Free Canada’s Telecom Industry

The essentiality of communication in Canada is challenged significantly by a few other industries. Revolutionizing everyday life, leisure, and facilitating the manner whereby business is conducted, the necessity for an aggressive approach to the telecommunication industry is needed, but ever complicated.

Markets benefit significantly from a continuum of competing entities, ranging from well-established corporations to emerging businesses. Engaging in healthy competition, the enterprises bolster the economy, employ workers, and are continually searching to innovate in their quests for increased profits. This economic model, which has been avidly defended by a host of 20th-century thinkers, aggregates the most desirable outcome. Yet, in Canada’s telecommunications sector, it has been abandoned. Instead, a small number of large corporations have control over the industry due to the federal government’s interjection. 

Nowadays, Canadians are left suffering from the monopoly. A 2019 Communications Monitoring Report found that Canadian households were paying a monthly average of $233 for communications services, a nearly 5% increase from 2016. With a resounding majority of Canadians facing uncomfortable financial situations, a concrete resolution that allows for a more significant influx of telecommunication companies must be enacted. 

History of telecommunications in Canada 

An article published by Telecommunications.ca, describes the industry’s history, beginning with the telegraph.

By 1847, the Montreal Telegraph Company was established and providing service in the Québec City – Windsor corridor, linking to Western Union in Detroit. In 1886, Canadian Pacific Railways Telegraphs came online as a competitor. Telegraphs were instrumental in the construction and operation of railways.

Throughout the period spanning from 1932 to 1964, the CN Telegraph Company and CP Railway Telegraphs competed and jointly offered services. The two telegraph companies were merged to form CNCP Telecommunications in 1980. 

Eight years later, in 1988, Canadian Pacific bought out CN, sold 40% of the company to Rogers Communications Inc. and renamed the company Unitel.

In 1993, 20% of Unitel was sold to AT&T Corporation of the United States. Complications and financial instability led to the ascent of Allstream, which provided corporate and data services. Allstream was later purchased by MTS and is currently the primary facilities-based interexchange carrier competing with the telephone companies.

The telephone companies in Canada can trace their origins to the telephone’s invention by Alexander Graham Bell in 1874, Ontario. The world’s first long-distance telephone call was made two years later, in 1876, and utilized over 16 kilometres of telegraph wires.

BCTel, AGT, Ed Tel and Quebec Telephone merged to form TELUS. As decades progressed, Bell Canada and the four telephone companies in the maritime provinces reorganized as Bell Canada in Ontario and Quebec and Bell Aliant elsewhere, both majority-owned by BCE.

The Marconi Company of London established the first radio communication in Canada in 1901.

The Companies:

The Canadian telecom market is an amalgamation of large providers. Approximately 90% of Canadians use one of the three most significant service providers when it comes to the mobile phone.

Floella Church of Canada TeleCommunications wrote that the Canadian Telecom companies would see an increase in business in the number of subscribers, however, admits:

“The industry is essentially a monopoly that is controlled by a relatively small number of major companies.” 

The large telecom providers of Canada are known for exceptional customer services, as well as the quality of voice along with several other factors. Church ranked the corporations, placing Rogers Wireless first. BCE Inc (better known as Bell), Telus Corporation, and Shaw Communications subsequently follow. 

Overregulation 

The first instance of government regulation in the telecommunications industry was through when the Telecommunications Act was ratified in 1993, per the Financial Post. 1993 was an incredibly tumultuous year in Canadian politics, as Brian Mulroney, Kim Campbell, and finally Jean Chrétien, all served as Prime Ministers. 

Right now, foreign ownership of a telecommunications company is strictly limited to 20 percent of a company’s voting shares and 80 percent of board members must be Canadian citizens, undermining meritocratic values. 

As addressed in the Financial Post, the Organisation of Economic Co-operation and Development ranking Canada’s sector as among the most restrictive alongside Iceland, South Korea, Mexico, Israel and Japan.

CRTC

Regulatory policies were adopted by the CRTC when local telephone markets became introduced to competition. Albeit the measures were designed to aid Canadians, it “failed to create facilities-based competition.” 

A subsequent dilemma arose wherein “competitors relying extensively on mandated network access at artificially low prices did not build significant infrastructure of their own.” In 2006, the CRTC even admitted that interventionist policies were no longer needed, but has failed to act. 

Large corporations

Even more concerning was the debacle involving Verizon and Bell. When Verizon publicly admitted to entertaining the idea of launching a business into Canada, the Chief executive of Bell George Cope published a letter describing the lack of fairness for Verizon to enter. 

This stands directly antithetical to Canada’s accepted notion of economic stimulation. Lacking competition, Bell and the other large telecommunication corporations can have complete dominance, therefore, manipulating prices as they see fit. Restricting the market and placing it into the hands of a few corporations ultimately leaves Canadians at the mercy of price manipulation. Furthermore, the big four telecommunication companies are recipients of government subsidies; they are the most aided, having no fear of competition and seemingly eternal stability.

Canadian Telecommunication Expenditures and Revenues, 2016.

Statista presented a graph demonstrating the annual increase in revenue generated by the telecommunication services industry. In 2016 alone, it had a revenue of $48.7 billion. 

While it is paramount that corporations in Canada are successful, customers are still paying absurd amounts for the services. 

The Huffington Post notes that Harper’s administration was catastrophic for the telecom industry. His plan to “Increase the number of major wireless players in every region of Canada from three to four, failed miserably, resulting in fewer wireless companies. Telus since the recent purchase of Public Mobile, and Mobilicity in receivership.

For most of the Mobile Wireless Telephony services, the UK, France, Italy, and Australia were among the lowest priced markets. Canadian Mobile Wireless Telephony prices were, however, among the highest along with the USA, Japan, and Germany, a study by Nordicity found.

Time for Change

Canadians are stuck in an inescapable whirlwind of high prices as a result of government regulation. It is time for power and decision making to be handed over to the people, who will make appropriate decisions as they perceive to be fit. 

Freeing the market and allowing other telecommunication companies into Canada will increase competition, ergo incentivizing corporations to alter their business models to remain successful. Moreover, it will allow for greater customer choice, naturally translating to lower prices. 

The less the government interferes in the market or pays favourites, and the sooner Canadians will begin realizing better results.