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No Competition, Please. We’re Canadian.

Whether it’s air travel or Internet, the time-honoured Canuck reflex is to boldly pacify the masses with the security blanket of quasi-monopolies, contends Convivium contributor Peter Menzies.  

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No Competition, Please. We’re Canadian. August 14, 2019  |  By Peter Menzies
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Those of us once housed snugly within Gatineau’s mid-century Soviet architecture just across the Ottawa River from the Parliament buildings were disappointed recently to read smug comments on social media regarding the Competition Bureau’s study indicating that competition is a good thing – or at least that most Canadians think it is when it comes to their Internet service.

Many within the Great Unwashed seemed to think this was a no-brainer. And so it would appear to be until you understand that competition within Canada’s telecom world – yes, the one that brought you mobile phone rates – is actually a snazzy new thing.

It was only 25 years ago that competition in terms of long distance (remember that?) service was first introduced. Yes, there were a few early years of wild abandon. But from 1906 when Bell Canada became subject to the Railway Act (for the next 90 years until the Telecommunications Act took over) competition was never in the picture.

As difficult as this may be for the Millennial mind, the libertarian-leaning Montreal Economic Institute or even just normal Canadians to grasp, there were other priorities. Indeed, for most of the 20th Century, the most important thing about a telephone was that you could actually get one. There was really no market argument that favoured running telephone lines anywhere outside major cities to the towns and farms where most Canadians then lived. Or so everyone was told and believed.

So, the priorities did not involve competition. Instead they were access, affordability and quality of service. Which meant heavy regulation, which in turn meant the nation’s industrial framework was a patchwork of protected private monopolies and provincial Crown or municipally-owned corporations. The regulatory “bargain” was that providers got to make money and the people got to get service. The regulator decided how much each got of each.

We are all aware of Bell Canada’s transition but, for context, the old system’s other survivors are entities such as City West in Prince Rupert B.C. and Bruce Telecom of Kincardine, Ont. Sasktel is the last provincial Crown, the others having been sold/privatized. All of course were and are Canadian owned. 

Throughout the nation’s history, Canada has believed that allowing communications infrastructure to be foreign-owned constitutes an existential threat. And, so, when it comes to telephony, railways, broadcasting, airlines and more, this country continues to maintain a big, beautiful wall to keep out foreign competitors and coddle domestic providers. It was perhaps understandable in a century that featured two World Wars and the threat of nuclear Armageddon. How the instinct survives today is another issue.

The story of Internet service is not that much different from telephony. Large sections of the country struggled for service. But because no regulator demanded connectivity, space was created for all kinds of different entrepreneurs happy enough to innovate and fill the gaps. Who knew? 

There are now about 700 of them sprinkled across the country and, according to the Competition Bureau, they are making customers happy. They range from satellite-based companies such as SSI Micro in the North to Wireless providers (WISPs) such as in Debolt, Alta., to pure service-based competitors to large, full service companies such as Teksavvy

Some have provided service where large providers wouldn’t and prefer now to be protected from competition. Some want low rates of access to networks built by others so they can offer good service and low prices. Some want a “level playing field.” 

Those who own networks say giving competitors cheap access removes their incentive to build. And on it goes. That, pretty much, is the endless world of the communications regulator, the Canadian Radio-television and Telecommunications Commission. As, for that matter, it is for every regulator of everything - including airlines - that struggle with the same issue: how to ensure access, affordability, and quality of service and whether competition makes that possible or impossible. 

Air Canada, for instance, does not fly any further north than Yellowknife and – get this – won’t take off if it’s below -40C. But First Air, Air North, Ken Borek Air and Canadian North all fly to Inuvik. If Air Canada decides to take that route and charge lower prices, will that result in more competition or less? And how will the people of Inuvik be served? Better? Or worse?

Over all of it persists the nagging fear within the national psyche that allowing the likes of KLM (yes, the dreaded Dutch) to compete to pick up passengers in Calgary and deposit them in Toronto will somehow leave the domestic landscape bereft of airlines.

Never mind the truth that the real story behind the Competition Bureau’s Eureka moment here is that the Internet, its availability, service levels and price in Canada evolved without the sort of regulation that kept a firm hand on telecom for 100 years. I’d like to think that was because the people who saw it coming knew it was a thing, but weren’t sure how big a thing it was going to be and listened instead to those like me who said “look, just leave it alone” and focused on regulating to ensure competition, not prevent it.

I would like to think that other regulators would learn from this.

But, knowing a little bit about the instincts harboured within the Socialist Realist-style office buildings populating the banks of the Ottawa River, I’m pretty sure that if their inhabitants had known then what they know now, they’d have been all over it from the start, suppressing competition and coddling providers - all in the name of the public good.


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