During the ongoing Covid-19 crisis, reliable and affordable internet connectivity has become essential for every aspect of life. Yet, the federal government and regulators are giving free rein to big phone and internet companies to drive up prices while posting huge profits. Millions of Canadians are struggling to make ends meet and pay some of the highest telecom bills in the world while others are unable to access high-quality reliable connections entirely as a result.
The market described as a very stable oligopoly:
When you mention, ‘the Big 3’ in Canada, people know you are talking about Ford, Chrysler, and GM in the past. Now, however that phrase refers to Canada’s telecom giants, Rogers, TELUS, and Bell.
According to the 2019 report by the regulating body, the Canadian Radio, Television, and Telecommunications Commission (CRTC), the three firms together control some 90.7 percent of Canada’s wireless market.
The market is pretty much split into two or three providers in most big cities with 90 percent of the share of services in internet, home phone, and television. And they’re the same companies that are leaders in all three of those.
So basically, you have all the same group of people/corporations owning all the same services owning most the market shares. That’s a very stable oligopoly market and it leads to higher pricing due cartel forming.
The market leaders own the networks and one way the prices have been lowered is by obligating them to share use of the infrastructure with smaller competitors like CanNet and several third-party internet service providers.
Governments in some countries like Australia have invested in infrastructure to avoid the problem we face. Canada also has restrictions on foreign ownership which prevent new companies from coming in and competing. So, lifting some of those restrictions could help increase competition and lower prices.
Federal government’s position:
Canada’s federal government said recently that having a Smartphone or internet is no longer a luxury and ordered providers to drop prices by 25 percent within two years or face legislation.
So far prices have generally been lowered slightly, around 8-10 percent for many plans offered by the Big 3, but not enough to keep Canadian telecom giants from the top spot as the most expensive in the world.
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