BUSINESS

Government-Run Wireless Company A Better Choice Than Verizon Coming To Canada: CEP

08/16/2013 12:11 EDT | Updated 08/16/2013 12:21 EDT
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So far, Canada’s telecom worker union has been — oddly enough — on the same side as the telecoms themselves in the great battle over Verizon. But that probably won’t extend to the union’s latest idea.

The Communications, Energy and Paperworkers (CEP) union is calling on the government to achieve its goal of bringing a fourth major wireless carrier to Canada by launching a government-run company that would compete with the big three. A CBC for wireless, as it were.

"Instead of giving a slew of benefits to a gigantic U.S.-based corporation that will take the jobs, expertise and profits out of the country, why not set up a Crown telecommunications company that will hire Canadians, build on this country's impressive history in the sector and return the surplus to the public?" CEP President Dave Coles asked in a press release.

The CEP has come out strongly against Verizon coming to Canada, arguing it would do little to help consumers and telecom workers, and the company might end up spying on Canadians, given its documented links to the U.S. National Security Agency.

Whatever the reasons for CEP's stance, both Canada’s telecom industry and the Harper government will likely think of numerous reasons why this isn’t a good idea.

The Conservatives’ staunch free-market ideology makes the idea intolerable on its face, and for the telecom companies, a new competitor backed by the deep pockets of the federal government is a frightening enough prospect to launch them into fits of moral outrage even larger than the ones they’ve been having lately.

But the CEP argues there is business sense in all this, pointing to the fact that SaskTel is a Crown corporation that provides telecoms services in Saskatchewan and competes with the large, private-sector companies.

The CEP also notes that the New Zealand government in 2007 bought a small internet provider “in a bid to strengthen the country's telecommunications sector.”

The CEP is right in that a government-run wireless company would hardly be an innovation. For many consumers, telecom is a utility, like water or electricity. And from that perspective, the idea of government involvement seems less outlandish.

In the U.S., for example, more than 60 municipalities are working on developing their own city-run internet services, either citywide wi-fi or high-speed internet to people’s homes or both.

But their efforts are being stymied by the private-sector telecoms, which have lobbied for laws to prevent municipalities from building networks, launched civil lawsuits and run publicity campaigns to stop the municipal networks from becoming reality.

Canada’s telecoms would likely react similarly if the government were to suggest opening a fourth national wireless carrier with seed money presumably from taxpayers.

Many of Canada’s wireless providers are owned by companies that also own many of Canada’s broadcasters, and many of these broadcasters have long complained about having to compete with the taxpayer-funded CBC. Present them with the spectre of a CBC for wireless, and they’ll hit the warpath.

Tech columnist Peter Nowak recently suggested yet another alternative. Reasoning that what consumers actually want is lower prices for wireless, and not necessarily a fourth major wireless carrier, Nowak suggested the government could set tight price controls on wireless rates

If a big strategic investor doesn’t materialize, the government may be faced with something it once considered ideologically unthinkable – further regulation,” Nowak wrote.

“With its anger evident, the sky really could be the limit here. [Industry Minister James] Moore could conceivably direct the Canada Radio-television and Telecommunications Commission to start cooking up a scheme to regulate prices.”

But Nowak said he finds this unlikely, given that the CRTC’s new wireless code of conduct hasn’t kicked in yet, and the impact on prices isn’t yet known.

And the Tories themselves would likely find the idea of strict price controls almost as unpalatable as launching a taxpayer-funded wireless network.

That leaves them with little in the way of options, aside from hoping that Verizon — or some company like it — decides Canada is worth the trouble.

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