Politicizing Canadian telecommunications regulation is a bad idea
THE AFFORDABILITY OF WIRELESS services is front and centre in the 2019 federal election campaign, with politicians of all stripes promising to take a big stick to mobile operators. One international comparator is cited frequently to justify these interventionist policies: Australia.
Australia appears to be a simple counter example to Canada, with similar population density and geographic challenges. However, the political interventionism in Australia’s mobile and internet markets should serve more as a cautionary tale then a gold standard.
When politicians usurp the role of regulators and start making matters of regulatory purview the subject of election campaigns, they are subject to none of the procedures or accountabilities that bind regulators. Decisions can be made based on the flimsiest, or most inadequate of justifications, or sometimes even no rational justification at all.
The Australian National Broadband Network (NBN) is one such example. This initiative sought to build out national fibre wireline internet infrastructure to connect 93% of Australian households by 2020. At $43 billion (AUD) in 2008, the NBN was the largest government-funded infrastructure investment in Australia’s history, and was enacted without a business case being prepared, or robust industry analysis of whether the proposed initiative would address the concerns it was claimed to be targeting.
The NBN has dominated every Australian election since 2008, when it was first proposed the government should intervene in the market. In successive elections, the policies governing the NBN have flip-flopped as governments promising to voters that they will “fix” the NBN have come and gone. After much politically-motivated meddling, estimated costs and specifications have morphed but 11 years later, “problems with the NBN are so great – it’s in such a bad position – that the only way forward is to do a proper forensic review and then take advice on how to improve things” according to a prominent Melbourne expert.
In 2018, former Prime Minister Malcolm Turnbull described the NBN as a “calamitous train wreck” and admitted a different outcome would have materialized if the industry, rather than the government, had taken the lead in network design and development. Earlier this year, the chair of the Australian Competition and Consumer Commission noted they were “now observing prices of low-speed NBN plans offered to new customers that are at least $10 per month higher than what consumers paid for equivalent ADSL plans.”
This is the direct result of political intervention.
“Advanced communications infrastructure is too important to be abandoned to the vagaries and short-term agendas of the political process.”
So what might Canadian politicians and voters take from the Australian experience?
Australia’s mobile market, which has so far escaped political interference, is much more concentrated than that of Canada, with almost 50% of post-paid users with Telstra whereas the three large operators in Canada have close to equal shares of this market, and a fourth carrier is present in every major Canadian centre. The outcomes in Australia’s mobile market are due in part to the very existence of the disastrous NBN which has encouraged many households to opt for wireless-only internet access.
To be sure, the mobile telephony prices paid by Canadian consumers (or consumers in any country) can be the subject of debate. As each market is different, and the factors in which they differ (geography, density, input costs including spectrum) vary widely, it takes a considerable amount of expert knowledge to determine what the “appropriate” prices (or other industry characteristics) should be.
That is a good reason to delegate important decision-making in these matters to independent experts, held accountable via statutory processes and reporting for their decisions, rather than to politicians accountable only to voters, who are even less 
Advanced communications infrastructure is too important to be abandoned to the vagaries and short-term agendas of the political process. Australia’s failed NBN experiment is stark reminder, for Canadians, of how expensive this trade off can be.
Dr Bronwyn Howell (right), Victoria Business School, Victoria University of Wellington, New Zealand, researches and publishes internationally on telecommunications policy and regulation. As an Adjunct Scholar at the American Enterprise Institute, she has written extensively about the experiences of politicization and government intervention in Australia’s NBN and New Zealand’s contemporaneous Ultra-Fast Broadband (UFB) network and what it could mean to North American policymakers.
