Search Results for: unintended

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?

The Globe and Mail discussed a new report, Lament for a Wireless Nation, from Seaboard Group, that concludes “Canadian wireless adoption is a national disgrace.” The report says that Canada’s adoption rate for cellphones puts it on par with Tunisia and slightly behind Turkey.

According to the Globe and Mail account:

Seaboard suggests the government take several steps to improve the situation for Canadians, including allocating wireless spectrum for one or more new competitors. The spectrum could be awarded to a new national carrier or one or more regional operators.

The newspaper says that the report is calling for new entrant incentives, such as a spectrum set-aside and mandated tower sharing.

Is Canada’s wireless penetration rate lagging because of our pricing, or is more aggressive pricing the result of higher penetration rates? As I have written already, I am not convinced that government intervention can avoid unintended consequences from interfering with the normal workings of the marketplace. I don’t think Seaboard’s recommendations are able to be implemented without market distorions.

For example, the Seaboard study found that low volume users are better off in Canada, paying 27% less than their counterparts in the US. Not all rates in Canada are worse than US comparables.

It is somewhat hard to understand Seaboard’s view that mobile phone companies should target new demographics, like seniors, with appropriate pricing. It appears that their own study shows Canada already has better standby emergency rate plans, despite the drag on carrier ARPU from these plans. When I wrote about the grey market for mobile last month, I was advocating big button, easy-to-use handsets, not critiquing the rates that are available.

It seems to me while heavier users may have the most to gain from Seaboard’s recommendations, low volume users may have everything to lose.

Will low-income Canadians lose their price advantage as an unintended consequence of government manipulation of the market to incent competition?

Did the CRTC go too far when it ordered ILECs to offer unbundled wholesale ethernet services?

That is what Bell, Bell Aliant and TELUS have charged in separate appeals. The TELUS application says:

First, that the Commission has exceeded its jurisdiction by ordering the construction of new facilities and the provision of New Services to competitors beyond those currently provided by the TELUS network. Second, in Order 2007-20 the Commission has erred in law by failing to apply the recent Policy Direction, which was issued by Order in Council of the Governor in Council and which the Commission is required by law to apply.

In addition, TELUS submits that there is a substantial doubt as to the correctness of Order 2007-20, as it fails to consider a basic principle which had been raised in the original proceeding.

Encouraging facilities-based competition was the basic principle that TELUS claims was ignored.

The effect of the Order will be to seriously erode the value of TELUS’ investments in advanced networks in both central and western Canada. The Order will discourage such investments by TELUS and by new entrants as well.

My posting earlier this morning spoke about unintended consequences of government action. Will mandated unbundling of ethernet lead to a US-style stagnation of investment in broadband facilities?

Imperial Oil has been having problems with premature ignition. Their gasoline seems to be setting fires at a couple of their refineries – Sarnia in December and Nanticoke last week. Add CN’s rail strike into the mix and you end up with shortages of gasoline throughout Ontario.

Line-ups at service centres, sold-out signs and rising prices have become familiar scenes. Truckers are calling for action. The Ontario Energy Minister has pledged to keep an eye on the prices.

Hopefully, he will resist the temptation to intervene.

As tough as it is on all of us at the pumps, the marketplace is working just fine on its own. Despite reduced supply, there is competition for fuel retailing and the stores are doing the right thing when demand outstrips supply. Higher prices helps cut down on demand and creates the right incentives to find and fund alternate sources, such as trucking in tankers from other areas. Government intervention and controls will only distort the proper working of the marketplace.

Is there a lesson to be applied to wireless telecommunications services – or other telecom services, for that matter?

Over the coming weeks, I’ll be taking a look at some of the issues associated with the consultation leading to the AWS spectrum auction. Among the most important issues being considered are incentives, such as a new entrant set-aside and mandated roaming, to stimulate the creation of a new wireless competitor.

Incentives are a form of subsidy for the new entrant. I won’t presume that such concessions are necessarily wrong, but we need to be clear about their implications.

As loyal readers are aware, I have never hesitated to critique the current mobile market participants. However, as attractive as it may seem to increase the level of competition, can government intervene in the workings of the marketplace without unintended consequences? I’ll have more thoughts later.