Subscriber Survey

Ottawa should allow more foreign competition in Canada’s telecom market, subscribers say

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Canadian legislators should allow more foreign competition in the telecommunications market and impose price caps on wireless and internet services, according to The Logic’s subscribers.

About 72 per cent of subscribers said there should be more foreign competition. Thirty-seven per cent said they strongly agreed, while 35 per cent somewhat agreed.

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Methodology

The results are from The Logic’s September 2019 subscriber survey. A private link was sent to subscribers by email and the survey was conducted online. All respondents were kept anonymous and duplicates were removed as needed. Subscribers were asked to provide responses to a series of questions. They were asked whether they agreed or disagreed with two statements. The first was “Canadian legislators should allow more foreign competition in the country’s telecommunications market.” The second was “Canadian legislators should impose price caps on the country’s internet and wireless service providers.” Their choices were: strongly disagree, somewhat disagree, neither disagree nor agree, somewhat agree, strongly agree.

“Our domestic providers are fleecing us,” wrote one subscriber. 

According to the Canadian Radio-television and Telecommunications Commission (CRTC), the prices of communications services (wireless, internet, television and home phone combined) fell by 11 per cent between 2016 and 2018. But Canadian wireless plans still cost more than those of most G7 countries—though the Big Three telecoms—Bell, Rogers and Telus—have argued their networks are higher quality. 

The three firms had 90 per cent mobile-subscriber market share, according to a 2018 CRTC report. “Canada’s wireless service market is dominated by the Top 3,” the commission noted.

Foreign firms are allowed to participate in the Canadian telecom market, but in limited ways. Overseas owners are not allowed to acquire over 20 per cent of the voting shares of any Canadian carrier with more than a 10 per cent market share. They also can’t own more than 33.3 per cent of the voting shares of a wireless provider’s holding company.  

“Canadians pay some of the highest telecom fees in the world,” wrote one subscriber. “With foreign competition, it will lower the cost for everyone.”

But another argued the regulatory environment is not what’s stopping international firms from setting up in Canada. “They choose not to because the industry is already competitive and there is not a business case for them to enter the market,” argued one subscriber. 

Many respondents said they preferred policies that would encourage more companies to offer wireless and internet services to measures that limit prices. 

“Increase competition and let the market do its work,” wrote one subscriber. “Price caps would lead to less investment.”

Nevertheless, about 63 per cent of respondents said Canada should impose price caps on its internet and wireless service providers. Around 32 per cent said they strongly agreed with the idea, while 30 per cent said they somewhat agreed. 

“I believe that telecommunications are a public good and a public service, which should be available to all, anywhere in the country,” wrote one subscriber, “and that they should be affordable, and revenue neutral.”

“Our rates [are] embarrassing,” wrote another. “I cannot believe that I now hate my cell phone bill and don’t mind my cable bill—I never believed that could happen.”

Opening the market to more foreign competition could lead to lower prices for internet and wireless plans and increase economic growth, according to internal government documents prepared for officials reviewing the Telecommunications Act in 2018, and obtained by The Logic. Doing so could also boost the stock prices of domestic giants like Rogers, Telus and Bell, the documents said. 

But Canadian carriers have opposed foreign firms’ attempts to enter Canada in the past. In 2013, the then-Conservative government’s new telecommunications policy attracted the interest of U.S. giant Verizon, which considered entering the Canadian market. In response, Bell, Rogers and Telus launched an ad campaign claiming the the regulations gave foreign carriers an unfair advantage in the market by allowing them to buy up smaller players. Verizon eventually lost interest in entering the market. 

Asked for comment, Bell and Rogers directed The Logic to the Canadian Wireless Telecommunications Association (CWTA), which represents wireless firms.

“The Canadian wireless market is fiercely competitive,” said association spokesperson Greg Burch. “Foreign investors are able to enter our market. but with multiple providers competing for a relatively small market, it is likely that investors see more lucrative opportunities elsewhere.”

Richard Gilhooley, Telus communications manager, said the company “has always expressed support for foreign investment and ownership in Canada, and we welcome competition from inside or outside of Canada provided it’s fair and equitable.” 

However, he said regulating domestic retail prices would be “unprecedented for a G7 country,” noting that wireless prices have decreased since 2014.

“[Price caps] stifle innovation and discourage investment in the expansion and upgrading of wireless infrastructure,” Burch said. He also argued declining wireless prices from “vigorous facilities-based competition” make them “unnecessary.” 

All four major parties have taken aim at telecoms charges during the current federal election campaign. 

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The Liberals have promised to lower wireless bills by 25 per cent if elected, saying they would open up the market to more competition and work with companies to get prices closer to global ones. If prices don’t decrease enough using those measures, they would implement more rules in two years.

The Conservatives have criticized the incumbent Liberals’ regulatory approach, calling it “heavy-handed.” The party has not yet proposed its own policies on wireless rates. 

The NDP has promised to put a price cap on wireless and internet bills based on what customers in other OECD countries pay. Leader Jagmeet Singh has also said the party wants “true, unlimited data plans,” as opposed to current offerings that throttle data speeds once a certain amount has been used.

The Greens’ platform states it would allow more domestic competition against the major telecoms to lower prices, creating “reforms to Canadian laws and fees” that would make it easier for smaller firms to do so.