Opening up the Canadian telecom and broadcasting industry to increased and less regulated competition, including from foreign investors, would promote more consumer-focused content, more choice and lower costs for Canadians over time, according to a new study released by the Fraser Institute.
Authored by the Vancouver think tank’s Senior Fellow and Addington Chair in Measurement, Steven Globerman, Promoting Efficient Competition in Canadian Telecommunications and Broadcasting maintains that particularly in the telecom space, competition has been too tightly managed by successive governments.
“Telecommunications and broadcasting are both vitally important to the economic health of a nation, and yet in Canada, both suffer from inefficient competition, which means Canadians suffer through more limited service offerings and high prices,” said Globerman.
Globerman suggests that with the emergence of Quebecor as a fourth national carrier, behind Rogers, Bell, and TELUS, the justification for regulated competition no longer holds.
The report says going forward, government policy in the telecom sector should focus on promoting efficient competition by eliminating all restrictions on foreign ownership except in cases where national security might be compromised. Globerman also writes that public policy in broadcasting has been too focused on subsidizing the production and distribution of Canadian content, which incumbent broadcasters largely pass on to consumers resulting in higher prices for streaming and other services.
“The subsidy scheme can be a barrier to entry or expansion, particularly for streaming services that are uncertain about their competitive ability to be profitable in the face of an effective tax on their revenues beyond a minimum revenue threshold. Efficiency and transparency argue for subsidizing Canadian content through general taxes if the relevant subsidy scheme is maintained,” Globerman writes. “Removing restrictions on foreign ownership of conventional broadcasters and cable companies would also enhance contestability in the sector.”
“Public policy in both the telecommunications and broadcasting sectors has been directed at objectives other than promoting efficient competition, and the result has been less innovation, more limited choice of products and services and higher prices for Canadians,” said Globerman.
