It’s ironic that a federal government that’s always so keen to tout its economic record doesn’t seem interested in the arguments from the incumbent telecommunications firms about tilting the rules for the wireless spectrum auction in favour of Verizon Communications Inc.
There’s no doubt the Canadian telecom giants are in part merely trying to maintain their dominant status by challenging the rules that reserve two blocks of prime wireless spectrum for new entrants. They’ve continued to earn healthy profits from wireless services despite increased competition in recent years and are no doubt eager to hold onto their advantage. Canadians, of course, love to hate the telecommunications provider they get hefty bills from each month often for bundled phone, TV, and Internet services.
If the spectrum auction does come down to Verizon — a less likely prospect given its deal last week with Vodafone Group PLC — there’s no reason for the Canadian government to offer it any added advantages. A new major provider would be welcome, but the incumbents are right in insisting it play on equal terms. While the rules may be necessary when it comes to small new entrants, they shouldn’t apply to a U.S. giant like Verizon.
It seems the government is taking the populist road by touting the advantages to consumers against the incumbents they love to hate. But this is the same government that says it wants to support Canadian jobs, and there’s no doubt that handicapping our homegrown companies that do employ lots of people during difficult times would likely come at a cost on that front. Verizon isn’t likely to have a footprint in Canada as large as the existing providers. While potentially paying less for cellphone services through greater competition sounds great, is it worth losing more jobs here? It may be, but we shouldn’t be achieving that through rules tilted in favour of a big U.S. company.
Like many things, what should be a straight-forward market-based process has become politicized. That’s not surprising given the government’s long record of intervention in the telecommunications sector, but it’s clear it will be on the wrong path on this issue should it continue to maintain rules that would favour a company like Verizon.
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Glenn Kauth
