Dividing Canada: The Fragmentation of Canada’s Telecom Markets

by Jordan Richardson on September 28, 2010

The Globe and Mail‘s Iain Marlow has an excellent piece from Friday in which he outlines the fragmentation of Canada’s telecommunications market. “The Canadian telecom business has become regionalized,” he says.

Upon examination, Marlow most certainly has a point. The Canadian telecom sector has gone through a host of changes, some larger than others, during the recent influx of new companies. With the arrival of WIND Mobile, Public Mobile and Mobilicity, a restructuring has taken place that has pushed Bell, Telus and Rogers Communications into differing courses of action. Also in the mix are Shaw Communications and Quebec’s Videotron.

The restructuring has been built around the urban centres because that’s where the competition is. The Big Three have adjusted their prices and plans – and, in some cases, have offered restructured (Solo Mobile) and “new brands” (Chatr) – to meet the competition from the new companies. This has meant lower prices and better plans for customers in urban cores.

Further to that, Quebec has become a critical battleground for Canada’s telecom giants. Marlow’s article points out Bell’s reaction to Videotron’s bundling in the province, with the former also introducing Solo Mobile service in an unlimited incarnation in the Montreal metro area. This has cleared the path for Rogers to dump Chatr in to the Montreal metro area as well. With Videotron’s strategy in the clear, the two giants went to work.

Of course, if you think you’re going to get the same Montreal-style prices elsewhere in Canada you’ve got another thing coming.

This is par for the course with the fragmentation of Canada’s telecom markets. The new companies have “forced” Canada’s big telecoms to adjust their pricing. Because the new companies are operating only in urban centres, the price adjustments (read: discounts and all sorts of unlimited plans) are operating only in urban centres. So who’s losing out? Rural consumers.

Rural consumers have typically drawn the short straw in Canada and elsewhere, naturally, because it’s not seen as good business to spend on areas of the country with so few opportunities and customers. Without competition in rural communities, Bell, Telus and Rogers can afford to play the same game because there’s no new competition. Add to the mix that most of the rural ISPs and providers have either been bought out or held down by the big telecom companies’ refusal to supply broadband at reasonable prices and you’ve got a recipe for more of the same.

As Marlow rightly points out, there are two basic pricing plans in Canada (at least ideologically): “One for urban customers on new discount brands or new plans, and another essentially more expensive offering for rural customers (who have less choice anyway).”

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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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