Canada’s telecom industry appears skeptical that the federal government can really provide consumers with lower prices and more innovation in wireless communications by supporting new competitors and restraining the power of the bigger carriers.
Ottawa recently moved to cap the wholesale prices that big wireless carriers charge their smaller rivals, and stands by a policy of having at least four rivals in every region of the country, but an organizer of this year’s Canadian Telecom Summit says that policy has both support and opposition.
“On one hand, you might have lower prices. On the other hand, you may have reduced incentives to invest in new technology,” says Mark Goldberg, who helped create the annual conference as a forum for the billion-dollar industry of smartphones, telephones, Internet and other vital communications.
Goldberg said there’s been extraordinary interest in a panel of academics and other economists who will debate whether governments can actually create sustainable competition through their regulatory policies at the conference which begins Monday.
Robert Crandall, a fellow of the Washington-based Brookings Institution who will be one of the panellists Monday, says there are only a few areas with very high population densities that can sustain more than three wireless carriers in the long term.
Even in the United States, Crandall says, the number of national competitors has dwindled to four and there are strong rumours that two of the remaining rivals will merge, leaving only a three-way race.
“When you have countries like the U.S. and Canada with large rural areas, to get universal coverage for four carriers would be difficult. It would require, I suppose, that the fourth carrier use the third carrier’s facilities. There, you get into all the regulatory issues,” Crandall said.
A similar position has been taken by the new chief executive of Rogers Communications, Guy Laurence, who will be a keynote speaker on Monday. He has said he doubts Canada can support four carriers.
A supporter of the opposite view — Tony Lacavera, chairman and CEO of Wind Mobile — will get his chance to make his case the following day in another keynote speech.
Industry Minister James Moore is on record as saying that the government’s wireless policy is “designed to benefit Canadian consumers, first and foremost.”
He has also said after the latest spectrum auction was conducted this year that Canadians “will soon benefit from a fourth wireless player in every region of the country having access to this high-quality spectrum to provide all Canadians with dependable, high-speed wireless services on the latest technologies.”
But the head of McMaster University’s business school, also in the Monday competition debate, says he’s skeptical.
“I think it’s politics,” Len Waverman, an expert in international telecommunications competition who is also dean of McMaster’s DeGroote School of Business, said in an interview.
“I think they believe that they need a fourth entrant or a fourth competitor, although if you look in other countries many markets are down to three.”
Waverman noted that Wind Mobile, owned by Globalive, is the only new national carrier to emerge from the 2008 spectrum auction, but it continues to depend on access to its rivals’ larger networks where it hasn’t got its own infrastructure.
“Wind is still out there, and I think the numbers are getting more successful for them, but it still doesn’t look like a profitable strategy,” Waverman said.