Cheap Cellphones Carry High Cost for Canada

8/11/2019 Cheap Cellphones Carry High Cost for Canada

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StarBusiness

Cheap cellphones carry high costs

for CanadaDave Coles, Tuesday November 23, 2010

Cheaper cellphones would be the consumer-beware loss leader ifthe Conservative government goes ahead with plans to sell outCanadas foreign ownership laws in the telecommunications andmedia sectors.

Jobs, our position as a technology leader, and our distinctCanadian media voice are the hidden costs.

And though cheaper wireless service could be a big selling featureof a Conservative bill expected to be introduced by next spring,there is something many Canadians dont know, and are not likelyto hear from any member of the arper government! Canadiansdo not pay more for their cellphone service than consumers inmost other countries.

"or one thing, the widely #uoted $%C& study that consistentlyranks Canadas cellphone services among the priciest of itsmember countries is seriously 'awed.

(t compares very di)erent plans, including *(+-only cards forsome countries and post-paid subscriptions in others.
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(t excludes some signicant perks that can be found in currentCanadian subscriptions, such as unlimited night and weekendcalling, which %uropean countries generally dont o)er.

And most importantly, the choice of the basket of services usedby the $%C& includes only //0 minutes of talk and about 12 textmessages per month. 3he Canadian average is about 452 minutesof outgoing talk 6or 122 minutes for both incoming and outgoing7and 522 text messages.

8hen applying the Canadian average 9 452 minutes of talk, 522text messages and ve multimedia text messages per month 9Canada ranks fth out of 5: $%C& countries 6excluding *outh;orea7 in terms of prices

%ven if Canadian pricing was way out of whack, creating morecompetition wouldnt help. 8hen it comes to telecommunications,the link between the number of companies and the level ofpricing is very tenuous.

Consider that Canada already has the most mobile networkoperators in the $%C&, after the ell, 3elus, *ask3el, +3* Allstream, ?ideotron,

@ublic +obile, 8(&, +obilicity7 and two more soon to launch6*haw and %astlink7.

>esides @oland and Japan, no other $%C& country has more thanfour competitors. 3his includes the few countries, such as *wedenand "inland, which have similar or lower prices than Canada.

8ireless is a natural monopoly because of high start-up costs 9mainly the network infrastructure set-up.

3hose costs explain why there are only two to four companiesholding onto a total B1 per cent to :2 per cent market share inmost $%C& countries.

8ith more foreign investment, in the current regulatoryframework, new entrants will likely do one of three things!


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+erge to form a larger entity or consortium to provide a truenational service. (n other words, a foreign company such as A3D3or ?odafone would probably take over a current Canadiancompany rather than develop a full infrastructure parallel to the

existing ones.

>e bought out by a larger company 9 as was the case with "idoand Clearnet.

Eo bankrupt because of inability to compete.

3hough prices wont be going down with more foreigncompetition, Canadian Fobs and Canadas position as a technologyleader in this sector will be.

3housands of networking, switching, =D&, head oGce and supportservices Fobs will go south or o)shore.

And the result of having foreign companies buying up chunks ofour wireless spectrum 9 there is very limited wireless spectrumfor the new generation of smart phones 9 means we could#uickly fall behind in technology instead of being on the leadingedge as we are today.

"inally, it is impossible to let foreigners own telecom and cable 3?without exposing our broadcast and media sectors to the samefate.

>oth industries are deeply integrated and cannot be legislatedand regulated independently from each other.

3he four largest private television networks in Canada belong to atelecommunications company! C3? to >ellH>C%, Elobal to *haw,

C(3I to =ogers and uebecs 3?A to ?ideotronHuebecor.

3hese companies need to stay in Canadian hands. 3he ability totell our own stories, listen to our own music and have a distinctCanadian point of view is well worth ghting for. +uch more sothan the empty promise of a cheap cellphone.


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Cheap Cellphones Carry High Cost for Canada