How the sale of independent carriers could drive costs up

by Andrew Roach on April 19, 2013

There has been a lot of pressure on the telecom industry recently as many of the major independent providers struggling to stay afloat in the current situations.

With the likes of Wind Mobile and Mobilicity now up for sale, industry analysts believe that it could drive mobile costs even higher in the next year or so.

The situation hasn’t been aided by the big telecom providers capitalising on the fallout and taking over some of the failing components of the struggling firms.

But with the government currently reviewing regulations surrounding the wireless industry, will the cost increases be just a short-term blip?

One of the main issues facing the wireless industry is that there is a dwindling amount of competition thee around in the wireless sector.

The “Big Three” group of Rogers, Bell and Telus have remain virtually unaffected, it has been a different tale for other providers who have faced significant difficulties in recent months.

Having only launched back in 2009, companies such as Wind and Mobilicity have failed to get a decent share of the market and get a solid financial backing.

The result of this has seen many of their assets sold off to their larger competitors hurting the chance to maintain competitive prices across the board.

These aspects have been noted by many industry insiders to be the main contributing factor to the struggles of so many firms. Rita Trichur, telecom reporter for The Globe and the Mail told CBC that “They’re up against three entrenched players who have been in the business for much longer. They have a head start that’s been decades in the making.”

As the providers face an uncertain future, it’s likely to force prices back up for the first time in over 5 years.

When the government looked to increase the number of providers, it drove prices to drop by 10% over the past 6 years.

The only saving grace for the public is the upcoming 700MHz frequency auction in November which could give struggling carriers a chance to get back in the game and re-establish their presence.

Until then, everyone will be holding their breath to see what happens next in the saga and find a way to stop the cost raising for all those involved in the telecom industry.

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