THE BLOG

What Big Telecom Is Really Afraid of: Competition

08/02/2013 12:37 EDT | Updated 10/02/2013 05:12 EDT
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TORONTO, ON - JULY 16 : Bell Pay Phones may soon become a thing of the past now that the CRTC has denied raising the usage charge. Mobile phones have made pay phones somewhat obsolete, or severely underused. These two on the corner of Boston Avenue and Queen Street East stand against graffiti on a building wall. (Rick Madonik/Toronto Star via Getty Images)

Canada's Big Three telecom giants are sounding increasingly desperate these days -- they're running expensive ads, that you paid for, invoking the bogeyman of foreign investment in growing new Canadian telecom start-ups.

Big Telecom's high-profile and misleading PR campaign is designed to convince the government to do a U-turn on their commitment to promote greater choice and lower prices for Canadian cell phone users.

Canada has strict foreign investment rules stipulating that investors must organically grow new telecom services, starting with investments in operations consisting of 10 per cent or less of market penetration. The government also chose to set aside less digital infrastructure for new entrants in the upcoming spectrum auction than policy experts recommended.

So what is Big Telecom really afraid of? Big Telecom's worst nightmare is seeing home-grown Canadian innovators finally have an equal platform to compete against their tired, bloated bureaucracies.

The old cell phone providers know that Canadians are fed up paying some of the highest prices in the industrialized world for some of the worst service. That's why tens of thousands of Canadians are working with policy makers to enable new startup providers to operate on a fair and equal basis with the Big Three.

A great example of what the coddled big three cell phone giants are afraid of is Toronto-based Tucows, which runs an independent affordable mobile service in the U.S. called Ting -- a service which could easily be brought to Canada once we finally stop protecting the big three providers. Ting is the kind of homegrown, innovative service Canadians need -- and it's what Big Telecom fears the most.

The truth is that Big Telecom is terrified by the prospect that its years of regulatory coddling by the government are coming to a close, and that a new set of independent Canadian providers might become viable alternatives to the high-cost Big Three.

Big Telecom's agenda is clear: with applications for a crucial auction of wireless spectrum (a scarce and vital resource that providers use to connect cell phone customers) due by mid-September, they are pulling out all the stops to try and prevent independent, innovative providers from having access to the digital infrastructure they need to offer real choice.

Big Telecom's protectionist posturing is all the more worrisome when we consider how much their price-gouging has cost the Canadian economy. Our sky high cell phone prices mean fewer Canadians are willing to sign up to cell phone service. According to the latest BofA Merrill Lynch Global Wireless Matrix, Canada's cell phone penetration level is dead last in the industrialized world -- fully 25 percentage points behind the U.S.

This is having a disastrous impact on our economy. An in-depth 2007 report found that Canada could have seen a 5 per cent increase in gross domestic product between 2002 and 2006 had our cell phone penetration been higher, meaning that Big Telecom's high prices have cost the Canadian economy up to $56-billion in lost investment, money that could have helped create new jobs and improve the lives of Canadians.

Word is spreading fast about how Big Telecom's high prices and monopolistic practices are a dead weight on the Canadian economy -- that's why so many Canadians are pressuring the government to take action. At OpenMedia.ca we've worked with thousands of Canadians to create a clear road map forward for the future of our wireless market.

In James Moore, we now have a heavyweight Industry Minister, somebody with the power and influence to take on the Big Three and fix our broken wireless market. Will James Moore listen to Canadians or Big Telecom lobbyists? Will James Moore take reasonable action to open up our wireless networks to new independent, Canadian service providers or will he cave to the old telecom bureaucracies? Time will tell.

Canadians who want access to more affordable cell phone services can add their voices to those of 57,900 other Canadians at DemandChoice.ca