Why Canadian Telecom Deregulation Will Send Prices Up
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The Globe on why Maxime Bernier is Canadian Telecom’s bestest-ever friend (note: the article is byline-d “Heather Scoffield” but email sig’d Derek DeCloet). This on the heels of Tom’s post on Canadian mobile data rates. Mark says it’s because Bell and Telus can’t afford to compete. I’d put it a little differently - it’s because Rogers doesn’t have to compete. If this situation weren’t so sad, I’d still be chuckling at the articles that the Globe has run in recent years describing Canadian telecom as “fiercely competitive”. Sigh. I like Rogers. I like Rogers a lot. But I hate pricing in this market. And the centrality of Rogers and the other cableco’s to all telecom in Canada, when paired with a regulator who would rather be sailing, is beginning to feel dangerous.
Update: Mark mentions Andy’s mention of a variety of IP services as a competitive pressure on pricing in Canada. Except that they aren’t, and won’t be in any time frame that matters now. Services that are used by a miniscule fraction of the Canadian population, and only in limited circumstances, pose no threat to the Rogers and Bells of the world, IMO, and won’t for a long time. Skype has been available now for an eternity in telecomm years, with no discernable impact. Finally, wi-fi with practical utility for mobile users is still an eternity away for the average user, and WiMax will be controlled by the same providers. Personally, I see no salvation in any of it.
Updater: Alec explains how to keep your costs in check.
Updaterest: And so it goes.
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If you think mobile data is the future of wireless, it’s difficult to see the future in Canada. The solution is either regulation or competition, neither of which really exist in our wireless space. If you believe competition is normally a better solution than regulation, Canada’s mobile industry desperately needs more competitors.
The only solution I can see is to lift the ban on foreign telco ownership (or perhaps just lift it for wireless) and allow multiple operators on desirable frequencies (for GSM these would 1900 and 2100). What I’d love to see is a credit union-like association of small (and large!) municipal service providers offering innovative calling plans and data services. Maybe the upcoming 3G spectrum auction will help, or maybe it will just further entrench the three ‘competitors’. The irony is I’m a Rogers customer, I like their phones and I’d probably stick with them even if a slightly more affordable competitor appeared. The alternative is the future will pass us by. Again.
That’s *exactly* how I see it, Rod. Any sense of what might come out of the auction?
Rob, spectrum auctions make sense when a huge capital investment is necessary to test an unproven business model, or if you want a monopoly which will offer some minimum level of service. Today you only need to look at wireless carrier profits to realize there’s money in this business, and the capital outlay required to launch a small network is becoming smaller as the technology (especially GSM) becomes increasingly commoditized. I may be utterly mistaken, but I can’t help thinking a small municipal carrier which plugs into Vonage for their PSTN integration and offering really cheap Blackberry data packages must be a viable business. (Maybe on Bay St.?) You don’t have to look very far to discover there’s a demand for it!
What I’d love to see is no auction at all and declare the spectrum available for general use provided any service adheres to published standards. (There are of course congestion issues, so there’s an upper limit for the number of carriers, but I think it’s more than three!) I’d like to see the barrier to entry for a tiny 3G carrier offering data exclusively (ie: VOIP reliable Mobile IP) reduced to the cost of putting up a tower and figuring out the billing model. Not that I expect this to ever happen, but is it too much to hope for a GSM pico-cell in a prominent chain of coffee shops? I call it the “Revenge of the CLEC†model, or the cringe-worthy “CLEC 2.0″.
Apologies for the rant.
Fascinating - a micro-carrier focusing only on metropolitan markets - it would probably meet the needs of 75% of the market. You know who should do this? Starbucks. LOL. Actually, Virgin probably has the perfect market for it …
MetroPCS will try to raise (I believe) US$1-billion in an offering on the NYSE soon.
It’s a carrier in the U.S., like Leap Wireless, that’s made a go of it by offering unlimited usage cell phone plans, to consumers in select metropolitan markets for a fixed cost.
What a concept!
Also check out Leap’s Cricket plans.
There is definitely room in Canada for a provider of the same ilk, perhaps even one that offers low-cost data services too.
Microcell had the right idea with its CityFido plan, it had started to gain traction too before the Rogers takeover.
Kevin
Well, that’s exactly what’s needed to shake things up, clearly. I’d forgotten about CityFido. It seems to me there’d be solid demand for this with the kids …