02/05/2013 12:20 EST | Updated 04/07/2013 05:12 EDT

Telecom: Everybody Knows the Deal Is Rotten

Canadians pay high prices for Telecom services of such poor quality that it has officially become an embarrassment to our country. Our Internet service prices are incredibly higher (in excess of 15 times) and shockingly slower (15 times for upload) than many other countries (e.g., Romania, South Korea, Latvia, Sweden..). We rank pitifully low on the world's Internet service charts.


Our wireless phone service contracts and rates put Canada 10 years behind Europe and Asia, even our neighbours to the South beat us by a large margin. Given that the prices for service are so high, perhaps we could rest assured that the quality would be on par. Here too Canada pales in comparison to other countries; the signal quality is abysmal and dropped calls are a common occurrence. The roaming "deals" that we are offered when traveling abroad are unheard of in other parts of the world since last century, and can really only be accurately described as modern day extortion.

Cable TV and satellite are part of the telecom services, and again, it is astonishing how limited the options are in terms of prices and channels. The basic package from the leading cable TV company costs significantly more than in other parts of the world, and what you get for this price is an abundance of channels you will never watch, combined with the "free-to-air" channels that you can get with an indoor home antenna.

Everything else is "premium" and you've got a lot of "deals" to choose from. To be sure, the industry conducts consumer focus groups to strategically "bundle" channels together to ensure that even the average household will need to purchase one or more premium packages simply to get basic programming.

We all pay our dues every month fueling telecom industry's profits and increasing their grip on a trapped market. How is this possible?

CRTC supervises and regulates Canadian broadcasting and Telecommunications systems. As an independent organization, the CRTC works to serve the needs and interests of citizens, industries, interest groups and the government -- at least that is what their website says. Ironically, it reports to parliament through the Minister of Canadian Heritage. But the interesting aspect is that the head of the organization is a person who worked for the leading telecom giants for many years.

In my opinion, CRTC must be disbanded and replaced with a truly independent governing body, free from the grips of the powerful industry it is supposed to regulate. The problems are too big and too many to even begin analyzing.

Besides exercising undue influence over the CRTC, the big telecom executives clearly have special status with the political powers. They benefited from relaxed regulations over the last two to three decades becoming bigger and meaner, expanding into media (radio, television, newspapers), and creating an oligopoly that ensures supra-competitive profit rates while keeping competition at bay (with a helping hand from their former employees currently running the CRTC). Leonard Katz has worked for Bell Canada (1974-1985) and Rogers (1985-2002). Through media, these big corporations receive money directly from the Canadian Government, in exchange for advertising.

Case in point: Have you seen the Canadian Economic Action Plan ads? Those ads represent $83.3 million that the government basically throws at the media, dwarfing big American corporations' budgets for actual products they have to advertise. A payment from government to media represents, in my opinion, a conflict of interest. How can CTV, a "Bell Media" corporation, say anything negative about the Government while running their paid advertising after the news? This conflict of interest might explain why media is friendlier to the Government in Canada in comparison to other countries.

Finally, these large corporations have introduced their stock value in the retirement portfolios of millions of Canadians, making them "too big to fail." In a perverted logic, we can be happy that our inflated telecom service rates increase the profits of those corporations whose stock we hold in our RRSP accounts. Our interest is for them to be profitable, and that can only happen if we let them continue to extort us. Since they own large portions of the media, who's going to defend the consumer?

If I were the Minister of Heritage, I recommend the parliament to introduce legislation enacting the following Telecom Industry Restructuring Plan:

  • Breaking down these large corporations and prevent them from spreading across. Telephony, Internet, Television, Radio, and Newspapers must be separated.
  • Telecommunications infrastructure must be nationalized - the wires, cables, antennas, etc. because there can be no real competition if a company owns the wires and their 'competitors' rent from them, just as a travel agent cannot compete against an airline company selling their tickets.
  • Finally I would recommend the replacement of CRTC with a truly independent regulating body, to open the markets for fair competition.

We get most our information through telecom services. Information is power. These corporations have become so big that they have overwhelmed the control mechanisms that were set in place for them. This can only be resolved through political action. We need to elect a Parliament that will stop this madness.

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