Give Even More Power to Canada's Big Telecoms, Think Tank Says

History suggests this might not be a great idea.

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Oct 21 2016, 1:00pm

Image: Flickr/Tony Webster

Pretty much everybody is unhappy with how telecommunications in Canada are being managed, except maybe the telecom overlords themselves. The market is dominated by three big companies. Prices are too high, internet speeds are too slow, swaths of the country have low or no connectivity, and Canadian television is as bad as it's ever been.

So, what's the solution? A recent survey showed that the majority of polled rural Canadians—who often have the fewest options and slowest connection speeds—believe that the government should step in to fix the problem, and that the free market is no panacea in itself.

But a new report from right-leaning Macdonald-Laurier Institute that's getting some media attention has a completely different idea, which appears to be at odds with the desires of Canadians who've been affected most severely by these failures: get the country's federal telecom regulator, the august Canadian Radio-television and Telecommunications Commission (CRTC), out of the business of regulating prices and competition entirely.

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The report, penned in part by former CRTC vice-chairman Len Katz, describes the CRTC with the eyebrow-raising comparison of being "like the lost Japanese solider [sic] who fails to realize that the war is over." In particular, the report bemoans CRTC-mandated "skinny plans" that must cost no more than $25 per month in order to serve low-income Canadians. "Regulation has begot regulation all in the name of so-called consumer choice," the report says of these plans.

What the report ignores is that the CRTC stepped in because the private sector that Katz and his colleagues believe can provide better value for customers fought tooth and nail against these packages. For example, Bell Canada first instructed its employees to downplay the plans to customers, and then bundled them with other services so that they ended up costing much more than the advertised $25. It was only after being hauled in front of a CRTC panel that Bell changed its tune.

And then there's the debacle over high-speed fibre internet infrastructure. Only three telecom companies are big enough to pony up for the cost of the cable and installation, and naturally, like Bell Canada, they didn't want to have to share with independent and often more affordable players. Thanks to a CRTC ruling, large companies laying down fibre cable will have to share it with smaller, local companies at wholesale cost.

And finally, there's the big issue that the CRTC hasn't been able to solve—access in rural and Northern Canada. Right now, many communities have a lack of broadband infrastructure that results in extremely pricey and slow connections. In some places, where internet via a single satellite is the only option, a single outage can mean life goes offline.

Is the solution to take away the CRTC's ability to dictate access standards and leave it up to the market to solve this problem? As many experts have noted, the entire issue is that there's not enough market demand in sparsely-populated rural and Northern communities for even Canada's largest companies to invest there. The CRTC operates a fund to subsidize infrastructure expansion, which the largest telecoms in the country pay into. This year they actually pushed back against a CRTC initiative that would ask them to pay into the fund through their internet revenues in addition to cable.

There's no doubt that a system controlled by three large companies is an inefficient one. We've seen that reflected in the prices Canadians pay for their internet, and the lack of access in certain areas. But we've also seen the market push back against nearly every attempt the CRTC has made to act in the public interest instead of companies' bottom lines.

If the CRTC were out of the equation, the question would become: can we trust the private sector to act any differently than it has over many years?

Well, for what it's worth, history suggests otherwise.

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