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Ottawa’s Goal of Four Wireless Carriers a “Waste of Resources” Says Study

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Screenshot 2014 05 06 22 44 29

Martin Masse and Paul Beaudry from the think tank Montreal Economic Institute has released a study on the state of wireless competition in Canada. A brief summary of their report is below:

To the detriment of consumers across the country, the federal government has been encouraging artificial competition in the telecommunications industry for the past seven years. Fixated on the goal of promoting the emergence of a fourth wireless carrier in each of Canada’s regional markets, the government has lost sight of the ultimate goal of promoting the development of a dynamic, efficient industry, according to this Research Paper.

The Globe and Mail says the study’s authors believe Canadians are better off with the ‘Big 3’ controlling wireless instead of a fragmented market consisting of smaller and “feeble” competitors offering plans that are close to break-even pricing:

“It may be preferable for financial resources … to be concentrated in the hands of a few strong players willing to invest in new technologies and services rather than scattered among several small and feeble competitors trying to survive by selling at prices barely above marginal costs,”

Beaudry is a competition lawyer at Stikeman Elliott in Montreal and told the Globe in an interview Ottawa has wasted valuable spectrum by selling it to inefficient, unprofitable players that have failed to deliver better service to the country:

“We all want lower prices, but if the way we get to lower prices is through artificial competition, that has adverse effects on innovation [and] the deployment of newer technologies,”

Jake Enwright, Industry Minister James Moore’s press secretary, didn’t respond to the study but reiterated average wireless rates have dropped 20 per cent compared to six years ago, saying “Canadian wireless consumers know that competition is good for everyone.”

Masse and Beaudry say Ottawa should adopt numerous measures to better wireless competition in Canada, specifically opening up the industry “completely to foreign investors, and liberalize its spectrum license transfer policy,” referring to Industry Canada shutting down multiple Telus bids for Mobilicity.

What do you think? Do you agree Canadians are better off having its wireless sector controlled by a few companies as echoed by this think tank?

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