Relaxing Foreign Ownership of Canadian Wireless
Posted on March 11th, 2010 in Canada | No Comments »
There have been a couple of stories lately by The Globe and Mail which paint a picture of coming deregulation of the Canadian wireless industry. Conservative Industry Minister Tony Clement has said that the strict Canadian ownership rules imposed by the CRTC on wireless companies in Canada will be “relaxed” in the near future. What does this mean to us?
On one hand, Anthony Lacavera, chairman of WindMobile’s parent company Globalive, has been very vocal, saying that in order to compete with the large incubments of Bell, Telus, and Rogers, new entrants desperately need access to foreign capital in order to build out their networks and survive. He has a point of course; there just isn’t enough interested investment capital in Canada to fully support a new wireless company, let alone two or three.
Few Canadians will argue that change isn’t needed. Wireless customers seem to be caught in a perpetual loop of being excited to get a new phone, signing a new contract to get the phone for ‘free’, praying that their $60 a month bill really is $60 a month, and then spending the next 3 years cursing their wireless provider while paying $87 a month after all the fees are added. Lather, rinse, repeat.
A shakeup of the wireless industry and relaxation of foreign ownership restrictions could effectively put an “open for business” sign on Canada’s front window, and while trying to blanket the second largest country in the world in wireless coverage is not at all attractive, Canadians have made it easy, especially for the big US companies. Much of the Canadian population resides in major cities close to the US border, easy expansion territory for amalgamation into US networks.
European and Asian wireless companies are only at a slight disadvantage. They can make tidy little businesses out of the urban centers themselves, marketing themselves as “city” plans for those who don’t often stray far from home.
The big three would have to lower prices, increase service, and change to adapt to customer needs, not their own constraints. Or else.
However, it isn’t all doom-and-gloom for the big three. In fact, they may benefit the most out of this.
In one article, the prospect of mergers and acquisitions is raised. The big three could raise huge sums of cash on the foreign markets. This could mean upgrades to networks, but could also fund a war chest to crush new entrants. Anti-competitive statutes would be there to regulate any blatant attempts to snuff out a new player, but ultimately the big three can do anything a new entrant can. They have the networks, they have the customers, and they know the market. Giving them access to foreign capital may tighten their stranglehold on the Canadian wireless industry.
But it’s the only option. It’s the only way a new entrant can survive. Ultimately, it will be up to Canadians to speak with their wallets when the time comes.
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