As Verizon hangs up, small business loses
Competition remains the main feature missing from mobile plans
Tim Querengesser is senior editor with Alberta Venture. He once snowmobiled to the Arctic Ocean to interview a guy in elf shoes about reindeer. Really. Peace Pipe is his critical look at the intersection between Indigenous peoples and industry. Email Tim
by Tim Querengesser
Now really, what was all that Verizon brouhaha about? And is the news that the American company has decided to ignore Canada ultimately good for small business in Alberta, or bad?
Word made the rounds over the summer that Verizon, with $115 billion in revenue last year, was being courted by Ottawa to enter Canada’s telecommunications sector. “If Verizon comes, it will be good for consumers in some ways, I think it will be a challenge in other ways,” Industry Minister James Moore told CBC in late August. Aside from ruffling feathers at Bell, Rogers and Telus, Moore was being captain obvious: the big three hold 95 per cent market share and, according to him, have the highest profit margins of any telcos in the Organization for Economic Co-Operation and Development. Canadians reacted positively: a Forum Research poll showed 71 per cent supported Verizon coming here.
Verizon, in this sense, rhymed with competition. It’s something Ottawa has pushed to encourage in the telecom sector for years — including back in 2008, when it offered Orascom, an Egyptian mobile giant, a fat slice of wireless spectrum (the radio frequencies we make our calls over, access to which Ottawa controls). Orascom has spent upward of $1 billion. But what has resulted, according to some reports, is an 18-20 per cent drop in costs in some regional markets but also the relative business failure that is Wind Mobile. For anyone hopeful that Verizon — bigger and with deeper resources than Orascom — would shake things up and maybe even succeed, well, last week’s announcement that talk of the company coming here was “overblown” snuffed that hope, too. Verizon had bigger concerns to worry about, like buying Vodafone’s 45 per cent chunk of the pair’s former joint venture for $130 billion.
So, where to from here?
Aside from cynical pundits, who’ve noted how tough anyone – Ottawa included – will find it to lure another outside mobile competitor in, such as Orange or Vodafone, the majority of commentary focused on consumer reaction to the Verizon snub. But Richard Truscott, director of provincial affairs for Alberta with the Canadian Federation of Independent Business, says small businesses and entrepreneurs in the province are definitely affected by the situation, given that they share the same concerns as consumers.
“What we’re hearing from our members is that they don’t feel particularly well served … and are looking for more choice, more competition, and ultimately lower prices and better service,” Truscott says, noting the situation places Canadian small businesses at a disadvantage to their American competitors. “It just feels like it’s all about what’s best for the big telecommunications industry and not what might best serve the needs of the small business owner. In some ways it’s an unbalanced power relationship.”
Last year, the CFIB conducted a survey on the issue, and this research will inform a report to be released this fall, Truscott says. Though he doesn’t have specific results as of yet, he says that it’s clear small business in Alberta is unhappy with the telecom industry and would likely support government intervention to create a more competitive playing field. “Anything that governments can do to create an environment in which there’s greater competition, lower prices and ultimately better customer service, that would be most welcome by Canadian entrepreneurs and including those here in Alberta.”
One hope, Truscott says, is that the mere prospect of a Verizon moving into the Canadian telecommunications sector could lead the big three to clean up their act and drop their prices. He notes the survey research indicates that prices, driven by increased competition among the established players, have already improved most markedly in Ontario.
But those are the small steps. “It all comes down to how the feds decide how to structure the telecommunications industry in Canada,” Truscott says. “Without some kind of intervention by an outside service provider, it certainly appears to be difficult for Canadian consumers, including small businesses, to receive better from the big three – the oligopoly that’s in place right now. It’s not delivering as well as it needs to.”