Technology
Sean Willett/the Gauntlet

Northern Sprites: Nothing like a little friendly competition

Why Canadian cellphone carriers are scared, and why this is a good thing

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If you ask almost any Canadian how they feel about their country’s phone companies, you probably won’t receive a very positive answer. People are painfully aware that the Big Three Canadian telecommunication companies — Bell, Rogers and Telus — have notoriously overcharged Canadians for cellphone services.

According to the Organization for Economic Co-operation and Development Canadian cellphone charges rank among the highest in the world, and the Big Three are able to sustain these inflated prices through a sort of mutual understanding. Since all three companies already have a fairly well established customer base, more profit can be gained by sustaining these high prices instead of drastically undercutting each other in an effort to compete. This type of enforced stagnation could only be unseated by another large telecom company entering the market, one that would have to undercut prices in order to attract a customer base.

Fortunately, if the federal government’s plan to attract Verizon works out, this may be exactly what happens.

Verizon is America’s largest telecom company and, like many other American franchises have in the past, is preparing to head northward. The mobile giant has expressed interest in buying Wind Mobile and Mobilicity, two small Canadian upstarts that have been struggling to compete with the Big Three. Purchasing these companies would allow Verizon to quickly gain a foothold in Canada, and begin to establish infrastructure and bid on wireless spectrums.

Verizon’s recent interest in Canada is no coincidence, though. The Canadian federal government, understanding that there needs to be more competition in the country’s telecom sector, has been actively attempting to attract a fourth large carrier. ‘Loopholes’ in anti-consolidation laws — which allow Verizon to buy smaller Canadian companies while preventing the Big Three from doing the same — and rules that allow foreign companies to bid on a broader range of wider spectrums than domestic companies have helped to provide more incentive to Verizon.

To no one’s surprise, the Big Three are not very happy about the federal government’s attempts to court competition. Telus, Rogers and Bell have launched a co-ordinated media campaign in an attempt to persuade consumers that Verizon’s presence would do more harm than good, while simultaneously harassing the Canadian government in an effort to remove the laws that would help give Verizon equal footing in the Canadian market.

Telus in particular has been raising quite a fuss, suing the federal government for blocking its earlier attempt to buy Mobilicity. They claim foreign companies like Verizon are being given special treatment by being allowed to bypass anti-consolidation laws, insisting that this puts domestic companies at a disadvantage.

While this is technically true — domestic companies are being denied certain privileges that Verizon will be able to take advantage of — these disadvantages are not at all the legal travesty the Big Three are spinning them as. The Canadian telecom sector needs more competition, and these allowances would give Verizon the head start it would need to actually establish itself as a competitor. Without the ability to buy smaller companies and bid on a broader spectrum of wavelengths Verizon would probably never attempt to enter such a saturated market, thus preserving the status quo the Big Three have worked so hard to maintain.

Telus, Bell and Rogers are terrified of this possibility, which explains why their backlash has been so sudden and visible. They are presenting themselves to the public as hapless victims of the government’s unjust laws, when in reality they are merely bullies who are finally facing their comeuppance.

While Verizon’s presence might not change anything, they may also be the country’s best chance to fix a broken system. Canadians have been pushed around by the Big Three for long enough — now the tables may finally be turning.

Northern Sprites is a bi-monthly column looking at video games and technology in Canada.

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