Get rid of CRTC Telecom’s interference and learn from US antitrust law

At a parliamentary hearing last week, CRTC Chair Ian Scott was grilled by various MPs on competition in the Canadian telecommunications market. It was sometimes tense, and all party members asked Scott about the prospects for American companies to enter the Canadian market.

Unfortunately, the focus on American companies is irrelevant. American players, especially AT & T and Southwestern Bell, forget that Professor Bell has a long history in our market since he sold his US and Canadian telephone patents for the benefit of the United States in 1880. It tends to be. (A Canadian investor refused to buy the patent.) Its US owner is now the Southwestern Bell Company (SBC). SBC swallowed AT & T in 1995, and the renamed AT & T sold only a 20% stake in Bell Canada in 2002.

It has never been easier to drive competition in the small Canadian telecommunications market, which is dispersed over long distances. From the 1970s to the early 1980s, CNCP Communications, a joint venture between the two railroads, failed to enter the long-distance communications market. The company, renamed United, was subsequently sold to Rogers, which also failed. Rogers has sold United to a consortium of banks and AT & T. AT & T accounted for 33% of the company’s largest share. The integration with AT & T’s (and renamed Allstream) leadership also failed, and AT & T finally left the Canadian market in 2004. Allstream remains on the market.

Why does MP think foreign companies (mainly American telephone companies) are hungry to enter the Canadian telecommunications market?

Of course, today, any American competitor can enter the market. The change made to the Foreign Ownership Regulations in 2012 means that the only restriction is to buy one of the largest existing companies like Bell, Rogers, Shaw, or Tellus. Perhaps Americans are never ashamed to pursue market opportunities and will enter if there is an unmet need. But why do you try again when you burn it once and twice? History aside, what should Congress change if Canada wants to more closely emulate America’s approach to the market?

First, we need to remove all CRTC regulations that interfere with relationships between carriers that have no equivalent to the south of the border. For more than five years, ambitious competitors in the Canadian telecommunications market have been committed to the endless battle at CRTC rather than servicing their customers. The strangest of these, CRTC has reduced the fees that Internet resellers have to pay to use someone else’s network by more than 80%, and even 30-40%, some. Rolled back, but all — all of the cuts when they realized they made a mistake.

It’s hard to blame resellers for putting all their eggs in their regulatory baskets. At one point, they were planning to collect over $ 2.5 billion in storm payments from the companies that build their broadband networks.You read that right: they Was paid by Their supplier.

Of course, when this is explained to our supposed American savior, it also encounters embarrassment and embarrassment. To say the least, most Americans believe that everyone involved should work on business planning rather than regulatory strategies.

Americans focus on enforcing mergers and antitrust laws when competition is truly threatened, rather than fine-grained control over day-to-day relationships. This is Canada’s most urgent lesson, as the Competition Bureau and the Minister of Industry are considering Rogers’ offer to buy Show and Freedom Mobile. The US experience with the proposed types of integration offers some important lessons.

When AT & T tried to buy T-Mobile in 2011, US competition regulators completely blocked the transaction. T-Mobile was a small, disruptive wireless entrant that succeeded the other three existing companies. AT & T was the second largest airline in the United States. After the transaction was blocked, T-Mobile continued to compete with AT & T and eventually overtook it. T-Mobile proposed the acquisition of Sprint in 2018. The merger took place after extensive discussion and analysis was approved in 2020, after a major sale was ordered to maintain full competition in mobile services.

Rogers and Shaw cannot complete the integration announced on March 15, 2021 without the approval of the Minister of Industry, CRTC, and the Bureau of Competition. MPs need to ask who is looking for consumers in these reviews and need to pay attention to existing tools available to the government to ensure that reviews are done properly and consumers are protected. there is. A related American lesson is to ensure that antitrust tools are used to promote competition and protect consumers, encouraging American companies to enter our market. It’s not about trying.

Finally, if a Canadian company boldly attempts to buy AT & T Wireless, it will encounter US regulations explicitly designed to prevent foreigners from taking a great deal of interest in the telecommunications sector. It’s familiar.

Leonard Waverman is a professor of finance and business economics and a former dean of the DeGroote School of Business at McMaster University.

Get rid of CRTC Telecom’s interference and learn from US antitrust law

Source link Get rid of CRTC Telecom’s interference and learn from US antitrust law

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