Tuesday, December 14, 2010

The worst of both telecom worlds

A quick follow-up today to on the lack of competition in broadband internet services in North America. Catherine Middleton, the Canada Research Chair in Communications Technology in the Information Society at Ryerson University, added a comment to that post yesterday wherein she linked to a pair of studies she'd done on broadband in Canada. Her studies came to many of the same conclusions - that there is a distinctive lack of broadband competition in Canada, and that will continue to be the case unless something changes with the government's or regulator's demeanour.

There was a quote in one of her reports that I found especially poignant, which she herself repeated from another, separate study. The previous 2008 report was titled "Right to Communication" and it stated that, “Canadians continue to face a market oligopoly comprised of a very limited number of powerful incumbents. As a result, they live in the worst of both worlds, enjoying neither the benefits of real competition nor the benefits of an industry regulated to serve the public interest.”

I've been saying this for some time: in Canada, we currently live in the worst of both worlds (or the diametric opposite of that great Van Halen song, ). When the Conservative government came into power in 2006 it directed our regulator, the CRTC, to basically take it easy - to stop proactively regulating and only get involved when a problem had become obvious. And so the process began in earnest of deregulating telecommunications services.

But there's one very important regulation still up and running: . In a nutshell, foreign companies need not apply to Canada to set up any sort of internet, phone or wireless businesses because they can't have any sort of meaningful ownership of them.

As the report succinctly puts it, this has created the worst of all possible scenarios. Our government has created an unregulated market for telecom and cable companies, but with no actual market forces to keep them honest. There is no threat of a large, well-funded foreign rival coming in to compete with them, nor are there any rules domestically to make sure they behave. There certainly isn't any possibility of a serious competitor starting up domestically because telecom is an expensive business and small companies generally can't get that kind of money. Especially not to go up against the likes of Bell and Rogers.

It's an overused cliche, but the inmates really have been given the keys to the asylum.

Hello government: is this enough of a problem for you yet?


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