Verizon in Canada?
So, the attack ads from Bell, Rogers and Telus have started. Canada is basically trying to bribe Verizon to make an entrance into the Canadian market. And the incumbents are more than unhappy with this.
I'm with Telus. I've never had any particular problem with them. But yes, my phone plan is likely worse than it would be if I were south of the border. Telus undoubtedly makes a wider profit margin than is necessary. And if they aren't it is likely to due to mismanagement of resources.
Competition is good. But, I can't say I necessarily like the way that the Canadian government is approaching this. I do feel that they are giving undue benefit to foreign companies. The way they are handling the spectrum licensing is a little odd being the only thing I can point at specifically.
But that being said... 90% of all cell phones in Canada are with those 3 companies. And their attack ads are ridiculous. None of the attack ads surround the way government is dealing with the spectrum or blocking other deals either. All of the attack ads I have seen have claimed things like Verizon will simply piggyback off the existing infrastructure rather than build their own (which means they will be paying the big 3 for that right so not much of an argument there) or that jobs at the big 3 will be lost (but they will likely be lost from the big 3 and recreated at Verizon).
And lets face it, Verizon isn't going to just piggyback. If their sole means of providing service is piggybacking off of others, then their plans are going to be more expensive (what Bell, Rogers and Telus seem to think no one will notice is that "piggybacking" means Verizon is paying one or more of them for the usage of that infrastructure). It would also mean that they have no way of differentiating their service from their competitors because their service would in fact be their competitors service. And lets not forget that the companies that they are talking about buying already have some limited infrastructure of their own.
My argument against Verizon would be much simpler. 90% of the market is controlled by the big 3. Add another giant and likely closer to 99% will eventually be held by the big 4 and it will literally be impossible for any new entrants. 4 parties controlling virtually the entire market will just result in the stagnant form of competition we see today. If anything, to increase competition in any meaningful we need to chop that number down to about 1/3 or less of the industry being controlled by so few players before we start talking about trying to introduce another one.
If Canada weren't bending over backwards for Verizon, they wouldn't enter the market as a dominant force... but then they probably also wouldn't bother entering the market at all. Part of the problem is that it isn't cheap or easy to break into the market in the first place and it is very much a gamble. Jointly, the big 3 hold something that amounts to much more than a simply monopoly. Frankly, I don't know what they're worried about. Most Canadians are locked into a contract with one of the big 3, and most people don't switch carriers on a whim. And even with Verizon on the scene it doesn't mean 100% of new cellphone users will go there. To top it all off, the big 3 tend to net new customers by bundling services (Cell, TV, Internet, Home Phone). The exception is Telus, and they are the smallest of the big 3. Verizon will not likely offer the variety of services Rogers and Bell do, which will almost certainly leave them with a stake in the market smaller than what Telus has (at least to begin with).
Basically, it would probably still be several years before a new comer, even one the size of Verizon could seriously disrupt the profits of the big 3.
I think fundamentally, the Canadian government will regret its decisions if they pan out. We need to clip the wings of the biggest players to make more room for multiple sources of competition rather than simply bringing in more telecom giants and helping them get big fast. There will likely be an initial blitz of competition, but it will fizzle out in no time.
I'm with Telus. I've never had any particular problem with them. But yes, my phone plan is likely worse than it would be if I were south of the border. Telus undoubtedly makes a wider profit margin than is necessary. And if they aren't it is likely to due to mismanagement of resources.
Competition is good. But, I can't say I necessarily like the way that the Canadian government is approaching this. I do feel that they are giving undue benefit to foreign companies. The way they are handling the spectrum licensing is a little odd being the only thing I can point at specifically.
But that being said... 90% of all cell phones in Canada are with those 3 companies. And their attack ads are ridiculous. None of the attack ads surround the way government is dealing with the spectrum or blocking other deals either. All of the attack ads I have seen have claimed things like Verizon will simply piggyback off the existing infrastructure rather than build their own (which means they will be paying the big 3 for that right so not much of an argument there) or that jobs at the big 3 will be lost (but they will likely be lost from the big 3 and recreated at Verizon).
And lets face it, Verizon isn't going to just piggyback. If their sole means of providing service is piggybacking off of others, then their plans are going to be more expensive (what Bell, Rogers and Telus seem to think no one will notice is that "piggybacking" means Verizon is paying one or more of them for the usage of that infrastructure). It would also mean that they have no way of differentiating their service from their competitors because their service would in fact be their competitors service. And lets not forget that the companies that they are talking about buying already have some limited infrastructure of their own.
My argument against Verizon would be much simpler. 90% of the market is controlled by the big 3. Add another giant and likely closer to 99% will eventually be held by the big 4 and it will literally be impossible for any new entrants. 4 parties controlling virtually the entire market will just result in the stagnant form of competition we see today. If anything, to increase competition in any meaningful we need to chop that number down to about 1/3 or less of the industry being controlled by so few players before we start talking about trying to introduce another one.
If Canada weren't bending over backwards for Verizon, they wouldn't enter the market as a dominant force... but then they probably also wouldn't bother entering the market at all. Part of the problem is that it isn't cheap or easy to break into the market in the first place and it is very much a gamble. Jointly, the big 3 hold something that amounts to much more than a simply monopoly. Frankly, I don't know what they're worried about. Most Canadians are locked into a contract with one of the big 3, and most people don't switch carriers on a whim. And even with Verizon on the scene it doesn't mean 100% of new cellphone users will go there. To top it all off, the big 3 tend to net new customers by bundling services (Cell, TV, Internet, Home Phone). The exception is Telus, and they are the smallest of the big 3. Verizon will not likely offer the variety of services Rogers and Bell do, which will almost certainly leave them with a stake in the market smaller than what Telus has (at least to begin with).
Basically, it would probably still be several years before a new comer, even one the size of Verizon could seriously disrupt the profits of the big 3.
I think fundamentally, the Canadian government will regret its decisions if they pan out. We need to clip the wings of the biggest players to make more room for multiple sources of competition rather than simply bringing in more telecom giants and helping them get big fast. There will likely be an initial blitz of competition, but it will fizzle out in no time.
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