Oligopolistic telecom market results in paying absurd prices

Preeteesh Peetabh Singh

Preeteesh Peetabh Singh
News Editor

When Verizon included a feature to call Canada in their Share Everything plan for $15, people thought the company has set its sights on entering the Canadian market.

There was a lot of excitement in the media when Verizon proposed an offer of $700 million to takeover Wind Mobile in June. The American giant was also reportedly in talks with Mobilicity with intentions of stepping into the communication scene in Canada.

The entire buzz went down recently when Verizon stated that it had shelved the plan of entering Canada. Instead they announced a $130 billion deal to buy 45 per cent stake held by Vodafone in Verizon Wireless.

This deal might have left the company with a lighter pocket to try out new ventures. So, they decided to drop Canada from their agenda.

Earlier this year, the federal government rejected a $380 million offer made by Telus Corp to buy out Mobilicity.

Mobilicity came into existence after the Advanced Wireless Services (AWS) spectrum auction held in 2008, reserved 40 MHz out of 105 MHz exclusively for new entrants to bid on. According to the rules of that auction any new wireless carriers were forbidden from selling their spectrum to an incumbent company within five years.

“At the end of the day, our goals are lower prices, better service and more choice for customers and business,” said then Industry Minister, Jim Prentice in a press statement. The move was cited to involve greater competition in the market and further innovation in the industry.

The next Mobile Broadband Services auction for the 700 MHz band is set to take place in January.

The federal government’s intentions did not seem to do the trick. The Canadian telecommunications industry today is still ruled by the three mega giants: Rogers Communications, Bell Canada and Telus which together holds the majority of the market.

As compared to Rogers, Bell and Telus; Wind, Mobilicity and Public Mobile provide inexpensive plans for the consumers, but at the same time their service (network) is even crappier than the big three. This leaves people with no or very little choice; a choice of picking one which is the least worst.

Students are big market for these companies. Less competition means higher prices and a higher price doesn’t necessarily mean good service.

Being tied in by two or three year contracts, $70 mobile bills, or a $55 plan including limited data, limited messaging,  and limited calling minutes leaves consumers dissatisfied and helpless.

Now with Verizon also backing out; the telecom market is venturing into a dangerous territory. The oligopolistic nature of the market will force consumers to stick to these limited phone service providers and continue paying absurd prices.

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Oligopolistic telecom market results in paying absurd prices