oligopoly (noun): A state of limited competition in which a market is shared by a small number of producers or sellers. Oligopolies often result in collusion to maximize profits.
Were this definition written in Canada, we’d no doubt have to add, “and is most likely to prosper over time in a regulatory environment devoted to normalizing it.”
Of course, you know I’m referring to the troika of Rogers-Bell-Telus, which controls nearly 91% of the nation’s wireless market, with Canada consequently ranked as one of the least competitive wireless markets in the world, accompanied by the highest wireless fees. Helsinki-based telecom research firm Rewheel declared in 2021, after studying rates in 40 countries, that “prices in the Canadian wireless market…continue to be the highest or among the highest in the world.” Owning a phone, they claimed, is costlier too. These findings were echoed by Swedish telecom market analyst firm Tefficient, which found in the summer of 2021 that Canadian rates were indeed the highest amongst 45 countries. According to The Markup, a New York-based data journalism not-for-profit, loading an hour of Netflix using Canadian mobile data was found to cost an average of $12.55, as compared to 43 cents in Italy.
Let’s face it, we’re the laughing stock of the developed world, with shareholders literally in a state of mirth on their way to the bank. So, when one wireless service in the troika goes down, it’s now more than egregious profits that fuel outrage. And down Rogers certainly went on July 8th. A coding error evidently caused a cascade of disaster across the nation, affecting any institution, enterprise, or consumer linked to their network, from emergency services to banking transactions, as well as third-party ISPs like TekSavvy who lease Rogers’ infrastructure.
If you’re a Rogers Communications customer, your inbox doubtless welcomed two post-July 8th mea culpa emails from Rogers CEO Tony Staffieri. First was the July 13th statement, which acknowledged that the outage “caused real pain and significant frustration for everyone…And critically, emergency and essential calls could not be completed. No one—not our customers, our governments, and not us—is anywhere close to finding what happened acceptable. Now we have to make things right.”
Mr. Staffieri took out ads, fired his chief tech officer (Jorge Fernandes), and then followed up this commitment to “make things right” with a second letter on July 25th, making a pledge to ensure 911 calls will get routed through other networks, and to promise an investment of $10 billion over the next three years to help with more oversight and testing and to fund the work of using artificial intelligence (?) to ensure that “we’re able to deliver the reliable service you deserve.” (That AI bit was ominous and vague, but I digress.)
As with anything that doesn’t add up, follow the money. And there’s a ton to follow. An upcoming merger worth about $26 billion is at stake in Rogers’ bid to purchase Shaw Communications. With a deadline of July 31st looming on the deal’s closure, the timing of the outage couldn’t have been worse, pitching contrite Mr. Staffieri into a summer of damage control.
That $10 billion investment pledge? I think we are the ones who have paid for this one way or another already, and will continue to, because of the price-fixed telco world we inhabit. But don’t worry: Rogers’ stock is still up, and there are goodies for all. Dividends are getting paid out this October, and customers are alleged to be getting about $150 million in “credits” for the July 8th outage, which they alone determine. The company’s 2nd quarter report has just dropped as I write this. Their wireless services saw a huge growth of 35%, with media growth coming in at a jump of 21%. A pandemic effect for sure. But in our made-in-Canada oligopoly, the troika always wins, regardless of the world’s challenges. That level of profit is never countenanced as something that should flow back to consumers. Instead, it took an outage to get a promise of anything back from Rogers.
The troika’s CEOs got a tongue-lashing from innovation, science and industry minister François-Philippe Champagne in the days following the outage, along with a House of Commons committee request to appear and explain themselves. No one, though, in the ministry’s office seems much bothered by the price fixing, which has endured so long that the abuse has been normalized, something that wasn’t lost on industry committee members like MP Brian Masse (NDP). It’s the stability of the system that has everyone else’s nose out of joint.
The minister queried Rogers on this issue, and in particular, on the status and timing of making Canada not more competitive but less with their impending swallowing of Shaw. When a telco fails, what to do? Give them more? It’s a move that flies in the face of official telecom policy, which is to promote competition, not just amongst re-sellers like TekSavvy, which have minimal facility investments, but amongst wires-in-the-air/ground investors, those “facilities-based” providers who must get their act together so that they’re all connected to provide critical emergency services.
To make nice with a seemingly stern Competition Bureau (CB), Rogers has to tolerate Shaw’s Freedom Mobile’s divestiture to Quebecor Inc. (no slouch, these folks), for about $2.85 billion. In time, it’s expected that Quebecor is to build its own facilities, and not just tap onto Rogers’ infrastructure—the same infrastructure that failed so spectacularly on July 8th. And indeed, the Competition Bureau isn’t buying it: According to The Globe and Mail’s Alexandra Posadski, the CB is seeking to block the merger, worried that it will hit wireless customers with higher prices and lousier service. The deadline has now been pushed back until December if not January, with Mr. Staffieri’s apology tour underway and the hope that people will surely forget all about it.
It’s likely that Mr. Staffieri is also hoping that, thanks to a quirk in the Competition Act (Section 96), this controversial deal has a shot at happening because, if the dominant player (Rogers) can prove that “efficiencies” (for whom?) from the merger can occur—presumably to the betterment of consumers and enough to offset any potential dampening of competition—then approval is likely. Now ask yourself this: Has that ever happened in any consolidation? With Bell Media’s takeover of CHUM? Corus of Shaw’s TV and radio properties? Telus and Clearnet? If I’ve missed these efficiencies, I’d be delighted to stand corrected.
In any case, if we take them at their word, how would “efficiencies” square with the pledge of that $10 billion to prevent destabilization of the network? This is likely what gives the Bureau considerable pause. Cuts to call centres, wireless staff, road crews, network maintenance, and you might just get back to those pesky code-error outages over and over. You see the hubris.
In fairness, it’s a contradiction that resonates with a larger historical contradiction that’s bedeviled Canadian cultural and tech policy since Bell was given a license to print money in the 1950s. The nationalistic logic was this: If we are going to be ruled by a monopoly, let it be a Canadian one. In other words, profit and monopolistic, duopolistic, and now oligopolistic growth have been aggressively allowed to skyrocket unfettered in the guise of an economic nationalism that has twisted the CRTC and the CB into knots for decades. Cultural content requirements for television, sure, but let unregulated market growth reign for the tech troika! The CRTC doesn’t have to seat corrupt commissioners (though there have been those), to see how this pattern of policy doublethink has ultimately led to Canada being both the most wired nation on earth and the home of the most expensive wire on earth. In the ’70s and ’80s, for instance, cable got an unregulated profit of some 40% before anyone took notice.
Let’s finally declare “mission accomplished” on the economic nationalism and press the CRTC and the CB to end this market domination and stranglehold on our wallets for lousy service, troika profits, and day-long outages. They may need to impose hefty fines and deeply incentivize more serious players, but first, some transparency from government would help, too. In 2020, the industry ministry asked the telcos to reduce their data package price by 25% on their lowest tier of offerings (the 2–6GB package). Telcos complied, but we’ll never know what carrot-and-stick deal was made. And don’t buy the small-population-big-land argument for our prices and infrastructure needs. Finland’s Rewheel said that, in fact, Rogers et al. maintain far fewer cell towers per customer than those in the (cheaper) Finnish market. Remember that the next time you pony up on your bill or read an insufferable email of contrition from a CEO, and maybe drop the Competition Bureau a line demanding action. You can also check out OpenMedia.ca’s work and sign a petition or two.