Battle Rages On: Upstarts Vs. Incumbents

by Jordan Richardson on June 11, 2010

As the federal government attempts to piece together some semblance of a strategy to deal with the changing environment of Canada’s telecommunications industry, the incumbents and the new blood can’t help but take pot-shots at each other.

In two keynote speeches at the Canadian Telecom Summit on Wednesday, top execs from Telus and Globalive delivered two vastly different visions of the telecommunications sector in this country.

Much like various parties deliver visions of the Gulf oil spill relative to their corporate interests, so too do the two speeches at the Summit echo varying degrees of “reality.”

Telus executive vice-president and chief financial officer Robert McFarlane was quick to point out that the idea of inadequate competition in Canada’s telecom sector was simply just mythological. McFarlane was condemned what he considered “regulatory handouts,” adding that the actions of the CRTC served to distort “capital markets” and subsidize “political favourites of the day.”

“Interventionist approaches are the wrong way to pursue a national digital strategy,” said McFarlane.

Globalive’s Anthony Lacavera had a differing view, of course. He stated that the industry was essentially a “national oligopoly” of carriers combined with “provincial duopolies” of cable and telecommunications companies. This is largely due to the paucity of raw capital, noted Lacavera, and big Canadian lenders are only too obliged to “dismiss” new competition outright.

Perhaps the only area in which Lacavera and McFarlane were able to find accord was as relates to the regulators.

With Rogers, Telus and Bell accounting for 95% of the market and with each of those companies also controlling interests in either broadcasting or cable TV distribution, it’s hard to imagine that Lacavera’s statement about a “national oligopoly” is all that far off from the truth. The case for a new national carrier worthy of note doesn’t need to be made with all that much ferocity, as it’s pretty clear the markets have room for new competition.

The question is how the new competition will fit into the current market structure, especially with the CRTC and the incumbents habitually playing regulatory games. The Big Three seem against all regulations that don’t help them apply their market control and seem to sustain regulations that help keep competitors tied down, so it’s hard to say with any sincerity that they favour a clear path.

In any event, the way this will all shake out remains a mystery. It’s anyone’s guess as to how or if the upstarts will be able to mount a case with the careworn and exhausted Canadian telecommunications consumers, especially with the systematic power grab from Rogers, Telus and Bell serving as more obtrusive than any regulatory body could ever hope to be.

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Written by: Jordan Richardson. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS >, Twitter >, Identi.ca >, or Friendfeed >

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