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Canada Opens Wireless Industry To Competition
FreeKill writes "The Canadian government on Wednesday paved the way for new cellphone companies by announcing new rules for an auction of radio airwaves designed to spur competition in the wireless industry. About 40 per cent of the spectrum will be reserved for new entrants with the remainder open to all bidders, including Canada's big three providers — Rogers, Bell, and Telus. The government will also mandate roaming area agreements which will force existing carriers to share their networks with newcomers for five years, plus another five if the new entrants can build up their own networks nationally."
... Telstra would complain that they are providing free air, and that it's giving competitors a free ride. they would at the same time propose that the the government pay them to provide the air and that it also be allowed a monopoly on the air.
If you mod me down, I will become more powerful than you can imagine....
Telus, Bell and Rogers don't really act that much different than what you've just described, these are companies that have transformed from the traditional local monopolies of phone & cable.
These sort of enforcements to make them "share" have happened before and they've become very clever at finding ways to discourage competition anyway.
Canadian Cellphone companies make Satan look like a Buddhist Monk.
They are THAT evil.
Anything to force them to compete on merits and features must be a good thing.
In news this week: Canadian government regulation on mobile telecom industry is welcomed by readers of Slashdot. "Truly wonderful example of succesful goverment regulation!" -Anonymous Slashdot commenter
In other news: FCC castigated by readers of Slashdot for trying to regulate cable TV industry. "Yeah, like more government regulation is what we need!" -Anonymous Slashdot commenter
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Canada didn't use to have 3 national wireless carriers. It was only a few years ago, that Rogers bought out Fido. A few years prior, Clearnet was purchased by Telus. The consolidation was great for the wireless providers...
Fido* was the price leader. They started billing by the second, unlimited voice plans, etc. Except they didn't make much money (actually they went bankrupt once). When Fido got purchased by Rogers, the competitive pricing pressure was taken off of everyone. Rogers got the best of it, since they became the only choice for those who need GSM (and those international users who end up roaming on Rogers). So prices have stalled, and in many cases edged up.
Naturally, we scream for more competition. I'm sure some company will win the frequencies, but I wouldn't bet on them succeeding.
Networks are bloody expensive to build. And, since Canada's land mass is larger than the US, with only 30M potential customers, it's more expensive to build on a per-capita basis. Granted, you don't need to provide service to the bulk of the unpopulated land, but still, a town in Canada is a whole lot smaller than a town in the USA.
Even today, Telus and Bell share their "home" networks with each other in the West and East respectively to provide national coverage while they complete their build-outs.
So, yay for more competition. Whoever it ends up being, I wish them well, and luck... they'll need it.
* Fido is operated as a distinct brand on the Rogers network, but a lot has changed - lots of nickel and dimeing.
That was a great article. I loved how they had the response of at least three different perspectives (a current telecom exec from Bell, the Allstream exec looking to go in the market, and a liberal critic) in the article without slanting the information towards a particular point of view. I wish newspapers and reporting agencies would do that kind of reporting more often. I know absolutely nothing about the wireless telecom situation in Canada, so I can't really contribute anything that insightful, but I enjoyed reading that article. It somehow makes me want to find out and learn more about the subject.
this is great new for us canadians, if you ask me our market is stale very stale.
who knows maybe google will come up here for a test run
I'm a Canadian citizen living in Ontario who has been screwed by Bell many times. I used to think the "oh no we have such a large country and only 30m people" argument justified these companies abusing us, then I realized the vast bloody majority of us live in Ontario and our population density in many areas is comparable to many states.
There is absolutely no reason that I pay $100 - $150 a month for BlackBerry service that would cost $50/month if I lived in the states. Apparently I am not the only one who thinks all three major Canadian mobility companies have been screwing us.
Honestly, this image tells the story about population density. You only need to drop towers where the lights are in Canada, which is practically nowhere. Most of the country is wilderness, other than towns every 60km or so along major highways, at most of which enough people are concentrated that it's worthwhile to drop a tower anyway.
I love it how everytime something like this come up, people screm "Yeah, at last the goverment *forces* these companies to to this and that, so we can finally have a free market!"
Rogers currently has a virtual monopoly on GSM networks. If all the entrants are CDMA, then Rogers will still have an exploitable advantage - ever since they bought out the only company that was lowering prices, Fido.
Fido used to have a plan called "City Fido" where you get unlimited plans local calling for $40 flat. Now, those plans, while not being offered any more, can be still be transferred from person to person, with the person receiving the plan usually paying over $400.
And why post it while most Canadians are alseep? Like we in the rest of the world give a £$%^.
I have excellent Karma and I am not afraid to Troll it.
So they have all this great bandwidth and all they can think of is more phones?
Phone systems are a relic of the last century. A much better use would be mobile IP addresses where consumers choose their own devices for Internet, text, voice, or whatever and cell phone companies can't limit our choice of devices or nickel and dime us for trivial stuff, like opening a port for email and selling it as a service (I'm sure glad the cell phone companies aren't running the Internet).
So perhaps we need to stop thinking in terms of phones and start thinking more about expanding the wireless spectrum to be part of the Internet because that's where we'll get real choice and innovation.
A longer pipe.
This made my morning. If this does help the prices get competitive *cough*fair*cough*, I may actually consider getting a cellphone now. Seeing the big phone carriers around here in Ottawa quash any new startups was getting sickening to watch.
What's the value of information that you don't know?
I just read Slashdot for the articles.
It's true north strong and free, dammit!
The reason this worked in Norway is regulation far beyond what is being proposed in Canada: In Norway anyone can start a cellphone network and can demand roaming access from the licensees at cost + a limited profit margin, under the argument that since spectrum is a imited resource, anything else would restrict competition.
As a result, there are tens of cellphone companies, some of which owns their network, some which own parts of their network (where it's cost effective compared to the roaming costs) and some who only sell additional services on top of the other networks.
It's similar to the "local loop unbundling" for fixed line telephony in several European countries (where the companies owning the physical lines are required to sell access to those lines for customers who want to use a different provider at cost plus a limited profit margin again) where the argument is pretty much the same (you can't have everyone digging up streets to lay more cable, so it's either less competition or treat the local loop as a semi-shared resource).
These are typical examples of where regulation leads to more choice and far more competition, and thus a far better working market.
I've been slowly switching all our work phones off of Bell and onto Rogers as contracts expire. Both are evil, but Rogers is less evil simply because of some of the benefits of GSM. Will Bell, lets say I want a new handset. I go to a Bellworld store, pick out a phone, pay the $300 for it with no contract, or $50-100 with contract. Now, they charge me a FEE, to switch the phone. I AM BUYING A PHONE FROM YOU!! DO NOT CHARGE ME A PENALTY FOR THE HONOUR OF AN UPGRADE!! It's like $35. I refuse to pay any made up admin fees when purchasing a product. With Rogers, I buy unlocked phones online, and don't even need to tell Rogers I got a new phone, I just pop the users SIM card into the new phone and off they go. Rates are still horrible with both, but I get more flexibility with Rogers. Getting unlimited data plans is almost impossible here.
Take off, eh?
-Bob & Doug McKinzee
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
...and you're about to give a great example of why the rest of Canada resents Ontario (btw, I live in Ontario too, though I haven't always)
then I realized the vast bloody majority of us live in Ontario12.8 million out of 33.1 million is a "vast bloody majority"? McGuinty really needs to get on that whole "reinvesting in schools" thing.
our population density in many areas is comparable to many statesYes, let's compare a small part of Ontario with entire states. Forget the rest of Canada, and even the rest of Ontario (Ontario isn't even close to the most dense province population wise; remember that it not only has the largest population, but has the largest land mass too).
I would be shocked if a phone company came along with the balls to say "our coverage area will only be in the golden horse shoe". I suppose if they priced competitively it might work for a little while, but I suspect that sooner or later customer's would take a drive more than two hours from their home, and get pissed when their phone stopped working.
There is absolutely no reason that I pay $100 - $150 a month for BlackBerry serviceActually their is a great reason. Collectively we let them. When alternitives come along we don't flock to them, we just stick with the guys that are screwing us and when alternitive are not present we don't cancel the service and wait for them to be reasonable, we just pony up the money (as you are doing apparently).
Or the Rogers "unlimited plan" where unlimited means "25MB a month" and every byte over that gets charged. We can't make Canadian money jokes any more since the CDN$ has reached parity with the US$. But we can make Canadian megabyte jokes!
(1) little companies will come forward
(2) said little companies will find it tough competing against big players, due to unfair practices
(3) Federal govt will ignore problem due to incompetence and/or backhanders
(4) little companies will end up getting bought out by Rogers, et al.
(5) Big companies increase their monopolistic stranglehold
It is the government's insistence on subsidizing their friends by blocking foreign competition that is the root cause of high cellular service prices in Canada. Foreign companies were allowed to bid last time around too, and some did. But once they realized that without a controlling position they would never be able to compete effectively against the entrenched locals, they sold their interests.
With effective competition limited to local interests, the likely outcome is that either the undercapitalized new entrants will be bought out by existing interests (at a handsome profit) for a return to the status quo, or they will join the oligopoly for return to the status quo but with a few more players. All that has happened is that the Liberal government has been replaced by a Conservative one; friends of the Liberals will now be joined by friends of the Conservatives in getting rich at Canadian's expense.
"The good reader is a rarer swan than the good writer."
Yeah, it's like they expect everyone to have forgotten about Clearnet and Fido. How are things going to be any different this time around, if it couldn't work financially last time?
I would be shocked if a phone company came along with the balls to say "our coverage area will only be in the golden horse shoe".
We used to call that phone company Fido, then Rogers bought them and the coverage expanded to cover what a normal cell phone co covers.
Clearnet used to be pretty much like that too, except with Clearnet you had coverage outside the cities as long as you stayed on a major highway.
But really how remote are those areas of Norway. In Canada, you can go to places where it's a 4 hour drive between anything over 50,000 people. Lets look at Saskatchewan for instance. Twice the size of Norway, and 1/4 of the population. Not only that, if you compare the top cities in Norway to the top cities in Saskatchewan, you'll see quite a difference in the number of people in those cities. The Number 10 city only has 8000 people. People from Europe don't really know what remote is. They don't really understand what sparsely populated is. I grew up in a Northern Ontario town, and considered it a short trip to drive to Ottawa which was 8.5 hours away. Toronto being only 6.5 hours was an extremely short distance from my view point. You could probably drive accross most of any European country in 8 hours.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
The entry of new carriers was mandated in the last spectrum auction (1900mhz pcs). Just like this one. So what does this mean? Prepare to see two small carriers try to play catch-up for five years, then get bought out by telus and rogers.
Land of No George Bush!!!
Ontario is third in land area if you only count provinces, after Quebec and BC. That, combined with your poor spelling and grammar, would suggest that your school needed as much investment as gp's.
The fact Telus and Verizon offer similar plans is not surprising, becuase there is cross-ownership between the two and they are partners, so they'd align at some levels...however there are a lot of differences.
local/long distance calling is 50 dollars a month for 400 minutes within Canada. I pay the same thing for my phone plan in America.
That is but one component of the services these companies offer. You completely ignore everything else:
* When Telus advertises "$x for y minutes" that "y minutes" is ALL you get. You get NO data transfer, NO voicemail , NO caller ID, NO call waiting...NOTHING. Even Mandatory "system access fees" and taxes are extra.
* Telus offers inflexible "SPARK" packages--if you want a specific feature you must get a more expensive package that is also bundled with features you don't want. "A la carte" is difficult to get, and when you do get features that way is quite overpriced.
* Telus data plan, at least for consumers, is VERY antiquated. They still charge by the KB or each HTTP request (and it can add up very very quickly). If you get a package the limits are so low they're a joke. They still ascribe to the "walled garden" strategy when it comes to web browsing too--if you go to one of a hundred or so "partner" websites it is part of the flat rate, and if you go to other sites, even if you have one of their packages, they STILL charge you by the HTTP request!
* They literally have ZERO "unlimited" plans, and the closest to unlimited you can get is EXTREMELY expensive.
I'm not familiar with Verison's rates, but from what I've seen of the US industry as a whole they are fairly more competitive than Canada now. What is sad is that US cell service is a joke compared to most of Europe and Asia, making cell service in Canada even more embarrassing. Considering that Canada got such a huge jump on the US in the area of broadband to the home it is tragic that wireless service didn't achieve the same thing (it's also sad that Canada's lead over the US in broadband has shrunk considerably too).
Then why are both rogers and telus crying? Why did rogers share went down right after the announcement?
Also when the same thing (deregulation) works for third world countries, it can't work for Canada?
Rogers ruined Fido. My plan is still the same price, but everything else has doubled or tripled. Extra minutes are 30 cents instead of 10, long distance is 30 cents instead of 10. Roaming is several times more expensive, all the miscellaneous fees are at least doubled. Grrrr.
That is an incorrect statement. Check out the facts: http://education.yahoo.com/reference/factbook/countrycompare/area/3d.html;_ylt=As1XMsN8kgSx746VWazy_s7PecYF
The US is slightly bigger in land mass. To your credit though, the difference is slight and you are correct that the cost to implement a nationwide network would end up being more costly per user.
Confucius say: "Man who associates with smarter men than himself is smarter than the men he associates with."
Hmm... point taken. I guess I've always been using the land + water area amount, where Canada is indeed #2 in the world, behind Russia.
A lot of the Canadian territory up north is mostly water...
I love it how everytime something like this come up, people screm "Yeah, at last the goverment *forces* these companies to to this and that, so we can finally have a free market!"
There are semantics and confusion of terminology in economics, just like in the realm of software development (open source vs Free software vs freeware).
What Canada has in the wireless market is a fairly "closed" market. There are 3 big players and each do their best to minimise interoperability and retain customers (they call the latter "reducing churn"). They fought strongly against number portability because it would be expensive and "damage business" (as a result we waited a long time after the US to get number portability). They minimised that impact by making contract lock-in terms stronger. In the absence of government action the market was doing nothing but getting more closed.
"Hands off" by the government would be like BSD-licensed software--the market would be very "free" but given the oligopoly that exists such freedoms could be abused (just as BSD licensed code routinely makes its way into closed software like MS Windows). Total freedom would be like "public domain" source code--even attributions could be stripped away (this would be like closing down the CRTC and letting the spectrum be used in a free-for-all--strongest transmitters win).
Regulations put in place by the government in this case are analgous to terms of GPL-licensed software. GPL contains a number of restrictions that "force these developers and publishers to do this and that" with respect to disclosing source code, the idea being to foster the OPEN "bazaar" development community. Given the current situation in the Canadian market I think radio spectrum reservations and mandating roaming access requirements is a very good GPL-like decision (it was in fact done in the US and many European countries and produced favourable results). The status quo (or even relaxing reculation on existing monopolistic players) certainly is not acceptable, and the socialist alternative (outright price controls/caps/etc on what existing providers can bill to end customers) would discourage competition and kill innovation and choice (imagine what your cellphone would do to you in Soviet Russia, basically).
I'd agree with your sentiment that government "forcing" companies or people to do this and that should be kept to a minimum, all things being equal. However all things are very far from equal. There is no serious competition between the dominant providers, and two of the three (Bell and Telus) historically were government-mandated/protected regional monopolies in years past (Telus was the result of privatising AGT--the Alberta Government Telephone company). Basically, past governments had a large hand in building up this mess, so yeah, it actually does make some sense for current governments to dismantle this mess to foster a more free market (well, more OPEN market actually, to start with).
Shaw is currently in the process of getting into the auction for some of that wireless spectrum and a move into cellphones. Considering the job they've done kicking Telus out of its festering monopolistic slumber in landline service in BC and Alberta I would not be surprised if the cell plans do the same.
While Fido's coverage was certainly lacking, it was nowhere near as bad as I was suggesting. (I can't speak to Clearnet, but I am pretty sure it was better than was suggested)
The OP thought that the higher population density of southern Ontario ought to make it viable for additional competitors to be in that market, suggesting that it could be considered independent of the rest of Canada. My point was that consumers have come to expect they can travel and still get coverage, so no part of Canada can be considered on its own.
And since you mention Fido and Clearnet, I think a big part of why they didn't do better came down to their coverage; I know its why I never considered them.
I was watching a speech on a Rogers community channel recently where Ted Rogers was giving a speech in Ottawa. He outlined that the open spectrum bidding wasn't necessarily a bad thing but in essence Rogers has built its network using borrowed money, incurred debts which it is repaying now. As a result he says it wouldn't be fair for a new upstart to just come in and start without having to pay for lines while it bought access at a reduced rate for 5 years while it accumulates cash and builts its cash reserves and builds its network.
On the one hand, I don't disagree with him. On the other, Canadian cell pricing as compared to the US is much more expensive especially on Data plans. Yes, vast country small population we have. But until the cell rates come down - with or without competition, I can't see that I'd agree with Ted Rogers on this. I'd like to at leat get unlimited evennings after 7 pm on my phone instead of 9 pm rather than having to pay an extra $10 a month for it. I don't see my self getting a land-line anytime soon. I've chosen to get a cell, yes. And I'm incurring higher fees. But any LD calls I make are on VOIP. I don't have cable and only get hi-speed internet. I don't want to get more services from Bell, Telus or Rogers, unless price comes down.
You say:
"I would be shocked if a phone company came along with the balls to say "our coverage area will only be in the golden horse shoe". I suppose if they priced competitively it might work for a little while, but I suspect that sooner or later customer's would take a drive more than two hours from their home, and get pissed when their phone stopped working."
You would be missing the entire effect of the federal government's decision. It opens up spectrum for someone to set up a Golden Horseshoe carrier with lower costs and forced roaming agreements on the other carriers when they go 2 hours from home.
Or did you think that Fido operated to bring better and cheaper prices to crappy rural areas?
Actually it was.
My sister had a fido for a while. We lived in Oshawa, she could not get to Columbus (which is still part of Oshawa) without losing her signal. As far as Fido was concerned they only needed to cover.. lets see... Google maps says 14.6km north of the 401.
Ontario...has the largest land mass too.
Are you sure about that?
It isn't, I know; I just was typing without thinking.
No real harm done. A bit ironic though, that you were taking a "fellow" Ontarian down a peg for thinking he was near the centre of the universe. Eh?
Cheers, Paul
You know what really sucks? When somebody tears into you and you have no defense because they are completely right. My original post is filled with errors, both grammerical and factual.
I can't even claim that I was rushed, because the final version is much improved over the one I previewed and then chose to edit. About the only excuse I have is that I was so enamoured with my own arguement that I made mistakes, both big and little. (which isn't to say that its a wonderful arguement; more like I'm an Alberta boy, who got dragged out to Ontario by his wife, and the things I've not liked about Ontario my whole life are in my face every day now and I have nowhere to vent these feelings save at some AC on slashdot)
yeah, your post seemed a bit harsh, so I felt the need to defend the guy. Then I realized he was an AC, so he probably never read either of our posts anyway.
I'm an Ontario boy who got dragged out to Saskatchewan (and hopefully Alberta soon enough) by the military. There's definitely a difference in culture... not to mention climate.