Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday March 19, 2021
A big deal threatens bigger cellphone fees
There are two things you can bet on when it comes to this week’s $20.4-billion bid by Rogers Communications to snap up rival Shaw Communications.
First, the deal would be very good for both of these telecommunications giants, and not least members of the Shaw family who would personally pocket $920 million in cash for their troubles.
Second, the current takeover plan threatens to be very bad for Canadian consumers, and that probably means people like you.
Think your monthly cellphone fees are sky-high today? They could blast into the stratosphere if this deal goes through as is. Because if one of Canada’s four biggest telecom companies is bought up by one of the others, there will be even less of the competition so urgently needed to keep some kind of a lid on prices.
Let’s hope Prime Minister Justin Trudeau is watching this one closely. Let’s hope even more that he’s ready to stand up for the interests of ordinary Canadians. The fact is, cellphone users in this country are already saddled with some of the most bloated cellular fees in the industrialized world. On average, Canadians spend 20 per cent more than Americans and an eye-watering 120 per cent more than Australians for cellphone plans that offer comparable service.
Canada’s “Big 3” telecom companies — Rogers, Telus and Bell — defend the high prices as the cost of providing a first-rate service in a vast land, though the U.S. and Australia are also pretty big places where bills are a lot lower than here. It’s also worth noting that a review by Canada’s Competition Bureau found that those Big 3 telecom companies, however they excuse their pricing, were racking up far stronger profits than their Group-of-Seven or Australian counterparts.
One of the problems industry analysts consistently point to is the lack of competition for providing wireless services in Canada. Today, Rogers, Telus and Bell control nearly 90 per cent of the market. If Rogers is allowed to gobble up Shaw, the Big 3’s market share will rise to 95 per cent.
Federal government after federal government has agreed more, not less, competition is what this sector needs. And they were all correct. Freedom Mobile, which was started by Shaw in 2016, has been credited with driving wireless plan prices down to at least some degree in Ontario, Alberta and British Columbia.
So what happens if big-fish Rogers swallows up smaller-fish Shaw and takes over not just Shaw’s cable and internet operations in western Canada but its Freedom mobile business? Rogers has tried to silence concerns about its takeover plans by promising not to raise cellphone fees for three years. However sincere that offer is, it would do nothing to stop a whopping fee hike on Day 1 of Year 4.
While Trudeau knows that telecommunications companies need to earn enough money to underwrite expensive investments in internet and wireless networks, he and his party declared they would lower cellphone fees by 25 per cent by the end of 2021.
Given that both the Competition Bureau and the Canadians Radio-television and Telecommunications Commission will now take a year or more to review this deal, Trudeau has time to think this one out carefully. But at the end of the day he should be willing to intervene strongly on behalf of consumers. One option among many would be to approve the deal — if Rogers agrees to sell Shaw’s Freedom Mobile business to a company such as Cogeco, which is interested in expanding into the cellphone business.
Such a deal between Rogers and Shaw might not be as big. Almost certainly, neither would the cellphone bills be in this country. (Hamilton Spectator Editorial)