Be wary of Verizon: Nader
Consumer advocate warns Harper about U. S. ‘tax dodger,’
TORONTO A prominent American consumer-rights advocate says the Conservative government should be wary about allowing Verizon into the Canadian wireless market.
In an open letter to Prime Minister Stephen Harper published by the Toronto Star, Ralph Nader says Verizon has made extensive use of U.S. tax subsidies even though the wireless communications giant was profitable at the same time. “What’s bad for the United States will be bad for Canada,” he writes.
Nader’s letter comes as a new study says Verizon would need to invest more than $3 billion just to get started in Canada. Much of the costs would be weighted in building a network and establishing a mobile-phone service infrastructure, especially in underserved markets, like rural areas, said the report by Moody’s Investment Service.
Verizon has been exploring an entry into the federally regulated wireless market, currently dominated by three Canadian companies — Rogers, Bell and Telus.
The three carriers and the domestic industry’s main association have responded with an extensive publicity campaign calling for the Conservative government to drop policies that they say give Verizon an unfair advantage over them. Industry Minister James Moore has responded with a cross-country tour to explain why the government wants to increase competition in wireless services.
In the letter published Thursday in the Star’s opinion pages, Nader says that it would be a “bad idea” for the government to allow Verizon to operate in Canada with unique rights to acquire certain wireless spectrum.
Citing a report by the Center for Tax Justice and Good Jobs First, Nader says Verizon received $14 billion in U.S. federal and state income tax subsidies in the 2008-12 period, even though it earned $33.4 billion US in pre-tax income.
“Question: Why would you allow one of our country’s most aggressive tax dodgers, a company with a track record of overtly ripping off our government, into your country?” Nader writes.
Meanwhile, the Moody’s study says the issue would be more about the user experience than an all-out price war, because Verizon would need to develop a top-quality network, which would be costly and time consuming.
“Although competitive threats tend to cause uncertainty and can lead to performance pressure, we see limited downside for Bell Canada, Rogers Communications Inc. and Telus Corp. from a foreign company entering the market,” analyst Bill Wolfe said in the report, released Thursday.
The report said it would likely take at least three years for Verizon’s network coverage and capabilities to reach critical mass, giving the established carriers time to better position their own networks and service. The Globe and Mail has reported that Verizon was putting off a potential acquisition of Wind Mobile and Mobilicity and contemplating participation in the next auction for wireless spectrum — the radio waves needed to operate cellphone networks.