Canadian Government Unveils Assertive New Telecom Deregulation Plan

Press Release - April 6, 2007

Overruling decisions by the CRTC and a Parliamentary committee, Canada’s Conservative government announced a plan this week to largely deregulate the country’s telephone market, beginning on April 18.

Industry minister, Maxime Bernier, said that incumbent telecom providers like Telus and Bell Canada – which have traditionally been heavily regulated – will be able to set their own prices in local markets where wireless and cable phone services are also available.

Up until now, incumbent carriers’ hands have had their hands tied until they lose more than 25% of their subscriber base in any given market. Even in these circumstances, the companies are restricted by so called “win back” rules, preventing them from regaining most of the lost customers.

“Canada’s new government is of the view that accelerated deregulation is appropriate and that win-back rules are no longer required,” explained Mr. Bernier. “In a competitive sector, there is no reason to prevent consumers from getting the best offers.”

Opponents of the deregulation claim that it will allow the big carriers to drive competitors out of the market by offering short-term discounts, but increasing prices over the long term.

Janet Yale, an executive vice president with Telus dismissed these suggestions, however, noting that “there may be a little fear of the unknown here … the reality will be a better situation for customers.”

In reality of course, the supposed doom and gloom of deregulation is pure fiction, especially now that telecom providers are competing primarily against well-established cable companies. If traditional landline rates go down, the market will do the same for cable phone pricing.

If that’s not a good situation for consumers, I don’t know what is.