Incumbents Acting as an Oligopoly, Lethbridge Professor Says

by Istvan Fekete on April 15, 2014

You may recall the recent $5 price hike from Telus, Rogers, and Bell: citing various reasons, the incumbents have raised the price of new contracts by $5, while existing contracts remain unchanged. By the way, they have the right to make such increases whenever they want to. The best word to describe this situation in Canada is oligopoly, according to a professor.

“It’s the power of what we call an oligopoly,” said Michael Madore, a professor in the Faculty of Management at the University of Lethbridge. “Rogers, Telus and Bell are acting as an oligopoly. It’s very difficult for a new party to come in and gain presence,” Madore said.

“It’s really based on supply and demand of markets. As long as Canadians are not going to push this with the government you’re going to continue to see the rates go up, I think,” he said.

By the way, the Organization for Economic Co-operation and Development (OECD) has found in its 2013 global scan that Canadians are paying the second-, third- and fourth-highest rates for cell services within countries analyzed by the organization.

“It’s frustrating. With data plans they said it’s around $80 if you were to buy a new plan,” he said. “As long as there’s demand for data, the businesses are going to reap profit from it.”

Those born since, who get everything right away and use their handsets wherever they are to shop online, post frequent updates to Facebook, etc. So opting out of data plans when signing a contract with any telco would be a no-no for them, just like limiting them to Wi-Fi hotspots.

To change the current situation, the market would need to have six or seven players. Now, we have seen some changes in this direction, as Quebecor has emerged as the fourth national player during the spectrum auction, but that’s only on paper until we see that network deployed in the licensed regions.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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