Mark Goldberg

A cautionary tale of political interference

This morning, Bronwyn Howell, adjunct scholar at the American Enterprise Institute, published “Upping the political ante in mobile markets: A cautionary tale from Canada” on the AEIdeas blog.

It is worth a careful read, urging caution for those advocating political interference in the telecommunications marketplace.

The politicization of matters such as the price of a mobile connection flies in the face of the conventional wisdom (if not even an article of faith) holding from at least the early 1990s that the long-term interests of telecommunications consumers are best served by political interests staying as far away as possible from day-to-day industry activities. Policy entities such as the Organisation for Economic Co-operation and Development (OECD) and the International Telecommunications Union (ITU) have urged nation states to delegate competition and regulatory oversight to independent authorities, and to allow the private sector to be the primary investors in network capacity and services wherever possible.

That isn’t to say that there is no role for politicians in setting policy.

Of course, the delegation of network ownership, competition, and regulatory oversight does not mean politics doesn’t have a role in telecommunications policy. Government subsidies play an important role in ensuring access to disadvantaged populations and providing funding for infrastructure in regions where private investment would not otherwise occur. Political debate is important for making decisions about which communities and activities should receive scarce taxpayer funds. There is also room to debate the finer features of the powers delegated to the arms-length overseeing agencies — for example, clarifying their powers to act in certain ways when undertaking their constitutionally-assigned duties.

A number of times, I have criticized surveys that find that anything less than 100% of Canadians want lower prices for anything. Of course we do. Whether it is milk, chicken, housing, gasoline, sushi, cauliflower or communications services, of course we all want lower prices for things we buy. That is what makes the politicization of telecom prices so attractive as a campaign promise. “No rational mobile consumer would disagree with a proposal that they should pay less for the same service, so it’s all too easy for voters to support politicians promising to deliver this result without giving much thought to whether there is a problem with current prices or the longer-term consequences of the methods by which price reductions will be achieved.”

There is a good reason why the ITU has stated [pdf, 254 pages] “the regulator should have sufficient independence to implement regulations and policies without undue interference from interested parties such as politicians or other government agencies (functional independence).”

We all want lower prices for everything. Let the CRTC weigh the evidence, consider the consequences of intervention, and make a determination away from the super-charged election campaign rhetoric. In the meantime, take a few minutes to read the cautionary tale being told of Canada’s telecommunications market.

The debate about phone rates doesn’t belong on the campaign trail; it should be adjudicated by an independent regulator.

1 comment to A cautionary tale of political interference

  • Michael Connolly

    By all means give the CRTC the resources, powers, mandate and independence it needs to be an effective telecommunications regulator. But let’s not forget that at the moment spectrum regulation is directly in the hands of a federal minister and is highly politicized and subject to political vagueries and a lack of transparency and fairness. Canada needs to fix its institutional arrangements badly.