Search Results for: incentives

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?

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.

In 2004, the CRTC created financial incentives for broadcasters to increase the amount of English language Canadian drama. Those rules permit a broadcaster to go from 12 minutes of commercial time and add up to another 6 minutes and 30 seconds.

Will more commercials get people to watch more Canadian drama? CBC thinks so. It has applied for an amendment to its license conditions to be able to take advantage of these rules.

With product placement and embedding promotional consideration right into story lines, like we saw in the opening episode of 30 Rock, should the CBC and CRTC be looking at other incentives? When more than 30% of a program hour is commercial time, aren’t we concerned that a lot of channel surfers are going to use the break to find something else to watch.