto hotel and unveiled the government's policy on the forthcoming spectrum auction. Dismissing misleading claims of government subsidies, Prentice pointed to the one fact that is obvious to millions of Canadian cellphone owners -- the Canadian market is sorely lacking in competition, leaving consumers paying too much for too little.

Prentice's proposed remedy? Reserve a portion of the spectrum for new entrants and mandate that the dominant incumbent providers -- Bell, Rogers, and Telus -- share their cellphone towers and enter into roaming agreements with the new competitors. The decision is the right one, but in the rapidly evolving wireless market, it should only be viewed as a first step toward fostering a robust and competitive Canadian wireless marketplace.

Spectrum allocation, which focuses on the availability of frequencies used to provide wireless services, involves fairly technical questions that few outside the industry follow closely. Yet the impact of spectrum policy has far reaching effects on consumers, since the right policies can foster greater competition, better services, and lower prices by encouraging the entry of new providers.

While the big three wireless companies sought to block new entrants by arguing for an open competition that would have left new competitors on the outside looking in, Prentice, who stood behind the slogan "putting consumers first," instead opted for proactive rules that should guarantee the entry of new competitors such as Videotron, Shaw, and MTS Allstream.

Rush to open US market

New wireless competition will be welcome news to consumers; however, it represents only part of the solution. The day before the Prentice press conference, U.S.-based Verizon Wireless shocked the industry by announcing that next year it will adopt an "open network" approach that will remove the restrictive walled garden that typifies the incumbent carriers. Instead, its customers will be permitted to use any device and any application that meets minimum technical standards.

The Verizon decision comes just weeks after Google introduced a partnership with leading U.S. carriers such as Sprint and T-Mobile to create the Open Handset Alliance, which will similarly enable consumers to use devices that are fully open to new innovation and third-party programs.

This rush toward an open cellphone market stands in sharp contrast to years of restricted networks that left decisions about new devices and functionality strictly in the hands of a few dominant cellphone providers. Over the past year, the emergence of the Apple iPhone, which demonstrated the potential functionality of new devices as well as the frustration with phones that are locked to single carrier, along with the growing awareness of the negative impact of closed networks, has persuaded many regulators and companies that open is the way to go.

Copyright clampdown counterproductive

The open network approach has yet to find much support in Canada, however, as the new spectrum auction rules did not include any open network requirements. In fact, while U.S. regulators have begun to prod the carriers to move toward greater openness by including open standard requirements into its forthcoming spectrum auction, Canadians are left with a closed market.

Ottawa does not appear ready to help since Prentice will likely discard the consumer-first slogan when he introduces new copyright laws later this month that could make it illegal for Canadians to unlock their cellphones. Moreover, while there will be another opportunity to inject both openness and competition into the market during the next spectrum auction in 2011, four years is a long time to wait to catch up to the rest of the world.

Indeed, with government on the sidelines and the established competitors focused on protecting their market share, the best chance for a truly open Canadian wireless market may rest with the new entrants, who would do well to differentiate themselves not only on price, but also by embracing a more innovative, open strategy.

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10  Comments:

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  • Capitalism

    4 years ago

    I'm Baffled

    I'm baffled that The Tyee and other left leaning sites are so tough on Harper and the Cons - and that is what they are...Cons.

    This is yet another leftist move in a leftist regime. They've cut Sales Taxes as opposed to income taxes, clamped down on energy companies and closed tax loop-holes and now a move to force competition when cell phone rates are fairly competitive. Are they as competitive as the U.S. - No. However, the big three have invested Billions and Billions to bring for excellent mobile communications.

    This is not free market and I don't like it. Then again, I haven't liked much these crooks have done.

    I stand corrected. These guys have lied - they've been populists and defenders of the free market.

    I'll abstain next election.

  • G West

    4 years ago

    cell phone rates competitive?

    Only when compared to North American standards.

    I'm pleased you're abstaining - one less vote for the right wing is always a good thing.

  • rockyvoids

    4 years ago

    Competition

    Competition by North American standards is who can steal more of your money, the tax man or foreign investors.

    Come-on Cappy. abstaining is just your way of pouting 'cause the parade dosn't march to the beat of your drum.

  • Van Isle

    4 years ago

    My Daughter has lived in

    My Daughter has lived in Europe for the last 3 years and came home for a holiday this summer. She went down to a local cell phone store to purchase a card for her phone. It was going to cost her in the neighbourhood of $100.00 and she said forget it. In Europe it would have cost her €10.00 which is about $14.00. Now do you think that we're being ripped-off? That's why I don't have a cell phone.

  • no1important

    4 years ago

    Thats why after 9 years I am

    Thats why after 9 years I am going back to a land line. Cell Phones are a rip off. I am getting a Shaw phone, I always wondered why they were not in the Cell market, hopefully this gives them a push.

  • neocon

    4 years ago

    That's a switch

    Gee - someone at the Tyee is actually promoting innovation, competition and American-style entrepreneurship.

    If you think cell phones are a ripoff in Canada due to government-stymied competition, think of a few other industries...like health care, air travel, satellite tv and cable, banking...I could go on.

    Let me get this straight...is competition, ergo the lowest price/best service, the most desirable economic outcome?

  • reality_check

    4 years ago

    Let's play the game WITH some rules! (1/2)

    Ok! Ok! Here is a reality check for the capitalists who don't like governments!

    IF all capitalists had morals, made no mistakes, and followed rules (instead of trying to find loopholes or illegal tricks), AND if the rules were fair and enforced, AND if all capitalists were truly skilled and innovative, there would FOR SURE be fewer bureaucrats and less red-tape. Unfortunately, some capitalists are just bad hockey players resorting to faking being tripped or sucker punching the best player on the opposite team. That being said, there is an abundance of bureaucrats who are also like bad hockey players! :) Mediocrity knows no bounds. Human errors is, well, human. Some people lack scruples. And, rules are sometimes unfair. Hence the notion that all games need to be refereed and that all players must use fairplay. Hence the notion of balances and checks! Hence the notion of a government withn a capitalist system.

    As a true liberal (in the sense of not being a partisan because there is a party or ideology to follow it) I am all for competition, but there needs to be rules. And, we need an entity to observe that rules are respected. As such, I do not share the views of the manicheists and ultra-capitalists. We need governments and we need bureaucrats to keep in-check the unskilled and unscrupulous capitalists. How much? How many? What rules?

  • reality_check

    4 years ago

    Let's play the game WITH some rules! (2/2)

    IMO, there is good capitalism and there is bad capitalism. The one that is based on innovation and following fair rules that give all capitalists a chance to compete is the one that I favour. The thing is those rules.have given to some an unfair advantage. Many of the "successful" capitalists are NOT truly innovative AND scrupulous. They probably had a forebear that took advantage of a loophole, was lucky, and/or bought his/her way into a situation of competitive advantage,... The ones who have large capital (acquired IMO mostly unfairly) have an unfair advantage. In other words, the game has been fixed. Therein lies the problem. Because of their power, powerful capitalists can make the rules that benefits them. And, guess what, they prefer fewer rules because they have power. Maybe they are nothing more than grade 7 bullies who bullied smaller and younger kids! Then and now, they need to be dealt with!

    It is clear that a capitalist like Wall-mart entrepreneurs who had a huge market to expand has more capital to outbid the competition. While it is maybe true that capitalists like Wal-mart entrepreneurs were skilled, their success is also due to their huge capital that they leveraged to destroy competition. It is clear that pro-global capitalists are nothing more than corporate colonialists who, like their forebears, conquered/developed (robbed/destroyed) regions and employed (exploited) the people. Global-neo-colonialists are not reinventing anything. They are using people of countries that are at a different level of development. They are using their capital to buy cheap land, cheap factories, cheap material, employ cheap labour and transportation system to be more competitive. How can the small capitalists really fight and win? It is my contention that capitalism to function like the purist would love it needs a government, needs red-tape, needs fair rules. It is also my contention that the system as it was set up has --is and will-- continue to move to entropy and chaos, unless there is a fundamental shift in value! What will it take? Is it possible? Do we have time? Maybe we need more drastic means. A revolution? Go rent V for Vendetta! Not my preference, surely! But, between two evils,...

  • neocon

    4 years ago

    yawn...

    dairy products, liquor, income taxes, gasoline/heating oil...

  • zalm

    4 years ago

    Your point being?

    None of these are subject to competition - one is deemed a necessity of life, a second, a sin whose cost to society far outweighs the taxes collected on it, the third pays for the education you got that let you write your last drive-by comment, and the fourth is an oligopoly designed to maximize profit, not to operate efficiently to maximize choice and minimize cost (including environmental) for consumers.

    There are extremely few markets in North America in which nearly perfect competition exists - the only one I can think of is the perishable produce market. All others operate in one or another forms of imperfect competition, mostly monopoly or oligopoly, in which someone or some body is restricting the supply of product, or information or other market tangibles.

    Maybe you should wake yourself up....

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