There’s no real downside to allowing foreign investment in Canada’s telecommunications sector, reads a new government report.
A new government analysis, classified secret (via The Logic), suggests a complete overhaul of the regulation of Canada’s telecommunications sector, citing best practices from foreign countries that might benefit the country.
According to the analysis, the Canadian government sees lots of potential benefits to letting foreign companies eat into Bell, Telus, and Rogers‘ combined 89 percent market share of the telecommunications sector: lower prices, technological innovation, increased adoption population-wide and economic growth.
According to the report, more foreign competition could come in two ways: the USMCA, which calls for the elimination of anti-competitive practices in the telecommunications industry and the rewriting of the Telecommunications Act.
Canada currently prevents foreign investment in telecommunications companies with a 10 percent market share or more, leading to some of the highest prices in the world and also insulating “The Big Three” from foreign ownership. Getting rid of this policy, however, could benefit the firms.
“The 1995–2017 review of FDI in telecommunications compiled by ISED suggests that foreign competition could boost share prices of Canadian carriers,” reads the report. “The analysis quotes Ted Rogers, then-president and CEO of Rogers Communications Inc., as saying in 2000, ‘Rogers shares could rise 50–100% if U.S. companies were allowed to bid on them.'”
The report cites a number of different studies that repeatedly highlight how quickly foreign investment can benefit a market. One report, titled “Foreign Investment in Telecommunications,” states that since Germany-based T-Mobile entered the American market in 2013, the average cost of US wireless plans has declined by 50 percent.
Another report cited a 2017 analysis of Mexico’s wireless market, which found that after foreign investment restrictions were liberalized and companies like AT&T entered the market, prices dropped by 75 percent and 50 million new wireless subscriptions were purchased.
“More competition is always better for customers,” said Ken Engelhart, a Toronto-based communications lawyer who spent 25 years at Rogers. “You’re always going to get lower prices and better value when you have more competition… it’s a no-brainer.”
“If, say, Verizon bought one of the Big Three carriers,” concludes Engelhart, “would they bring some competitive clout and some new technology into Canada that would shake things up for the other competitors? Probably—sure. I think that’s why you want more competition, is to shake things up.”
Read the entire report on The Logic here.