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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.

Comments
  1. WheatGrass Fri, 02 Aug 2013 01:11:13 GMT

    Excellent piece about Laws!

     

    Indeed, unintended consequences when lawmakers pass, approve and implement  a bill or law happens inevitably. What should they do to avoid this to happen is daunting. So it is not also easy for them to do this.

  2. D Gagne Mon, 05 Aug 2013 19:42:54 GMT

    Time to get the best deals available and to hell with what we have in Canada. Get the cheaper US deals

  3. Alice Thompson Mon, 05 Aug 2013 21:10:18 GMT

    Well articulated explanation of the issue. Well reasoned and reasonable proposal of how to correct this problem.

    if our government doesn't listen and respond favorably to this Chamber of Commerce request, it won't be my government any more and i will be voting for another party next election, despite being a die-hard Canadian Alliance/Conservative supporter for many many years.

    Don't let us down, Mr Harper.

    Alice Thompson

  4. Azim Tue, 06 Aug 2013 19:52:17 GMT

    The Big 3 have had the entire themselves. In a Capitalistic society it's a fair game. How come no one stood up when Canada's or rather Alberta's  natural resources where bought out my foreigners? How much outside monies have poured in the Alberta's oil sands up north?? I spoke up and asked our current government that Natural Resources should never be sold a foreign country let alone it was China!!

    We cannot pick and choose. Smaller  communities will suffer no the coverage but then it's no different not having large box stores in smaller towns.

    The big 3 Telcos have their Profits to worry about  and their shareholders! They have to keep their Share values and consumers are least on their mind. Didn't Shaw's Wireless Spectrum some of it sold to Rogers? Why? If shaw had no plans to enter the wireless market (cellular), it should have not been allowed to buy and then sell it off. 

    There are very many US businesses in Canada. 

    My thoughts. 

     

  5. wafflehat Tue, 06 Aug 2013 19:59:32 GMT

    "What will be the impact on rural areas if a major new competitor enters and “cherrypicks” the urban markets?"

    Not sure I really get this. The big 3 telecoms companies are suggesting that having a competitor would cause them to *reduce* their own coverage of rural areas? And there's a pretty big 'if' there - "...IF... the new competitor cherrypicks the urban markets".

    (Not to ignore, of course, the delicious irony of the big 3 complaining that someone else might cherrypick urban areas - has the author tried to get a decent 3G signal on the drive from Toronto to Kingston, for example?)

  6. Dave Kutinsky Thu, 08 Aug 2013 02:41:06 GMT

    Canada pays the highest rates in the world for cell phone use.  Bring on the competition, maybe our rates will get down to where they should be.

     

    GO VERIZON

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