Markets benefit greatly from healthy corporate competition, and Canada is no exception.
Canadians nationwide, however, have collectively been addressing the problems regarding the nature of our current telecommunication industry.
With a lack of competitive drive, the telecommunication corporations adjust prices as they wish and are running Canadian pockets empty.
Customers are left nestled at the foot of its mercy, and with an abundance of expenses. The government’s current regulation is hurting citizens nationwide, and there seems to be little regard to fix the issue.
Brief history of telecommunications in Canada
The telecommunications industry in Canada began with the telegraph.
In 1847, the Montreal Telegraph Company was established, providing service in the Quebec City – Windsor corridor, linking to Western Union in Detroit. In 1886, Canadian Pacific Railways Telegraphs became a competitor.
Throughout the period spanning from 1932 to 1964, the CN Telegraph Company and CP Railway Telegraphs competed and jointly offered services. Then they merged in order 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 main facilities-based Interexchange carrier competing with the telephone companies.
The telephone companies in Canada can trace their roots to the invention of the telephone by Alexander Graham Bell in Ontario in 1874.
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.
Canada’s telecom market is an amalgamation of large providers. Approximately 90% of Canadians use one of the 3 largest service providers when it comes to the mobile phone.
Floella Church of Canada TeleCommunications wrote that the Canadian Telecom companies will see an increase in business regarding the number of subscribers, as the sector is facing a boom.
Church ranked the corporations, placing Rogers Wireless first. BCE Inc (better known as Bell), Telus Corporation, and Shaw Communications subsequently follow.
Contentions towards the current corporate multipolar dominion over the telecommunications industry could be weaponized by free-market enthusiasts who want to see a collapse of government constraint on the industry.
A proposed law compiled in 1987 was ratified, coming into effect six years later in 1993.
Right now, foreign ownership of a telecommunications company is strictly limited to 20 percent of a company’s voting shares and no more than 33.3 percent of the voting shares of a carrier’s holding company, and an effective total limit of 46.7 percent (as long as the foreign entity doesn’t have control). To further add to the list of chain rattling constraints, at least 80 percent of the board members must be Canadian citizens.
Amidst the federal government’s choke-hold on the industry, Canadians have found room to take in a breath of optimism. In 2012, the government slightly loosened its rules, absolving companies with less than a 10-per-cent market share from any foreign ownership restrictions. However, there has still been a complete lack of any foreign entity that has moved into Canada under the edited regulations.
In addition, the Organization of Economic Co-operation and Development still ranks Canada’s sector as among the most restrictive alongside Iceland, South Korea, Mexico, Israel and Japan.
Former CRTC chairman Von Finckenstein states that foreign ownership provisions are becoming irrelevant given the technological revolution since their inception, as consumers can access any content at any time over the internet.
When Verizon publicly admitted to entertaining the idea of launching business into Canada, the Chief executive of Bell George Cope published a letter describing the lack of fairness for Verizon to enter.
This, however, goes directly against the capitalist notion that stimulates the economy. Without fearful competition, Bell and the other telecommunication corporations can have complete dominance, manipulating prices as they see fit.
The big four telecommunication companies receive government subsidies. They are the most aided, having no fear of competition and seemingly eternal stability.
Statista presented a graph demonstrating the annual increase in revenue generated by the telecommunication services industry. In 2016 alone, it had a revenue of $48.6 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 the Harper government has staked its reputation on a simple policy: increase the number of major wireless players in every region of Canada from three to four, with the ensuing increased competition resulting in lower prices and better customer service. It failed miserably, with the number of wireless companies shrinking. Since then, Telus purchased Public Mobile and Mobilicity.
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.
Most recently, 14,272 complaints raised by Canadian telecom and TV customers over the 2017-18 period increased from last year. Commission for Complaints for Telecom-Television Services says the total number of issues they raised rose 67 percent to 30,734, in its 12-month report.
Need for Change
Canadians are stuck in an 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 see fit.
Opening up the market and allowing other telecommunication companies into Canada will increase competition incentivizing the corporations to adapt their business models in order to remain successful. Moreover, it will allow for greater customer choice which only broadens the horizon of development.
The less the government interferes in the market, the sooner Canadians will begin recognizing significantly better results.
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