Affordability has emerged as a central theme in this year's election campaign, and all the contending parties have developed platform promises to address affordability in important aspects of Canadians’ lives, including in housing, childcare, and telecommunications.
The last 18 months have made it plainly apparent that effective and reliable telecommunications networks are an absolute necessity in a modern economy. It is no surprise, then, that parties vying for government have produced a suite of promises designed to address affordability in telecommunications services. These promises include blunt policy instruments like the imposition of price caps for telecommunication services and a declaration that retail internet services are an “essential service”.
One recent promise requires closer attention. The Conservative Party of Canada platform promises to increase competition in Canadian telecommunications by allow foreign companies to offer services to Canadians. Announcing this promise at a press conference last week, Conservative leader Erin O’Toole said:
“We need more players in the Canadian market to help improve wireless choice and affordability for consumers … But Canada currently bans foreign companies from competing here, leaving Canadians with limited choice and higher prices.”
Under Part II of the Telecommunications Act, a carrier is eligible to operate as a telecommunications common carrier if it is Canadian-owned and controlled, or if it has annual revenues that represent less than 10% of the total annual revenues from the provision of telecommunications services in Canada. While this does not serve as a “ban” on the provision of telecommunications in Canada by foreign corporations, it does constrain the ability of these companies to enter the market.
Despite there being some truth to O’Toole’s claim, this promise requires scrutiny for two reasons.
First, it is not clear that foreign telecommunications companies have any plans or even desire to expand operations in Canada, a fact made abundantly clear when a previous Conservative government attempted to court foreign telecommunications companies to enter the Canadian market in 2013.
Second, and more significantly, the Canadian Radio-television and Telecommunications Commission (CRTC) recently completed a review of mobile wireless services in Canada and, while it decided to implement targeted regulatory measures that allows competing service providers to access incumbent networks to resell wireless services to consumers, it also found significant evidence that competition in the Canadian wireless market is already increasing:
“…there are also positive signs that competition is intensifying. Retail prices, although higher than what would prevail in a fully competitive market, are clearly trending down across Canada, and there is evidence of rivalrous behaviour among wireless carriers.”
So while affordability continues to be a central theme in this election, it is not clear that headline-grabbing promises like increasing foreign investment in Canadian telecommunications will help achieve this affordability goal.
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