Earlier this week, I was asked how Industry Canada should measure the success of its programmes designed to stimulate competition in the mobile wireless market.
After all, at this time a couple years ago, we were preparing for a spectrum auction that set-aside 40MHz that could not be acquired by the 3 largest mobile service providers, Bell, Rogers and TELUS.
Yesterday’s advanced launch by Public Mobile gives Canadians in Toronto and Montreal more choices – although it is important to note that Public Mobile bought spectrum that was not reserved for new entrants, paying bargain basement prices compared to any of their peers.
In response to a question from the media, Public Mobile CEO Alek Krstajic said that liberalization of foreign ownership rules would likely stimulate consolidation among the new entrants. Set-asides and changes to the ownership rules represent disruptions in the status quo, which brings me back to the question of how Industry Canada will measure success of actions intervening in the marketplace.
Will opening Canada’s telecom sector markets to increased foreign investment result in fewer (but potentially stronger) competitors?
That all depends on how far the foreign investment floodgates are allowed to be opened. If we limit such investment to a minor increase to the existing system, then the incumbents would likely benefit the most from foreign investment. This could, perversely, entrench the positions of the incumbents against the new entrants.
On the other hand, if the borders are thrown open, and foreign companies are allowed to set up shop in Canada themselves, it’s hard to see how this would result in fewer competitors in Canada. Even assuming the merger of Bell & Telus, and that of Globalive/Public/DAVE, there are a lot of potential new competitors that might wish to establish a foothold in the North American market.