Telecom companies’ merger benefits only the very few
Rogers acquiring Shaw was a move that some worry will burn consumers
Free-marketers often praise laissez-faire capitalism for encouraging competition between firms that are allowed to operate with the absolute minimum of government oversight. They will repeat ad nauseam that the markets will regulate themselves through the spirit of competitive one-upmanship. Corporations pitted in a contest to attract the most customers via innovations in marketing, and product development will surely create jobs and offer important services to the public at fair rates.
In Canada, out of the top six telecom companies, the top three are Rogers, Bell, and Telus. These brands operate nationally, while the next top three are regional services. That means in a sector worth $53.4 billion in 2020, you can count the biggest of the beneficiaries of those profits on one hand. And one of those big beneficiaries is on track to absorb one of its relatively smaller competitors.
The Canadian Radio-television and Telecommunications Commission (CRTC) recently approved Rogers’ acquisition of the broadcasting services of the country’s fourth-largest telecom company Shaw Communications Inc. It is the first of three hurdles that Rogers must clear with public regulators to fully integrate Shaw’s broadcasting into its own framework.
The CRTC ruled that Rogers must “pay $27.2-million to the Canada Media Fund, … the Independent Local News Fund, … and specific independent production funds” as recompense for absorbing another large corporation. Also, Rogers must satisfy Canadian content requirements, provide English- and French-language programming, and have Indigenous news teams in every province.
All of which are small potatoes in comparison to the rewards Rogers will undoubtedly reap by obtaining so many Western Canadian customers on top of its nationwide base. The number one telecom company would widen the gap between itself and its competitors.
Some might say those with concerns should vote with their wallets and sign-up for another service, that will let Rogers know how you feel in a language corporations understand. But which one should dissatisfied people switch to?
Very few companies offer the full monty of internet, cable, and telephone services for fully competitive prices. The landscape is an oligopoly that could shrink in the near future.
Bell and Telus oppose the merger because it puts them at a competitive disadvantage, and Innovation, Science and Industry Minister François-Philippe Champagne has stated that he will oppose Rogers from acquiring Shaw’s wireless licenses in the name of fair competition.
However, the foibles of business and politics change like the wind’s direction. What may be bad for business and unallowable by regulators today may become acceptable practices tomorrow.
If the Rogers-Shaw acquisition clears all the barriers, it will set a precedent that paves the way for the small pool to shrink further. What would stop Telus from buying out Quebecor, or Bell from taking over SaskTel? Or worse yet, any big three merging into a monstrous media conglomerate.
Under the status quo, Canadians already pay some of the highest mobile plan fees in the industrialized world. In an environment where there are fewer players, the situation will only get worse than it already is. We are getting price-gouged either way.
This is why we must always remain vigilant both with politics and business. Remaining ignorant of the machinations of both leads to situations like this.
The industry of Canadian telecommunications is the way it is thanks to privatization and deregulation that was instituted by the government for the corporations. Even if Rogers fails to get Shaw’s wireless licenses, owning the broadcasting capabilities will be a monumental partial win. Through the merger, a win for Rogers, partial or full, could be a big loss for average people.
