Canada needs more competition in the wireless phone business, not less.
So it is remarkable that the CRTC recently blocked the launch of newbie telecom Globalive Wireless Management Corp.
According to the regulator, it does not meet Canadian ownership laws.
The wireless company has received most of its financing from Orascom Telecom Holding SAE, an Egyptian corporation. This is the reason the Canadian Radio-television Telecommunications Commission ruled against Globalive.
The problem, of course, is that this foreign ownership ruling has come late in the day.
The firm has hired 800 staff and paid more than $442 million for broadcast licences recently auctioned off by Ottawa.
Then, at the last hurdle, it was told it couldn’t operate. Globalive is now scrambling to come up with a Plan B, which includes lobbying the federal cabinet to overturn the CRTC decision.
There is a lot at work here.
Canadians want more competition in the cellular market. Anybody who owns a cellphone knows that our rates and fees are far higher than they should be.
For example, at 15 cents per text message, Canadians are currently paying more than $1,000 a megabyte for the service. That’s usurious.
More competition would bring the fees down.
And there’s plenty of room for competition here. At 70 per cent penetration, cellphone use in Canada is among the lowest in the industrialized world.
Part of the reason for that is that they are too expensive, and that’s because there’s too little competition.
Of course, Bell, Telus and Rogers are not likely to welcome more entrants with open arms.
In the past, we’ve seen them buy up competitors before they get a chance to launch. The Egyptian financiers of Globalive were large enough that such an event was unlikely.
But Canada’s telecoms are powerful corporations, with significant influence over politicians in Ottawa. So this showdown with Globalive is significant.
The cabinet is going to have a tough time deciding this one -Â it risks angering voters or well-heeled corporations. As well, the stock prices of the big three rose on news of the CRTC’s decision.
What’s a politician to do?
And there is a legitimate issue with foreign control of our telecom industry.
It recently surfaced with the selloff of Nortel’s enterprise solutions business to Avaya, a US-based firm, which is currently under review by Canadian regulators.
At issue is whether Canadian companies owned by foreign nationals become mere shell operations.
Canada retains low-cost sales jobs, while the important financial team and research and development wings are located abroad, in places with lower corporate tax rates and wages. And all the money paid the telecom flows out of the country -Â Canada is shortchanged the jobs, technological development and taxes. Not a good deal.
This is the theory. The reality is that the CRTC is unlikely to prevent such things from happening in a wildly global digital economy.
And maybe it shouldn’t.
Protectionism is currently hurting Canadian citizens, making them pay more for services, and doing little to protect jobs.
Perhaps it’s time Canadians were exposed to the unfettered world economy. It may force us to become a little less complacent, and spur more innovation.
At the very least, it would make our telecoms more competitive.
And that would give the rest of us a little more pocket money.