You might think that such an outcome is the result of some crass political calculation, like the one that diluted the impact of $950 million by creating a supercluster in each of Canada\u2019s five regions, instead of seeking maximum impact by betting on one or two.\u00a0<\/p>\n
But that\u2019s one of the things that makes this late-summer announcement by Industry Minister M\u00e9lanie Joly extraordinary. Despite heavy lobbying, politics appear to have had little to do with it. Instead, the Liberal government backed the Canadian Radio-television and Telecommunications Commission, no small thing at a time when the credibility of democratic institutions has been damaged by the culture wars. <\/p>\n
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\t \t The fallout of Carney\u2019s decision to side with the CRTC reveals the political pressures his government was facing. The blowback is coming from Quebec, the home of seven cabinet ministers, including Joly. Montreal-based BCE, whose Bell brand sponsors the home of a certain legendary local hockey team, has said the policy will force it to slash investment in new infrastructure. Cogeco, a smaller player owned by Quebec\u2019s Audet family, is even angrier. \u201cI am in shock,\u201d chief executive Fr\u00e9d\u00e9ric Perron told<\/a> the National Post this week. The Bloc Qu\u00e9b\u00e9cois called on the government to reverse its decision immediately.\u00a0<\/p>\n You get the idea. The easy decision would have been the opposite of the one Joly announced on behalf of the government. Toronto-based Rogers, which shares a home with nine cabinet ministers, is also<\/a> a critic of the CRTC\u2019s policy. So is Nova Scotia\u2019s Bragg Communications, the owner of Eastlink, an important internet provider in Atlantic Canada. Two cabinet ministers are fellow Bluenosers and a third is one of the prime minister\u2019s parliamentary secretaries. \u201cWe encourage consumers to reach out to their local MP to voice concerns about this decision and the unintended consequences of losing, not gaining, sustainable competition,\u201d Lee Bragg, executive vice chair of Eastlink, said<\/a> in a statement.\u00a0<\/p>\n It\u2019s possible, even likely, that you are hearing about all of this for the first time. Telecommunications policy is a swamp of arcana, populated by trolls and tricksters, that repels most mortals. Here\u2019s what you need to know.\u00a0<\/p>\n The cost-of-living crisis compelled the previous government and the CRTC to try to manufacture competition in a notoriously concentrated industry. One of the ideas that policymakers landed on was forcing the owners of communications infrastructure to provide wholesale access to competitors at government-mandated rates.\u00a0<\/p>\n It\u2019s a flawed approach for the same reason rent control is flawed: All things equal, it dulls the incentive to invest. Still, you could make a decent argument for it in the case of mobile. Telus, Bell and Rogers are so entrenched that you\u2019re never going to create competitive pressure without regulation, at least for as long as foreign ownership restrictions are in place.\u00a0<\/p>\n Home and office internet is different. Stringing cables to buildings is expensive. Corporate boards will insist on a certain rate of return before they let management make such an investment, and that changes if you have to share those lines with companies bent on stealing your profits. This is what the outrage is about.\u00a0<\/p>\n The addressable markets that Bell and Rogers dominate in Ontario and Quebec are much larger than those that Telus controls in the West. Bell and Rogers could theoretically piggyback on Telus\u2019s infrastructure, but the economies of scale aren\u2019t necessarily attractive.\u00a0<\/p>\n For Telus, it\u2019s the opposite. The CRTC opened a path to some of North America\u2019s biggest urban areas, prompting chief executive Darren Entwistle to march into eastern Canada with bundles and marketing budgets that Cogeco and Eastlink can\u2019t match, and that might force Bell and Rogers to lower prices.\u00a0<\/p>\n Near the end of 2024, former prime minister Justin Trudeau\u2019s government, via another Quebecois industry minister, Fran\u00e7ois-Philippe Champagne, nudged<\/a> the CRTC to reconsider its policy. The regulator did so, and determined<\/a> in June that its approach was indeed the right one. So the bigger question facing Carney was whether an assembly of politicians should bigfoot the independent regulator. Put that way, he didn\u2019t opt for Telus\u2014he opted to trust Canada\u2019s system of checks on political whim.\u00a0<\/p>\n Carney\u2019s decision might yet prove to have been poor because it heavily favours an incumbent at the expense of Cogeco and Eastlink, companies that created a niche by serving rural communities that the bigger mobile and internet providers tend to ignore. The objective of telecommunications policy since Stephen Harper was prime minister has been to nurture potential competitors that would end the oligopoly. Granting companies such as Cogeco and Eastlink access to legacy infrastructure makes sense. Granting Telus that privilege risks further concentration. Telus will disrupt retail prices in Toronto and Montreal in the short term, but what happens when the oligopoly resets?\u00a0<\/p>\n
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