Why we think it's common sense to stick to the big 3 cell companies

 It is the influence of irresponsible PR campaigns and lack of competitive voices that drive consumers to believe that sticking with these companies is best for them. This is irrational given the factual information we have on price differences not only between competing companies in the country, but compared to other countries. These stories, in the form of advertising and PR campaigns, are relayed through mass media outlets for a desired effect. In the debate for a set-aside to allow space for new entrants in the market to acquire spectrum, Rogers argued that:

“Canadian consumers are very satisfied with their choice of Canadian providers, pricing plans and technology options. Consumers are the first to object in the face of poor competition among service providers, yet surveys indicate the exact opposite sentiment.” (Geist)

Thankfully, the Canadian Government rejected these unsubstantiated arguments and allowed a set-aside which led to new market entries such as Wind Mobile and Mobilicity. The results of the last spectrum option allowed for increased competition and reduced bills and fees for Canadian consumers. However, is this auction actually as open as they say? With the current policy for foreign investment and ownership, the auction is actually closed to foreign options which may improve the current landscape. Rogers recently put out a campaign called “I want my LTE!” which urged customers to sign for more competitive prices and better service. The campaign was an effort to convince customers that putting another “set aside” for smaller, new entrants in the auctions for 700 MHz spectrum is unfair. They claim that excluding Rogers from this bid will have a major negative impact on the distribution of LTE across the country and will stall innovation. However, the campaign is actually a plea for Rogers to take the entire spectrum, along with Bell and TELUS, for themselves. They want to eliminate competitors by protesting the “set aside” since Rogers, Bell and TELUS all have the resources to outbid any smaller company in the auction, allowing them to buy the entire spectrum, and potentially sell it to smaller companies at a higher price. This type of behaviour could raise service prices across the board. Their arguments come as no surprise of course, since there have been studies and reports on the effects of competition on their bottom lines. This is how we have arrived at highly overpriced telecommunications services.

I think Shiller may have something to say about Canadian cell phone behaviour...

Customers of the three companies that control most of Canada’ telecommunications services (Bell, Rogers and Telus) are trading in classical economic theories for confidence in these companies abilities to provide superior service. Classical mathematical economics would suggest rationally that the more people using a service or buying a product, the cheaper it will be. We know that this is not always true in Canada with internet, phone and cable prices. Robert Shiller and George A. Akerlof outline human psychological behaviour that affects financial markets in their book Animal Spirits. What I consider to be their most important argument is that investor’s actions are driven by stories, and the confidence, or lack of it, which results from these narratives. One of Shiller’s arguments is that we need to consider the social and psychological effects of society as well as individual behaviour and the influence or stories and narratives surrounding the market in order to fully understand why prices fluctuate (behavioural finance lecture, Yale University, 2009.)  His theory is about investor behaviour, but can easily be related to consumer behaviour. Economically, rational pricing of products and services should be reactions to supply and demand, material, labour costs and other expenses. Relating this to overpriced services in the telecommunications sector, why are consumers irrationally paying more money for the same product or service they can receive at less than half the price? If we were behaving rationally in paying these prices, one would assume it is because we are getting better quality service. But this is not the case.  Data collected by CBCnews reveals that Canadians work more hours a year to pay for the same cell phone plan compared to other countries. Below are hours worked per year for a determined cell phone package per country:

Canada: 30.55

Frace: 25.71

UK: 25.42

Ireland: 22.65

Iceland: 14.53

Austria: 14.31

Sweden: 11.01

 

Outdated Regulation for Foreign Ownership in Telecommunication

The history our foreign ownership regulations in telecommunications dates back to the Free-Trade Agreement with the U.S. in 1987 when the policy was adopted to mirror U.S. regulations of the time.  The Telecommunications act was drafted in 1993 and regulations came into force for telecommunications foreign ownership in 1994 outlining that companies must be owned and operated by Canadians. However, while other countries have reviewed their foreign ownership regulations, the issue has been put on the backburner here in Canada. The history of this policy is described by the Canadian Centre for Policy Alternatives in the book The Internet Tree. While Canadians were heading telecommunications developments in the past, we are now lagging far behind our global competitors in the developed world. In the end of 2008, Canada actually ranked 27^th out of 30 OECD countries for average monthly broadband prices and 25^th in download speeds (73.)  One of the biggest obstacles we have had to overcome in effectively wiring the country is our size. We have 5 time zones, and the European Union can fit into us twice. This challenging geography required huge financial investments. Previously, in the 1800s, the obvious solution to this was foreign investment. But, there were complaints and problems with this arrangement, some of which were that rural areas were being ignored, service was lacking, prices were too high and foreign owned telecommunications companies eliminated new entrants with anti-competitive prices behaviour (47.) Sounds similar to the complaints we have today. When the government claimed in 1987 that ‘domestic ownership of Canada’s telecommunications infrastructure is essential to national sovereignty and security,’ this made sense to Canadians, but the concerns expressed by Canadians now mirror the concerns from the past, which means the Government’s solution for these problems have yet to fix the problem (and neither have market forces.)

We deserve Better-The Dismal State of Canadian Telecomm

Canadians that have been slapped with an excessive and unfair phone bill by a telecomm giant to which they are chained to contractually are not part of a small group. There have been a rising number of complaints from Canadian consumers concerning their monthly cell phone, internet and cable bills since 2009. Below are statistics for the number of consumer complaints per telecommunications company in 2011 compiled by the Commissioner for Complaints for Telecommunications Systems (CCTS.) Unfortunately the data is not separated by service, so companies that combine telecomm services have been bunched together. We can see a large number of complains across the market, mainly concentrated in the tech giants (Bell, Rogers, TELUS.) Out of these complaints, 62% are wireless, mainly billing errors (Hardy.)

Bell:                       2,348 complaints

TELUS:                1,387 complaints

Rogers:                                 1,355 complaints

Fido:                      657 complaints

Virgin Mobile:    637 complaints

Solo Mobile:        226 complaints

Videotron:            153 complaints

Koodo Mobile:    129 complaints

Wind Mobile:      86 complaints

MTS:                     72 complaints

SaskTel:                31 complaints

Mobilicity:           23 complaints

Chatr Wireless: 4 complaints
Public Mobile:    3 complaints

Compared to a few years ago, we have more options when it comes to service providers due to an opening of spectrum for new entrants. However, the conservative government is planning on loosening foreign ownership restrictions in the telecommunications sector in order to foster more competition and allow to market to flourish. Complaints in relation to service quality and pricing have been attributed to the lack of competition in the Canadian market, which can be amongst other factors, attributed to strict foreign investment restrictions.  The current policy not only discourages competitive pricing, which is Canadian consumers’ main argument, it also hinders Canadian telecomm companies’ ability to remain competitive in a global market, discourages innovation in the technology sector and is mainly in the interest of the near-monopolistic companies that are in its favour. However, Canadians have voiced their concerns when it comes to opening our doors to foreign investment, such as the threat to Canadian culture, employment and the fear of losing research and development to other countries (Open Media.) In order to catch up to other developed countries and offer Canadians the best service, there is a need for government intervention and regulatory changes. Loosening these laws will result in a more competitive market, which is in the public interest. However, there are ‘spillover’ issues that must be considered while this change is made. Recently, the Conservative Harper government has begun to come to an agreement about the benefits of removing foreign investment regulations in the telecommunications sector. The Canadian government has proposed three options for reform (Industry Canada):

1.      Increase direct limit for broadcasting and Telecommunications ownership to 49%. In this case companies would only be required to have Canadian owned voting shares of 51% compared to 66 2/3%.

2.      Telecomm companies with less than 10% of total telecommunications market revenue would be excused from current restrictions.

3.      Remove restrictions completely.

Bill C30 Needs a Remedy

Michael Geist has posted his suggestions on how to remedy bill C30, the online surveillance bill that threatens to jeopardize Canadians' privacy online. Although there has been a huge public push-back since the government has introduced the bill, I fear it may still get pushed through. However, Geist is right, if it does; it NEEDS to be reviewed. Here are his primary suggestions.

1. Evidence, Evidence, Evidence
2. No Mandatory Warrantless Access to Subscriber Information
3. Reporting Warrantless Disclosure of Subscriber Information
4. Remove the Disclosure Gag Order
5. "Voluntary" Warrantless Data Preservation and Production
6. Government Installation of Surveillance Equipment
7. Reconsider the Internet Provider Regulatory Framework
8. Improve Lawful Access Oversight
9. Limit the Law to Serious Crimes
10. Come Clean on Costs
11. The Missing Regulations
12. Deal With The Failure of Privacy Laws To Keep Pace

Read more at http://www.michaelgeist.ca/content/blogsection/0/125/

The Web Was Almost Anarchic...

It seems now as though we lack proper definitions and categorization of the media we engage in (there being so much) , which results in undistinguished policies which seem to be applied to mass communication mediums as well as telecommunications--which seem to have become increasingly similar. As Freedman puts it in his book The Politics of Media Policy,  it used to be that mass communication applied to broadcast, print and radio and there were therefore certain policies and restrictions concerning content ownership and censorship. Copyright laws were strict in order to protect intellectual property, while with telecoms (medium used for 2 people to communicate with one another, usually asynchronous), had their own regulations and policies. 

Now that the lines are blurred between what is private use and public use, the communication between a certain group of individuals easily becomes mass communication. Siva Vaidhyanathan describes the web a few years back saying “the web was exciting and democratic-almost to the point of anarchy, in his book The Googlization of Everything (and why we should worry.) This is no longer the case. Vaidhyanathan also points out “the mythology of the web leads us to assume that it is a wild, ungovernable, and thus ungoverned realm. This could not be further from the truth.”  And with this assumption, we behave online as if there were no consequences.

Anti-Piracy Treaty "Potentially Draconian..."

While the CTRC's policies regulate broadcast content, and  what we find in newspapers and magazines is heavily influenced by those who finance them, the web is one of the most accessible places where people can share information and opinion without restriction, produce content, organize social and political action, and take the direction of the internet into their own hands with open source platforms. The internet has the potential to democratize art, literature, learning, ownership and governance--all usually reserved for an elite few. But this is only possible when the right people are appointed to make sure it stays this way--individuals independent of short-term political goals and corporate profit agendas. Copyright laws that favour keeping the power in the hands of big industry players, such as the proposed Anti-Counterfeiting Trade Agreement (ACTA), Bill C-11, and spying instruments like DPIs used by companies and government alike to limit what can put on the web by criminalizing personal activity will be the demise of how this tool is really meant to be utilized. According to an article in the economist, found here: http://www.economist.com/node/21547235

recent protests in Europe against the agreement may put an end to it. Let's hope!