In the last month, they probably overbilled you, charged you unfairly, cut short your conversations, made you listen to muzak for hours while you waited for customer support, or told you outright marketing lies.
A 2017 poll found they’re the industry with the worst reputation in the country, worse even than bankers or oil barons.
Few will be surprised that the commanding heights of Canadians’ corporate shit list are occupied by the telecommunications sector — your phone and internet providers.
The architects of this system are a handful of corporate giants that control virtually all of our communications infrastructure. The Big Five – Bell, Rogers, Telus, Shaw and Quebecor – have perfected the art of squeezing ever-greater profits out of Canada’s captive market of mobile phone and internet users. In 2017, their profits totalled $7.49 billion, and their profit margins have reached an astonishing 46.2 percent.
Their power is about to become even more consolidated. Last week, shareholders of western telecoms giant Shaw Communications voted to accept a buyout offer from Rogers Communications worth $26 billion. If approved by regulators, the merger will reduce wireless competition in about two-thirds of the country, including Toronto and Vancouver.
So then there were Four.
Wielding their control over the nation’s cables and signal towers, the dominant players shut out smaller companies and keep prices high. They delay the rollout of new technologies and seek to undermine net neutrality protections. They slash funding for local journalism and outsource jobs abroad despite record profits. They refuse to produce Canadian content without generous public subsidies, but wrap themselves in the flag when facing the prospect of foreign competition.
High-speed internet and mobile phone service are a necessity for work and life in the 21st century, but the monopolization of these essential services means that divisions between rural and urban, rich and poor, are growing in Canada. Low-income Canadians struggle to pay for these essential services and are disproportionately shut out by the rising cost of connectivity. Those who live in rural, remote and Indigenous communities are forced to pay high prices for slow, unreliable service due to a lack of infrastructure investment.
There are proven, better ways to provide communications for everyone. In many European countries, affordable broadband internet and mobile phone service and even unlimited mobile data are a reality, thanks to stricter regulations.
In Helsinki, the local government has created a free, city-wide WiFi network, offering speeds higher than in many other European capitals. In Uruguay, a publicly-owned company has made the small South American nation a world leader in fibre-to-the-home and wireless connectivity.
Even within Canada, the otherwise bleak telecoms landscape features a few bright spots. In Saskatchewan, SaskTel has proven that publicly-owned telecoms can help lower prices and ensure better service for rural customers without acting as a drag on the public treasury.
It is hardly utopian, then, to suggest that we could build a national, publicly-owned telecommunications network that provides high-quality, affordable service to everyone. But telecoms are the kind of infrastructure that screams “natural monopoly.” To really harness the benefits of public ownership, we would need to nationalize the Big Four outright. The profits currently pocketed by shareholders could instead fund local culture and journalism in the public interest, and a socialized telecoms sector could begin to tackle the pernicious effects of dominant digital platforms.
Taking control of our communications infrastructure can mean lower phone bills, better service for everyone, and added vitality to our political and cultural lives. It will require only a bit of imagination — and a lot of political organizing.
The telecom rip-off
Culture and entertainment, work and education, love and friendship, politics and business — our lives have become inextricably intertwined with internet connectivity.
For lower-income households, internet and mobile phone bills account for nearly five percent of expenses, a bite out of the family budget that is two and a half times larger than for average-income families. Millions of Canadians can’t afford to pay for broadband service unless they sacrifice other necessities, such as food, clothing, and healthcare.
Faced with such an excruciating choice, many poor and working-class Canadians are forced to do without internet connectivity entirely. Canada ranks a lowly 24th out of 35 OECD countries in terms of mobile phone adoption. And it’s the poorest who don’t have access, with 35.6 percent of the lowest-income households lacking a connection at home.
In Northern or rural areas, internet users pay higher prices than elsewhere for slower and less reliable connections. Over 2.4 million Canadians (comparable to Metro Toronto, or the entire Greater Vancouver area) cannot access the broadband speeds deemed essential by the Canadian Radio-television and Telecommunications Commission (CRTC) at any price. The barrier? Lack of adequate infrastructure — and First Nations “are the most disadvantaged communities in almost all respects,” the CRTC notes.
Telecom’s Big Five can make enormous profits, but they can’t provide decent connectivity to rural areas.
The big telcos try to argue that prices here are similar to other wealthy countries. But international comparisons confirm what most Canadians know instinctively: we pay too much for the broadband internet and mobile phone service we receive.
The CRTC’s own studies show that broadband internet prices in Canada are among the highest in the advanced capitalist world for the connection speeds that the regulator has designated as essential. For mobile wireless phone service, the price gouging is even worse. Among Organisation for Economic Co-operation and Development (OECD) member countries, Canada consistently ranks near the top for most expensive wireless pricing, particularly on data plans.
It’s easy to squeeze out robust profits when you don’t think about quality for remote users or providing affordable options for half the population.
Take the Sasktel model national
An interesting example of what can be done at the provincial level to challenge Canada’s telecoms oligopoly comes from Saskatchewan — and the model could very well be taken national.
The Big Three mobile providers (Rogers, Bell, and Telus) claim that high prices for mobile phone services are an inevitable consequence of our country’s immense geography and sparse population, rather than due to a lack of competition.
This is pure nonsense. The notion is spectacularly disproven by Saskatchewan, the province with the lowest population density — and the lowest rates for cellphone services. The province’s mobile phone users get lower prices and more data for their mobile phones than in other provinces because of the competition provided by SaskTel, the last provincially-owned telecoms company left standing in Canada after decades of privatization.
Wireless plans in Saskatchewan are up to $70 cheaper than their equivalents in Ontario, Alberta and British Columbia, thanks to SaskTel. Competition from SaskTel has forced the Big Three to lower rates for their Saskatchewan customers, by 40 percent for some plans relative to other provinces.
Prices are so low, in fact, that there is a thriving black market of Ontarians clandestinely obtaining Prairie mobile phone plans. And only SaskTel (along with the recently-privatized telco in Manitoba) offers unlimited data plans. Even industry consultants hostile to the notion of a publicly-owned provider admit that the best wireless rates in the country are thanks to SaskTel.
SaskTel has enjoyed tremendous commercial success, taking a 67 percent share of the wireless market and regularly returning tens of millions of dollars in dividends to the provincial treasury. Endowed with a strong public service mandate, SaskTel has invested heavily in rural infrastructure. While Bell, Rogers and Telus have limited their infrastructure spending to Regina and Saskatoon, SaskTel has built cell towers throughout the province.
The crown corporation also boasts the lowest number of complaints per subscriber among wireless carriers, and has won top marks for customer service.
All this, while paying its CEO and board of directors one-tenth of what MTS (Manitoba’s privatized telco which is of similar size and was sold off in 1996) pays its corporate leadership. Taking SaskTel national, as UNIFOR’s David Coles proposed in 2014, could be an interesting way of challenging the hold of the Big Three over wireless.
To realize such latent possibilities will require a major political fight. Every step of the way, other places that have introduced public enterprises have faced intense lobbying and hostile media campaigns funded by the incumbent corporations. And it would happen without the help of the current government in Saskatchewan, which is more interested in hobbling, rather than expanding, the crown corporation.
To pave the way for its eventual privatization, former premier Brad Wall’s conservative Saskatchewan Party government sought to undermine SaskTel by cutting it off from new sources of revenue and limiting its activities outside of the province. Fortunately for everyone, privatization is deeply unpopular — even with the Saskatchewan Party’s political base.
Break the power of the Big Four…….then Nationalize
To give a publicly-owned player like SaskTel a chance, concerted regulatory action is necessary.
Regulatory priorities should include consumer protection measures like abolishing data caps, the break-up of vertical integration between telecoms and media corporations, and the establishment of a wholesale access regime for telecommunications infrastructure that will allow public alternatives to survive and thrive.
Above all, weakening the power of the telecoms oligopoly requires putting an end to the revolving door of industry insiders at the CRTC and installing commissioners with the necessary independence to face down the telecommunications industry and their army of lawyers and lobbyists.
The aggressive use of regulatory power, on top of new publicly-owned alternatives, will help reduce prices and improve service. And there will be a temptation to stop there. But regulation can only limit the worst abuses of the telecoms giants. With billions in profits, the temptation to reassert themselves will always be there.
There are compelling reasons to continue to the next step: to institute social ownership of the telecommunications infrastructure and run the whole network as a publicly-owned, democratically managed, unified network.
The most compelling reason is resources. Without the surplus generated by the most profitable parts of the network (currently in the hands of the Big Four), it is difficult to imagine how to make the investments necessary to achieve the key items on any list of communications justice demands:
- High speed internet in remote areas;
- Free or extremely low-cost options for poor and working-class Canadians;
- Upgraded networks connecting every building, home and device at gigabit speeds;
- A flourishing of popular, democratic culture through publicly-funded arts, culture and public-interest journalism;
- A strategy to take on the power of the online advertising/data duopoly, Google and Facebook.
The profits of the more densely connected urban areas are essential to realize the vision of a telecommunications network run as a universally accessible, affordable public utility.
Canada’s big investment in closing the digital divide in 2018 was to invest “up to” $100 million to expand the reach of existing telecommunications providers in small towns and rural areas. That’s a multi-year investment, but it amounts to about 1/70 of just one year’s annual profits for the Big Four.
A small country with better infrastructure
Uruguay is a remarkable example of what a nationalized telecoms company can do for connectivity. Its state-owned telecommunications provider, ANTEL, holds a monopoly on land lines and data services. It has two multinational competitors in the mobile phone space, but remains the most popular mobile provider as well. Under the left-wing governments of the Frente Amplio, ANTEL has directed the profits from its thriving business to invest in infrastructure.
Rather than concentrating exclusively on profitable, densely-populated areas, the state-owned company has installed fiber to the home (FTTH) in 79 percent of the country, and intends to establish fiber optic connections to 100 percent of homes in the country by 2022.
Canada, by contrast, is widely recognized as a laggard when it comes to fibre deployment.
ANTEL also runs several TV and radio stations, providing journalism and a variety of cultural programming. As the Transnational Institute’s Daniel Chavez has documented, the public telecommunications provider is progressive in other ways: bucking regional trends, women represent 50 percent of the company’s workforce, and it has been led by two women CEOs in recent years.
Enter the naysayers
The right never tires of telling us about all the ills that would befall us, if we were to trod the path of “GovtTel”. Surely it would mean bureaucratic bloat, shoddy customer service, underinvestment, lack of innovation, loss of privacy and media manipulation.
The trouble with this nightmare scenario is that it sounds a lot like what we have now.
Most of the infrastructure was once in public hands, after all. Telus was the product of the sell off of BCTel and Alberta’s AGT, and Bell’s Maritime holdings were once publicly-owned telcos too. Bell itself was created by an Act of parliament in 1880 and built its empire through a government-granted monopoly on Canadian long-distance telephone service that lasted nearly a century. Vidéotron was the creation of huge investments of public money (the Caisse du Dépot et placements du Québec and Investissement Québec, principally) and the cable companies were allowed to virtually print money for years thanks to friendly relations with the CRTC. The Big Three dominate wireless largely thanks to the federal government’s giveaway of prime spectrum (known as “beachfront property” in the industry) in the 1990s.
The question is less “Why nationalize?” than “Why not nationalize?”
Why should we let the Big Five keep the most valuable parts of our telecommunications network?
Concerns about the overreach of state-owned enterprises are not unfounded. But they are also not without solutions. Movements and left political leadership have developed a rich discussion of ways to ensure that democratic control, transparency, and oversight are established and maintained.
It starts with lower prices and access for all, but public telecommunications can become a powerful tool to build a better future.
It’s time to fight for these ideas to succeed.