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Fri, 16 Aug 2013 13:45:00 GMT | By Deirdre McMurdy, MSN Money

The false hope of Verizon in Canada

Ottawa needs a backup plan to ensure telecom competition for Canada.


Deirdre McMurdy

For governments – as for people – it’s always wise to be careful what you wish for. All the more when your wish is very public and the stakes are very high.

The government of Canada has recently made very clear its wish for greater competition, lower prices and improved service in the nation’s telecom sector. It correctly argues that the three incumbent players have had plenty of time to step up in a business that’s so important for the Canadian economy.

And not to be disingenuous, the Conservatives also understand that this is an issue that can only win them grassroots support at the polls. Canadians are openly frustrated with the costs and the constraints imposed by the unholy trinity of Bell, Telus and Rogers.

The grassroots grumblings, furthermore, have only been reinforced as powerful corporate leaders – who also sit on the boards of the telecom companies – publicly excoriate the government for its telecom policies. If Tony Fell, the former head of RBC Dominion Securities and a Bell board member can’t see how his objections come across, John Manley, CEO of the Canadian Council of CEOs, a Telus board member and a former federal Industry Minister, certainly should.

It’s also worth noting that in their self-absorbed fury at the federal government’s stance, the telecom CEOs are squandering an awful lot of personal – and political – capital. The patronizing comments about the newly appointed Industry Minister James Moore aren’t going to win them many friends in Ottawa’s higher echelons should they need any favours down the road.

In any game of corporate chess, it’s usually a wise idea to protect your king and keep him out of the fray. Better to let the pawns, knights and bishops get their hands bloodied in battle.

To counter the incessant corporate attacks, Minister Moore has announced a cross-country tour to explain the rationale behind his government’s policy to Canadians.

But there is one area of this much-scrutinized policy that needs to stay in the oven just a little longer: its implementation.

Wishes are funny things. It’s one thing to have one but quite another to execute it. And so it is with federal government’s wish for its telecom policy.

Ottawa has a policy – and arguably a good one. Its flaw, however, is that it relies too heavily on a single, third-party to execute it. Not only that, it’s a foreign third-party with lots of other agendas and objectives.

As things stand, Verizon – should it stop fluttering its eyelashes and firmly declare its intent to invest here – is being vested with inordinate responsibility for implementing an important national policy. That’s a lot of onus on any one company, especially one that’s not exactly a paragon of corporate virtue itself.

Any U.S. consumer will tell you that Verizon is no better than any other telecom service provider in the cutthroat American market. But in their Canadian incarnation, the heavy hopes pinned on its arrival could make any fallibility problematic.

There is no question that Minister Moore is highly competent. And so far, he’s kept his cool and been very ministerial in the face of heavy fire.

Equally, there’s no question that he – and the Conservative caucus – really need a coherent and well-considered Plan B.

If Verizon decides not to purchase Mobilicity or Wind Mobile, if it decides to defer its entry into the Canadian market for any number of reasons, Ottawa needs to seamlessly shift to the next option.

That not only needs to be in place, it needs to be clearly articulated to a public that’s now had expectations stoked. It also needs to happen fast because the spectrum auction is coming quickly. The deadline for bids in the auction is next month.

If the incumbents aren’t allowed to bid for the whole shebang, what will happen if Verizon doesn’t step up? What will happen to Mobilicity and Wind Mobile if they’re not bought by Verizon and the incumbents aren’t allowed to acquire them? And what will happen to the wish for greater competition?

The spectrum auction is not just a huge deal for the incumbents who want to build out their business, it’s a huge deal for Ottawa too. At a time when debt and deficits are running high, the public treasury needs the billions of dollars that the auction can generate.

Even setting aside juicy chunks of spectrum for new entrants like Verizon carries a public cost, because it represents money foregone in the interests of a longer-term policy.

So let’s just hope that Ottawa’s ability to execute its wish for greater telecom competition is every bit as fervent as the wish itself.

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