Special treatment for Verizon?

The rationale Ottawa used to deny homegrown firms goes out the window if Verizon succeeds in its bid to take over Mobilicity

Why are our three biggest telcos effectively banned from bidding for little wireless competitors , Don Cayo asks, when U. S.- based Verizon is not?

LIf ( Verizon) were a snake it could swallow Telus, Rogers and Bell whole and barely show a bump in its belly.

ike many Canadians, I find our big telcos hard to love. Of course, I still do quite a bit of business with one of them, but this doesn’t mean I have a soft spot for them, despite their cutesy ads. Rather, it’s hard- nosed self- interest — I get a better price by buying a bundle of phone/ Internet/ TV services from a single supplier ( though it rankles that federal rules prohibit them and me from including my cellphone contract in a truly all- inclusive deal).

As a customer, I’ve had to deal with many of the usual hassles — fights over hard- to- understand charges over and above what I thought I’d agreed to pay, periodic service issues and the like. And as a guy who travels, I can’t help but notice that almost anywhere I go a local SIM card and minutes cost much less than I pay at home.

So I’m an unlikely champion for Canada’s telecommunications heavyweights. Yet I can’t help but wonder why our three biggest telcos are effectively banned from bidding for little wireless competitors like Mobilicity or Wind, when U. S.- based Verizon is not.

Verizon is a true giant. If it were a snake it could swallow Telus, Rogers and Bell whole and barely show a bump in its belly. It has almost 100 million customers in the U. S. — roughly three times the total Canadian population.

As I understand rationale for Canadian telecommunications policy, the thrust is to protect consumers from companies that get too big and consolidate too much market power. That’s why my telco’s rep can’t even talk to me about my cellphone when I finally wend through automated- telephone hell and find a real person to help fix a glitch in my Internet connection.

Such regulated separation of services may be inconvenient for customers and inefficient for companies, but it’s seen as justified because it protects little companies from big ones who might otherwise undercut the upstarts by leveraging the efficiency and convenience they could offer. This is also why Ottawa doesn’t want Telus, Rogers or Bell buying small companies that got their start with the support of bandwidth policies that gave them a leg up.

But this rationale, no matter what you think of its merit, goes out the window if the rumoured sale of upstart Mobilicity to global giant Verizon goes through.

Ashif Mawji, an IT entrepreneur who sold his thriving Edmonton- based business and now works with non- profits to make them more efficient, tells me he sees this as another manifestation of a common problem in Canada — the failure of the government to look out for the interests of our own leading companies.

Mawji has met with senior officials all the way up to the prime minister to beat the drum for better support for homegrown firms.

Whatever big guy ends up owning a company like Mobilicity or Wind, he says, will get the benefit of wireless spectrum that was bought at the lower rates set to help these companies establish themselves. So he can’t understand why federal policy seems determined to ensure the beneficiary will be a big foreign company, not a Canadian one.

“Government has all the right rhetoric when it comes to supporting Canadian business,” he told me. “But here they are favouring another player. That’s not fair.” I agree. Though I tend to favour competition over regulation, I concede that the entrance of companies like Mobilicity and Wind into the Canadian marketplace was facilitated — at least in the short term, though they may not last — by federal communication policy. And it does seem to have helped scale down the traditionally sky- high Canadian prices for wireless phones.

A study done for the CRTC and released last week said the cost of a typical cellphone package in Canada dropped 13 per cent after these new players entered the market. This, it said, brought price levels here to the middle of the pack compared with other developed countries — although I point out that such differences as roaming costs, high when you carry a Canadian phone abroad, and long- distance costs makes apples- to- apples comparisons very difficult.

I also see the point of industry commentators who speculate that Verizon will shake up the wireless industry — to consumers’ benefit — if it gets into the market here.

But for competition to work over the long term, it has to be real. And I don’t see how it can be real if another new player — this time a huge global one — gets a toe in the door only because the government has slammed this door in the face of homegrown competitors.