Weaning Canadians from government intervention

On Friday, I wrote about the ability of comparitive statistics to be misleading. The National Post began a series of articles this past weekend, Swaddled in Nanny Nation. The first article speaks of the damage to Canadian consumers caused by government intervention in the marketplace, with comments aimed specifically at banking, air transport, telecommunications and agriculture.

One of the most flagrant ways Canadian industry is being coddled is through corporate subsidies.

The Saturday article points out billions in dollars in aid to Pratt & Whitney, Bombardier, GM and Ford.

Proponents of government subsidies argue that they create jobs, encourage research and development and spur economic growth. But often, the opposite happens.

Unintended consequences of artificial incentives.

This morning’s final installment of the Post series focusses on foreign investment restrictions in telecom: Not Upwardly Mobile. Writer Peter Nowak concludes:

The only way to solve a Canadian-created problem, therefore, is to bring foreigners in to fix it. Canadian politicians will first have to rid themselves of their cultural and economic xenophobia

A truly level playing field, with no handouts to try to pick winners, will work best for consumers and business alike. For sustainable competition, the lesson would appear to be that consumers will win if government will just get out of the way.

Who will answer the DNCL?

The National Post began a series of articles this past weekend, looking at how “Canada’s tangled subsidies and trade restrictions are stunting economic growth and cheating consumers.”

Saturday’s Post also had an article bemoaning the delays in implementing the national do-not-call list (DNCL).

Efforts to set up a long promised registry where consumers can declare their phone numbers off-limits to telemarketers have been delayed, in part by controversy over how to pay for it.

The do-not-call registry is an example of paternalistic government intervention. The legislation does nothing to stop the bad eggs from being bad, but the responsible telemarketers are at risk of being saddled with even higher costs, chasing more jobs off-shore where enforcement will be that much tougher.

Is the DNCL becoming another gun registry? Are we going to harm carrier call centre revenues and domestic call centre jobs?

Who will track the unintended consequences of what seemed to be well intentioned consumer-friendly legislation?

Canadians ahead in internet use

Sometimes, it seems no country really wants to be first in on-line connectivity.

There are a lot of organizations and programs that are dependent on the belief that government intervention is needed to improve the nation’s internet performance. Not just in Canada, but worldwide, countries are trying to find the right formula for regulation and policy incentives to ensure that their citizens aren’t left on the wrong side of the Digital Divide.

We worry about industrial competitiveness. Rural residents look for all the advantages of the city, without the traffic, high real estate prices and taxes.

Now we find out that Canada is number one in at least one area: monthly hours online. We beat out Israel and South Korea for top honours according to Comscore.

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Turkey blocks YouTube too

The Globe and Mail is reporting that Turkey has ordered ISPs to block access to YouTube, because of videos that are “allegedly insulting the founder of modern Turkey, Mustafa Kemal Ataturk.”

It is another country asserting national sovereignty over the internet. Italy acted previously with respect to child pornography. Brazil had blocked YouTube, Denmark blocking AllofMP3.com. France and Germany have their own restrictions.

Paul Doany, head of Turk Telekom said:

We are not in the position of saying that what YouTube did was an insult, that it was right or wrong. A court decision was proposed to us, and we are doing what that court decision says.

Who should make these kinds of determinations for various types of content?

To what extent can countries exert sovereign authority over their portion of the internet? Should countries have that authority?

The 2007 Canadian Telecom Summit in June includes a session examining Illegal Content on the Internet.

Lies, damned lies and statistics

The headline grabbing news that Canada’s wireless penetration rates were on par with Gabon helped colleagues enjoy their 15 minutes this week.

Statistics can be persuasive. They appear to be so factual, but also allow for distraction through irrelevant comparisons. Comparing Canadian wireless prices to overseas rates is an example of such comparisons.

Outside of North America, wireless services are paid for using a system known as Calling Party Pays (CPP). When you travel overseas, it is quite common to be able to get a phone with unlimited incoming calls for free from your hotel; the hotel and their supplier carrier make money everytime you receive a call. Incoming calls are free but you pay for outgoing calls, often a lot, especially if calling to another carrier.

Why is European data usage so much higher? A large component is text messaging to people in order to avoid placing expensive voice calls. You text message your colleague or parent at the office and have them call you back – call it the modern way of taking home pens and pads of paper from the office. Free monthly service, high per minute outbound calling, high costs to call to a mobile from fixed lines or other carriers. Is that the kind of competitive wireless environment we want to emulate?

Canadian wireless minutes of use are higher than most other countries. Is this consistent with a conclusion that prices are inhibiting use of wireless? Canadian rates per minute have fallen substantially and can be expected to continue along that trajectory. Calling plans are continuing to get more creative. As a consumer, I would like rates to fall even more – I like free, to tell the truth.

But government intervention to artificially stimulate an additional competitor? I liked the opening of Rob Carrick’s column in yesterday’s Globe and Mail:

The Prime Minister said the other day that paying fees to withdraw money from a bank machine annoys him. Me, too. I’m also annoyed by the inability of the Toronto Maple Leafs to win the Stanley Cup, by morning rush-hour traffic and the long lines at every Tim Hortons in the country. Do I want the government to get involved and solve these problems?

The same applies to wireless service competition. Let the marketplace work.

Although, I’d agree with government action to help the Leafs. Playoffs are around the corner.

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