Ottawa’s Interventionist Wireless Policy is Wasteful, Study Says

by Istvan Fekete on May 8, 2014

So far, Ottawa’s “interventionist policies” in the wireless market (i.e. pushing for a fourth carrier in every region) are considered wasteful and counterproductive in Canada by a new study conducted by the Montreal Economic Institute (MEI) (via the Globe and Mail).

The study does support the theory that more competition always benefits the consumer, but this isn’t the case with the Canadian wireless market, they say, because concentration in the hands of the incumbents (Rogers, Telus, and Bell) is good for Canadian wireless customers Martin Masse and Paul Beaudry, the authors of the MEI study claim.

“It may be preferable for financial resources … to be concentrated in the hands of a few strong players willing to invest in new technologies and services rather than scattered among several small and feeble competitors trying to survive by selling at prices barely above marginal costs,” the report said.

To get the full picture, we need to add that MEI officials admitted that telecom companies are among the institute’s paid members. The authors claim, however, that they have done the work independently and that no outside groups approved or reviewed the report.

“We all want lower prices, but if the way we get to lower prices is through artificial competition, that has adverse effects on innovation [and] the deployment of newer technologies,” added Mr. Masse, MEI’s senior writer and editor.

What they say undermines the Harper government’s many years of effort at fostering wireless competition in sparsely populated Canada. This includes rejecting the Telus–Mobilicity deal twice, due to set aside wireless spectrum moratorium.

Finally, the message of the 60-page study is that Ottawa should drop everything it has been fighting for, make a U-turn, and ease foreign ownership restrictions, as well as allow the transfer of existing wireless spectrum licences.

The government has not responded directly to the study’s claims, but Jake Enwright, press secretary to Industry Minister James Moore, pointed to the price of average wireless rates, which, he said, are 20% down since 2008.

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

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