Canada’s cell phone gap

The Globe and Mail begins what looks like it will be an interesting series this weekend:

Canada Competes is a six-month project examining the people, politics and economic issues that are helping or hurting the countries ability to compete in a post-recession world.

First up: Loans, mobile, and travel, all of which, in Canada, are controlled by small cartels of protected Canadian companies.

I confess that on the whole, I have mixed feelings about the airline and banking sectors: while the domestic protectionism is almost certainly driving up consumer/small business costs, we do and have benefited from the protectionism. Canada’s banking system survived the credit crunch in large part because the banks are subject to more control than in other countries; and I suspect, as a large but sparsely populated country, that a purely market-driven open air industry would end up focussing almost exclusively on three or four major urban centres at the expense of everywhere else: I don’t see United or KLM flying into Lethbridge any time soon (or Winnipeg, or the Sault), and even Calgary lacks international connections appropriate to its economic importance (on the other hand, some of this problem seems to be due to restrictions which prevent even internal competition).

But the cell phone providers? It’s difficult to see what we gain from being the last OECD country to restrict ownership of the industry. The major carriers have not used their protected status to provide adequate rural service or become world players in the industry (none are even in the top 30), and Canadian adoption of mobile technology is lagging as a resultA new approach, involving increased competition with appropriate regulation, may turn out to be  as effective as anything we’ve seen thus far.

Letting T-Mobile, Orange, Vodafone, etc. into the market could hardly make things worse!


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