It seems that this post about the big three Canadian’s telcos complaints about Verizon potentially entering the Canadian market has gotten some attention. Thus I’m going to batch answer some questions I’ve received over the last few days.
Here’s a good question that I received from a reader.
Hello IT Nerd. I have a bit of a bone to pick with you. In this article, you point out that Verizon used to be in the Canadian market. But you in this article claim that they are a new entrant. Isn’t that logic flawed? Could you not argue that Verizon is not really a new entrant in the Canadian market?
Good question and thanks for asking it. I still consider that Verizon is a “new entrant” and I am pretty sure that the Canadian government who is running the spectrum auction does as well as the rules say that a “new entrant” must have less than 10 per cent of the market share. So with that in mind, consider this: They are not currently a player in the Canadian cell phone marketplace. Therefore they are a “new entrant.” Yes the fact that they’ve been here before has it’s advantages from a business perspective, but it doesn’t hurt them in terms of bidding for two blocks of spectrum.
Here’s my next question:
Hey IT Nerd. Answer this question for me. Would Verizon really bring cheaper prices to Canada. Rumor has it that they have the highest prices for mobile service in the US?
I think they would. If Verizon were to enter, it would force the big three to compete with them and that means lowering prices and offering better service. Verizon would have to offer decent pricing as well to acquire customers because while Canadians are fed up with the big three, they would be unlikely to switch to Verizon simply because they exist. Plus areas that have been irritants for years for Canadians such as US roaming would likely disappear because I would find it difficult to believe that Verizon would not leverage that advantage to get a leg up on the competition. Thus the big three would have to respond. Net result: Cheaper prices.
Here’s my next question.
IT Nerd, I have a question. Could you not argue that Rogers, Telus and Bell have a point by saying that the rules for the upcoming spectrum auction aren’t fair to them?
They do have a point. But these rules are not designed to be fair to them. It’s designed to be fair to those who want to enter the marketplace so that it encourages competition which is what this country needs. So either the big three don’t get that or are trying to slant things in their favor in my opinion.
And this is my final question. Actually three of them:
Good day IT Nerd, I have three questions. One, I am hearing ads on radio from the telcos claiming that Canadians are not reading the reports of the OECD correctly and we are paying less for wireless service than we think we are. Is that just the wireless industry in Canada trying to fight back? Second, Bell on it’s Play Fair website claims that jobs will be lost if Verizon comes in. Do you think that’s possible and shouldn’t we be concerned? Finally, shouldn’t the auction be delayed to work all of this out?
To your first question. I would love for someone from the OECD to make a statement about their various studies to prove or disprove the claims of the big three. But in the absence of that, here’s what I will say. I travel frequently to do work for my customers to the US and Western Europe. If I compare what I pay to what they pay, it seems to me that I as a Canadian wireless subscriber pay more and get less for my money. This is particularly true in Western Europe. Other Canadians likely see the same thing thus the Canadian Wireless Industry has to speak to that. This is how they’ve chosen to do so. As I’ve pointed out previously, I truly think they’ve already lost that argument and they need to address the pricing disparity that exists.
To your second question, will jobs be lost? That’s a possibility that I would be foolish to deny. But Verizon, if they were to come to Canada, would have to set up shop in Canada which means hiring people and putting together an infrastructure that includes both official languages (English and French). Thus I can’t see them running the show completely from the states. That suggests to me that there could be some jobs lost, but those jobs in whole or in part would be picked by Verizon as it sets up shop here. Also, one has to wonder how much the jobs issue has been overstated by the Canadian wireless industry in an attempt to rally support. So, should you be concerned? In my opinion, it’s food for thought, but I don’t think it should be something that should be at the top of the list of things to worry about.
To your final question, I do not believe that the auction should be delayed as there is nothing wrong with the process despite what the big three say. Thus it should go ahead and let the chips fall where they may.
Let’s see how much e-mail this generates.
🙂
Verizon Approves Buyout Of Vodafone Share
Posted in Commentary with tags verizon, Vodafone on September 2, 2013 by itnerdIt may be Labour Day, but it doesn’t stop the tech news from hitting the Internet. The big news today is that Verizon has bought out the stake that Vodofone had in it for $130 billion:
The complex cash-and-stock deal includes a $58.9 billion cash component, as well as a further $60.2 billion in Verizon shares. The American company also will hand Vodafone its current 23 per cent holding in Vodafone Italy for $3.5 billion, as part of a series of smaller transactions connected to the deal.
Here’s why Vodafone would do this deal:
The deal does give Vodafone a huge war chest, and could have a big effect on the European telecommunications industry, which has been faced with lackluster earnings and increased international competition — even as regulators push for carriers to invest in new, high-speed data networks that would put consumers and business customers on a more equal digital footing with data users in the United States and the most advanced parts of Asia, like South Korea.
As for Verizon, the reason for them to do this deal is that they would not have to share the revenue from the US marketplace. Over time, that could become very profitable.
Now, the only outstanding item is this. Does this deal mean that Verizon’s entry into the Canadian marketplace is off the table? That’s still up in the air. We’ll find out on the 17th of September when the deposits for the spectrum auction. My feeling. They’ve just dropped $130 billion. What’s another few billion?
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