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How Tories Let Cell Phone Providers Gouge Away

04/10/2013 12:10 EDT | Updated 06/10/2013 05:12 EDT
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A customer waits for a Rogers store to open on Yonge Street in Toronto, Ontario, Canada, on Tuesday, Oct. 26, 2010. Rogers Communications Inc., Canada's largest wireless carrier, said third-quarter profit declined 24 percent as it added fewer subscribers and spent more on current customers' phone upgrades. The stock slumped as net income dropped to C$370 million. Photographer: Norm Betts/Bloomberg via Getty Images

The government is on the defensive. Since OpenMedia.ca released our community-powered report on Canada's cell phone market, Canadians have been sending it to their MPs, calling for their support. While MPs from the Liberal Party and the NDP have responded in support of our plan, and Elizabeth May was quick to put out a formal statement supporting the report, the Conservatives are trying to work their positive spin, supporting Big Telecom and saying that everything is just fine.

We've decided to address their claims point by point, so that it's clear that bold action is necessary to improve Canada's cell phone market. If you're upset by the government's unwillingness to listen to Canadians, consider taking a moment to submit a letter to your local paper with our easy-to-use tool.

The Conservative Response

  • Conservative MPs are arguing that they have tried to increase choice for Canadians, pointing to the 2008 wireless spectrum auction ('spectrum' is the resource that allows your calls and data to reach your cell phone).

A portion of this resource was set aside in 2008 for new independent service providers. However Rogers and Shaw have recently have made a pact that will allow a few big telecom companies to take over these scarce resources. This will allow Rogers to get even bigger, increase prices, and guarantee that Canadians have only three mobile telecom giants to choose from. So far Industry Minister Paradis has done nothing to stop this takeover and enforce cell phone industry rules.

  • Conservative MPs say that Christian Paradis, Minister of Industry, is trying to improve choice by encouraging service providers to share their network assets by tightening up rules around cell tower sharing

Tower sharing is important in order to ensure that new independent options are able to enter the market without being held back by the high startup costs of building these assets. Industry Canada is currently reviewing existing roaming and tower-sharing policies, however, we have yet to see a comprehensive solution emerge. There needs to be improved enforcement for tower-sharing rules, including financial penalties for uncooperative practices.

  • Conservative MPs are arguing that Paradis is expanding and extending requirements for wireless companies to provide roaming on their networks to competitors.

As we've explained in our cell phone report and our report on wireless spectrum, in order to provide Canadians with wireless services that function seamlessly across the country, on a level playing field between independent and incumbent providers, Industry Canada should implement clear indefinite roaming obligations. At the moment there are disputes over the level of service that these rules would require. New Industry Canada rules should ensure seamless hand-offs of calls between operators and penalties for service providers who refuse to meet these requirements.

  • The Conservative MPs claim that the next spectrum auction will allow four wireless companies in every Canadian market.

As our organizational allies at the Public Interest Advocacy Centre (PIAC) have pointed out, this does not address the real problem. The upcoming auction puts a 'cap' on the amount of this public asset that a service provider can own, but says nothing about the type or quality of this resource. Not all spectrum is created equal -- some offer much better service than others. So without a 'set aside' of this high-quality resource for new independents, there is nothing to stop Big Telecom from using its allotted cap to gobble up all the best spectrum, leaving only the less desirable parts for independents. Independents can't offer Canadians real choice if they only have access to substandard resources.

  • Conservative MPs promise to review their policies towards these wireless assets before the next auction.

Current rules allow Big Telecom to obtain massive amounts of spectrum and hoard it away. Industry Canada should adopt a clear "use-it or lose-it approach," so that Big Telecom must show that it is using this public asset within a specific period of time. If they don't, it should be auctioned again, giving new entrants the opportunity to obtain it.

If the conservatives are serious about ending price-gouging, and ensuring that Canadians have real choice, fairer contracts, and reliable service, they must do more to facilitate new independent service providers.

The Liberal, NDP, and Green Party Response

While the Conservatives continue to defend their pro-Big Telecom position, the opposition parties have responded by supporting our call for real change and pro-customer policy.

The NDP agrees with us that "Canadians continue to be saddled with a wireless telecommunications sector which lacks effective competition" and that as a result, "Canadians experience above-average pricing, restrictive contracts, a lack of clarity in their monthly billing statements, and rampant frustration with Canada's telecommunications providers."

Both parties think that the upcoming auction of wireless resources is stacked in favour of the incumbent providers, and doesn't do enough to facilitate independents, and the NDP also echoed our concerns that Canada is lagging behind international wireless standards, and that this is negatively affecting our economy.

Both parties support many of our suggestions for an improved wireless market, such as improving the transparency and clarity of contracts and pricing, ending three year contracts, building on existing provincial rules, and making sure the CRTC's Wireless Code of Conduct is enforceable and has teeth. The Liberal Party notes that Canadians "can be better protected by implementing a number of the measures mentioned in the OpenMedia report."

It's great to see the NDP, Liberal Party and the Green Party backing up our findings, and calling for policy that will promote real choice for Canadians. If you haven't already done so, send the report to your MP.

OpenMedia.ca is a post-partisan organization and we hope that all the parties will work with us to fix our broken telecom market and stand up for an open, affordable, surveillance-free Internet.

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