For the past few months, the question of how to reform the mobile phone sector in Canada has come to the fore. Currently, most mobile service in Canada is provided by just three telecommunications giants — Bell, Rogers, and TELUS. Because of this, Canadians pay some of the highest mobile rates in the entire industrialized world. Now that US behemoth Verizon is looking to enter the Canadian market, a debate is raging about what should be done about the mobile sector, and what would be most beneficial to Canadian workers and consumers.
The entire issue was largely brought up when two of the most well-known small carriers, Mobilicity and Wind Mobile, were put up for sale. TELUS attempted to purchase Mobilicity but had its bid blocked by the federal government. The federal Tories’ reasoning was that they were concerned about the Big Three’s oligopoly and the amount paid by Canadian consumers, and wanted to encourage more competition in the Canadian mobile market. The CRTC, Canada’s state telecommunications regulatory body, has stated that its goal is to have at least four competing firms in each region across Canada. TELUS’ purchase of Mobilicity would have threatened that goal and, in the eyes of the government, further cemented the power of the Big Three.
In addition to Mobilicity and Wind Mobile coming up for sale, the CRTC will be overseeing the upcoming auction for lucrative new wireless spectrum, which would help to expand and improve the services provided by the wireless companies. In order to supposedly spur competition, the CRTC had reserved the largest share of the new spectrum to the smaller carriers, much to the chagrin of the Big Three wireless providers.
Immediately after TELUS’ rejection, Verizon jumped in with a $700-million bid for Wind, as well as a proposal to buy out Mobilicity. Presumably, this would give Verizon preferential access to new spectrum that would have been allocated to Mobilicity and Wind. This has prompted Bell, Rogers, and TELUS to send out a joint letter to the federal government condemning Verizon’s entry into the Canadian market and demanding that the government protect Canadian telecommunications from foreign competitors. In response to the letter the Conservative government created a website encouraging the sale of Mobilicity and Wind to Verizon.
The Big Three are playing pauper and claim that the whole of the Canadian wireless industry is under threat if Verizon is allowed to enter the Canadian market, putting both consumers and workers’ livelihoods at risk. Bell, Rogers, and TELUS’ cries of poverty have had little traction with the majority of the Canadian public who are well aware of the massive profit margins that are enjoyed by the Big Three.
Combined, Bell, Rogers, and TELUS own over 90% of the wireless market in Canada and their average customer pays almost $77/month for cellular service. In our present society, cell phones are no longer an expensive toy and instead, have have become a key utility in our everyday lives. Many workers are forced to have a constant connection to phone and email in order to do their jobs; wireless service is a necessity in their lives.
The Big Three claim that because of their large size, they serve to keep one another accountable through competition. However, a quick perusal of the services and prices provided by the Big Three show this assertion is patently false. Each of the three companies have virtually identical plans and pricing, and quickly move to match one another. Recently, TELUS introduced higher mobile rates; under the so-called logic of the market, we would have expected that Bell and Rogers would try to maintain their lower prices in order to win more customers. However, both companies immediately raised their own rates to match those of TELUS!
Each of the three large wireless companies have also set up their own minor brands, in order to perpetuate this illusion of choice and competition: Rogers owns Fido, Bell owns Virgin Mobile, and TELUS owns Koodo. However, all of these brands behave just like their larger parents, offering identical packages and rates. Having three firms that together dominate the market gives the stockholders and upper management of Bell, Rogers, and TELUS the ability to collectively keep prices as high as possible, and none of the companies worry that one of their partners will undercut their business. Between 2012 and 2013, the average rate plan increased by $9/month. In the hands of a private minority, they can increase prices with impunity at the expense of working people who rely on these services to get by.
Aside from their subsidiaries, these three giants are also involved in other telecommunications industries such as internet and television, but in all of their internal reports they cite wireless services as the crux of their business. For example, 58% of Roger’s revenues comes directly from cell phone services, with TELUS and Bell floating in and around that margin. In 2012, Rogers made $3.1-billion in mobile service profit alone, while TELUS earned $2.4-billion and Bell $2.1-billion from wireless. Combined, these companies generated a surplus of $7.6-billion in just one year!
However, the billions of dollars of profits that are generated do not go into the pockets of working families, who on the tails of the Great Recession struggle to pay their bills. Nor does it enter the pockets of the hundreds of thousands of workers employed in Bell, Rogers, and TELUS’s retail, engineering, or customer services sections. It is not the people who make, sell or buy the product who benefit from the profits these companies make; instead, all three companies have driven down wages for their own workers, further fattening their bottom line.
Will Verizon improve conditions for Canadian workers and consumers?
For some, the great hope in finally breaking up the Big Three’s cartel is US mobile giant Verizon entering the Canadian market. Bell, Rogers, and TELUS have certainly reacted in such a way that would indicate that Verizon could pose a mortal threat to their interests. The Canadian Big Three collectively have about 25-million customers, but Verizon dwarfs them with over 100-million customers in the USA. By virtue of sheer numbers, Verizon’s presence in the Canadian market could easily grow to marginalize the role of the Big Three in the market in the coming years.
The Big Three have united to launch a massive campaign called “Fair for Canada”, trying to build support in keeping foreign telecommunication companies (such as Verizon) out of the country, and claiming that only Canadian companies (i.e. the Big Three) will protect Canadian jobs, technology, and consumer rights. For their part, the federal Conservative government has reacted strongly against the Big Three and launched their own campaign, “Consumers First”, arguing that bringing in a strong large fourth player to the Canadian wireless market will promote competition, spur the growth of wireless coverage to rural Canada, and lower wireless rates for everyone.
Do the Tories’ claims ring true? In the USA, Verizon has certainly not acted in a manner that would be beneficial to all. It has been pointed out that Verizon is one of the largest corporate tax-avoiders in the USA and has also actively co-operated in the NSA’s “Spygate” scandal. Moreover, Verizon has worked hard at keeping unions out of their wireless division within the USA, prompting a showdown with 45,000 of their workers in 2011. On the consumer side, Verizon’s wireless plans make Canadian ones seem positively affordable; basic US plans generally cost around $70/month and smartphone plans can easily reach $200/month! The targeted small carriers, Mobilicity and Wind Mobile, have limited footprints in just a few Canadian cities. According to international financial house Moody’s, Verizon would probably need to spend upwards of $3-billion to improve their presence across the country, further negating the possibilities that Canadian consumers would see a reduction in wireless prices. With the Canadian wireless telecommunications industry generating a whopping $50.2-billion revenue annually, it seems Verizon has more on its mind than playing philanthropist. It is trying to move in on the Canadian cash cow and milk it for what it’s worth.
No corporate welfare or protectionism; nationalize the telco industry!
The Big Three wireless companies are presenting their case for protectionism as one that is good for Canadians. Perhaps it may be good for Canadian CEOs and Bay Street, but the Big Three have certainly not been good for Canadian workers or consumers.
Perhaps a surprising ally to Bell, Rogers, and TELUS has been the Communication, Energy, and Paperworkers union (CEP), who were original signatories to the Big Three’s open letter to the federal government. It is natural that the CEP would want to protect union jobs at Bell, Rogers, and TELUS, especially considering Verizon’s known anti-union stance. But, defending well-paying jobs should not be the same as supporting and standing behind the Big Three telcos who squeeze both consumers and their own workers for every last dime of profit.
Fortunately, the position taken by the CEP has rapidly developed into a much better one. CEP’s outgoing president, Dave Coles, has now suggested that the federal government should buy the failing minor wireless carriers and combine them into a publicly-owned Crown corporation — one that would be able to provide better wireless service and rates to consumers, while at the same time protecting Canadian workers. Coles argues that a Crown corporation would employ workers at a living wage, build valuable infrastructure, and return surplus to the public.
We agree with Coles, but we would also tell him that the whole of the wireless sector should be nationalized, not just the smaller carriers. Compensation should only be given to those in genuine need. From the outset, the Big Three have had an advantage of years of government subsidies in basic infrastructure. The idea of bringing the profits back to the public and providing good jobs through a small nationalized carrier is a good start, but taking direct control of the whole industry would generate bigger public returns, more livable jobs, coordinated infrastructure development, and lower rates for consumers.
This is why the CEP needs to come out for a nationally owned public telecommunication company, not just through the small carriers but the big ones as well. The extorting trio of Bell, Rogers, and TELUS should be nationalized, unified, and put under democratic workers’ control and management. Cellular phone services are a public asset that should be utilized for the benefit of the majority of society and not to grease the pockets of the greedy few.
With $7.6-billion in surplus to redistribute publicly, we could easily offset consumer rates to make cell phone plans cheaper for consumers, while also being able to give the hundreds of thousands of workers in the industry a pay increase and an adequate pension system.
The instances where consumers are gouged through roaming fees and other hidden fees would be erased. Shift organization, health and safety issues, and training within the workplace could be organized by the workers themselves in order to end the miserable grind, demoralization and inefficiency that is the result of shift work.
It is the CEP, especially the leadership, which needs to go to the government with an ultimatum for nationalization and workers control. If they raised the slogan of cheaper rates for consumers they would garner public support, not animosity. If they fought for stability as a nationalized public entity, they would be doing a service to the hundreds of thousands of workers they represent by setting an example. This is how Canada’s wireless industry can changed for the benefit of both worker and consumer.