It is surprising when telecoms becomes sexy," says Dwayne Winseck, a professor of political economy at Carleton University in Ottawa, Canada. I hope Prof Winseck doesn’t mind me saying that he is someone for whom the discussions of telecoms – bandwidth caps, foreign investment and regulatory capture – provides a stirring in the loins. Canada is a test of the faith that a light-touch regulator in a liberalised market is the key to healthy competition. At least, I think the CRTC is light-touch: when you read its decisions, working out exactly what they say can be quite an exercise.
That’s part of the point, says Prof Winseck, who explains that the big three media operators have been adept at "wriggling out of their obligations" in Canada’s original liberalisation agenda. "There are two games: the shop window for display, and the deep background that you need to be a wonk to understand. The shop front looks OK. But there are important things, such as are you going to define elements like bottleneck facilities as essential. The regulator never
goes there."
Canadian consumer campaigning organisation OpenMedia is grabbing the headlines with a series of campaigns designed to stiffen the regulator’s spine. It concludes that Canada is slipping from a position in the telecoms elite because the concentration of ownership that aids investment hurts customers. Its latest campaign, "Stop the Squeeze", has collected 44,000 signatures and hit the news on the unsexy subject of cellphone spectrum auction policy. "The big three cell phone giants (who control almost 94% of the market) are trying to trick the government into shutting independent competitors out," it claims.
Governments want to regulate competition, but they want the maximum price when they auction spectrum. Realpolitik balances the desire to allow carriers to make profit, with the need to do things to their networks that increase competition. Prof Winseck points approvingly to regimes in Australia, France and the UK ("a government that has stood up and got a spine"). Canada is not alone in experiencing the effects of strong concentration and vertical integration. Professor Eli Noam of Columbia University concludes that volatility and cyclicality are a fundamental part of telecommunications for the first time – ironically caused by deregulation and the need for investment. That gives incentives for carriers to create cooperative oligopolies which, without regulation, emerge as the equilibrium.
The global financial crisis is testing the faith that what’s good for consolidated carriers is also good for consumers. Canada is a test of whether consumers can influence the way the government works. In the short term, Winseck thinks they are winning.
Tim Phillips can be contacted at: tim@timphillips.co.uk
