Canada’s New Telecom Landscape
By Ryan Goldsman, CFP®, PAIP®
The past few months have been eventful in Canada’s wireless industry. To begin with, the well-known wireless provider in the west of the country, Shaw Communication (TSX:SJR.B), was purchased by Rogers Communications (TSX:RCI.B), and the deal received regulatory approval. As a result, the new entity would be required to divest its interest in Freedom Mobile (which was owned by Shaw).
The new suitor for Freedom Mobile is none other than Quebecor Inc. (TSX:QBR.B), which owns Videotron in the province of Quebec.
The question: what does all of this mean for consumers? and the answer isn’t an easy one. If competing firms inside of an industry are merging, it’s most often to create better economies of scale and increase profits.
On the side of the consumer, it often leads to higher prices (due to lower competition), but that was not the argument made by Rogers. In fact, they said the opposite. With another coast-to-coast operator, the argument can be made that consumers are better served, and that competition is in fact increased. Unfortunately, I don’t agree.
Although each geographic area is served by more than one competitor, the reality is that having a “national” provider is rarely a top priority for consumers. Most Canadians don’t travel enough to make this a concern – at least in one man’s opinion.
When considering the larger footprint for Rogers, they will undoubtedly increase their coverage across the country and better compete with Bell, but they may not be the biggest winner. That crown may very well go to Quebecor, which in spite of being a behemoth in the province of Quebec, it has not been able to replicate that success anywhere else. With the “last place” Freedom Mobile being passed around like the proverbial “hot potato”, it may be time to finally unlock its true value. Here's hoping that consumers will be provided with better alternatives than what’s been offered by the well-established, well-entrenched providers.