July 31, 2013 2:46 pm
Updated: July 31, 2013 3:43 pm

New ad against Verizon exposes Canadian telecom companies’ worries: expert

When it comes to promoting competition in the Canadian wireless industry, the federal government is going about it the wrong way, according to the Fraser Institute.

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TORONTO – Rogers, Bell and Telus have seemingly put their differences aside in a new video campaign, urging the government to deny “U.S. giant” Verizon entry to the marketplace, and suggesting its arrival would mean lost jobs and added expenses for Canadians.

The ad, which can be seen here, features people identified as employees of Rogers, Bell and Telus from locations across Canada. Some of their comments include:

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Global News

“When I found out that our government is getting a giant U.S. cellphone company to come to Canada, I thought, will there be thousands of jobs lost?”

“Our government is allowing a giant U.S. cellphone company to buy up small Canadian operators that cellphone companies like mine aren’t allowed to buy. Since we can’t bid, they’ll likely even get a huge discount on the price, effectively at Canadian taxpayers’ expense.”

“So why is our government giving a giant U.S. corporation special treatment? That’s not real competition.”

The video ends with the slogan: “Sweetheart deals for U.S. giants are a bad call for you.”

Though the ad never explicitly mentions Verizon, it comes about a month after Verizon Communications, owner of one of the largest cellphone providers in the United States, reportedly made an offer to buy Wind Mobile and possibly Mobilicity, two newcomers to the Canadian market who have each struggled to compete against the ‘Big Three’ mobile providers. It also comes five months before January’s auction for airwave spectrum.

But Queen’s School of Business Associate Professor of Marketing and Innovation John-Kurt Pliniussen says Rogers, Bell and Telus are the ones who have had a “sweetheart deal.”

“There’s a lot of costs and risks for anyone coming into Canada when anybody that has a cellphone is with a carrier right now,” he told Global News. “So where’s the growth going to come from? The only way to grow is if [consumers] leave these three providers, and the only way we’ll leave is if the service is better, and there’s a better price package offered.”

Read more: What’s the best, cheapest Canadian cellphone plan out there?

Pliniussen suggests the three main Canadian providers might be “jealous or worried” that the new policy will provide an incentive for other companies to come into this highly competitive market, and that’s why they’re calling it a “sweetheart deal” and citing potential consequences.

While he acknowledges that job losses are a possibility, he notes that if a company is more competitive and sales increase, that company will in fact be able to hire more people.

“Look at the auto industry—they went through some turmoil, and now there are more sales for these companies that were virtually bankrupt, because of better deals, products and warranties,” he said.

Likening himself to other cellphone users in the baby boomer generation who frequently travel throughout North America and are sick of roaming charges, Pliniussen said he would gladly re-sign with his provider if incentives—absent from the video ad—were offered.

“They’re not selling the consumer on the benefits and attributes of their plans or their pricing policies because they know they’re not that good when you compare what other countries have,” he said. “I don’t know who this video is targeting—not me as a consumer.”

DeGroote School of Business strategy professor Nick Bontis also suggests Verizon service offerings could include cheaper transborder roaming services.

“Personally,  I can’t wait for more competition,” wrote Bontis in an email to Global News. “This will drive prices lower for all Canadians.  We already pay among the most in the whole world for mobile monthly fees.”

Minister of Industry James Moore said in a statement that the government has decreased wireless service costs by nearly 20 per cent since 2008, through new policies to increase competition in Canada’s telecommunications industry.

“Our policy has been clear and remains unchanged: greater competition and liberalized investment has meant more choices at lower prices for Canadian families,” said the statement, noting that the policy is the result of consultation that started in 2008 and continues today. “All players – industry, consumer groups and everyday Canadians – contributed to this policy.”

While the video campaign seems to paint the government in a negative light, Pliniussen suggests this is an example of a helpful response to public opinion of cellphone costs.

“The team that put this together for the government – they’re educated, they’re wise in the ways of competition policies,” he said. “They’ve done the analysis; they’ve heard our complaints.”

© Shaw Media, 2013

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