Home > Uncategorized > More competition in the Canadian cell industry

More competition in the Canadian cell industry

People love to hate on monopolies. Or in the case of the Canadian cellphone industry, oligopolies. I doubt many people would say that they love their cellphone provider, but for the most part, prices are going down and quality is going up. Even with only three companies to compete with each other, markets work.

With that being said, more competition, as long as it is viable and able to sustain itself, is never a bad thing. Canada has recently opened its doors to more competition by licensing wireless spectrum to new companies. These startups face a difficult market where many potential customers are locked into contracts with their competitors or have multiple other services that can be bundled together for cheaper prices. It won’t be easy for them, but if they have good products, good plans, and better customer service than their entrenched rivals, they will be able to make money. Ultimately this increased competition is good for consumers. We as consumers shouldn’t care about which company offers us the better deal, if it is one of the older providers that is just as good for us. And that is where the law might get in the way.

One of the new startups is already looking to impose legal sanctions on Rogers because they dare to compete. These competition laws, which were implemented to stop the “horrible abuses” of market leadership, end up only hurting competition as it handicaps large companies from implementing what customers want. Rogers knows that many customers want cheaper and simpler plans on a network designed for urban areas only. They want to compete in this area with a new company called Chatr. I fail to understand how this is in any way bad for anyone but the shareholders at their competition, yet Canadian law may stop them from doing this.

Many might argue that as soon as the competition goes out of business, Rogers will jack up the prices again and consumers will be worse off but there is simply no evidence to support this view. I can not think of an example where an entrenched company offered a better product, or a cheaper product, than their upstart competitor and then after they went bankrupt jacked up the price or started producing an inferior product. One only needs to think of the recent example of iPods and their incredibly dominant market positions (far more dominant than any one carrier in Canada). As more competitors entered the market, Apple lowered prices and added better features and after much of the competition fizzled away (Creative, Microsoft etc.) they kept innovating and kept lowering prices.

Competition is good for Canadians, but laws designed to promote competition often do just the opposite.

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Categories: Uncategorized
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