When the proposed $20 Billion merger of Shaw into Rogers was first announced, a few days ago, my initial reaction was:
Rita Trichur, writing in the Globe and Mail, explains that:
- First, Rogers’ “friendly deal to acquire Shaw for $20.4-billion was inevitable. Their long-standing agreement to not compete in each other’s respective home turf (Rogers taking the east and Shaw the west) on legacy services such as cable TV, and the families’ close ties meant the companies would always be the perfect match;” but
- “The future of telecommunications, however, is all about wireless. It’s a costly business and companies require scale to remain profitable. That’s why our weak-willed regulators will eventually approve this tie-up. Princely sums are needed to build high-quality 5G wireless networks across our vast country.“
She also says, and I agree fully that, this deal will hurt Canadian consumers. “Sure,” she says, “Rogers is promising to invest billions to “create jobs and connect communities.” It’s no mystery, though, who will ultimately foot the bill for those investments. Common sense dictates that consumer prices will only go up after this deal is done.” That’s because successive governments, egged on by Marxist economic theoreticians keep trying to use regulations to create a competitive environment, using the same arguments that people use to justify one more attempt at communism: ‘It is sure to work, next time. We just didn’t implement it correctly in the last hundred or so attempts.‘ That is, it seems to me, a belief ~ one entirely devoid of any practical foundation ~ that prevails amongst most (65±% at a guess) Canadians, especially amongst those who, habitually, vote for the BQ, Greens, Liberals or the NDP.
It’s nonsense, of course, the best, probably the only way for governments to promote competition is to remove the impediments to it. Regulated ≠ free. Going all the way back to the 1930s, at the time of the creation of the CBC, Canadians have been increasingly protectionist about something that doesn’t even exist: Canadian culture. Our Laurentian Elites have used our ingrained fear of American domination to set up barriers to broadcasting, telecommunications and media ownership.
Go back to what Ms Trichur said, above: “The future of telecommunications, however, is all about wireless … [and] … It’s a costly business …” Canadian know how costly it is, but, as a reminder look at this (from July 2020):
Look more closely at two of the notes:
That says it all. India and Israel and most Asian countries, where competition is fierce, have low cost data for everyone; Canada and several third-world, Marxist dictatorships have high cost data for most people because they forbid real competition.
Ms Trichur says, and I agree, again, that: “After years of bungled attempts to create more competition in the telecom market, the federal government only has one significant lever left to pull. It must finally relax foreign ownership rules for large telecoms to allow American giants to acquire Canadian incumbents,” including Bell and Telus “– Rogers’s two main rivals – to drive down prices for consumers.” She notes that “Back in 2012, the federal government made legislative changes to enable 100-per-cent foreign ownership of small telecoms that have a revenue market share of 10 per cent or less … [and she says] … Now is the time for Canada to take the next logical step and drop the remaining foreign investment restrictions for large players.“
Although Ms Trichur focuses on the big American telcos like Verizon and AT&T, the market should also be open to e.g. Japan’s NTT Britain’s Vodafone and European giants like Deutsche Telekom and Telefonica. There is still an obvious role for regulators: to keep unfriendly giants like China Mobile and MTS (Russia) out of our market. Free needn’t and shouldn’t equal totally open to all.
Doing what Ms Trichur says, very sensibly, is right and doing it the right way, too, will require an act of massive political courage and superb regulatory craftsmanship. It will need a national leader with a nation building vision, a 21st-century St Laurent, and a political manager with the skills and determination of CD Howe: