Verizon vs the Canadian carriers: An open letter to incumbents

After a week in which all three major wireless carriers cried foul over the way they are being treated by Industry Canada, it seems only appropriate to respond with the same approach one of them, BCE, decided to take: an open letter.

Dear Incumbents,

Thank you for speaking out. By meeting with several newspaper editorial boards and plastering your open letters in print and online ads, you are finally giving voice to the one group that Canadians often forget to care about: yourselves.

As ill-advised as this public relations mission will ultimately prove itself to be, it is helping all wireless consumers understand how important it is to have a fourth competitor in every major market. After myriad failed policies aimed at assisting newcomers into the space, and following decades of spectrum being handed out like slices of watermelon at a family picnic, we are finally witnessing the first signs of what may be a potential disruption to the status quo that has mired us in high phone bills and often sub-standard customer service. Never has the vague, uncertain prospect of a possible fresh telecommunications rivalry ignited such reflexive anti-Americanism.

I am referring, of course, to the widely-discussed but still unconfirmed story that Verizon Communications has made a bid for Wind Mobile and is in talks with Mobilicity, two competitive local exchange carriers you happily watched wither and nearly die before this latest round of 700 MHz spectrum was about to be put up for bidding. The criticism from all of you -- BCE, Telus and Rogers -- suggests that Verizon is being given “loopholes” to effectively gain an immediate foothold in the Canadian wireless space.

What you call loopholes, however, I and others would call a more level playing field. Yes, it would have been better to see Wind, Mobilicity or Public Mobile flourish as local success stories. What’s more important to Canadians, however, are viable alternatives, and whatever its foreign origins, Verizon or any others of its size would be able to offer that.

Yes, Verizon or a similarly large telecom firm would be getting, in some respects, preferred treatment in setting up its business here. This should be an experience that is familiar to all of you, because it is almost exactly what happened 30 years ago. Just ask market research analysts like Eamon Hoey, who pointed out that in those halcyon days, the government doled out spectrum in such a way that you all got the running start which you have been exploiting ever since.

“The whole context of this is (the incumbents) attempting to defend their oligarchy,” he said. “They’re appealing to the good nature of consumers, but what’s really unjust is when a consumer opens their invoice every month from Bell or Rogers and Telus and they see what they’re paying.”

This makes it difficult to take your warnings seriously. There is no evidence that Verizon or a similarly large entrant would forever ignore wireless customers in rural areas. If, as some of your recent comments suggest, you would turn away from rural Canada to fight for the urban market, there would be even greater incentive to target underserved areas. You suggest jobs will be lost, but new jobs may also be created if a fourth carrier were able to grow here.

The suggestions to “close the loopholes” and push back the spectrum auction yet again leave one important thing out: why is this crusade happening now? The deadline to register for the next spectrum auction is more than a month away. Verizon remains silent about its intentions. In fact, the only thing that has changed in the last few weeks is the leadership at Industry Canada, with Christian Paradis being replaced by James Moore amid a federal cabinet shuffle. Perhaps there is a hope that with a new face at the helm, you can put pressure on the government to dial back what you describe as an “activist” approach to fostering wireless competition. Well, activism is what happens when conditions become so intolerable that the usual approach to effecting change doesn’t work. That sounds a lot like Canada’s wireless sector to me.