WE’RE AN ODD BUNCH, we Canadians.
We shop at Wal-Mart, Sears, Home Depot, the Gap, and Best Buy. We dine at McDonalds, Starbucks, Boston Pizza, Outback and Subway. We drink Budweiser, Heineken, Miller and Corona. Foreign (mostly American) brands, all.
We also shop or eat at Canadian Tire, Second Cup, Rona, Sport Chek, Loblaws, Shoppers Drug Mart, Mountain Equipment Co-op, Sobey’s, Roots, Swiss Chalet, Kelsey’s, Aldo and Harry Rosen. Canadian brands, all.
Then again, we also fork over our dough to the likes of The Bay/Zellers, Holt Renfrew, Tim Horton’s, Future Shop, Molson’s, Club Monaco and La Senza. This is the Canadian brands, U.S.-owned, division.
Let’s not even start down the road of how many hours of U.S. television we consume.
And yet, we’re supposed to believe Canadians would fear getting a cell phone from T-Mobile or somesuch?
Two weeks ago, during the heart of the "Telus will/won’t bid for Bell" imbroglio, Angus Reid released a poll which found Canadians were split over the possible merger of the two biggest Canadian telcos – but that they would far rather see one monster company own most of the telecom business in Canada than have an American company buy Bell.
In the words off the release-writer: "In the online survey of a representative national sample (1,177), 44% of respondents say the proposed (Bell-Telus) merger makes them uncomfortable, even if the service is not affected, while 42% see no problem with the deal. However, 65% of Canadians prefer a Bell-Telus merger over a Bell partnership with a U.S. company."
As far as the actual effect of a possible Bell-Telus merger, 68% figured it would increase the costs of their wireless services, 62% thought Internet prices would go up, and only 31% believed a merged entity would improve its services. In addition, four-in-five Canadians (80%) foresaw massive layoffs if the companies do join together.
And despite all of that, 65% still said they would prefer Belus over a U.S. company!? It boggles the mind. Are we stupid, or just deceiving ourselves into thinking we’d pay more because Belus would be Canadian and that sounds like the right thing to do? I think it’s the second one.
What the survey didn’t ask was a hypothetical such as: "If buying a cell phone and you’re faced with an identical U.S. wireless plan that is $20 a month less than a Canadian company, which do you choose?"
I know what the answer would be in my house.
The simple fact is that every retail sector of the Canadian economy has fared just fine with the entry of American competition. Sure, some companies disappeared because they wouldn’t or couldn’t adapt (see: Eaton’s) but most sectors responded very well (remember how lousy the Canadian Tire experience was before the entrance of Wal-Mart?).
But, Canadians’ knee-jerk reaction to any poll like the one mentioned above is to invariably reject American ownership in whatever sector we’re talking about at the time.
This month, it’s telecom.
And Telus played it to the hilt – until its board and CEO decided not to bid. We all know that tugging on Canadian heartstrings by wrapping yourself in the flag usually means public relations success, the kind that carries weight in Ottawa, even though a Telus purchase of Bell would have some near-insurmountable competitive and political hurdles to leap. You can’t convince me that letting one company own more than three-quarters of the Canadian landline residential business, nearly all of the large enterprise telecom market and over 60% of the country’s wireless subscribers is a good thing.
But, as of today, it looks as though the mighty Ontario Teachers Pension Plan will control Bell, with some outside help, so the company remains Canadian, for now.
But what if, say, Verizon or any other U.S. telco had been allowed to take a run at Bell? What if, for that matter, Sprint or Vodafone were allowed to bid on wireless spectrum in 2008 and allowed to create a Canadian arm? When it comes right down to it, most Canadians would not care whether Bell’s swirly yellow face silhouette logo was on their bill or Verizon’s red check mark, so long as their service was good and their monthly bill was cheaper.
That red checkmark is also in the midst of spending north of US$25 billion upgrading its network so that it can bring fibre optic cable right to the homes of its American customers – and competitors’ customers – and launch super-quick Internet and digital TV under its FiOS brand. Verizon’s high speed Internet new customer offer is US$14.99 a month and a $25 Target gift card. Wouldn’t it be neat to have that option here?
For Canadian carriers though, that’s pretty scary-sounding pricing compared to the cloistered, "disciplined" pricing strategy here – well, everywhere except Quebec, where Videotron has been pretty aggressive on price.
But I bet Canadian consumers would an offer like Verizon’s.
Further, while Verizon spends what it says is necessary to compete in the North American telecom/media world, Bell’s new owners plan to load a massive amount of debt onto the company to make the leveraged buyout work for them.
Do billions in new debt obligations make for a company that is ready to spend what’s required to launch IPTV or to get its Internet speeds up to the 100Mbps threshold everyone else is pushing for? That, I can’t say. However, I do figure it would be easier for Verizon to add another billion or two to outfit southern Ontario and Quebec with cutting-edge fibre-to-the-premises architecture and bring even more competition to the telecom, TV and wireless markets.
But for some reason, despite all this, we Canadians, we who consume all sorts of products and services that originate from around the globe every day, still say we fear American telephony service providers.
I say baloney – and that it’s now well past time to drop the Canadian ownership requirements in the telecom and cable space.
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