Every year Ottawa creates thousands of regulations and passes dozens of laws—some good, some very wrong.
But the law I always worry about the most is the law of unintended consequences. No matter how well intentioned ministers may be, they cannot know for certain how their decisions will impact our economy and our lives.
Over the last several years, Ottawa has taken steps to encourage competition in our wireless telecom markets. This is a principle we strongly support at the Canadian Chamber. More competition spurs innovation and drives down prices, and we congratulate the government for its pro-competition policies. The last time Ottawa auctioned off wireless spectrum, in 2008, it set the rules to give an advantage to new entrants. It worked. A number of new players entered the market, and their investments have given Canadians more options and, in some cases, lower prices.
Now, Industry Canada is just weeks away from another auction which will use a very similar approach—including special advantages for new players—to buy the most valuable spectrum (700 megahertz) yet offered.
Here’s where the law of unintended consequence comes in. Preoccupied with the need to coax small players into the market, the government set up a better deal—a much better deal—for them. But now, speculation abounds that some of the largest companies in the world may show up to take advantage of that special deal designed for small new entrants.
For newly-named Industry Minister James Moore this is a critical moment. Plenty of people in the government will doubtless urge him to proceed immediately. After all, isn’t more competition good?
But as a former minister responsible for Canada’s telecommunications policy, I can say that it’s infinitely more important to be right than to be fast. Mr. Moore has a few precious weeks to consider how this policy will impact the Canadian wireless marketplace. Once he’s made his decision, having weighed the facts, he’s committed. With so much at stake for Canada, it’s important to take whatever time is needed to get the decision right. There’s no benefit for him, consumers or the business community in being driven by an artificial deadline that he did not create.
Instead, he should ask for thorough replies to some critical questions:
- What will be the impact on rural areas if a major new competitor enters and “cherrypicks” the urban markets? The 200,000 members of the Canadian Chamber’s network, most of whom are SMEs that need dependable, affordable telecom services, are located in every part of Canada. They would say: “Lower prices for the largest cities is tremendous… unless it’s at the expense of the smaller markets.” We have to serve the needs of all Canadians, regardless of where they live.
- Canada’s market has been very investment intensive and, in fact, leads the OECD. The result has been great networks—the best infrastructure in the world. Recent research from Europe has noted how the EU has moved from world leaders to laggards in the state of mobile networks—dropped calls, connectivity between states—because of low levels of investment. Will Ottawa’s proposed approach send us down that same road, or will investment stay strong outside the urban corridors?
- Should a new entrant many times larger than our existing players be allowed to piggyback on their networks? Again, that approach may make sense with small players, but do the largest companies in North America really need such an advantage to compete?
- What will happen to the Canadians who responded to the call in the last auction? Companies like Videotron, Mobilicity and Public Mobile who have invested as we asked them to? Will they survive now that international giants are poised to take advantage of the special benefits designed specifically for our smaller domestic players? It will be a huge black eye to the government if these players are swallowed up.
The new minister is one of the most capable and experienced members of the Cabinet. He’s demonstrated in the past that he’s able to weigh tough issues and craft his own approach. This auction has been delayed before. Given the stakes for the industry, the wisest course is to answer these questions before he commits himself to the next, irreversible step.
Canadians, including the hundreds of thousands who belong to chambers of commerce and boards of trade throughout our country, strongly support competition. They want low prices and powerful networks. But they also want fairness in the marketplace. Many have invested in the telecom sector, or their retirement funds are invested there. They expect a careful, considered approach to market reform and they hope the government will take the time to get it right.