MONTREAL – By fixating on promoting the emergence of a fourth wireless carrier in each of Canada's regional markets, the federal government has lost sight of the ultimate goal of promoting the development of a dynamic, efficient telecommunications industry, says a new research paper released Tuesday by the Montreal Economic Institute (MEI).
The paper, The State of Competition in Canada's Telecommunications Industry – 2014, says that the current government has committed itself to relying on market forces as much as possible to achieve its telecom policy objectives. But this orientation has been contradicted by set-asides, spectrum caps, mandatory network sharing and other interventionist rules that have "distorted the market process, leading to a misallocation of resources".
"Well-established regional players that benefited from preferential treatment in the 2008 auction very likely did not need the subsidy," said Paul Beaudry, co-author of the study, in the paper’s news release. "And as for the new entrants that likely would not have entered the market without the subsidy—Public Mobile, Mobilicity and Wind Mobile—they have not fared well."
Michel Kelly-Gagnon, president and CEO of the MEI, added that the federal government's handling of telecommunications has wider implications, too. "The government changing the rules in order to prevent Telus from acquiring Mobilicity is very worrisome, not only for the telecommunications industry but for the economy in general," he said. "It sets a dangerous precedent of state intervention into economic matters that will harm the development of dynamic industries, and the consumers they serve."
The paper also proposes the "liberalization" of Canada's foreign investment regime in the telecommunications sector and of its spectrum licence transfer rules.
The research paper was prepared by Martin Masse and Paul Beaudry, respectively senior writer and editor and associate researcher at the Montreal Economic Institute. The MEI is an independent, non-partisan, not-for-profit research and educational organization.
